Tuesday, August 7, 2018
Monday, August 6, 2018
Multifamily Sales On Pace of Reaching Record High for the Year
Annual U.S. multifamily property sales are approaching a record in the face of a flood of new apartment construction and increasing home ownership.
Market doomsayers may be confounded by how the new units are being quickly absorbed by renter,s but demand remains unabated across the sector.
"The multifamily market continues to surprise market watcher. Expectations that supply would overwhelm demand, expectations that price growth would trail off, both appear to be contrary to what we’re seeing today."
While data from the second quarter confirms that rent growth has slowed in many markets and vacancy has inched up in places, apartment vacancy for the U.S. market as a whole actually declined 50 basis points in the second quarter, to just under 6 percent.
In addition, average apartment rents rose 3 percent compared to the second quarter of 2017, an increase in the year-over-year rate compared with the first quarter.
And the average apartment in the U.S. now rents for $1,298 per month. That's another increase from the first quarter, but still well below this cycle’s peak of late 2015, when the average U.S. rent edged toward $1,400 per month.
Taking stock of the second-quarter performance, analysts tied the apartment sector’s success to a favorable overall economic picture nationally: job growth is high and new households are forming quickly, both of which are driving demand for apartments.
But the multifamily market also benefits from some of the bad news in the economy. Increasing mortgage rates are keeping many renters from making the jump to home ownership, while a slowdown in single-family home construction has made it even more difficult for first-time home buyers, even as homeownership rates edged up slightly.
"This cycle, nearly every marginal household has been a renter household, bringing the home ownership rate down from 69 percent to 63 percent. More recently, however, more and more new households have been buyers, and the home ownership rate has begun to rise, albeit slowly. Over the last two quarters, the home ownership rate has risen by just .1 percent, a slower pace than the last two years, and frankly, more slowly than we expected.
"So why aren’t more people buying homes? Rising interest rates and aggressive pricing certainly matter. But are there actually any homes to buy?" he added.
On the capital markets side, investors have shown strong interest in the apartment sector. Many large institutional investors, including those outside the U.S., consider U.S. apartment markets to be a good, long-term investment, and have amassed billions to invest in properties.
Affleck also predicted the year-end total for apartment sales this year will match or exceed last year’s total of just under $180 billion in trades.
www.omegare.com
Market doomsayers may be confounded by how the new units are being quickly absorbed by renter,s but demand remains unabated across the sector.
"The multifamily market continues to surprise market watcher. Expectations that supply would overwhelm demand, expectations that price growth would trail off, both appear to be contrary to what we’re seeing today."
While data from the second quarter confirms that rent growth has slowed in many markets and vacancy has inched up in places, apartment vacancy for the U.S. market as a whole actually declined 50 basis points in the second quarter, to just under 6 percent.
In addition, average apartment rents rose 3 percent compared to the second quarter of 2017, an increase in the year-over-year rate compared with the first quarter.
And the average apartment in the U.S. now rents for $1,298 per month. That's another increase from the first quarter, but still well below this cycle’s peak of late 2015, when the average U.S. rent edged toward $1,400 per month.
Taking stock of the second-quarter performance, analysts tied the apartment sector’s success to a favorable overall economic picture nationally: job growth is high and new households are forming quickly, both of which are driving demand for apartments.
But the multifamily market also benefits from some of the bad news in the economy. Increasing mortgage rates are keeping many renters from making the jump to home ownership, while a slowdown in single-family home construction has made it even more difficult for first-time home buyers, even as homeownership rates edged up slightly.
"This cycle, nearly every marginal household has been a renter household, bringing the home ownership rate down from 69 percent to 63 percent. More recently, however, more and more new households have been buyers, and the home ownership rate has begun to rise, albeit slowly. Over the last two quarters, the home ownership rate has risen by just .1 percent, a slower pace than the last two years, and frankly, more slowly than we expected.
"So why aren’t more people buying homes? Rising interest rates and aggressive pricing certainly matter. But are there actually any homes to buy?" he added.
On the capital markets side, investors have shown strong interest in the apartment sector. Many large institutional investors, including those outside the U.S., consider U.S. apartment markets to be a good, long-term investment, and have amassed billions to invest in properties.
Affleck also predicted the year-end total for apartment sales this year will match or exceed last year’s total of just under $180 billion in trades.
www.omegare.com
Friday, August 3, 2018
Settlement reached over Seven Tower bankruptcy
by Natalie Kostelni Reporter Philadelphia Business Journal
A settlement has been reached in a Chapter 11 bankruptcy proceeding that involves an entity overseeing the development of Seven Tower Bridge, a proposed office building in Conshohocken, and a company that lent money to help fund the project.
After going through mediation, Seven Tower Bridge Associates, the debtor in the bankruptcy, along with the Redevelopment Authority of Montgomery County, R&J Holding Co., and the borough of Conshohocken have come to terms that will allow the Seven Tower Bridge Associates to proceed with the development.
“We’re back in business like it never happened,” said Don Pulver of Oliver Tyrone Pulver, who controls Seven Tower Bridge Associates. “It’s all resolved and we're back to business as usual.”
Seven Tower Bridge Associates, a limited partnership formed to develop the proposed office tower, has had plans since 2010 to build a 14-story, 250,000-square-foot structure on 2.3 acres at 110 Washington St. The project would have 10 stories of office space atop a four-story parking garage.
It voluntarily filed for Chapter 11 bankruptcy protection on March 22, putting a stay on a mortgage foreclosure proceeding, brought by R&J Holding Co. of Trappe, that was underway in Montgomery County Court of Common Pleas.
R&J Holding initiated the foreclosure, saying in court documents it lent Seven Tower Bridge Associates a total of $8 million in two separate loans — one that totaled $7 million and another $1 million — in 2010 that were secured by the Seven Tower site and scheduled to mature March 1, 2017.
Full story: https://www.bizjournals.com/philadelphia/news/2018/08/03/conshohocken-seven-tower-bankruptcy-settlement.html
www.omegare.com
A settlement has been reached in a Chapter 11 bankruptcy proceeding that involves an entity overseeing the development of Seven Tower Bridge, a proposed office building in Conshohocken, and a company that lent money to help fund the project.
After going through mediation, Seven Tower Bridge Associates, the debtor in the bankruptcy, along with the Redevelopment Authority of Montgomery County, R&J Holding Co., and the borough of Conshohocken have come to terms that will allow the Seven Tower Bridge Associates to proceed with the development.
“We’re back in business like it never happened,” said Don Pulver of Oliver Tyrone Pulver, who controls Seven Tower Bridge Associates. “It’s all resolved and we're back to business as usual.”
Seven Tower Bridge Associates, a limited partnership formed to develop the proposed office tower, has had plans since 2010 to build a 14-story, 250,000-square-foot structure on 2.3 acres at 110 Washington St. The project would have 10 stories of office space atop a four-story parking garage.
It voluntarily filed for Chapter 11 bankruptcy protection on March 22, putting a stay on a mortgage foreclosure proceeding, brought by R&J Holding Co. of Trappe, that was underway in Montgomery County Court of Common Pleas.
R&J Holding initiated the foreclosure, saying in court documents it lent Seven Tower Bridge Associates a total of $8 million in two separate loans — one that totaled $7 million and another $1 million — in 2010 that were secured by the Seven Tower site and scheduled to mature March 1, 2017.
Full story: https://www.bizjournals.com/philadelphia/news/2018/08/03/conshohocken-seven-tower-bankruptcy-settlement.html
www.omegare.com
Thursday, August 2, 2018
Amazon’s PillPack Deal Could Further Drive an Already Tight Industrial Property Demand
Amazon’s pending purchase of online pharmacy PillPack has the potential to create a need for specialized warehouse space to ship prescription drugs and even lead to small retail clinics, adding demand to an already surging industrial property market.
The move by the online retailer could have significant implications for industrial property sales, which outperformed other major commercial sectors across the U.S. in the second quarter as Amazon and other companies pump up their supply chains for e-commerce delivery.
"If you really read between the lines here, and kind of analyze this, Amazon wants to be part of every single transaction that happens in our lives."
Amazon, the world's largest retailer, bought PillPack in late June for an estimated $1 billion. PillPack holds pharmacy licenses in all 50 states and ships medications from its primary drug distribution center in Manchester, NH, to customers who take multiple daily prescriptions. The company is targeting a major market: On its website, PillPack says 40 million adults take more than five prescriptions each day.
If Amazon incorporates PillPack’s approximately 1 million customers into its Prime membership business, which has 100 million subscribers, the company would need drug distribution centers near large cities cleared to handle medicines, said Santo Leo, founder and CEO of MailMyPrescriptions.com in Boca Raton, FL.
Those could be small centers dotted across the country or a handful of larger ones. In either case, they will have to meet far more specialized state and federal requirements because the goods being handled are medicine, Leo said.
Though Amazon already owns or leases about 100 million square feet of distribution space, "you can’t just rip a warehouse out and put a pharmacy there," said Leo, whose mail-order pharmacy is licensed to dispense prescription drugs in more than 40 states. "You need to design these from scratch. You need more power, more data, more security measures. Traditional big, bulky, automated facilities are just not designed for pharmaceuticals."
Pharmaceutical warehouses must have processes in place for temperature control, security, documentation and the ability to address product recalls, said Carmine Catizone, executive director of the National Association of Boards of Pharmacy, which accredits wholesale pharmaceutical warehouses. Each state also has different licensing requirements.
The company may need new buildings for an online pharmacy, the analysts said. Though Amazon is opening fulfillment centers at a dizzying rate -- eight so far in 2018 -- it has a host of controls to ensure each center operates at maximum capacity and has little extra space, the company said in its 2017 annual report.
Amazon declined to comment on its plans for specialized PillPack warehouse space. Amazon hasn’t made any public statements about its PillPack strategy since shortly after the purchase, which is expected to close by the end of the year.
Amazon’s PillPack purchase follows its joint venture with Berkshire Hathaway Inc. and JPMorgan Chase to improve the U.S. health care system and cut costs. PillPack is part of that strategy, said Leo, who predicted Amazon would move quickly to grow PillPack to place pressure on health-care competitors.
"How do you keep people out of the doctor’s office or hospital lab? Make sure people take their prescriptions," he said.
Healy said the purchase could have implications for any brick-and-mortar plans Amazon has as well, noting the trend toward small, walk-in clinics across the country. It's estimated there are now almost 3,000 such clinics, according to Accenture. He also speculated that Amazon could add pharmacy services to its Whole Foods stores.
"It will probably net a greater industrial space for Amazon, but I would think there would be some sort of new retail model," he said. "There could be something else down the pipeline, perhaps a new form of retail."
www.omegare.com
The move by the online retailer could have significant implications for industrial property sales, which outperformed other major commercial sectors across the U.S. in the second quarter as Amazon and other companies pump up their supply chains for e-commerce delivery.
"If you really read between the lines here, and kind of analyze this, Amazon wants to be part of every single transaction that happens in our lives."
Amazon, the world's largest retailer, bought PillPack in late June for an estimated $1 billion. PillPack holds pharmacy licenses in all 50 states and ships medications from its primary drug distribution center in Manchester, NH, to customers who take multiple daily prescriptions. The company is targeting a major market: On its website, PillPack says 40 million adults take more than five prescriptions each day.
If Amazon incorporates PillPack’s approximately 1 million customers into its Prime membership business, which has 100 million subscribers, the company would need drug distribution centers near large cities cleared to handle medicines, said Santo Leo, founder and CEO of MailMyPrescriptions.com in Boca Raton, FL.
Those could be small centers dotted across the country or a handful of larger ones. In either case, they will have to meet far more specialized state and federal requirements because the goods being handled are medicine, Leo said.
Though Amazon already owns or leases about 100 million square feet of distribution space, "you can’t just rip a warehouse out and put a pharmacy there," said Leo, whose mail-order pharmacy is licensed to dispense prescription drugs in more than 40 states. "You need to design these from scratch. You need more power, more data, more security measures. Traditional big, bulky, automated facilities are just not designed for pharmaceuticals."
Pharmaceutical warehouses must have processes in place for temperature control, security, documentation and the ability to address product recalls, said Carmine Catizone, executive director of the National Association of Boards of Pharmacy, which accredits wholesale pharmaceutical warehouses. Each state also has different licensing requirements.
The company may need new buildings for an online pharmacy, the analysts said. Though Amazon is opening fulfillment centers at a dizzying rate -- eight so far in 2018 -- it has a host of controls to ensure each center operates at maximum capacity and has little extra space, the company said in its 2017 annual report.
Amazon declined to comment on its plans for specialized PillPack warehouse space. Amazon hasn’t made any public statements about its PillPack strategy since shortly after the purchase, which is expected to close by the end of the year.
Amazon’s PillPack purchase follows its joint venture with Berkshire Hathaway Inc. and JPMorgan Chase to improve the U.S. health care system and cut costs. PillPack is part of that strategy, said Leo, who predicted Amazon would move quickly to grow PillPack to place pressure on health-care competitors.
"How do you keep people out of the doctor’s office or hospital lab? Make sure people take their prescriptions," he said.
Healy said the purchase could have implications for any brick-and-mortar plans Amazon has as well, noting the trend toward small, walk-in clinics across the country. It's estimated there are now almost 3,000 such clinics, according to Accenture. He also speculated that Amazon could add pharmacy services to its Whole Foods stores.
"It will probably net a greater industrial space for Amazon, but I would think there would be some sort of new retail model," he said. "There could be something else down the pipeline, perhaps a new form of retail."
www.omegare.com
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