The primary conversation in the commercial real estate market today revolves around the substantial amount of equity capital chasing high-quality core investments as prospective buyers exhibit a high level of interest in the stability of income and an overall lower risk level. For reasons that have yet to be fully explored, there is comparatively little discussion of value-add and opportunistic space.
Value-add and opportunistic investments traditionally have been considered higher-risk strategies that use significant degrees of leverage to maximize the total return of an investment. Value-add opportunities generally involve Class B or C assets in high-quality locations that can be significantly improved operationally or rehabilitated to increase cash flow. Leverage approaching 65 percent can be used both to enhance returns and to finance part of the renovation capital.
The retail real estate market currently suffers from an oversupply of space—the result of overbuilding before the financial crisis struck in 2008—plus a dearth of retailers now willing and able to fill space. Consumer spending is down for the foreseeable future as the buying public remains wary of returning to the days of large credit-card debt. While welllocated retail destinations may continue to thrive and maintain national retailers, plenty of others are going to keep losing tenants. In this environment, town centers and mixed-use centers may have an edge over their mall counterparts.
As recovery from the current deep recession begins, creating strategies for reinvesting in the world’s urban areas—where half the planet’s population lives—will require an understanding of development options.
The director of Georgia Institute of Technology’s Center for Quality Growth and Regional Development and an adviser to the Obama administration’s White House Office of Urban Affairs discusses the implications of megaregions for future development and how best to develop to compete globally.
The U.N. Climate Change Conference in Copenhagen may have ended without an international commitment to specific greenhouse gas reduction targets, but the development community still needs to prepare to meet stringent targets in the next five to ten years. Both California and the U.K., among others, have already started down the path that the rest of the world is likely to soon follow.
While the transportation component of Vancouver’s Winter Olympics is being watched closely by planners of the 2012 summer Olympics in London, Vancouverites saw the event also as an opportunity to reframe the city’s long-range transport picture, particularly in the context of a greener future.
Four U.S. mayors discuss strategies to tackle rapidly declining neighborhoods that have been hit with vacancies and foreclosures.
Developers are applying novel conservation strategies to prevent water shortages from triggering building moratoriums.
Atlantic Wharf, a mixed-use development scheduled to include a waterfront plaza, 30,000 square feet (2,787 sq m) of retail and public spaces, and a 31-story, 750,000-square-foot (69,677-sq-m) Class A office tower, is taking shape in the capital of Massachusetts. And in strong markets around the New York metropolitan area, retail development appears to be a bright spot. In neighboring Connecticut, the single-family home sector is expected to strengthen this year, and the office market in northern New Jersey is starting to gain traction.
The future of cities could be considered the centerpiece of the Urban Land Institute’s entire program of work. How and where we will live and work and how we will get from one place to another in the decades ahead are issues that will shape urban growth patterns and change our approach to planning, design, and development.