New York City office landlords are increasing their use of “goodies” such as free rent periods and remodeling money to incentivize tenants to rent space, according to market reports.
These benefits are commonly known as concessions, hitting a record $173/sq. ft. in the first quarter in Midtown, up 3.3% from the previous year. This comes as a result of increased competition from new office space, specifically in West Side Manhattan. Not long ago, owners of office buildings were offering rent reductions between five to seven months and tenant-improvement cash contributions of up to $70/sq. ft. Today, tenants get offers of anywhere from 12 to 15 months of free rent and landlord contributions between $85 and $100/sq. ft. While these concessions have been rising since the recession, brokers and analysts remain cautious. For example, historically low interest rates, have made concessions more affordable to landlords than that of previous real estate cycles. “Higher concessions are not a sign of a weak market. As long as interest rates remain relatively low, owners would rather offer concessions today for higher rent profits in the future.” said Keith Knutsson of Integrale Advisors. Landlords interested in boosting rent levels in order to maintain or increase the building’s value can negotiate higher rents with tenants, offering to cover a significant portion of construction costs and sometimes even take on the task of an office buildout, remodeling office space. They can make their returns when they refinance, recapitalize or sell their properties.
0 Comments
Amid investors, thoughts remain on the enigmatic question of “how long can this last?” After eight years of economic expansion, investors are starting to wonder when the real estate contraction will happen. Ryan Severino, chief economist for JLL in New York, believes “we have at least a couple of years before we start to have that question about is the clock ticking or not.” Some would argue this is a rather optimistic opinion and align their sights more so with the ‘Skyscraper Effect,’ which is an economic indicator suggesting recession follows the construction of the world’s tallest buildings.
There is no arguing that we are late in the cycle, but depending on the market sector and asset type, additional investigation is required. Softening areas include central business districts (CBD), high street retail, and CBD multifamily. However, strength continues in suburban multifamily, class B and C multifamily, suburban office, and industrial sectors. It is also important to note that market cycles vary greatly based on geography as “[t]here is no such thing as a national real estate market. Every market and economy is local in nature,” adds Ted C. Jones, Ph.D., chief economist and senior vice president at Stewart Title Guarnty Co. in Houston. Jones along with others, forecast a bullish overall outlook on the economy. Keith Knutsson of Integrale Advisors, states “there is still upside potential for the remainder of this fiscal year, however, market shifts will present themselves in the near future.” Employment rates will remain high, but there will be lower levels of growth according to the Urban Land Institute (ULI). New Trump fiscal stimulus policies remain in question, particularly with the tax reform, which will greatly affect the amount of growth. Investing in real estate seems like a straight forward plan to the beginner. After getting a loan, you buy a property, find renters or fix it up, and either sell it or sit back and receive monthly payments. Once you actually start trying to get into investing though, things aren’t that simple. If you are interested in becoming a real estate investor, here are ten noteworthy tips to help you get started.
If you need more help getting started in real estate investing, Integrale Advisors can help. Contact us today! With stronger employment numbers and relatively depressed housing and rent prices, the conditions are right for real estate investors to do well. When deciding on what market to invest in, it is important to do research. You have to consider whether or not properties in an area are overpriced or affordable, the demographics of an area, and the local employment conditions. In researching, some cities, which one would think is a no-brainer, didn’t make any of the top lists. To be a smart investor, look for markets on the rise or ones which the market has been steady. It can be all too easy to get sucked into investing in the current hot market. There are also real estate investment firms, such as Integrale Advisors to help walk you through the oftentimes tricky investment journey. Below, Keith Knutsson, CEO of Integrale Advisors, lists the top five U.S. real estate markets to invest in:
According to Investopedia, Georgia’s capitol city’s house prices fell 38% from their peak prices in June 2007. Prices still continue to decline with a 12% decrease over the last year. At around $109,000, housing is very affordable. Rent in Atlanta is also affordable, with the average rent being around $1,100 a month. Dallas/Fort Worth Unlike most major housing markets, Dallas didn’t experience too severe a fallout during the housing crisis. During the housing fiasco, home prices here fell a mere 16% in 2007. Since then, the housing market has rebounded. According to Forbes, Dallas has experienced a 6.2% population growth, 3.5% job growth, and an 11% home price growth. The home prices in Dallas remain underpriced by 5% and are expected to increase by 33% over the next three years. Tampa While Miami is a popular hotspot among investors, even bringing in the interest of foreign investors, Tampa has gone largely unnoticed. The influx of investments helped Miami recover from its housing crisis. In Tampa, however, prices remain low with the current average price of $103,000. These low prices make Tampa one of the most affordable housing markets in the country. The population growth of Tampa is around 3%, with a 2.6% job growth and a 9% growth in home prices. Housing prices for the area are expected to grow by 25% over the next three years, according to Forbes. Charlotte With home prices averaging at $220,758, making the price under-valued by 10%, Charlotte, North Carolina is a largely affordable housing market. The area is experiencing a 5.5% population growth and a 3.6% job growth and a 6% house price growth. Seattle Much attention has been brought to this Pacific Northwest city due to a booming job market facilitated by the presence of big companies such as Microsoft and Amazon. Unlike other major tech hub cities like San Francisco and San Jose, where the housing market is highly over-valued, the house prices here are only 4% over-valued, making them still a great deal for investors and home-buyers. According to Forbes, the average home price in Seattle is $370,300 and prices are expected to increase 22% over the next three years. Real estate investing involves a lot of research and strategy, but can be very lucrative. Keith Knutsson and his team have many years of real estate investment experience which they would gladly share with you to help you make sound, lucrative investment decisions. |
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
October 2018
CategoriesAll Investing Keith Knutsson Real Estate Real Estate Investing |