Commercial property price indices (CPPI) continued to either hold steady or trend upward at the end of 2016, the most recent period for which data is available, signaling the likelihood of an extended market cycle. According to the National Real Estate Investor, the Moody’s/RCA national all-property CPPI rose by 1.4 percent in November compared to October. Over a three-month period, the index went up 3.0 percent. Suburban office buildings experienced the most significant month-over-month increase in prices, at 2.6 percent, followed by office properties in general, at 2.1 percent. Retail assets saw the least movement in prices, at 0.1 percent (prices in the sector also fell 0.4 percent over a three-month period). The Moody’s/RCA CPPI is calculated using repeat sales transactions that take place two months before the figures are released.
Property tax bills for New York City commercial real estate owners have soared under Mayor Bill de Blasio, according to city data. While the tax rate for commercial properties increased slightly, the annual increase is driven largely by rising value assessments. The average tax bill, without abatements, is set to jump to $111,023 in fiscal 2017, which ends June 30, from $85,841 in fiscal 2013, the last full fiscal year former Mayor Michael Bloomberg was in office, the data show. In all, the average commercial property tax bill has jumped 29.3% since Mr. de Blasio’s tenure.
Fueled by the rapid growth of e-commerce, the U.S. industrial market is benefiting from tight supply and rising rents and is expected to enjoy sustained momentum throughout 2017. To track the most in-demand markets, real estate services firm CBRE put together a list of cities and regions with the lowest prime yields on logistics assets. The average prime yield for the U.S. is currently 5.84 percent.
As the number of empty storefronts continues to grow across the U.S., signs are pointing to a slowdown for the national retail-property market. Vacancy rates in community shopping centers increased in 30 of 77 U.S. metro areas last year, compared with 24 in 2015 and 19 in 2014, according to data from real estate researcher Reis Inc. Rents, which usually increase roughly at the rate of inflation in healthy markets, decreased in two metro areas for the full year. In the fourth quarter, rents fell in 15 metro areas from the third quarter.
The hotel industry could be facing an uphill battle in 2017 as new supply may erode pricing power and hinder performance. Hoteliers are already seeing performance dip as supply meets and surpasses demand. In a Hotel News Now roundtable, hotel executives and market analysts provide perspective on supply growth and how it will affect the hotel industry going forward. Jan Freitag, SVP of lodging insights at STR (Hotel News Now’s parent company), says new supply will negatively impact occupancies, now more than ever since demand growth will slow. While it remains to be seen how hoteliers react to the new competition in their markets, Feitag expects continued pressure on pricing and limited (average daily rate) increases going forward. Some markets (such as New York City and Miami), however, are already observing pricing weakness and ADR declines.
Ohio’s oil and gas industry may get a retroactive windfall tax break estimated at $264 million under a bill passed by the legislature during the lame-duck session The heavily amended Senate Bill 235 would expand the sales-tax exemption for tangible personal property for the oil and gas industry. And in an unusual move, the General Assembly made the tax breaks retroactive to June 30, 2010, requiring refunds from the state totaling $215 million and local governments totaling $49 million.
Due to a considerable amount of availability amid Manhattan’s softening retail market, temporary stores, or Pop-Ups, are teaming up with landlords in an unexpected win-win scenario. Cautious retailers who are hesitant to open brick-and-mortar operations due to the rapid growth of on-line shopping get to test the waters in the elite shopping district with a shorter-term lease and often discounted rent. And rather than try to sell empty spaces, landlords can show off the energy and activity pop-ups bring to the space to prospective long-term tenants.
Philadelphia City Council unanimously approved legislation aimed at closing the loopholes that has allowed buyers and sellers of some of the city’s biggest commercial real estate transactions to avoid or lessen the transfer tax on those deals. City Council believes the changes made to the real estate transfer tax law could add millions to public coffers. The vote comes after an analysis by The Inquirer found those loopholes being exploited more often than not in the city's biggest real estate deals, where the tax savings can be most pronounced.
At the beginning of the year, researchers warned that hundreds of thousands of new apartments would open in 2016 and drive up the vacancy in the sector. However, average vacancy rates remained low throughout most of this year and the sector’s strength exceeded expectations. Steady job growth numbers and a strong demand helped fill many new units, while construction delays held up a significant number of apartment projects, which will now open next year. Vacancy rates are still anticipated to rise in 2017, when even more new apartments will open than in 2016. However, experts now expect the U.S. vacancy rate to stay at or below 5.0 percent.
Local officials expressed concerns last week over a bill that gives property tax breaks to Ohio developers, prompting significant changes to the legislation. Designed to help developers predict costs and make more job-ready sites available in Ohio, the business-backed bill would freeze property values for land under commercial or industrial development until the project is completed through a sale of the property, an occupancy permit or the start of business operations. However, local officials who deal with economic development around the state said without major revisions, the bill could do more harm than good in some regions.