CBRE: U.S. office space vacancy increased to 13 percent during Q4 2017

Los Angeles, 2018-Jan-15 — /EPR Retail News/ — Vacant office space in the U.S. increased slightly by 10 basis points (bps) during the fourth quarter of 2017 (Q4 2017) to 13 percent, according to the latest analysis from CBRE. For the year, vacancy inched up 10 bps, marking the first year-over-year increase in vacancy since 2010.

The vacancy rate in suburban markets increased 10 bps, to 14.2 percent and downtown vacancy ticked up 10 bps to 10.7 percent. Vacancy continued to fall in a majority of U.S. office markets, and the national office vacancy rate remains near its post-recession low.

“The fourth quarter’s slight office vacancy rise can be attributed to an increase of supply and a slight loosening in the tightness of the market as we have closed in on the previous cyclical low,” said Spencer Levy, Americas’ head of research for CBRE.

The largest metro-area declines were recorded were recorded in Riverside (-80 bps), Salt Lake City (-70 bps) and Richmond (-60 bps). Tucson, Wilmington, Louisville, and Indianapolis, each declined by 60 bps or more. In the past four quarters, the vacancy tightening has been found in mid-sized markets located predominately across the Sun Belt, including Tucson, Las Vegas, Richmond, Albuquerque, Louisville, Orlando, Wilmington, Tampa, Phoenix, Kansas City, Riverside, Detroit and Jacksonville. The nation’s lowest vacancy rates list in Q4 2017 were led by tech markets: Seattle (7.6%), San Francisco (7.8%), Austin (8.2%), Raleigh (8.3%), New York (9.4%), and Boston (9.8%).

“Despite the slight rise in vacancy, we see the new supply as healthy overall, as many markets were becoming space constrained, in particular for large block space,” added Mr. Levy.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

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SOURCE: CBRE

CBRE: Middle East to spend an average of US$15.0 billion per year into direct real estate globally

  • Middle Eastern Capital Increasingly Targeting U.S. Markets
  • Private Investors Emerge as Major New Source of Outbound Capital

Los Angeles, 2015-8-6— /EPR Retail News/ — An average of US$15.0 billion per year will flow out of the Middle East into direct real estate globally in the near-term, with investors from the region increasingly targeting U.S markets, according to the latest research from global property advisor CBRE Group, Inc.

The Middle East continues to be one of the most important sources of cross-regional capital into the global real estate market, with US$14.0 billion invested outside of the home region in 2014—the third largest source of capital globally. Qatar, driven by its sovereign wealth funds (SWFs), was by far the largest source of outbound capital with US$4.9 billion invested. Saudi Arabia has emerged as a significant new source of capital globally, investing US$2.3 billion in 2014, up from almost no reported investment in 2013.

The Middle Eastern investor base has expanded, fueled by weakening oil prices; this has led to a major shift in global investment strategies towards greater geographic and sector diversification, with activity spreading across gateway markets to second-tier locations in Europe and the Americas. A greater proportion of Middle Eastern capital is now targeting the U.S.—the US$5.0 billion invested globally in Q1 2015 was almost equally split between Europe and Americas, with New York, Washington, D.C., Los Angeles, and Atlanta targeted. London, while retaining the top position, is no longer as dominant, with a 32 per cent share of all Middle East outbound investment in 2014, compared to 45 per cent in 2013.

Top Investment Hotspots for Middle Eastern Capital

MIDDLE EAST INOUT_USA.jpg

Middle Eastern investors are becoming more active across a wider range of sectors. This is clearly evident in the U.S. where, historically, these investors have bought office buildings and trophy hotels in New York, Los Angeles and other gateway markets. Competition from Chinese investors and other global capital sources means that these investors are increasingly seeking alternatives, such as Abu Dhabi Investment Authority’s $725 million acquisition this year of a 14.2 million-sq.-ft. industrial portfolio.

“While not back to the peak levels of the pre-global financial crisis, Middle Eastern capital flows into the U.S. continue to be strong, growing and diversifying in nature. As the big sovereigns continue to seek safe havens and long-term stable growth potential, the flow of capital from the Middle East will become even stronger. We expect a greater amount of this capital to start looking beyond the gateway markets to achieve its objectives,” said Spencer Levy, Americas Head of Research, CBRE.

Private, non-institutional investors (property companies, high net worth individuals (HNWI), equity funds and any other form of private capital) have emerged as a major and increasing source of outbound capital from the Middle East. With a greater allocation to real estate and more concentration on geographical diversification away from the home region, the potential for non-institutional investors to expand their global real estate investments is of growing importance. Weaker oil prices are a strong contributing factor to this, triggering and accelerating global deployment of capital, with value-add investments in high demand. CBRE forecasts that global real estate investment by non-institutional capital from the Middle East will range from US$6.0 to $7.0 billion per annum in the near-term, if not higher, increasing from approximately US$5.0 billion per year during 2010 to 2013.

“Private capital from the Middle East is once again becoming a measurably more important investor group globally. The most immediate change will bring down the average lot size, as non-institutional investors tend to target assets at circa US$50.0 million. This extends naturally to a more diverse investment strategy—a trend already felt in the market so far in 2015 and is expected to become more pronounced in the next six to 18 months. In particular, we expect the Americas region to see more capital flows from the Middle East, with Europe less dominant than it has been over the last five years,” said Chris Ludeman, Global President, CBRE Capital Markets.

In addition to private capital, SWFs from the Middle East are also expected to remain important market-makers, albeit not as strong in their acquisition strategies as they would have been if oil prices had not fallen. It is very unlikely that regional governments will make radical decisions to affect the existing capital allocations, with only new allocations likely to be affected. CBRE expects US$7.0 to $9.0 billion per annum of Middle Eastern SWF investment to flow into direct global real estate in the near- to mid-term, compared to what would have otherwise been in the range of US$9.0 to $11.0 billion per annum had oil prices remained at levels above $100 per barrel.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue).  The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

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CBRE Research: lower oil prices will have effects across Houston commercial real estate market, but fears of broad-based decline are overblown

CBRE report shows impact will vary by property type, with the retail sector most insulated and the office market most exposed

​Los Angeles, 2015-3-12 — /EPR Retail News/ — Lower oil prices will have effects across the Houston commercial real estate market, but fears of broad-based decline are overblown, according to a new report from CBRE Research. The report finds that the degree of impact will vary based on the magnitude of change in employment, and by property type, with expected impact to the retail sector being negligible and the office sector, modestly negative.

“The outlook for Houston commercial real estate is less positive than a year ago, and certain submarkets and property sectors can expect to see at least temporary shortfalls in demand,” said Spencer Levy, Americas Head of Research, CBRE. “However, we expect oil prices to slowly drift up over the next two or three years. That, plus strong growth in the U.S. economy will limit the impact of the recent drop in prices on the market.”

Much has been written in the popular, economic and real estate press about the challenges the Houston economy may face due to low oil prices. However, in commercial real estate the story is more nuanced, with a number of considerations, including:

  • The U.S. economy will benefit on net from lower oil prices, with the positive impact to consumer spending potentially boosting real GDP growth by up to 0.7 percent in 2015, according to Moody’s Analytics.
  • Houston’s economy is entering this period from a position of strength, having gained four new jobs since 2009 for each one lost during the recession while experiencing income growth about the national average.
  • While energy is a key industry in the Houston economy, the sector has also diversified across the energy industry’s three segments – upstream, midstream and downstream – and each is impacted by lower oil prices in different ways. Most notably, the negative impacts to exploration and production (upstream) will be partially offset by positive impacts on petrochemical manufacturing (downstream).
  • Retail is best positioned among the property types because the spending of Houstonians will benefit from lower gasoline prices, the occupancy rate is historically high and construction of new shops has been uniquely constrained in this cycle.
  • The office market is most exposed due to the Houston’s concentration of upstream energy headquarters and major operations as well as the amount of new supply coming on line through 2017.
  • Impacts to industrial and multifamily will likely be limited to slower rent growth. Both sectors enter this period with strong occupancy and face offsets to weakness in the upstream segment from downstream expansion and, for multifamily, support for continued demand from a tight single-family market.

“Ultimately, the fall in oil prices results in winners as well as losers. The winners are broadly spread, the losers are usually in specific locations” added Mr. Levy. “Investors are acknowledging the changing global industry dynamics, including the U.S. push for energy independence, the decline in OPEC’s power and growing political support for the international trade of domestic liquefied natural gas (LNG) and crude oil – all of which could potentially have positive implications for Houston and the U.S. energy sector.”

CBRE Research’s global perspective is that most of the oil-producing economies face a tough 18 months or so. “Russia, for instance, is expected to see its GDP decline in 2015 by 5 to 8 percent. However, led by the U.S., overall growth in the world economy is expected to pick up in 2015 and 2016. This will provide some support for oil prices, which we expect to drift up slowly from this point onwards as some production capacity comes out of the market,” said Richard Barkham, Global Chief Economist, CBRE.

“It was always clear that the beneficial effect, on consumer spending for instance, would only show through in the medium term. The pain would be near term and localized in energy-centric markets, such as Houston and Calgary. Houston can at least look forward to some offset for falling energy-related investment from revived domestic demand growth across the whole of the U.S. The same cannot be said for Russia, Venezuela and Nigeria,” added Mr. Barkham.

Note to editors/journalists: To speak with a CBRE expert or obtain a copy of the report, please email robert.mcgrath@cbre.com or corey.mirman@cbre.com.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue).  The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

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CBRE Group, Inc. announces the appointment of Jeffrey R. Havsy as Americas Chief Economist effective December 1

Los Angeles, 2014-11-10— /EPR Retail News/ — CBRE Group, Inc. today announced that Jeffrey R. Havsy, a leading analyst of commercial real estate, will join the company as Americas Chief Economist, effective December 1.

The Americas Chief Economist is a new position in which Mr. Havsy will work with CBRE’s research team to develop insight, analysis and a viewpoint on economic, financial and market trends impacting commercial real estate. Mr. Havsy joins CBRE from the National Council of Real Estate Investment Fiduciaries (NCREIF), where he was Director of Research.

“Jeff is a terrific addition to our Americas Research team, he is a leading real estate analyst and a top forecaster of future activity,” said Spencer Levy, Americas Head of Research. “His insight will be invaluable in formulating the thoughtful perspective on the macro environment essential to providing our clients with the best advice. Jeff’s addition to the CBRE team is another important step in further aligning our research and economic forecasting efforts to more efficiently meet the needs of our clients.”

Mr. Havsy will also lead a team of economists at CBRE Econometric Advisors (CBRE EA), the company’s real estate forecasting unit. He will work closely with Richard Barkham, CBRE’s Global Chief Economist, Bill Wheaton, the co-founder of CBRE EA, and Mr. Levy to further align CBRE’s forecasting and market research activities.

Mr. Havsy brings to CBRE a nearly two decade track record of producing results using economic analysis, commercial real estate research, strategic analysis, and risk management techniques for a wide range of financial assets. Prior to his role at NCREIF Mr. Havsy held senior real estate strategy positions at Property & Portfolio Research, Equity Office Properties and LaSalle Investment Management. He began his career as an economist at the Chicago Board of Trade.

Mr. Havsy received a B.A. in Economics from Lehigh University, an M.A. in Economics from the University of Virginia and did significant course work toward a Ph.D from the University of Virginia. He is a Homer Hoyt Fellow.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue).  The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

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