Here at Valbridge | KC, we pride ourselves on our flexibility when it comes to different report types within the appraisal industry. This week we talk with our own Daniel Kann, MAI about Market Studies; specifically what they are and why they are so important. We hope you'll learn something from Daniel in this post, we certainly did! What is a Market Study? "A market study identifies the demand drivers for a particular type of property in a specific market or submarket. It calculates the residual demand based on current and projected growth and the amount of existing and future supply. In comparison, a marketability study focuses on how one particular property will interact within a market or submarket. Market studies are most commonly used in the multifamily space due to apartment projects being built on a speculative basis." Why Don’t Very Many People Perform Market Studies in KC? "Market analysis is part art and part science and requires an in depth analysis of the underlying fundamentals that drive supply and demand for a particular property type. The level of analysis included in a market study is not commonly utilized in daily appraisal practice creating a specialized niche within the valuation industry." Besides Here, Where Else Have You Performed These Studies? "I have recently traveled to Dallas, Richmond, Detroit, Jersey City, and New Orleans for market analysis. Traveling to an unfamiliar place and spending the time necessary to gain geographic competency allows you to learn interesting things about a particular city. After studying the urban core of Richmond, Virginia, my wife and I decided Richmond was a place that we would enjoy visiting and are planning to travel there in the near future." See Some of Daniel's Projects Below: We hope you were able to learn a little more about Market Studies! If you are interested in learning more or having a market study performed, click here to contact Daniel Kann. Since 2010 Daniel has specialized in all aspects of multiunit valuation, with an emphasis placed on marketability/feasibility studies and valuation for new construction. The last several years have been extremely active for multiunit housing. Daniel and the team completed valuation and consulting assignments totaling $2.3 billion in 2015 and $1.90 billion in 2016. Recent assignments in Kansas City include One Light, Two Light, Mission Farms, Woodside Village, Roaster’s Block, 51 Main, The Vue, Avenue 80, Prairie Fire Apartments, Union at Berkley Park, Heights at Linden Square, WaterSide on Quivira, and numerous loft and conversion projects in the urban core. Daniel is also active in the Section 8, Low Income Housing Tax Credit (Section 42), and senior housing space.
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Where people live greatly affects commercial real estate markets. Lately, we've seen a transformative influx of people moving into the urban core, but does that mean the suburbs are dying? Join us as we dive a bit deeper into this topic below! Conceptually, Suburbs are Dying: To really answer the question above; no, suburbs themselves are not dying. In fact, more people still live in suburbs than in cities. However, our concept of suburbs is definitely changing. Construction of single-family homes has slowed while we are seeing a 40-year high in the construction of apartments and condos. More people are choosing to live in multifamily housing than the traditional suburban single-family home. City vs. Suburb Gray Area: The lines are becoming blurred between what is 'city' and what is 'suburban'. This is partially due to peoples' preference for convenience over size. According to Business Insider, "Urban planners across America are rethinking how suburbs are designed. Towns like New Rochelle, a suburb of New York City, are evolving to focus less on space and possession and more on walkability and environmental impact." New opportunities: As mentioned above, we may have to change the way we think about the suburbs, but that doesn't mean they can't be useful. There are several arguments for retrofitting them for seniors as a competitive option while society continues to move to more urban areas. It's likely that more solutions similar to this will pop up in the next few years. A great example of this happening in Kansas City is the Meadowbrook Redevelopment in Prairie Village, KS. This mixed-use development will include senior housing along with retail, office, and park space! Kansas City: Our city is a great example of re-purposing in the suburbs. Right now, one of our own suburbs, (Westwood, KS), is working on becoming home to a huge mixed-use development to increase walkability in the area. Not only this, but one of our biggest suburbs (Overland Park, KS) is in negotiations for a final financing package for Brookridge Development. This project will include a mixed-use area with office, retail, and apartments, and the redevelopment of an 18-hole golf course into a city park and a 9-hole course. The suburbs may always be a thing, but our perceptions and needs as suburbanites are definitely changing. Do you think the suburbs are changing? Tell us in the comments below! Sources: Peak Millennial? Cities Can’t Assume a Continued Boost From the Young Are American Suburbs Dying? The American Suburbs as We Know Them are Dying What 'The End Of The Suburbs' Means For Boomers Brookridge Project in Overland Park Clears Another Hurdle Meadowbrook Redevelopment Woodside Village With the new year rapidly approaching, what can we expect for the CRE Market? We've taken a look around the internet and collected some of the possible market conditions for your reading pleasure!
Mixed-Use: Investors are starting to see mixed-use property types as a safer bet in this economic climate. However, this may require compromises from investors and tenants. REITs! REITs! REITs!: Because of the uprise in the work, live, play mentality, the demand for office space may decrease; however, retail, multifamily, and industiral demand should remain high. In addition to this, transactions may continue to decline and upward momentum in pricing is likely to slow down due to modest economic growth and ongoing political uncertainty. What investors are being cautious about are potential interest rate rises and credit availability going forward. Labor in the Construction Indusrty: Changes in the job market have put some pressure on the labor force of the construction industry. This worker shortage means a longer development timeline and more delays. Construction companies may also be more selective about which projects they choose to take on. Global Markets: Unforseen political issues and conflicts make for a less stable global economy. Implications could be economic deceleration and less investment in real estate. New Types of Goods/Services: We've written several posts about the growing virtual/sharing economy, and there's no doubt that it will play a huge part in the economy in 2017. With this burst of new economic growth will come new types of regulations; the implications of which are unforseen at the moment. Next year will hopefully give us a more solid look at the sharing economy and the impact on the CRE market. How do you think the CRE market will look in the New Year? Let us know in the comments below! Sources: Top 10 Emerging Trends Shaping Real Estate in 2017 The Future of Mixed-Use Development A Look at Coworking Spaces in KC, and Why it Matters to You 2017 Commercial Real Estate Outlook Fed Raises Key Interest Rate, Citing Strengthening Economy 10 Construction Industry Trends to Watch in 2016 The CRE 2016-2017 Top Ten Issues Affecting Real Estate How the Shareconomy Affects Commercial Real Estate We think of grocery stores as necessities in our neighborhoods, but how will these necessities change as technology increases? As we explore the future of grocery stores in this post, we'll uncover some interesting trends, and what you could possibly expect for the future!
You Guessed it: Millennials: Just like many of the recent CRE trends we've been posting about, this one has a lot to do with Millennials' life-style choices and preferences for convenience and efficiency. According to articles here, here, and here (as well as here, here, here, and here...this has been a well-documented trend), Millennials prefer not to leave home or take time out of busy schedules to grocery shop. E-commerce is HOT!: Because folks are so busy these days (and thanks to the internet), services like Amazon Fresh, Jet.com, Google Express, and many more are taking off at a record pace. If you could get your groceries faster, more cost-efficiently, and environmentally friendlier, why wouldn't you? Discount Chains are Gaining Popularity: We are seeing trends like increased student loan debts among the population and people have begun shopping more and more at discount chains like Dollar General to save money. Research suggests that even prosperous adults choose discount stores for home staples. Warehouse Development Is Increasing: Warehouse facility development is trying to meet the demands of e-commerce. In Kansas City we've certainly seen an increase in warehouses first-hand as of late! After reading this, it should come as no surprise that the future of grocery shopping will be driven by technology. Because of this we can expect new types of jobs, developments, and services to increase and possibly change our economic landscape. What do you think the future of retail will look like? Sources: How the Shareconomy Affects Commercial Real Estate Groceries & Millennials: They’re Buying Less, Shopping Online Why Do Millennials Hate Groceries? Millennials in the grocery store: Are they really that much different from older generations? Millennials Want More From a Grocery Store Grocers Feel Chill From Millennials 8 Shopping Habits of Millennials All Retailers Need to Know About If Time Is Money, Millennials Are Broke--And They Couldn't Be Happier Amazon Fresh Jet.com Google Express Online Grocery Shopping On Pace For 9.5 Percent Annual Growth Do Online Grocers Beat Supermarkets? Grocery delivery service is greener than driving to the store Increasing Student Loan Debt Affecting Millennial Renters Prosperous Young Adults Don’t Need To Shop At Dollar Stores, Do Anyway How Ecommerce Is Changing Warehouses for the Better Kansas City Will Benefit From the Shift to E-commerce When it comes to appraising commercial real estate, you never know what you'll get to work on! Our work on complex projects includes everything from space rocket facilities to RV parks, and everything in between. Listed below are some of the most unique projects we've been able to assist with and the challenges that came with them. Challenges like these are what we encounter on a daily basis, which is why we highly recommend hiring an experienced appraiser for special-use projects like these. 1. Crude-By-Rail What it is: Trains transport crude oil all over the country and unload it onto barges, tankers or pipelines for onward delivery. Challenges of this property type: - Estimating Construction Costs - Economic obsolescence -Market analysis 2. Steel Mill What it is: Steel mills are industrial facilities where steel is manufactured. Challenges of this property type: - Estimating construction costs - Economic obsolescence -Market analysis 3. RV Park What it is: A campground for recreational vehicles or caravans. Challenges of this property type: -Type of user (recreational versus work related) -Forecasting demand What it is: A structure used to hold airplanes in protective storage. Challenges of this property type: Typical leases on hangars include varying rents that depend on the amount of fuel that is purchased (which is business value as well), so finding a market rent due solely to the real estate can be difficult to identify. What it is: An industrial facility for manufacturing space rockets. Challenges of this property type: It is rare that these sort of buildings sell on the open market, therefore the identification of comparable properties for a specialized facility like this can be difficult. Our contributor for this post was Jason Roos, MAI. Jason is an MAI designated member of the Appraisal Institute, and former President of the Appraisal Institute's Kansas City Chapter. He is a State Certified General Appraiser licensed in Kansas, Missouri, North Dakota, Nebraska, Illinois and Iowa. Jason is focused on providing clients with up-to-date, relevant and accurate market information as a director at Valbridge Property Advisors | Kansas City. Valbridge Property Advisors | Kansas City provides unbiased commercial real estate valuation for local, regional, and national clients. In business for over 38 years, the firm is led by five MAI-designated members of the Appraisal Institute. Here (in no specific order) are several mixed-use projects we're eager to see come to fruition in Kansas City. Check out our list and let us know what you're most excited to see in the comments below!
1. Armour Boulevard and Troost Avenue Redevelopment: Antheus Acquisitions, LLC was just granted redevelopment rights for three parcels near Armour and Troost. This project is calling for a total of 300 to 320 residential units over a total of 25,000 square feet of retail space at the four corners. Why we're excited: Not only will this development create much needed housing, but it will help mitigate the 'dividing line' affects that Troost is known for. 2. Woodside Village: A mixed-use development, Woodside Village will house 330 luxury residences and 35,000 square feet of retail shops. Why we're excited: Woodside Village will increase the walkability of Westwood by providing a grocery store and gym, as well as create a stronger community bond. 3. Commerce Tower: A "vertical village"; Commerce Tower in Downtown Kansas City will be improved by a $139 million renovation to create a mixed-use oasis for city-dwellers. Why we're excited: Commerce tower will employ smart design techniques with LEED Silver sustainability. This project will not only create much-needed housing, but essentially become a virtual neighborhood within a building. What's not to love about that?! 4. Plexpod Westport Commons: You may remember Plexpod Westport from a previous post we published about coworking! Plexpod will be the world's largest coworking facility housed inside Westport Middle School. Why We're Excited: As a coworking facility, this development will be an incubator for start-ups and small businesses, while also paving the way for innovation in the workplace. Aside from this, the development will be an asset to the community itself and contain a neighborhood urban farm. Sources: Armour Boulevard and Troost Avenue Redevelopment Troost/Armour Developer Throws in 300 Apartments to Dilute Risk Woodside Village Woodside Village Brochure Commerce Tower Aims to Solve Downtown Living Woes Commerce Tower Returns to Village Concept Development Group Announces Worlds Largest Coworking Facility A Look at Coworking in KC and Why it Matters to You You've probably heard the term "Shareconomy" floating around the lexicon, but do you really know what it is? The Sharing Economy (otherwise know as "Peer Economy," "Shareconomy," or "Collaborative Consumption") refers to the open-source nature of the ways we access goods and services. Essentially: AirBnB, Uber, or Snapgoods. As consumers we love the convenience and cost-efficiency of a Shareconomy, but how do these services affect the health of commercial real estate?
The Hospitality Industry Takes a Hard Hit, but Continues to Thrive: We all assumed that companies like AirBnB and HomeAway would be taking away business from hotels, what we didn't see coming was the $450 million that the hospitality industry lost to AirBnB. Despite the monetary hit, the demand for both hotels and AirBnBs are about the same . Zoning? What's That?: If your apartment doubles as an AirBnB, what should it be zoned as? Zoning, and many other regulations have come into question as building purposes become more fluid. In the beginning, Shareconomy services only made up a small part of the economy and had little impact on zoning and rental agreements. However as time goes on, this new way of making money challenges current rules and can step into legal gray-areas. Investors Can Now Bypass Traditional Lenders: Crowdfunding has made it much easier for people to raise money for just about anything, and that includes real estate. For instance, RealtyMogul is a crowdfunding source for real estate investors; an "online Real Estate Investment Trust ("REIT") designed for diversification, cashflow and appreciation," according to their website. With resources like this, people can skip banks altogether when it comes to investing. Shareconomy Innovation is Snowballing: If you thought the Shareconomy was just a fad, think again. We started out being able to temporarily rent houses for our vacations, and now people are able to rent commercial kitchen space, office space, and even someone's personal Wi-Fi connection. The more that the freelance mindset takes over, the more people feel they can be a part of it and begin to innovate with their own ideas for services. Bottom Line: The Shareconomy is the child of technology and the savvy mindset that resulted from the Great Recession. Technology will continue to get better, as will the Shareconomy; however, as new ideas come to fruition, so do new problems like taxation. The CRE world, much like the Shareconomy, must learn to innovate and roll with the punches. How have you seen the Shareconomy affect CRE? Let us know in the comments below! Sources: AirBnB Uber Snapgoods Homeaway The Impact of AirBnb on Hotel and Hospitality Industry Airbnb Is Thriving. Hotels Are Thriving. Uber, Airbnb and Consequences of the Sharing Economy: Research Roundup Airbnb has Removed 2,570 Illegal Listings from NYC, but Housing Advocates Say it's Not Enough RealtyMogul What You Need to Know About the Sharing Economy Can The ‘Airbnb Of Kitchens’ Give Local Food Economies A Boost? A Look at Coworking Spaces, and Why it Matters to You Fon Why Millennials Understand the Future of Work Better than Anyone Else All Eyes on the Sharing Economy Millennials: A Financial Mindset Shaped by Recession Top 6 Tax Tips for Sharing Economy Freelancers Street Culture: Startups Bring the ‘Sharing Economy’ to Commercial Real Estate By Madelyn Johnson A New Generation of Office Space One of the biggest trends in the office sector as of late; "Coworking" is a style of work that involves shared work spaces and promotes independent office activity. Kansas City is not immune to the rapidly spreading concept. As the city continues to be a hot spot for Millennials to work and play, perceptions of the nine to five are changing. Almost 40 percent of the generation is involved in freelance work, which allows for innovative opportunities and the freedom to work wherever. As the largest generation ever begins the cycle of entering the workforce, the economic landscape of office real estate will change. The Future has Arrived in Kansas City Kansas City will soon be home to the largest coworking space in the world thanks to Sustainable Development Partners-Kansas City and their partnership with Plexpod, a Lenexa based Coworking community. This project, Westport Commons, will involve the rehabilitation of 360,000 square feet of historic school buildings to include a massive Coworking space. Plexpod has begun accepting applications for office space and expects Phase One of the facility to be complete by the end of 2016. Currently, Plexpod is operating a Coworking facility in Lenexa where members can enjoy the use of conference rooms, game rooms, a cafe, a barber shop and much more, all in one building. Lenexa Plexpod acts as an incubator for creative companies and start-ups by offering a wide price range of facility memberships. For more information on Coworking, please read the articles we've referenced in this post:
Millennials Going to Kansas City, to Live and Work Freelancing in America: A National Survey of the New Workforce Prepare for the Millennial Migration, Says USC Development Group Announces Worlds Largest Coworking Facility Historical Building Highlight: Westport Commons Did we leave anything out? What do you think of Coworking? We looked back through our Valbridge Advisor newsletter archives to find the most popular CRE articles of 2015. Take a look below to see the most prevalent in order: 1. 2015 and 2007: A Sense of Déjà Vu 2. Which Generation is Really Driving the MF Market? 3. Developers May Backfill Dead Metcalf Shopping Centers 4. Why the Apartment Cycle is Good for Five More Years 5. Kansas City's Office Market: A Look at the Latest Stats 6. Is Multi-family Rent Growth Hitting a Slowdown? 7. Time to Worry About Speculative Construction? Not Yet, Experts Say 8. Renner Commerce Center Sells for $13.15 Million 9. Walgreens in Shawnee Mission Sells for $7 Million 10. Land South of Kansas City Purchased to Prevent Future Development |
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