L.A. Top Choice for Private Equity Capital

Los Angeles has become the top investment destination for institutional capital, bumping New York out of the number one spot, according to new research from CBRE. In 2017, equity funds accounted for the majority of the institutional investment activity, increasing 60% year-over-year to $6.2 billion. Foreign investment activity also accounted for a significant portion of institutional funds, however, the number fell over prior years. We sat down with CBRE’s George Entis, senior research analyst of capital markets and Michael Longo, VP, to talk about the surge of private equity activity in Los Angeles.

Read More
What Comes After Co-Working To Commercial Real Estate?

Our economy is now driven more by innovation and information, less and less by manufacturing. And yet, the majority of our workplaces are modeled on the “old” economy assembly line, where workflow was linear and corporate structures were hierarchical. But the nature of work has changed, and our workforce has changed. Every day nearly 10,000 baby boomers retire. Their millennial children are currently the largest segment of the labor force and are predicted to comprise 75% of the workforce within the next decade. They’re digital natives who have little memory of life without mobile technology — they carry everything they need for work in their back pockets and their concept of work is no longer a physical place but an activity that, for better or worse, follows us everywhere 24/7/365. Old economy office buildings just don’t make sense anymore, and what doesn’t make sense gets disrupted.

Read More
Small Balance Commercial Real Estate Borrowers Find Open Doors

As capital markets have become increasingly crowded, competition to place capital is pushing some lenders to reach down and do smaller balance loans. “The mortgage bankers are really earning their money, because there are a lot of different choices,” says Mark Ventre, a senior vice president at Stepp Commercial, a multifamily investment brokerage firm based in Los Angeles. Lenders across the board are actively financing sub-$5 million loans, including banks, Fannie Mae and Freddie Mac, private debt funds, CMBS and even life insurance companies.

Read More
Local and Regional Banks Double Down on Apartment Construction Lending

Banks provided 71 percent of all construction financing in 2017, according to data from RCA. Regional and local banks continue to gain market share and had the largest market share last year—33 percent of the construction loans made in 2017. Smaller banks continue to make most of the multifamily construction loans under $30 million.

Read More
Lots of New Supply Is Leading to More Concessions in the Office Sector

Competition for tenants in markets with an oversupply problem is pushing concessions higher, according to a first quarter 2018 JLL office report, which noted that while office rents grew overall by 1.6 percent in the first quarter, rent gains were outstripped by tenant concession packages. Allowances for tenant improvements (TIs) rose 3.5 percent in the first quarter to an average of $75 per sq. ft. That figure was even higher in markets where there is a lot of competition for tenants—up to $150 per sq. ft. for trophy properties.

Read More