The DC Council is considering a bill that would direct the city to prepare and make public every six months a list of dilapidated properties owned by foreign governments, according to The Washington Post. The bill aims to address citizen complaints about run-down properties in NW DC that hold diplomatic status. Such properties are considered foreign soil and are not subject to the zoning and building codes that govern real estate in the District. Diplomatic status also exempts properties from taxes including property taxes ($0.85/$100 in assessed value (residential) and up to $1.85/$100 in assessed value (commercial)) and vacant or blighted property tax rates of $5 and $10 per $100 of assessed value, respectively.
The Q3–2017 commercial construction composite index score was 73, only slightly below the previous two quarters (76 in Q2 and 74 in Q1). The 0-100 index, based on a survey of contractors, looks at three leading indicators – backlog levels, new business opportunities and revenue expectations – to gauge confidence in the sector.
- Backlog (77): Contractors are currently holing 9.5 months of backlog, on average versus the ideal backlog of 12 months;
- New Business (54): Fifty-four percent of contractors report high confidence in new business over the next 12 months;
- Revenues (67): Sixty-seven percent of contractors expect revenue to grow or remain stable in the next year.
HomeServices of America, an affiliate of the Warren Buffett conglomerate Berkshire Hathaway acquired the Mid-Atlantic residential brokerage house The Long & Foster Companies on September 7 for an undisclosed amount, according to The Washington Post. The acquisition includes Long & Foster’s mortgage, settlement services, insurance and property management business lines. For now, the brand, leadership, and headquarters location will not be affected by the change in ownership. Five days after it was acquired, Long & Foster bough the three-office brokerage firm Evers & Co., also for an undisclosed amount. Long & Foster’s 2016 sales volume totaled $29 billion.
From 2012 through 2016, developers completed an average of 225,000 new apartments per year, according to National Real Estate Investor (citing data from Multifamily Housing Council (NMHC) and the National Apartment Association (NAA)). To meet growing demand and compensate for the loss of older properties, 4.6 million new multifamily units must deliver to market between now and the end of 2030 (an average of an average 325,000 units/year). The western U.S., Texas, Florida and North Carolina are expected to have higher than average demand for additional housing units.
Houston’s flood problems are more a distinctive feature of its topography, geography and the sheer magnitude of Harvey and less the result of the city’s limited zoning and land use regulations. A 2013 study of the city’s impervious/pervious cover ratio by the Houston-Galveston Area Council found that over 90 percent of the land within Houston city limits is generally considered pervious (water-absorbing green area or the like). Out of a total acreage of 383,737, 52,912 acres of Houston is parkland, according to The Trust for Public Land.
A CoStar Group assessment of the impact of Hurricane Harvey and the subsequent flooding shows 175 million square feet of commercial space located within Metro Houston’s 100-year flood zone. This total includes 72,000 apartment units and 20 million square feet of office space that may have been affected by the storm. Another 225 million square feet is located within the 500-year floodplain. A total of 27 percent of that market’s gross leasable area (about 12,000 properties worth approximately $55 billion) is located within these two floodplains and is at risk. At 1.6 billion square feet, Greater Houston is sixth largest CRE market in the U.S., according to the report.
Over 6,000 retail stores have closed so far year, according to Business Insider. In the same time period, the value of Amazon has increased by 31 percent, buoyed in part by the acquisition of Whole Foods Market which it will likely integrate into its retail and distribution platform. Despite the impressive growth of e-commerce, brick-and-mortar retail still represents about 85 cents of every retail dollar transacted and even if e-commerce grows at 15 percent per year for the next five years, brick-and-mortar would still retain a 70 percent market share with distribution centers and showrooms doing especially well, according to the report (citing analysis from Goldman Sachs).
New construction triple net investment properties are commanding a premium, according to National Real Estate Investor (citing analysis from The Boulder Group). Net lease QSR-occupied buildings sold at an average cap rate of 5.56 percent during Q2—2017 whereas restaurant buildings constructed in 2016 and 2017 sold at an average cap rate of 5.25 percent, about 30 basis points lower. Rents on new construction single-tenant QSR properties increased by eight percent year-over-year as of Q2—2017, according to the report.
As eastern and western Germany continue integration following reunification, a new economic divide is emerging, this time between north and south, according to The Economist. Tracking roughly along the Uerdingen Line (see map) and with the population roughly the same on each side (about 40MM) the south contains nine of the ten cities with the highest salaries and significantly lower unemployment (1.0MM compared to 1.7MM in the north). Almost three times as many patents were registered in southern Germany compared to the north and state (Länder) debt in the south is less than half of that in the north (€170bn vs. €371bn). The north-south gap in life expectancy is now greater than the east-west one. The south also has a significant advantage in population growth (+1.3MM vs. -100,000), according to the report.
Capital One will open two Capital One Cafés in DC next year, according to Washington Business Journal. The concept, which has already been implemented in other markets, merges a café and a bank into one location offering coffee, pastries, free WiFi, lounge seating, ATMs, meeting rooms and free consultations with Capital One associates. The DC cafés will be located in two of the most prominent corners in the city – Wisconsin and M NW in Georgetown and 7th and H NW in Chinatown.