Headlines – Week of April 15, 2012

April 26, 2012

The 20 Best Small Towns in America

Smithsonian Magazine recently announced their list of the top20 best small towns in America.

To help create the list, the magazine asked the geographic information systems company Esri to search its data bases for high concentrations of museums, historic sites, botanic gardens, resident orchestras, art galleries and other cultural assets common to big cities.

The focus was on towns with populations less than 25,000, so travelers could experience what might be called enlightened good times in an unhurried, charming setting.

The two Florida cities were listed in the magazine’s rankings.

Naples was ranked No. 9 on the strength of its beauty, philharmonic orchestra and an abundance of art galleries. Key West, which the magazine calls a “haven for creativity,” came in at No. 16.

The full list

  1. Great Barrington, Mass.
  2. Taos, N.M.
  3. Red Bank, N.J.
  4. Mill Valley, Calif.
  5. Gig Harbor, Wash.
  6. Durango, Colo.
  7. Butler, Penn.
  8. Marfa, Texas
  9. Naples, Fla.
  10. Staunton, Va.
  11. Brattleboro, Vt.
  12. Princeton, N.J.
  13. Brunswick, Maine
  14. Siloam Springs, Ark.
  15. Menomonie, Wisc.
  16. Key West, Fla.
  17. Laguna Beach, Calif.
  18. Ashland, Ore.
  19. Tamarack, W.Va.
  20. Oxford, Miss.

Full Article

The Early Phase of Real Estate Recovery

National Real Estate Investor considers the country to be in the early phase of a cyclical recovery.

Recently they published an article in which they stated their belief that real estate investment performance continues to display favorable conditions, a result of historically low borrowing rates and a modest inflationary outlook. Very limited new supply and rising demand is buoying real estate fundamentals for most property types.

The  vast majority of investor interest to date has been focused on top-tier assets in prime markets (New York, Boston, Washington D.C.) and is thus reflected in bifurcated cap rates, with rate compression in those select markets and assets. It is their belief that the real estate asset class can provide very attractive return opportunities relative to other alternatives.

A summary of the various property types follows.

Multifamily – As widely forecast, multifamily has been leading the recovery, exhibiting year-over-year rent growth of 4 percent to 5 percent in 2012, according to CBRE Econometric Advisors. Rent growth for multifamily is strong in virtually all markets, with half already exceeding prior peak rents.

The strongest markets include New York City, San Francisco/San Jose, Seattle, Washington, D.C., Boston and Houston, with value-add and new development emerging as popular strategies in this sector. However, with this rapid increase in new development comes a moderate risk of excessive supply in the next two to three years.

Office – Contrary to many expectations, the office sector has been second place nationally in both absorption and rent growth. Office vacancy declined from 16.5 percent in the fourth quarter of 2010 to 16.0 percent in the fourth quarter 2011, and rents increased by 3.0 percent during 2011, according to CBRE.

High-tech, energy and professional and business services markets such as Austin, San Francisco/San Jose, Seattle, Houston and New York City outperformed, while markets with high levels of federal, state and local government employment remained weak.

Industrial – The industrial sector has shown strong improvement, with six consecutive quarters of positive net absorption (162 million sq. ft.) and vacancy declining from 14.3 percent in the fourth quarter 2010 to 13.6 percent in the fourth quarter of 2011, according to CBRE.

Port markets posted the greatest absorption, including the Inland Empire, Oakland, Houston and Miami, as well as select inland markets, including Dallas, Atlanta and Central Pennsylvania. Large warehouse properties (defined as those greater than 400,000 sq. ft.) saw the greatest space demand to date, with opportunities present in build-to-suit and speculative development in select markets. Overall, industrial rent growth continues to lag, but growth is generally forecast in 2012 as long as demand continues to grow and landlord concessions decline.

Retail – Retail absorption nationally turned slightly positive in 2011, marking the first year of positive net absorption since 2007. Despite the positive absorption, vacancy remained unchanged at 11 percent as a result of an equal amount of new deliveries.

Following three years of rent declines, retail effective rents were unchanged in 2011. Retail is a divided sector, despite relatively robust consumer spending over the past six months: Necessity and high-end retailers are doing well, while middle retailers are being squeezed. We do not anticipate any meaningful rent growth until late 2012. We also anticipate construction to be minimal, holding vacancy in check.

Hotel – The hotel sector has had continued solid operating performance, with growth in revenue per available room of 7 percent in 2011, enhanced by robust corporate travel. While a weak economic recovery and high fuel prices remain risks to room demand in 2012, muted supply growth may provide a boost to occupancy.

U.S. Home Prices at a Glance

According to the real estate data firms CoreLogic and Trulia, U.S. home prices rose slightly in February and March in some major metro areas,. Price gains have occurred in many hard-hit areas, such as Miami and Phoenix, while losses have been reported in cities ranging from Las Vegas to Seattle to Wilmington, Del.

Six out of the top metro areas are in Florida.

Here’s a look at some of the cities with the sharpest home price gains and losses over the past year, according to Trulia:

Best metro areas year-over-year change

  1. Cape Coral-Fort Myers, Fla.: 14.8%
  2. Miami: 14.1%
  3. Phoenix: 13.2%
  4. Pittsburgh: 9.2%
  5. Little Rock, Ark.: 6.7%
  6. Orlando: 6.3%
  7. North Port-Bradenton-Sarasota, Fla.: 6.2%
  8. Palm Bay-Melbourne-Titusville, Fla.: 6.1%
  9. West Palm Beach, Fla.: 5.8%
  10. Warren-Troy-Farmington Hills, Mich.: 5.6%

Worst metro areas year-over-year change

  1. Tacoma, Wash.: -11.9%
  2. Seattle: -9.1%
  3. Sacramento, Calif.: -8.3%
  4. Las Vegas: -7.7%
  5. Wilmington, Del.: -7.7%
  6. Columbia, S.C.: -7.3%
  7. Cleveland: -6.9%
  8. Fresno, Calif.: -6.8%
  9. Milwaukee: -6.7%
  10. Allentown, Pa.: -6.7%

Posted by Scott R. Lodde

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