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Brian Suiter: Tech companies come back to town

Posted on June 29, 2011 by Guest Author

Google buys 111 8th Ave, a 2.9 million sf building which encompasses an entire block in NYC, for almost $2B, their largest office outside of California. Twitter moves into San Francisco’s mid-market neighborhood. Microsoft expands to 300K sf in Kendall Square in Boston. Google expands into 150K sf mixed use space in Shadyside area of Pittsburgh. Internet based Receivables Exchange sets up shop in New Orleans’ central business district.
These types of headlines have become commonplace in metro area news. Tech companies, once the key players in suburban office parks have started to pull back into urban settings. Long gone are the volley ball fields, seas of surface parking, and manmade lakefront settings. Value has been placed on compact and dense settings for new offices and expansions. Their employees are often young and drawn to urban lifestyles. Why not bring the office to your prospective workforce rather than pulling your workforce to the suburbs from 9am to 5 pm? The aggregations of large offices, at one point in time, were always based in city’s business district. Then there was the mass population and business exodus to the ‘burbs. It seems like things have turned back around again as the population and their accompanying jobs are coming back to the central core of the cities. There will always be the need for the Apples of the world to have their corporate campuses in the suburbs, purely due to size constraints (where are they going to find 100 acres to house 20,000 staffers?!), but this is not mutually exclusive to also having urban hubs. First, the corporate decision makers moved to the ‘burbs. Then their headquarters followed. Now we are seeing a reversal of fortune for the suburbs and their sprawling office parks.

~~ At The Feil Organization, Brian is responsible for all facets of two new retail developments that encompass 35 acres and 350 thousand square feet of leasable area with budgets that exceed $75 million, in addition to leasing oversight for 400 thousand square feet of retail assets in the southeast. Brian's expertise spans financial and site feasibility analysis; entitlement, permitting and zoning; site design and engineering; and land and air-right sales and acquisitions. You may contact Brian here.

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This entry was posted in Guest Post and tagged Trends

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Young people still want to own homes

Posted on February 08, 2011 by Tadd Miller

DeSoto mixed use milhausGen Y – Largest Population Segment in the Market! “In 2010 Generation Y surpassed the baby boomers to become America’s largest generation,” begins Leanne Lachman and Debrah Bretts article Generation Y: America’s New Housing Wave in this months Urban Land Magazine (January/February 2011) www.uli.org. Gen Yer’s now account “for 25 percent of America’s population,” which can be seen as incredibly positive or negative depending on how you envision the associated descriptions of Gen Yer’s as “emerging adults, plugged in, social, connected, high maintenance, outspoken, educated, multi-cultural, high performance, entitled, civic minded, tattooed, pampered.”

As you read the article however, the most striking thing is their desire for home ownership, even though “29 percent are still living at home.” Even after witnessing one of the most severe economic downturns other than the depression, values of real estate being depleted, and record foreclosures and peoples net worths and residences being taken away. The article repeatedly references a ULI survey, which shows a large majority of the respondents want to own their own home:

35% of the respondents currently own their own homes…..[and] within five years, two-thirds of all respondents expect to own their residences, including over half those who will still be in their 20’s in 2015. Almost 80 percent of those who will be in their mid-30’s anticipate owning, [thus] 90 percent of gen-Yers plan on owning a home.

I have not reviewed the survey, nor have I been able to find it online, however, this is a major factor that will affect our business. As a long time homeowner, I have been actually questioning whether the flexibility and mobility of renting could be a good plan. I've also long thought the idea of a second home was a crazy expense in lieu of hotel. This is an interesting dynamic. What does this mean to our current focus on for-rent housing, I don’t know, but what I do know is that it sounds like the future is bright for those of us condominium and for-sale developers as soon as the mortgage market gets itself worked out!

Here are the Current Generations by Percentage of U.S. Population
3.3% Silent generation (age 81+)
9.7% Depression and war babies (65 – 80)
24.6% Baby boomers (46 – 64)
17.2% Generation X (33 – 45)
25% Generation Y (15 – 32)
20.1% Generation Next (<15)

Source: U.S. Census Bureau, 2010

This entry was posted in Housing and tagged generation y, Trends

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Beyond the "State of Real Estate"

Posted on January 14, 2011 by Milhaus Development

trends mixed use milhausLast evening Cassidy Turley hosted their annual “State of Real Estate” event in Indianapolis. It’s always great to catch up with colleagues this time of year after the holidays and discuss the status of the local market. While it is evident that the Indianapolis area economy is fairing slightly better than the nation as a whole, there remains a lot of room for improvement. You can download their full report here.

In the spirit of trends, we thought we’d offer a few words of our perspective for 2011. It’s no secret the single-family residential market remains troubled. Foreclosures will continue to be a drag on the economy through 2011 and 2012 (there were almost 4 million homes taken back by lenders just in the last 24 months). However, there are some very good signs of life in the multi-family sector. We know from the Urban Land Institute’s Emerging Trends Report near the end of last year that the only things investors should be looking at nationally in 2011 is apartments and perhaps industrial space. The market for retail and office space will remain dormant.

We have seen some loosening in apartment financing in late 2010 and look for that to continue through this year. A couple of the more positive trends for apartments are unemployment and demographics. First, unemployment is expected to stay above 9% through 2011 and not fall below 5% until 2015 or later – dependent on GDP growth. With so many people out of work, there are still others in precarious employment positions. All this uncertainty prevents most people from making long-term commitments, like buying a home. The only alternative for them is an apartment. In fact, for every 1% drop in the home ownership rate, there are 1 million more renters. Depending on whom you ask, the rate has dropped from somewhere over 69% in 2004 to 67% today, and it continues to fall.

Second, the demographics are increasingly favorable for renting. Almost 3 million teenagers graduated from high school in 2009 – the largest graduating class in US history. Of those, 70% entered college. Of course, some are living with mom and dad (maybe some of you); but rest assured, a majority of them will be renters over the next 5 years.

This entry was posted in News, Our Philosophy and tagged Trends

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