Institutional Real Estate Americas
January 1, 2015: Vol. 27, Number 1Buy For $225.00 Add to Cart
The European awakening: U.S. investors are once again becoming Europhiles
Early in the fourth quarter of 2014, the European Central Bank reported the results of a yearlong audit of euro zone lenders. Of the 130 big euro zone banks under review, just 25 showed shortfalls in capital.
Class B office sees rent growth in some CBDs
When Plan A is not working out, there is always Plan B. Some real estate investors are embracing that logic these days. With limited space and heavy competition for class A office space among tenants in major central business districts, class B office rents have seen massive growth in crowded CBDs, including year-over-year growth of 29.5 percent in mid-market San Francisco, according to new data from JLL.
CalPERS plans expansion of infrastructure program
There is an unofficial rule in poker, sports and investing: Play the hot hand. In the case of the California Public Employees’ Retirement System, that hot hand is its infrastructure portfolio, which returned 22.8 percent for the year ended June 30, 2014. The program has had an even greater five-year return of 23.3 percent annually, beating its 6.7 percent benchmark by 16.6 percent.
Dark data: Real estate investors can do more with their digital information
While the term “big data” captures the imagination, it is poorly understood outside of the realm of data science and those instances where it exists. Real estate investors typically do not have big data but — unless they have already addressed it — most certainly do have a data opportunity or “dark data.” There is value to be found in addressing the data opportunity — in finding the dark data and putting it to work.
Face value: Why Blackstone will never make the cover of this publication
It’s true. Blackstone and its senior executives will never make the cover of The Institutional Real Estate Letter. Neither will any of the other top 10 largest investment managers, or any other manager, for that matter.
The emerging manager: Some case studies that illustrate what it takes to succeed
Imagine that you had the opportunity to invest with one of the industry’s most astute and successful real estate investors (pick your favorite master of the universe). Instead of managing a multibillion-dollar vehicle investing across the globe, this star manager would invest only $200 million to $300 million and a significant percentage of this allocation could be yours. In addition, this manager might offer you an exclusivity agreement guaranteeing that he or she would effectively spend the entire time managing only one strategy — yours — while at the same time offering a significant fee break and strong control provisions. We believe this scenario would be the best of both worlds — unprecedented investment talent with highly focused and dedicated resources providing investor-favorable terms and governance.
Industrial heats up in some parts of United States
Industrial vacancies in the United States reached 7.2 percent at end of third quarter 2014, lower than the prior trough in 2008, and JLL expects the rate to be even lower when year-end 2014 data is available. Furthermore, the sector’s sales volume is on pace to reach between $55 billion and $60 billion, just below the peak volume of $61.7 billion set in 2007, according to Real Capital Analytics.
The future of urban agriculture in U.S. cities
The U.S. population is more than 316 million. In less than 40 years, the U.S. Census Bureau projects, we will reach 450 million, a 42 percent increase. Where is this population going to live? The answer to that question appears relatively clear. America’s urban population increased by 12.1 percent from 2000 to 2010, outpacing the nation’s overall growth rate of 9.7 percent for the same period. Today, more than 82 percent of U.S. citizens live in urban areas.
Pace of multifamily investment poised to break record
A mere 25 years ago, multifamily housing was not even considered an institutional-grade property type. Today, it is on pace to attract more than $105 billion from institutional investors, setting a new investment record for the property class.
Report cites five pension industry trends
Pension systems might have a reputation for being hamstrung by politics and bureaucracy, but it does not mean they are incapable of change. Indeed, a global survey conducted by State Street Corp. found that changes are afoot at pension funds and they are reshaping “almost every aspect” of how they are managing their investments.
REITs find their niche: The performance of specialty REITs has been mostly good so far, but there are concerns aplenty
Does the real estate securities sector’s budding embrace of highly specialized equity REITs suggest pension systems and other institutions will soon be placing multimillion-dollar bets on publicly traded casino companies? The answer appears to be at least a tentative “yes.” But the motivations underlying plans by three large gaming companies to establish new REITs illustrate both encouraging and dubious drivers of niche REIT formations.
Finally, real estate gets some respect
Real estate’s days as the Rodney Dangerfield of asset classes are coming to an end. The business simply got no respect from organizations such as the S&P 500 Index, which did not even consider real estate its own asset class.
Retail rents continue to rise globally
Despite battling the rapid expansion of e-commerce and near stagnant economic growth in many regions, retail rents rose by an average of 2.4 percent worldwide in the 12 months to September 2014, and rose or remained flat in 83.9 percent of the 330 global markets surveyed for Main Streets Across the World, a report by Cushman & Wakefield.
U.S. REITs triple yield earned by private real estate
The people at NAREIT love to brag about the financial superiority of investing in publicly traded real estate rather than private real estate. They are making one heck of a case this year.