American dollars grow from the ground

Many economists aren’t just expecting a recovery this year—but one with the potential for significant economic growth.

In a new research video, John Chang, SVP and director of research services from Marcus & Millichap, gives a positive outlook for the economy and the commercial real estate sector based on new reports from leading economists.

“Over the last year, we have navigated numerous, very serious challenges, but the outlook for 2021 holds great promise for the economy and for commercial real estate,” Chang says in the video. “Looking at the economy, the outlook is strengthening dramatically. In fact, most economists are now forecasting that 2021 will deliver the strongest growth since 1984.”

Chang outlines three underlies as the catalyst for growth this year. Stimulus is at the top of the list. Following the $2.2 trillion CARES Act package in March 2020, Congress passed an additional stimulus bill in December valued at $900 billion. Now, a third round of stimulus is being discussed. President Biden is pushing a $1.9 trillion round, but Chang expects the ultimate bill to be lower.

“There is considerable debate over whether there is enough congressional support for that much of an infusion,” says Chang, saying that a smaller package totaling around $760 billion could be negotiated.

Still an additional round of stimulus will come with major economy-boosting benefits.

“The new round of stimulus would likely include stimulus checks. They are suggesting about $1,400 on top of the $600 already in process,” says Chang. “I am just speculating here, but the new stimulus could expand or extend federal unemployment benefits.”

Although the debate over the stimulus package has focused on stimulus checks, there is more value in expanding unemployment benefits.

“Janet Yellen, the former chairman of the Federal Reserve and the expected Treasury Secretary, has already indicated that she believes the federal unemployment benefits will deliver the biggest bang for the buck,” says Chang. “Additional stimulus checks and more unemployment benefits will give the economy another boost, increasing consumption and helping people that were hit the hardest by the pandemic to cover their expenses.”

The vaccine is another reason that growth is on the horizon.

“We are making substantive headway toward inoculating the US population. Although there have been setbacks and the process is not going as quickly as hoped, many believe the Biden Administration will more aggressively pursue measures to get the pandemic under control,” says Chang.

Finally, renewed economic confidence will also help give the economy a boost. According to Chang, there is $4.5 trillion in savings and money market accounts that represent the pent-up demand in the market. This funding will help to increase consumer spending once people feel safe again.

“As these three factors align, the potential impact on the commercial real estate market could be enormous. In the second half of 2021, assuming that we achieve a critical mass of vaccine distribution, we could see stores, hotels and entertainment venues reopen,” says Chang. “That would bring back jobs and spending, and in turn unlock household formation, creating demand for apartments.”

The economic growth will also help to drive shopping center and travel demand, and as the economy strengthens, companies will launch new office strategies.

All asset classes are set to benefit.

“If the economic growth gets even close to the 5%, 6% or 6.5% growth rates that I am seeing from many well-known economists, then the prospects of a major real estate revival in 2021 will be very positive,” says Chang. “That would set the stage for 2022 and beyond.”

 

Source:  GlobeSt.

 

amazon warehouse

South Florida’s industrial market performed well in the fourth quarter and in 2020, as Amazon leased about 3 million square feet throughout the year, according to a recently released report.

The region’s average asking rent rose slightly to $8.88 in the year’s final quarter, up 1.6 percent year-over-year, according to the report from Newmark. The fourth quarter vacancy rate hit a low 4.9 percent, thanks to pre-leasing activity. About 6 million square feet of industrial space is currently under construction in the tri-county area, with more than half of it already leased.

Here is a breakdown for each of the counties:

Miami-Dade County

Miami-Dade’s vacancy rate stayed consistent at 4.5 percent for the fourth quarter. Average asking rent was $8.33, up 1 percent quarter-over-quarter, and up about 4 percent year-over-year.

The county saw 266,000 square feet of space delivered during the quarter. Miami-Dade represented more than half the region’s net absorption, with 2.7 square feet absorbed during 2020. Fifteen buildings totaling more than 3.1 million square feet are under construction, with 56 percent of that already leased. That means that it will not have much of an impact on the county’s vacancy rate this year, according to Newmark.

The top lease deals in the county included Keuhne & Nagel leasing 209,610 square feet at 3401 Northwest 72nd Avenue in Miami and IFS Neutral Maritime leasing 93,320 square feet of space at 1350 Northwest 121st Avenue in Miami.

Top industrial sales in the county included the $16.2 million sale of Doral warehouse by a family that owns an international logistics company.

Broward County

Broward’s vacancy rate continued to rise, reaching 5.6 percent at the end of the fourth quarter, the highest in the region. That’s an increase, quarter-over-quarter and year-over-year, of about 2 percent and 6 percent, respectively. But the vacancy rate remained below the 6 percent vacancy rate reported at the end of 2015.

The county saw 373,000 square feet of new space delivered during the quarter. About two-thirds of the 1.6 million square feet under construction is available for lease.

The average asking rent in the fourth quarter was $9.39, down 0.3 percent, year-over-year, and down 0.7 percent, quarter-over-quarter. Increased availability from second-tier space helped rents decrease, according to Newmark.

Amazon signed three of the top leases in the quarter in Broward for about 1 million square feet. Overall, Amazon is responsible for most of the largest leases signed during the year.

Elion Partners had two of the top purchases of the quarter, paying $31.5 million for a Dania Beach building and $12 million for Bennett Auto Supply in Pompano Beach.

Palm Beach County

The county’s vacancy rate was 5.4 percent in the fourth quarter, a new record high since at least the fourth quarter of 2015. Newmark credited this to the delivery of five buildings totaling over 768,000 square feet.

The average asking rent was $9.84, up 1 percent, quarter-over-quarter, and up 0.4 percent, year-over-year.

About 1.3 million square feet is under construction in the county, 1 million of it for an Amazon distribution center. The county had 77,000 square feet of industrial space absorbed during the fourth quarter.

The largest leases signed during the quarter include two in West Palm Beach: Tire Hub leasing 40,500 square feet of space at 305 Haverhill Road and Jamlyn Supply leasing 38,880 square feet of space at 6051 Southern Boulevard.

Top deals during the quarter included an Atlanta-based industrial investment group buying a newly built warehouse in the Palm Beach Park of Commerce for $27.2 million.

 

Source: The Real Deal

Close up image of human hands holding sprout

Microsoft, Citadel and Elliott Management are all in talks to lease office space in South Florida, adding fuel to the trend of major tech and finance firms expanding in the region.

Seattle-based Microsoft is reportedly in talks to lease 30,000 square feet at 830 Brickell, a 57-story office tower being developed by Vlad Doronin and his joint venture partner Cain International, according to Business Insider.

Billionaire Ken Griffin’s Chicago-based hedge fund Citadel is also eyeing 830 Brickell, and is on the hunt for up to 80,000 square feet in Miami. Griffin has been acquiring land on Miami Beach’s Star Island, and his Citadel Securities has been operating a temporary trading room in Palm Beach since the pandemic began.

Baker McKenzie is also in talks for space at 830 Brickell, according to Business Insider.

MSD Partners, the private investment firm of Dell Technologies billionaire Michael Dell, provided a $300 million loan to construct 830 Brickell in 2019. WeWork was announced as an anchor tenant, though it’s unclear whether the co-working operator will still be a tenant. When it is completed in 2022, the building will mark the first new large Class A office tower in the downtown Miami market in the last decade.

Elliott Management, the hedge fund founded by Paul Singer, is expected to sign a 40,000-square-foot lease at Related Companies’ 360 Rosemary office tower in downtown West Palm Beach. (Related is expected to close on the nearby Phillips Point office towers for $282 million.) Elliott Management has been looking in the market for months, the Palm Beach Post reported.

New Day USA, a mortgage company based in Maryland, is also reportedly finalizing a lease for about 50,000 square feet in the same building as Elliott Management.

Blackstone Group announced earlier this year that it is taking 41,000 square feet at 2MiamiCentral, an office building at the mixed-use MiamiCentral development, anchored by Brightline.

Virtu Financial plans to sign a 10-year lease in Palm Beach Gardens to relocate about 30 people from New York, Bloomberg previously reported.

 

Source: The Real Deal

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 Kushner Companies is expanding in South Florida, acquiring two development sites in Palm Beach County, The Real Deal has learned.

The New York-based firm is buying two properties near Delray Beach and near Lake Worth Beach, according to a source close to the deal. An industrial project is planned for the Delray-area property and a mixed-use multifamily development for the Lake Worth site.

Kushner Companies could not be reached for comment. It’s unclear when the deals will close.

The firm, founded by Charles Kushner and led by president Laurent Morali, has already announced plans for three major apartment projects in South Florida since the start of 2019. The company is planning to bring roughly 3,000 units at a cost topping $1 billion in Miami and Fort Lauderdale.

Morningstar Nursery, led by Paul Okean, currently owns both Palm Beach County properties. The Lake Worth property is on the northeast corner of Hypoluxo Road and South Military Trail, across from a Walmart Supercenter, and the other is agricultural land west of the Florida Turnpike and north of Atlantic Avenue, along Starkey Road, near Delray Beach.

Morning Star Nursery reportedly works with Home Depot, Walmart and wholesale suppliers. The company could not be reached for comment.

On the Delray site, Kushner is planning a 900,000-square-foot industrial development, likely for a single distribution tenant. The developer would have to secure a land use change from agricultural to industrial to build the project.

On the Lake Worth property, Kushner plans a multifamily and retail development with 384 apartments and 60,000 square feet of retail space.

Kushner is expected to break ground this year on its Wynwood and Edgewater apartment projects in Miami. The company opened a South Florida office last year in Bay Harbor Islands, led by Michael Szafranski and Gabriela Toledo.

 

Source: The Real Deal

shipping containers

Shipping never stops. But, the Covid-19 pandemic certainly altered how it was done in 2020.

Locally, container revenues at the Port of Jacksonville for October — the most recent number information was available—was 1% below October 2019 figures at $2.86 million. Auto revenues for the same period were $1.35 million, a 2 % decrease. The year was expected to wrap up with volumes continuing to rise but still below the same period in 2019.

“For the first quarter we should be doing better than projected,” Jaxport CEO Eric Green said.

“The state’s ports are catalysts for commerce,” said Florida Ports Council chief executive Doug Wheeler in a November podcast with Tallahassee Chamber of Commerce.

Wheeler represents the state’s 15 deep water ports, including the Port of Jacksonville and Port of Fernandina.

“I’m confident that our seaports will play a big role in that recovery,” Wheeler said. “…We’re about $117 billion. Our ports are delivering, pretty much, everything that people, businesses, residents, consumers in our state are using in their everyday lives.”

Wheeler said the diversity within the state’s ports is what allowed many to withstand 2020. Jaxport executives certainly believe that is the case.

“We’re not just all cruise ships,” said Ed Fleming, a longtime maritime executive who has served on the Jacksonville Port Authority since 2014. “We’re bulk cargo. We’re Asian cargo. We’re domestic cargo. We do some military cargo, liquid bulk, dry bulk. So, we don’t have all our eggs in one basket. And, I think, that diversification has shielded us, somewhat, from some of the other ports that are heavy into cruise ships like PortMiami and Port Everglades.”

Fleming said the key heading into 2021 is getting the pandemic under control.

“Covid will still be with us next year, for the most part,” Fleming said. “It will get better and better, gradually, over time. I think 2021 will be better than 2020, but probably not back to normal – in any industry for that matter.”

 

Source: Jax Biz Journal

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The economy is in dire need of restructuring in Florida, and according to experts with the Florida International University of Miami, manufacturing will be key in building resilience in 2021 and onwards.

This is not the dirty manufacturing of old, however. Using new technology and tools, exciting new industrial developments and manufacturing businesses will be able to tie together old processes with the new to create a high-tech and profitable new manufacturing environment.

Diagnostic Tools

Florida has a very diverse manufacturing history, and this has lent itself to the need for technological upscaling. Business consultants SME note this: manufacturing encompasses everything from plastics, to tortillas, to motor vehicles. This makes the use of new technology that can be used to improve tech, new and old, very important, and can bring a high-tech tilt to manufacturing.

Industrial tech experts SPI Borescopes (www.spiborescopes.com) note this in relation to optical technology; pairing the simple use of newer optical tech in conjunction with older manufacturing processes and technology can help to upscale older equipment and make it more useful.

Upscaling Old Processes

Building new manufacturing resilience in South Florida is going to be important if the industry is to continue to develop and thrive. This is because Florida as a whole suffers a skills gap; despite there being over 500,000 unemployed Floridians, 260,000 jobs remain open due to a lack of appropriately skilled workers to place into these roles. Key technological advances that make new and old processes accessible to Floridians is crucial, as is education.

Technology-Driven Education

A positive result of the events of 2020 has been an upscaling of digital skills and education. Reuters highlights the current generation of newly digitally-able people as a promising change in the overall labor market. Nowhere will this be more beneficial than in the Florida of the future. Providing the skills for manufacturing workers in all sectors to be able to cross-skill and drive new industry is going to help the state create a new economic profile and uplift society in general.

In much the same way as other industries are experiencing, technology and digital skills are leading the way.

 

Source: South Florida Reporter

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A new chapter is emerging for the closed Macy’s at the Pompano Citi Centre as developers have applied to replace the now-shuttered department store with a 356-unit apartment complex.

The Pompano Beach review committee on just gave an initial blessing to the proposal by the Morgan Cos. of Houston, which has developed or is in the process of building rental projects in Fort Lauderdale, Miami and Boynton Beach. Besides Florida, Morgan has projects in its home state of Texas, as well as in Missouri, Arizona and California.

The proposed luxury multi-family development in Pompano Beach is yet another installment in a trend where vast shopping complexes are giving way to new uses as consumers opt to shop online instead of driving to crowded malls and big box stores.

“I think shopping center owners are recognizing they have good pieces of land in good locations,” said Hugo Pacanins, Morgan’s regional development partner for South Florida. “Bringing residential to that existing mix accomplishes everything. You’re activating the center and bringing 24-7 people to the shopping center. It’s a trend we’re seeing nationally. You’re starting to see a lot of these projects being delivered in Pompano Beach and doing really well. I think that will bring new life to the area.”

But the face of commercial life in the Pompano Citi Centre neighborhood has changed along with a major overhaul in retailing. Macy’s shut the Pompano store last spring as part of a plan to streamline its operations amid sizable financial losses nationwide. That left an opening for the Morgan Group to buy over 12.1 acres of land — most of it from Macy’s and a portion of the mall parking lot from the shopping center owners. The developer has yet to set any prices, sizes or layouts for the apartments. But the buildings will be four stories in height with views of the nearby municipal golf course.

“We’ll have a big range of units from studios to three bedrooms,” Pacanins said.

After gaining its first green light in a lengthy approval process, Morgan will make “minor adjustments” to its application, which will then move to the Planning and Zoning Board for a public hearing in January, a city spokeswoman said.

The city’s board is currently targeting Jan. 27, 2021, for a public hearing. The full City Commission would then have to give its approval, and a Broward County land-use plan needs to be changed to reflect the proposed new land use to “irregular residential.” It is currently zoned commercial.

The review committee also has urged Morgan to communicate with residential neighbors who live north of Copans Road, which borders the northern edge of the Citi Centre.

“One of the advantages this site has is we’re abutting a golf course and it’s adjacent to a shopping center,” Pacanins said. “Traffic is always a concern, but there will be a lot less traffic than what Macy’s was generating. We’ve still got a long way to go and looking forward to getting this deal started in 2022.”

 

Source: SunSentinel

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Long before the novel coronavirus pandemic sent Americans racing for their smartphones to order groceries, industrial real estate observers were keeping a close eye on the availability of temperature-controlled warehouses.

Covid-19 vaccines that require very specific temperatures — Moderna Inc.’s vaccine requires temperatures of minus-20 degrees Celsius and Pfizer Inc.’s candidate requires storage at minus-70 degrees Celsius — have put cold-storage warehouses in the spotlight in recent weeks.

But the sector has seen little vacancy for years, and industrial real estate experts don’t expect that to change as consumers shift more of their food shopping online, even after the pandemic is in the past.

Historically, the national vacancy rate of cold-storage warehouses has hovered below 10%, according to JLL, and much of that inventory is aging and rapidly approaching functional obsolescence. The average cold-storage warehouse in the U.S. is 42 years old, according to JLL.

“If we have a client who wants to know all the available temperature-controlled storage in the U.S. … on any given day, this isn’t something that takes up 10 pages,” said Tray Anderson, Cushman & Wakefield Inc.’s logistics and industrial lead for the Americas. “It’s more like two or three.”

The lack of available space is a function of economics: Temperature-controlled warehouses cost nearly twice as much to build as their dry-storage counterparts, according to JLL, which forecasts that those construction costs will only rise as demand intensifies. A temperature-controlled warehouse can cost $130 to $180 a square foot, whereas construction costs for a conventional warehouse range from $70to $90 a square foot.

“That pricing makes speculative construction — breaking ground without a signed tenant in place — difficult but not impossible,” said Anderson, who is based in North Carolina.

But the uptick in demand from food companies and retailers — coupled with the variable of a massive vaccine-distribution effort — is enough to embolden some developers to try their hand at speculative construction. Already, 95% of U.S. food goes through a third-party distribution center before it reaches consumers, according to CBRE Group Inc. And as early as May 2019, CBRE predicted that the country needed an additional 75 million to 100 million square feet of cold-storage space to meet demand for direct-to-consumer food orders — and that was before the pandemic threw online ordering of everything from furniture to food into overdrive.

“JLL is tracking more than 20 speculative cold-storage developments,” said Dustin Volz, a managing director on JLL’s capital markets team who specializes in such properties.

Cold-storage properties tend to be specific to individual users, but Anderson said projects could at least begin construction by pouring a floor that can handle a specific temperature.

“Speculative cold storage is still challenging, but a few select developers are figuring it out,” said Volz, who is based in Dallas.

Vaccines for the novel coronavirus aren’t expected to drive much additional supply for cold storage because the goal will be to administer the vaccines quickly. What that might do for short-term demand for space is another matter.

“The growth we’re talking about isn’t really vaccine-related; it’s food,” Anderson said. “Especially at minus-20 degrees … Minus 20 is much more common with pharma and food. You can find space that can do minus 20. You’re not going to find any vacant space at minus 80.”

Volz agreed that food is driving the majority of the demand — and that the pandemic highlighted weaknesses in the U.S. food supply chain, such as its reliance on international vendors and inability to handle sudden upticks in demand.

“The need for excess warehouse space is therefore a result of keeping additional inventory to handle any surges in food demand,” Volz said, “and maintaining a domestic supply chain with the unrestrained geographical access for the population with supplemental food imports to complement the new infrastructure.”

 

Source: SFBJ

Skyscraper Buildings Made From Dollar Banknotes

Tony Arellano and Devlin Marinoff are co-founders and managing partners of Miami-based DWNTWN Realty Advisors.

The firm focuses on urban core transactions ranging from $3 million to over $20 million. GlobeSt.com caught up with them to discuss the long-awaited arrival of distressed assets on the market.

GlobeSt.com: When can we expect to see a high volume of completed distressed real estate transactions, and what opportunities are you already seeing?

Devlin Marinoff: Everyone in the industry knows what is on the verge of happening. We are starting to see the initial wave of bankruptcy and foreclosure filings, and this will accelerate quickly once the forbearance periods burns off during the fourth quarter. In Miami Beach alone, I anticipate at least 50% of the hotels there filing for bankruptcy in the coming months. We are already seeing notes on hotel properties in Miami Beach go on the market, and that’s before lenders start discounting notes to levels where investors will get interested. There have been some studies showing that up to 50% of retailers may not make it through this. This isn’t just local, statewide or national – this is global. The worldwide economy is going to be much smaller when we exit this pandemic. We will see many hotel, retail and even multifamily distressed opportunities in the fourth quarter and early 2021.

Tony Arellano: As with the broader market, the state of distressed real estate depends on the product type and neighborhood. It also comes down to the type of loan, whether it is CMBS, a conventional loan from a bank or private lender financing. Those factors will determine the urgency for a lender to get assets of their books, the appetite for acquisition and what makes for a truly enticing opportunity. Certain deals that are discounted by 20% will create a feeding frenzy. There are a lot of investors waiting for the market to flood with massive amounts of distress, but while there will be great opportunities to buy, I don’t necessarily think it will be an immediate glut of great deals.

GlobeSt.com: What are your investor contacts in South Florida and the Northeast saying about distressed real estate?

Devlin Marinoff: Pretty much every investor I know is calling me asking “what do you have?” There is an incredible amount of liquidity on the sidelines waiting for the non-performing loans to become available and for the forbearance extensions to end. It runs the gamut from small private investors to huge institutional funds with billions of dollars. Overall, there is more than $1 trillion just waiting to be deployed.

Tony Arellano: They are saying “send me every deal you have.” New York investors want out of New York and feel it won’t be investible for the next few years. They want to come to South Florida, but that doesn’t necessarily mean they will be able to understand what makes a good deal here. Real estate is local, and investors need to understand the supply and demand drivers and nuances of the different submarkets. South Florida is a particularly fragmented region with a mix of established core neighborhoods, emerging pockets and overlooked areas with upside potential.

GlobeSt.com: What do some of the high-profile South Florida assets going into special servicing (such as the Fontainebleau Hotel, Westfield Broward Mall and Southland Mall – now in foreclosure) tell us about where the rest of the year/early 2021 is heading?

Devlin Marinoff: The Fontainebleau belongs in its own category because I see that getting worked out due to the strength of Turnberry as a sponsor and size of the loan (nearly $1 billion). Every situation is unique, but there definitely are antiquated malls around the country that need repositioning. This cycle will expedite the issue of certain malls being obsolete. Looking broadly, a new Wells Fargo report showed that appraisals on CMBS properties in special servicing have averaged a 27% decline. That is staggering. For investors, the challenge with trying to acquire CMBS properties is that the servicer has all the power to make decisions with the goal of recouping the most dollars for the loan’s backers. Because of that, it’s a long road for an investor to get to the finish line.

GlobeSt.com: How is the investor interest in distressed real estate going to impact pricing?

Tony Arellano: The cost basis is relevant, but the most important thing moving forward is what the lending requirements are. It’s not about what someone paid or how much an investor bought below what someone else paid. The capital markets drive commercial real estate. If you can’t meet debt standards, coverage ratios or reserve requirements, the deals don’t work. Pricing will be determined by what something can be financed at and the underlying fundamentals. Is there a path to profit?

Devlin Marinoff: Investors are simply kicking tires until it gets to the level where they can obtain at least a 20% discount from the face value of the debt. If there is a $10 million mortgage on a commercial property previously acquired for $16 million, most of our investors would want to buy at $7-to-8 million and end up at a 50% valuation of the previous sale price.

GlobeSt.com: What are some of the challenges that could come from such a competitive environment for distressed assets?

Devlin Marinoff: People will buy debt and distressed real estate in different ways. The Starwoods and the Blackstones of the world will come in and acquire big portfolios of debt, put receivers in place, keep core assets and sell others. The buyers of debt will eventually become the sellers of assets, so there are many layers to this. The hardest thing right now is you can’t get the data. We don’t know what’s going on with the banks, they are not so transparent, so we’re guessing at this point.

Tony Arellano: The current value opportunities are hard to understand. That’s the biggest challenge in the market. At DWNTWN we like to say that we don’t find good deals, we make them. It’s going to come down to being creative and having the wherewithal to see where values and fundamentals are trending.

 

Source: GlobeSt.

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The US commercial real estate market is looking very cheap to foreign investors, who find their currency hedging costs aligning nicely with the direction of interest rates.

Currency hedging costs are driven by interest rate differentials between two currencies. Low US rates translate to lower costs for foreign investors looking to hedge the currency risk of their US investments. Here is why this dynamic is expected to continue.

 “Short-term and medium-term rates drive hedging costs,” Ciccy Yang, director of Global Markets for Hudson Advisors told listeners in CBRE’s weekly podcast. “And on that front, the Fed’s been giving very strong hints that more fiscal stimulus is needed to keep the economic recovery on track.”

If the stimulus is less than what the Fed prefers, Yang thinks it may have a more significant role in spurring the recovery. Its tools include more quantitative easing for an extended period and a further delay on the next Fed hike.

“The Fed currently forecasts that they’re going to be on hold until the end of their forecast horizon at year-end 2023 as per their dot plots,” Yang says. “In other words, they’re already forecasting short term rates will be bound to zero for quite a long time. Now, we already saw significant hedging cost declines from the beginning of this year when US rates fell significantly in the flight to quality and Fed easing on the back of the onset of COVID-19.”

The five-year annual hedging cost for Euro-based investors in the US has fallen 100 basis points this year to 1.2% today, according to Yang. In the same period, it has fallen 50 basis points to 2.6% for South Korean investors.

“There probably isn’t that much more room for these levels to fall further,” Yang says. “But given the likely expectation of accommodative Fed policy, it does feel like the lower currency hedging costs are generally here to stay in the near term.”

So far though, foreign investors are, for the most part, not biting.

In Q3, cross-border investment fell 71% year over year to $3.5 billion, according to Real Capital Analytics. This is still better than the low of $0.5 billion seen in the depths of the Global Financial Crisis.

The drop-off in cross-border investment might be partially the result of the types of properties being sold. Cross-border groups find it easier to purchase larger properties. Sales for assets priced greater than $50 million fell 61% year-over-year in the third quarter, while properties priced $5 million and below fell 39%, according to RCA.

Some foreign CRE investors, however, are stepping up their US  allocations. In the first nine months of the year, Korean investors accounted for 8.6% of all overseas investment in U.S. commercial real estate, up from 3.7% a year earlier, accordingto the Wall Street Journal,  citing Real Capital Analytics numbers.

South Koreans invested $1.56 billion, up from $1.24 billion a year earlier, trailing only Canadian and German investors, the WSJ said. A year ago, South Koreans ranked 10th among foreign investors in U.S. real estate.

 

Source: GlobeSt

Amazon wants to build a 65,000 square-foot distribution center at the intersection of Woolbright Road and Military Trail near Boynton Beach but nearby communities are not exactly putting out the welcome mat.

Delray Dunes and Quail Ridge, two large golf-club communities, are gearing up for a major fight to kill the project.

Most Amazon facilities, they note, are in industrial centers, not adjacent to large residential communities. Amazon’s agent recently met with Village of Golf planners to request major changes to the town’s growth plan in order to accommodate the facility. Village of Golf Manager Christine Thrower said the process has just begun. Agents for Amazon were told to revise their plans to see if they can be made more palatable to area residents. Thrower said she expects the project to be discussed again at a meeting in January.

Amazon wants to build a 65,000 square-foot distribution center at the southeast intersection of Woolbright Road and Military Trail.

But the two communities along with the Coalition of West Boynton Residential Associations are expected to argue the location is not appropriate for an Amazon distribution center despite the nearly 100 jobs it may create.

The world’s biggest online retailer recently broke ground on a 1 million square-foot facility on 100 acres in the Palm Beach Park of Commerce, which lies west of Jupiter near the Beeline Highway. The company announced in July that it plans to open a delivery station in Boca Raton this year. Last October, it opened a 96,000-square-foot delivery warehouse on Belvedere Road near Florida’s Turnpike west of West Palm Beach.

With around 300 residents, the Village of Golf is one of the smallest communities in South Florida. It encompasses about 530 acres, including a Publix supermarket that is currently under construction. The supermarket, a self-storage facility, a gas station and retail outlets are all part of a master plan recently approved by the town as are the seven warehouses that Amazon wants to replace with one building.

The Village of Golf location would be an operation similar to Amazon facilities on Belvedere Road and in Pompano Beach in Broward County. Large tractor trailer trucks drop off packages to the facility that are then sorted and placed onto scores of delivery trucks.

“This is basically an around the clock 24/7 operation that is not suited for our community,” Delray Dunes said in a letter to the Village of Golf. “The high-intensity industrial use contained in a single 44-foot-tall building is not compatible with the surrounding communities and will impact all of us negatively.”

A number of Village of Golf residents also said they were opposed to the project during the recent meeting.  But Kelly Smallridge, president and CEO of the Business Development Board of Palm Beach County, told The Post that critics should understand that the 10-acre site is already approved for seven separate warehouse buildings that would generate far more traffic and employ far more people than the Amazon facility. Those seven warehouses would total 100,000 square feet as opposed to the 65,000 square-foot Amazon building.

Thrower said Amazon would need to either seek special exceptions or a zoning change to build one 65,000 square-foot building to replace the already approved seven buildings.

Delray Dunes noted that approving the plans would amount to a drastic reversal of a zoning code that has fostered “low density, neighborhood commercial development.” It questioned why the town would consider locating “industrial development” adjacent to Quail Ridge and Delray Dunes.

The Village of Golf has for the past 65 years held to a two-story height limit, even on its current commercial development in keeping with the surrounding residential neighborhood, Delray Dunes noted.

And Quail Ridge said it was concerned about noise pollution caused by back-up alarms on trucks and other heavy equipment that “will pierce the peaceful nights that our residents enjoy.” Even more important is that approval of Amazon’s plans will “set the precedent for years to come in future development of that property as well as the remaining unsold property along Golf Road.”

 

Source: Palm Beach Post

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Integra Investments principal Victor Ballestas accidentally stumbled into the marina industry.

After having worked on numerous condominium developments, he co-developed a project in Bay Harbor Islands, near Miami, that had a marina component with 14 slips. Seeing the high demand for them, his firm went on to buy marinas in the Florida Keys and even develop a marina arm within the company.

“The boater demand is growing like crazy, but the supply of new marinas is obviously not moving too much,” Ballestas said during a Bisnow webinar about the future of marinas Nov. 4. “That supply/demand constraint is where we think that the opportunity lies in the space.”

Powerboat sales had already been seeing consecutive year-over-year growth this past decade, and the industry exploded since the coronavirus pandemic began. According to the National Marine Manufacturers Association, 115,000 new powerboats were sold in May and June alone, a 30% increase over the same time period last year. Additionally, Europe exports nearly $20B worth of boats each year. This is fueling demand for marina space.

“There’s nowhere to put ’em,” F3 Marina President John Matheson said.

Seahaven Superyacht Marina Harbormaster Marieke van Peer agreed. “The water space is so limited that the only way to go is up, in my opinion.”

Matheson’s company is developing marinas in the U.S. and Central America. A focus is on taking boats that are 30 to 50 feet in length, moving them to dry storage where they can be stored and retrieved with automated high-tech systems, and leaving space at docks for larger vessels.

 

F3 Marina is being developed as a 130-foot-tall, high-tech marina in Fort Lauderdale (PHOTO CREDIT: Miller Construction)

Miller Construction Co. CEO Harley Miller, whose company is building an F3 facility in Fort Lauderdale, had already built a similar automated self-storage facility for cars.

“Your boat and all of its dimensions and information is programmed in the computer,” Miller said. At the push of a button, it can be plucked and dropped into the water.

While seeing demand from new boaters, marina developers are also facing resentment from middle-class boaters who feel that access to the water is being hijacked by private interests.

“Developers can get around that by focusing on visual appeal,” Matheson said, “Particularly if it’s a dry stack marina, and in the case of F3 Fort Lauderdale, there’s a perception that these buildings are these old corrugated metal panel buildings with noisy forklifts flying boats around. Nobody wants to have that in their neighborhood, so we had to demonstrate that this is a completely different building.”

Optimum Asset Management USA Managing Director Matthew Barry is based in Miami and runs a fund out of Luxembourg. He is currently invested in the Monaco Yacht Club in Miami Beach, which has 39 residential units and 12 boat slips. Barry suggested that marina developers work harder to reach out to their adjacent communities.

“Get to know your neighbors, you get to know the land, you get to know the area surrounding it, and you find a public benefit. I think ultimately people aren’t necessarily against development,” Barry said. “They are against bad development. A public component can win over neighbors and politicians and bring up a neighborhood.”

One of the slips at Monaco Yacht Club is reserved for the whole building to use and a boardwalk along the back of the building allows public access directly to the water.

“While there are different considerations for all types of marinas, from boat storage facilities to destination marinas, developers should appeal primarily not to boat owners, but to their staff. Amenities like gyms can be key,” Van Peer said. “A happy crew is a happy captain, and a happy captain will keep coming back to the marina.”

 

Source: Bisnow