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Industrial Solutions for E-commerce Grocery Fulfillment

Originally published  by Scott Murdoch for the Summer 2021 Issue of NAIOP Development Magazine.

The pandemic forced the industry to adapt quickly to meet soaring demand.

While grocery e-commerce was growing prior to the pandemic, the sector saw staggering market penetration over the course of 2020 and beyond. Concerned about safely accessing food, consumers across all demographics turned to online grocery shopping as a convenient, safe option.

A survey by LEK indicated that food e-commerce made up 3%-4% of total grocery retail sales before the pandemic and that overall penetration would reach 15%-20% by 2025. But in its February 2021 Online Grocery Report, Business Insider projected online grocery adoption will reach 55% in the U.S. by the end of 2024. Consumers have clearly grown accustomed to the convenience and safety of grocery e-commerce. 

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Commercial-Property Sales Volume Returns to Pre-Pandemic Levels

Originally published on July 27, 2021, by Ester Fung for the Wall Street Journal.

U.S. commercial real-estate sales this year have rebounded to pre-pandemic levels, fueled by historically low-interest rates and the belief of many investors that the worst of Covid-19 is over.

But the commercial-property sales landscape looks a lot different than it did before the health crisis hit in early 2020. Cities including New York and San Francisco have fallen in favor as have property types such as downtown office buildings and convention hotels.

Meanwhile, Sunbelt cities posted record sales and investors flocked to property types that performed well during the pandemic, including amenity-packed apartment buildings, warehouses and office buildings that cater to pharmaceutical and biotechnology industries. “There is a move to both new property types and new markets,” said a report recently released by data and research firm Real Capital Analytics.

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REIT Deal-Making is Robust in Light of Favorable REIT Outlook

Originally published on July 29, 2021, by Sheheryar Hafeez for the NAIOP E-Newsletter.

Real estate investment trust (REIT) merger and acquisition activity has emerged from the pandemic in full force with some $75 billion in investment nationally from January through mid-July 2021. This robust activity is expected to continue throughout what could potentially be a record-breaking year. While all 11 Global Industry Classification Standard sectors are in positive territory for the year, real estate ranks second highest with a strong 27% performance, just slightly below energy.

With the U.S. economy posting robust growth rates and expectations of a return to pre-COVID normalcy in many areas, investors are readjusting their views on various REIT sectors. Property sectors that felt the deepest impacts in 2020 – office, retail, and hotel, or “out-of-favor” sectors – are increasingly eyed by commercial real estate investors, who are betting on a strong rebound. Conversely, tech-driven and industrial REITs – or “in-favor” sectors – that benefited from the country’s increased reliance on e-commerce in 2020, have underperformed so far this year but are still in positive territory.   

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Senate Enters Final Stage of Bipartisan Infrastructure Negotiations

Originally published on July 27, 2021, for NAIOP E-Newsletter.

Republican and Democratic Senators negotiating infrastructure legislation signaled they were close to a final deal, with lead negotiator Rob Portman (R-OH) saying they were “90% of the way there.” The coming days are critical after Senate Majority Leader Chuck Schumer (D-NY) forced a procedural vote last week on moving a bill forward despite there being no legislative language available. The vote failed to garner the 60 votes needed for passage of the procedural motion, with the lead negotiators arguing they hoped to have any remaining issues resolved and legislative text drafted this week.

 

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As Building Material Prices Skyrocket, Project Managers Offer Strategies to Mitigate Risk

Originally published on July 23, 2021, by Roger McCarron for NAIOP E-Newsletter.

The COVID-19 pandemic, and the waves of lockdowns and business interruptions it prompted, affected global supply chains in virtually every industry — and construction is no exception. Due to widespread shortages of building materials, and pent-up demand from projects that were delayed or postponed during the pandemic, costs for materials including lumber, copper, steel, aluminum and vinyl skyrocketed. According to the National Association of Homebuilders, lumber prices spiked to a more than 300% year-over-year increase in May. While prices have since come down, they remain higher than historical averages and data suggest that demand for construction materials is approaching pre-pandemic levels.

 

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States Look to Strengthen Local Permitting Processes

Originally published on July 21, 2021, for NAIOP E-Newsletter.

Owners and developers of commercial real estate recognize that obtaining local building permits is an essential and fundamental requirement for the development and improvement of their properties. The processes for obtaining these permits vary by municipality and state. These variations lead to uncertainties and delays in projects moving forward, which impacts the development project’s financing, cost and the retention of contractors, construction equipment and other materials.

Many state legislatures have taken action to address this by bringing more predictability, transparency, and accountability to the local permitting processes within their state. This was the case in Florida and Georgia following effective advocacy by our local NAIOP chapters. Our members were increasingly concerned with the negative effect on development with the inconsistent application of permit requirements and fees by local governing entities.

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Integrating Vaccinations into Wellness Programs

Originally published by Wendy King for NAIOP's Summer 2021 Issue.

The real estate industry faces unique challenges in designing vaccination programs based on workplace types and the nature of jobs.

As COVID-19 vaccines continue to roll out, and with the possibility of booster shots for variants as fall approaches, many commercial and residential property management companies, as well as sales and leasing brokerages, are considering how to deal with vaccinations within their workplaces. 

If designing a company-wide vaccine program, consider prioritizing vaccine distribution based on job function. For example, some essential employees must work in-person to keep commercial buildings functioning. Meanwhile, a significant portion of the workforce will likely continue to work from home until this fall or beyond. 

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Now Available! CRCBR/NAIOP Charlotte Fall Golf Sponsorships

Tournament Sponsorships Now Available!

NAIOP Charlotte & CRCBR are hosting their always sold-out industry golf tournament on Monday, September 27!

Get your company name in front of developers and brokers and catch up with your industry peers. For one price, your company will be recognized as a sponsor during this two-flight tournament! Make plans to join us as a sponsor for this fun and valuable event! 

Sponsorship opportunities are available on a first-come, first-served basis.

At this time, player spots are only available through sponsorship of the tournament.

To become a sponsor, click the button below and send the completed form to Sandy Hower at [email protected].

Become A Sponsor

 



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Starting a Lab Facility: A Primer for Real Estate Professionals

Originally published by Daniel Castner, Brian Spence and Trevor Boz for NAIOP's Summer 2021 Issue.

This fast-growing sector can be complex to navigate for developers.

The scientific research market has grown substantially over the past 10 years. With a global pandemic top of mind, investors are looking at the life science industry now more than ever.

This expanding market is evolving into one of the fastest-growing real estate investment sectors, yet some developers, investors and real estate professionals may be intimidated or confused by the complexities in site selection, design and construction of lab facilities. Familiarity with industry-related terms and a basic understanding of what is needed to develop a successful lab research facility are key starting points. 

Scientific research requires an appropriate environment to conduct experiments, process data, foster collaboration and inspire creativity. Proximity to potential clients and talent, availability of public transportation, tax incentives, zoning restrictions and surrounding neighborhoods are intrinsic traits that must be considered when finding a suitable location to build a project. The configuration of the space can be adaptable to accommodate unknown needs of a program or a future tenant, or it can be targeted toward a specific type of science. 

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Investment in Senior Housing Poised for Strong Growth Following COVID-19

Originally published on June 29, 2021, by Zach Bowyer, Brian Chandler and Bryan Lockard for NAIOP E-Newsletter.

The COVID-19 pandemic interrupted a nearly 12-year growth cycle for the senior housing market, causing a drop in valuations to an eight-year low. Stabilized occupancy rates also fell to record lows due to infections, mandated holds on new resident admissions, safety concerns, and isolation fears. Rents, however, continued to rise, despite significant occupancy losses.

In addition, following four consecutive years of year-over-year decline, total price per bed for nursing homes increased by nearly 22 percent in the first quarter of 2021, marking the second-highest price point for nursing homes ever recorded, according to JLL Valuation Advisory’s recently released Seniors Housing & Care – Investor Survey and Trends Outlook

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Market Activity Focus on High-Value Assets Sustains Growth of U.S. Office Lease Rate

Originally published on July 2, 2021, by Ioana Ginsac for NAIOP E-Newsletter.

Last week, commercial real estate property data and listings platform CommercialEdge published its most recent national office report, which paints a more current picture of office sector activity across the top 50 U.S. markets. Data analyzed for the June 2021 report found that:

  • The average office lease rate was up 0.4% year over year, as asking office rents averaged $38.36 per square foot in May.
  • Vacancy rates reached an average of 15.6%, following a 240 basis points increase compared to May 2020.
  • Office sales closed during the first five months of the year totaled nearly $23 billion, contouring the possibility that 2021 investment activity is likely to at least match last year’s total volume of $61 billion.
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NAIOP June Coronavirus Impacts Survey: Operating Conditions Improve but Developers Grapple with Supply Shortages

Originally published on July 9, 2021 by Shawn Moura Ph.D. for NAIOP E-Newsletter.

In June, NAIOP conducted its eighth survey of its U.S. members on the impacts of COVID-19. Since April 2020, the association has examined the pandemic’s effects on commercial real estate and how firms have responded. Most American adults are vaccinated, and daily coronavirus case counts have plummeted in the five months since the previous survey. This has allowed a widespread return of customers to restaurants and retailers, and most observers now expect that office occupancy rates will rebound in the fall when schools re-open for in-person instruction. 

Respondents to the survey report a strong recovery in retail property rent collections, as well as retail property acquisitions and development activity, alongside continued favorable trends for industrial, office and multifamily properties. Less than one-quarter of respondents now expect the pandemic to significantly affect their business operations for more than a year, and respondents are much more optimistic about employment within their own firms than in previous surveys. 

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Senate Returns to Work on Infrastructure and Democratic Budget Bill

Originally published on July 13, 2021, for the NAIOP E-Newsletter.

The Senate returns this week from its July Fourth recess to continue work on an infrastructure package supported by President Joe Biden and a bipartisan group of 22 senators, which the White House hopes will garner the needed 60 votes in the Senate needed for passage. At the same time, House and Senate Democrats are working on a parallel track to develop a budget bill that will include Democratic leadership priorities and that can pass the Senate with only Democratic votes.

 

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NAIOP of North Carolina Holds Successful Day at the State Capitol

Originally published on July 7, 2021, by Toby Burke for NAIOP's blog.

NAIOP of North Carolina recently hosted the first in-person Day at the State Capitol since the outbreak of the pandemic. It provided NAIOP members from the Charlotte, North Carolina Piedmont Triad, and Raleigh-Durham chapters with the opportunity to advocate for effective policies that advance commercial real estate development within the state. This year’s legislative priorities focused on three areas: economic development, tax reform, and regulatory reform.

Regulatory reform emerged as a dominant issue during NAIOP of North Carolina’s meetings with state legislators. In particular, NAIOP members advocated for strengthening the state’s brownfield program within the North Carolina Department of Environmental Quality. There is growing concern within the commercial real estate community that the administrative delays and inconsistencies with the current program are discouraging the redevelopment of dormant or underutilized contaminated properties.

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Welcome New NAIOP Charlotte Members

We are proud to introduce our new association members! The following is a list of individuals who have joined NAIOP Charlotte since March 12, 2021:

  • Brian Taylor, Miller-Valentine Group
  • Caleb Gass, Heritage BlueFire
  • Chandler Markey, Sands Investment Group
  • Philip Elliott, Consulting Services Incorporated
  • Elsa Simaan, Stewart Title Guaranty Company
  • Greg Hartley, Acro Development Services, PLLC
  • HeatherMucci, Novus Architects
  • John Moscati, GTA Associates, Inc.
  • Philip Potter, Whiting-Turner Contracting Company
  • Allen McDowell, Bohler Engineering
  • AnthonyZook, Bohler Engineering

Infrastructure Deal Revived After Biden Walks Back Comments

Originally published on June 29, 2021 for NAIOP E-Newsletter.

Last week President Joe Biden announced agreement with a bipartisan group of senators, led by Kyrsten Sinema (D-AZ) and Rob Portman (R-OH), on a bipartisan infrastructure plan. The infrastructure deal would total $1.2 trillion over eight years, with approximately $579 billion in physical infrastructure, including roads, bridges, transit, water and sewer projects, and upgrades to the electrical grid. However, the nascent deal almost unraveled when Biden, in an effort to appease Democratic progressives, promised not to sign the legislation unless it was simultaneously accompanied by a reconciliation bill incorporating elements of his other domestic spending priorities.

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Eight Crucial Post-Pandemic Takeaways for the Industry

Originally published by Ron Derven for NAIOP's Development Magazine Summer 2021 Issue.

The post-pandemic period could see a lot of innovation and experimentation in commercial real estate.

COVID-19 delivered a gut punch like no other to the commercial real estate industry last year, with transactions in the second quarter of 2020 plummeting approximately 40% over the same period in 2019.

By the fourth quarter of 2020, however, sales activity had nearly recovered, according to John Chang, director of research with Marcus & Millichap.

“Investors adapted to the new climate and devised new solutions to address the many obstacles to getting business done,” Chang said. “Barring a new, severe and deadly outbreak, COVID-related challenges ahead will likely be speed bumps for the commercial real estate industry rather than roadblocks.”

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5 Solutions for Building Office Interiors Through Supply Shortages, Price Volatility

Originally published on June 22, 2021 by Andy Halik for NAIOP E-Newsletter.

With U.S. coronavirus cases plunging and knowledge workers craving the social component of the workplace, many companies across the country are fully reopening their offices to employees. Some companies took the opportunity to renovate or update their workspace during the lockdown periods of the pandemic, and others are planning significant design changes to prepare for the next era of the office.

Meanwhile, the challenges of renovating or building out office interiors – or constructing ground-up office buildings – are only compounding as the desire to move forward on office projects butts up against unpredictable economic factors. Facing volatile materials prices, a tightening labor market, soaring demand and supply chain inefficiencies, real estate developers, owners, tenants and their builders must take action to mitigate the financial impacts and keep projects on track.

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When Office Real Estate Investors Can Expect a Turnaround

Originally published on June 21, 2021 by Marc Rapport for MillionAcres.com.

The pandemic recovery in the office sector is underway and is projected to reach positive net absorption in the fourth quarter of this year, according to research from NAIOP, the Commercial Real Estate Development Association.

 

That turning point will be followed by a return to more normal levels, predicts the report titled “Office Space Demand Forecast, Second Quarter 2021,” researched and written by professors Hany Guirguis of Manhattan College and Michael Seiler of William & Mary and the University of Cambridge.

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Next Steps with the 2040 Plan

The following statement was issued by REBIC on Tuesday, June 22, 2021.

Last night the “Plan Policy” section of the 2040 Comprehensive Plan passed the Charlotte City Council by a 6-5 vote. This outcome had been widely expected for several weeks. In the end, REBIC took the position that moving ahead to the more difficult challenges, such as the debate over the “Implementation Strategy” and “Manuals and Metrics” sections, as well as the Place Type mapping and ultimately the Unified Development Ordinance (UDO) was in the best interests of all parties. It was evident that members of City Council had withdrawn to their respective corners and that any further compromise was not possible.

Following an introduction, the real estate industry faced some big hurdles:

  • Removal of Mandatory impact fees
  • Removal of Mandatory inclusionary zoning
  • Removal of Mandatory Community Benefit Agreements
  • A broken process set up to accept comments but one that provided little feedback in return
  • A City Council (with the exception of a few members) with little knowledge of the Plan
  • A tight, artificial timeline with a proposed vote on the entire document by April 26th

After last night here’s where we are:

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