All Dates > All Authors > Capital Markets


  • 07-01-10

    New Capital for Urban Growth

    Two megatrends are currently shaping what will become the new normal after the prolonged period of recovery for the U.S. economy. The first is the rapid emergence of America’s metropolitan areas as the true centers of population and economic growth. For the first time in history, more people are living in urban areas throughout the world than in rural communities.

    The second is a worldwide shift in the sources and flows of global capital, creating a new world of funding sources available to be configured in new ways toward new goals. The fluidity of global streams is becoming more pronounced and vast sums of capital are seeking stable, long-term returns.

  • 07-01-10

    Housing Adults with Autism-Related Disorders

    A growing group of developmentally disabled children and young adults will need housing that allows them to live away from their families but still provides the medical, therapeutic, and vocational support they need.

    During the next 15 years, more than 500,000 children with autism-related disorders will become adults, many cared for by aging parents who likely will not outlive them. Adults with autism currently have few options for housing apart from their families. They are too old to receive continued care from the special education departments of public schools and too fragile to live on their own with no supervision.

  • 07-01-10

    Pockets of Opportunity

    The number of distressed residential properties spilling onto the U.S. market is expected to depress the national median price for a single-family home another 5 to 10 percent before bottoming by year’s end or early 2011. More than 3 million homes are expected to go into foreclosure this year, with one in four homeowners owing more on their mortgage than their house is worth.

    According to Urban Land’s roundtable of housing experts (page 46), markets will be dominated by local public homebuilders, while smaller development companies will focus on small-scale infill development where sites are reasonably priced. With construction costs leveling off, home sizes will shrink. Expect smaller single-family lots and townhouses. Federal stimulus money and some state and local financial assistance are being made available for affordable housing projects. Green design, much discussed lately, is beginning to give projects a marketing edge, participants said.

  • June

  • 06-01-10

    Repositioning Retail

    In the current recession, thousands of stores have been shuttered, new projects have been shelved, rents have been pared, property values have cratered, and retail workers have been sent packing in legions: more than a half million lost their jobs alone in 2008. But as the dust begins to settle and the rolling metal curtains are peeled back for a new sales day, retail is reemerging as a different animal, one that is leaner and keener.

  • 06-01-10

    Harvard Wins 2010 MIT Boston Open

    The Harvard Graduate School of Design won the 2010 MIT Boston Open, a real estate competition hosted by the Massachusetts Institute of Technology’s Center for Real Estate Alumni Association and held this year at the Prudential Center during the ULI Real Estate Summit at the Spring Council Forum in the city. The competition, a case-based competition open to all U.S. real estate graduate programs, sought redevelopment schemes for a historic and challenging site in Boston. Finalists were invited to the city to compete and pitch their highest and best-use argument to a live audience and judging panel.

    Taking second place in the competition was the New York University Schack Institute of Real Estate, and the University of California at Berkeley Haas School of Business placed third. The teams were judged by industry practitioners Phil Bakalchuk of Water Street Investments, Jeff Cushman of Cushman & Wakefield, Kathleen MacNeil of Millennium Partners, and Eric Nelson of the Bulfinch Companies.

  • 06-01-10

    Needed: An Underlying Ethic

    An allegory for the financial industry’s present condition might be that of a red-tailed hawk soaring above the Manhattan skyline, flying at full speed toward the sheer wall of a glass-enclosed skyscraper—and relying on the transparency of the glass for protection from undue risk. The crisis occurs, and the bird falls fluttering to the ground with a broken wing.

    Is this the bird’s fault? Is it a law of nature? Should the glass have etching or cross ribs to alert the bird to the danger? Can the bird recover? Can it recover by itself, without outside help? Will it ever soar again? Will it ever fly again with uninhibited grace? What resources should be applied to its recovery? Is it too rare a bird to fail?

  • 06-01-10

    Are REITs a Leading Indicator for a Commercial Real Estate Recovery?

    While the capital markets ended the year in positive territory, few real estate investors would say that 2009 was a “good year.” Property fundamentals, most notably rental rates and occupancy levels, continue to deteriorate; demand drivers showed few signs of recovery; and banks gave little indication of a desire to restart lending to commercial real estate. Furthermore, the bid/ask spread between buyers and sellers remains stubbornly high.

    Nevertheless, real estate investment trusts (REITs), as measured by the National Association of Real Estate Investment Trusts (NAREIT) U.S. Real Estate Index, delivered an approximate 27 percent return during 2009. It was a bumpy ride along the way, with the index touching a multiyear low of 185 in March before ending the year at 325.

  • 06-01-10

    Where are the Careers in Real Estate?

    As commercial property development and homebuilding practically came to a standstill last year, many real estate companies laid off employees. This year, amid signs that the U.S. economy is slowly recovering and property markets may be nearing the bottom of the cycle, companies are beginning to hire again. “We are beginning to see signs of life,” observes Tony LoPinto, head of the North America real estate practice at executive recruiting firm Korn Ferry International.

  • May

  • 05-01-10

    Drivers for Town Centers

    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.

  • 05-01-10

    Value-Add and Opportunistic Investment

    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.