Commercial Real Estate Executives Report Stable Market Conditions for Q3

WASHINGTON, Aug. 16, 2019,/PRNewswire/ — Commercial real estate industry leaders continue to see balanced and stable economic market conditions, according to The Real Estate Roundtable’s 2019 Q3 Sentiment Index released today. “As our Q3 Index shows, industry executives are entering the second half of the year with confidence in stable market fundamentals, supported by a solid economy with low employment,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. “Although there are political uncertainty and the economic recovery is historical in length, commercial real estate market dynamics remain sound, with balanced supply and demand in most markets, and debt and equity readily available, particularly for high-grade investments,” DeBoer added. The Roundtable’s Q3 2019 Sentiment Index’s registered a score of 50 — a one-point decrease from the previous quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.] Click to read more at www.finance.yahoo.com.

Malls Are Filling Their Empty Spaces With Doctor’s Offices

New York (CNN Business)As malls search for innovative ways to draw in shoppers and fill empty storefronts, they are turning to unexpected partners: health clinics. Mall of America in Minneapolis, America’s largest mall, announced plans last week to open a 2,300-square-foot walk-in clinic in November with medical exam rooms, a radiology room, lab space, and a pharmacy dispensary service. Mall of America is teaming up with University of Minnesota physicians and a Minnesota-based health care system to operate the clinic. The health care industry in the United States has ballooned to $3.5 trillion a year and retailers are increasingly trying to latch onto the booming market. Mall of America’s concept is part of a small but growing trend of mall owners tapping health care providers to help them reinvigorate their shopping centers. Click to read more at www.cnn.com.

Appealing To Millennial Renters Who Wish To Remain Child-Free And Mortgage-Free

If you own or manage rental properties, your ideal tenant is likely a young, gainfully employed person who plans to rent long-term. Luckily for you, this dream occupant comprises one of the largest renting demographics: millennials. According to Pew Research Center, 74% of them are renters. And given that the same study states that they’re also less likely than other age groups to move once they’ve found an ideal rental space, marketing your properties to millennials is a great way to attract reliable, long-term tenants. Most millennials view homeownership as a risk they’d prefer to avoid. Many have amassed stifling levels of student loan debt and, having come of age during the 2007-2009 credit crisis, are more cautious about investments. Click to read more at www.forbes.com.

HUD Secretary Ben Carson Wants More Cities to Ditch Single-Family Zoning

As cities across the U.S. grapple with severe housing shortages that send prices soaring and would-be buyers fleeing, Ben Carson said he’d like to see more cities address the zoning regulations that contribute to the problem. Carson — who leads the U.S. Department of Housing and Urban Development (HUD) — made his comments Tuesday during a visit to Minneapolis, where lawmakers voted last year to ditch single-family Zoning, which had previously dominated the city limits. Speaking to reporters, Carson suggested more cities should follow Minneapolis’ example and drew a connection between zoning and homelessness. Click to read more at www.inman.com.

U.S. Finance Execs Hold on to Positivity

U.S. business leaders remained significantly more confident in the domestic economy than the global economy, but the gap narrowed slightly in the second-quarter Business & Industry Economic Outlook Survey released Thursday by the Association of International Certified Professional Accountants. The survey’s CPA Outlook Index (CPAOI) dipped one point to 75 out of 100, reflecting slight easing in expansion, revenue, and profit expectations. The index peaked at 81 in the first quarter of 2018. The most recent survey, conducted in May, included 785 responses from CPA decision-makers such as CFOs, CEOs, and controllers. Fifty-seven percent of respondents were optimistic about the U.S. economy, consistent with the first quarter. Their views were boosted in part by lower taxes and less regulatory burden. Click to read more at www.journalofaccountancy.com.

The Future of the Parking Garage

By Rand Stephens (Houston)

It is no longer a matter of “if” driverless cars will be on the road, it’s a matter of “when.” And, that “when” is sooner than most people think. Some grocery stores in the Houston area are already delivering groceries to homes using autonomous vehicles and in June, METRO along with Texas Southern University (TSU), will launch Phase 1 of their first driverless vehicle dubbed Generation 2. It won’t be long before private autonomous vehicles hit the road. Personal mobility will have implications reaching beyond the automotive industry. Some speculate that the parking landscape in metro areas will be fundamentally restructured, which can lead to new challenges and opportunities for commercial real estate.

Theoretically, a driverless car will rarely need to park because it will drop off passengers at their destination, then drive off to pick up another passenger or collect your groceries. Street parking could be replaced with drop-off/pick-up zones, and parking garages could become “urban mobility hubs” where autonomous vehicles will refuel, recharge and undergo cleaning and maintenance. All this is still dependent on how many will actually use this new technology. We know it’s coming, but it will be a while before it becomes an actual way of life. Cell phones have been around for a couple of decades, but not everyone has given up their land line yet.

Source: DowntownHouston.org
Almost 160,000 people work in Downtown Houston and roughly 60% drive to work. There are approximately 100,000 parking spaces in 42 existing properties classified as parking garages in the Central Business District, totaling 10,190,359 square feet.

With the population growth on the rise, it’s hard to imagine that parking areas will become obsolete. And, adaptive re-use of parking garages is much too costly. Some estimate it can cost as much as $90 to $100 per square foot. It would make more sense to tear it down.

It will be a gradual transition. It is likely to start with transforming street parking into mobility drop-off/pick-up spots, delivery zones, etc. Perhaps that will be the next “must have” amenity that tenants will be looking for. Parking lease clauses will be augmented with language providing for mobility usage that ensures building and garage access by autonomous electric vehicles. It will be interesting to see how developers, landlords, tenants and brokers will respond to this transportation revolution and what innovative solutions will emerge.

(Rand Stephens is a Principal of Avison Young and Managing Director of the company’s Houston office.)