Institutional owners of office buildings continued to pursue green building certifications in the 30 largest U.S. markets during 2015. Continuing an upward trend over the past decade, green certifications are now held by 11.8 percent of all surveyed buildings, representing 40.2 percent of all office space. Both figures are slightly above last year’s results, according to the third annual Green Building Adoption Index study by CBRE Group, Inc. and Maastricht University. “Green” office buildings in the U.S. are defined as those that hold either an EPA ENERGY STAR label, USGBC LEED certification or both.
After placing second on the Green Building Adoption Index the two prior years, the San Francisco market claimed the top spot with 73.7 percent of its space qualified as green certified. Chicago claimed the second spot, narrowly trailing the leader at 72.3 percent and Minneapolis fell from the top into third spot at 60.6 percent. Houston, Atlanta and Los Angeles all also achieved more than 50 percent green certification in their office markets.
As the Minnesota Legislature decides what to do with the $900 million state budget surplus projected for the remainder of the fiscal biennium through June 2017, a major focus of the Minnesota Chamber of Commerce will be lowering state business property taxes. The chamber is pushing for several business-friendly measures, and President Doug Loon said adapting the chamber’s tax strategies will increase state competitiveness, performance and prosperity.
After officials unveiled a projected $1.87 billion surplus heading into the next legislative session, The Minnesota Chamber of Commerce and more than 70 other business groups began advocating for business tax cuts once again. Both the House and Senate saw landmark business tax relief proposals last year, and lawmakers are optimistic for new tax legislation moving forward in March. The Minnesota Chamber said tax cuts will be the top of its legislative priority in an effort to lighten businesses’ tax burden and ensure Minnesota’s competitiveness.
U.S. Apartment growth is not showing signs of moderating, according to the July 2015 edition of Matrix Monthly, a report on U.S. multifamily market trends in the 101 U.S. markets surveyed by real estate software developer Yardi. Apartment rents in the United States rose 6.5 percent year-over-year in July to a record $1,155, up 20 basis points from June and the highest rate of growth in the current market cycle. Technology-fueled markets in the Western U.S. continued to spearhead year-over-year growth, led by Portland (14.6 percent), Denver (13 percent) and San Francisco (9.8 percent). Although markets in the Midwest, Northeast and Mid-Atlantic continue to lag the rapidly-growing metros in the South and West, growth is strong across the board. Rents increased by less than 4% year-over-year in only five metros, and only three were below the national long-term average of 2.8%.
Office investment has taken off in the past two years, with the national sales volume in the sector rising to about $40 billion in the second quarter, according to the National Real Estate Investor. However, the high demand for office building in primary markets has pushed down available yields, causing investors to shift their attention to secondary markets in order to find higher returns. Office property sales in secondary markets totaled $8.5 billion in the second quarter, representing the strongest quarter since the recession and a 19.6 increase from a year prior, according to commercial real estate services firm JLL. In addition, the current urbanization movement and the growth in fundamentals, such as increased employment, is making secondary markets even more attractive to investors.
On Monday, Minnesota House Republicans rolled out a $2 billion tax break plan, which featured $539 million in income tax cuts with another $453 million for beginning to phase out the statewide business and cabin property tax. The bill will be introduced to full House shortly, as the final budget and tax bills must be finalized in less than a month.
The U.S. hotel industry ended 2014 with a bang, reporting positive results in the three key performance metrics during December 2014, according to data from STR, Inc. Overall, in year-over-year results, the U.S. hotel industry’s occupancy was up 4.8 percent to 52.6 percent; its average daily rate rose 4.3 percent to $113.42; and its revenue per available room increased 9.3 percent to $59.62. Demand for the month was 5.8 percent higher than last year, and Interstate and Suburban hotels even reported demand increases of more than 6 percent.
In 2013, Minnesota legislators increased the local government aid program for cities by $80 million, touting a reduced property tax burden. The commissioner of the Minnesota Department of Revenue, however, warns taxpayers to be skeptical of the likelihood of state aid actually decreasing the tax levies, as it is up to local officials to set the local levies and amounts.
In an effort to save and revive at-risk historical buildings, effectively generate living-wage jobs and stimulate local economies, Restore Oregon has called for a historic preservation tax program. In a special report released last week, Restore Oregon said a State Rehabilitation Tax Credit would help fill the gap between private and federal funding available for redevelopment. According to the report, similar tax credit programs have proven their effectiveness in 34 other states, creating a ripple effect in local economies. In Ohio, every dollar of state tax credit leverages $6.25 in investment. In Minnesota, every tax credit dollar creates $8.32 in economic activity. And in North Carolina, every tax credit dollar generates $12.51 in economic benefit. Restore Oregon reports that approximately 2,600 commercial buildings are listed on the National Register in Oregon and could benefit from a State Rehabilitation Tax Credit, which would to help cover the cost to refurbish older buildings, bring them up to code and to support seismic updates.