Commercial real estate is a dynamic industry. Keep up with Spaces’ monthly recaps of the most valuable industry articles we’ve recently come across, focused on news in Ohio, Michigan and Pennsylvania.
Strong Performance for Commercial Real Estate Expected in 2014
JLL research experts revealed that performance expectations for commercial real estate (CRE) will be stronger this year, as compared to 2013. According to JLL’s 2014 global viewpoints, occupier sentiment has improved since the previous quarter, and “leasing markets will move from flat globally in 2013, to slightly improving growth of leasing volumes of 5 to 10 percent” in 2014.
The report also predicts that the upsurge in the job market will have a positive impact on the CRE industry. The increase in employment personnel is expected to have a multiplier effect, which in turn creates a higher demand for real estate.
Check out Spaces’ blog post on the 2014 outlook for details from the expert, John Sikaitis.
U.S. Warehouse Speculative Development to Increase Through 2017
CoStar reported on its predictions that the development of speculative warehouses will increase gradually in the U.S. within the next few years. This speculation derives from a continual increase in demand for modern industrial space throughout the recovery. And, with more confidence in current CRE and economic conditions, investors are willing to take more risks.
In the past year and a half, activity in the industrial space had only a slight increase; however, “the ratio of speculative development as a percentage of new inventory has finally returned to 2006-2008 levels,” said CoStar. Also, according to JLL’s Third-Quarter Construction Outlook, 83% of the top U.S. markets (40 out of 48) are engaged in speculative development.
Tax Reform Proposals Will Impact CRE
National Real Estate Investor recently reported that “legislators are negotiating the details of a huge reform of the nation’s tax code,” which could greatly impact the commercial real estate industry. The proposals, if approved, would terminate the law that allows “like-kind exchanges.” The elimination of these exchanges could potentially lower real estate sales.
Although this change of the depreciation period could have a negative impact on the CRE industry, it could raise revenue for the federal government. According to U.S. News and World Report, the changes might increase the cost of development by asking “builders to pay taxes on construction projects prior to the sale of the property.” This likely could have a negative impact on overall economic performance.
News Wrap-Up In Our Region
- Tata Consultancy Services leased space in Union Township at the Ivy Pointe Office building. The 25,000 square foot space is projected to house up to 250 employees.
- Tristate Valves & Controls Inc. (TRIVACO), a hardware manufacturer, invested $3.1 million to open its new 40,000 square foot facility in Boone County. The new site will bring 45 jobs to the area.
- Nestlé Pizza is moving to the Cleveland area, bringing up to 250 jobs to Solon, Ohio. The move will bring an additional $21.8 million in annual payroll to the region.
- Cleveland-based Amsdell Cos. will house its new self-storage warehouse in two buildings located at 1545 and 1559 East Superior Ave. The self-storage facility is slated to open in May 2014.
- OhioHealth Group Ltd. will occupy 10% (15,477 square feet) of the PNC Plaza office tower in downtown Columbus starting in February 2014. A total of 41 OhioHealth Group employees will relocate to the new space.
- Tosoh SMD Inc., a materials company located in Grove City, is expanding. The company revealed that the expansion “…is the biggest in its history and that it’s expanded four times before.”
- Vectorform, a design firm, will expand its headquarters in Royal Oak. The new expansion will bring 75 new jobs to the area, and will attract roughly $2.24 million in new private investment.
- Circuit Controls Corp. and North American Lighting Inc. have plans to invest approximately $28.6 million in Michigan. The planned expansions could bring up to 112 jobs to the state.
- CSC, a tech firm based in Virginia, will open a new delivery center at 1350 Penn Avenue in Pittsburgh. The 57,201 square foot space will house roughly 50 to 75 employees.
- Industrial Scientific and Newbury Market were awarded grants through the Redevelopment Assistance Capital Program. Industrial Scientific received $1.5 million to expand its headquarters, while Newbury Market received $4 million to construct a mixed-use development project.
Newspaper image via NS Newsflash