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What’s most important to a real estate investor these days? – Orange County Register

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You will be amazed at the activity of investors these days!

Recently we talked about two types of investors. Investors who buy with their own money and those who don’t. The former is referred to as private and the latter as institutional. As you know, retail investors typically secure debt in addition to their down payment. This enables institutional groups to have a pool of equity ready to deploy.

We started the offer last week. So far we have received more than 76 inquiries and 2 offers. The transaction is expected to trade at a record price. Here’s another example: Newly rented Class A building – before construction is complete. A completely unilateral investor has offered to buy it on a new lease. This was a record-breaking return and price per foot. Our customer said thank you! It is very difficult to find land and build it with the consent of the city. Your plan is to keep it for the long term.

Both of the above are great examples of what is considered the most important thing for investors these days. Please pamper me as you discuss some of my observations.

Motivation generally starts with money. In particular, the source of those dollars. With our new offer, the property owner has bought a building to house his business. He closed the deal in 2013 by combining the money he made with a 90% loan from the Small and Medium Business Administration.

Flash forward. His business model changed in 2018. I no longer needed a warehouse. We found a new tenant for him to replace his apartment. He later turned into a private investor but previously owned a home.

So why sell? After all, tenants offer nice checks every month. Two reasons. The owner’s move from the state to a tax-friendly state means they’ll be exempt from California taxes on a sale. Besides, the market is hot! Take your boots and buy them elsewhere for more results. What is the most important? Net cash flow – what remains after paying the bank and income tax.

With a new Class A lease and a unilateral offer, the situation is now different. Let’s start with money.

Prior to 2019, customers worked with Canadian pension providers. A fund was structured with a clear purpose. Obtaining an industrial transaction in the infill market (mainly the market that is being developed). Existing structures and locations that need to be reused are taken into account. The dollars invested will benefit retirees in the years to come.

As a result, when new projects are developed and sold, there is a greater shortage of investment grade real estate, which creates even greater problems. In other words, where to invest your profits. What is the most important? A long and sustained flow of income.

Are there any institutional sellers these days? Rare. People who use Wall Street for investment capital, such as real estate funds, are dominated by the amount they are allowed to dispose of each year. Other companies that buy on behalf of pension funds, such as CalSters and CalPERS, are required to hold a percentage of the pool in asset classes such as commercial real estate.

Sure, they could make a big profit from the sale, but as mentioned above, what then? Bank cash returns and T-bills are bad. What can lead to a sale? Do you remember our customers with Canadian retirement funds? Usually when executing a business plan (dollars rolled out) there is a sunset in the 5 year, 10 year and 15 year agreements. Hence, we can see that properties are in the market with underlying assets due. If your timing is now – what a hit!

Allen C. Buchanan of SIOR is a director of Orange Lee & Associates Commercial Real Estate Services. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

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St. John Properties, Inc. Celebrates 50 Years of Leadership in Real Estate Development With Continued Focus on Sustainability and Expansion Into New Markets

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BALTIMORE–(BUSINESS WIRE) – NS. John Properties, Inc., a commercial real estate development, management and investment company founded in 1971 by Edward St. John and headquartered in Baltimore, MD, is celebrating its 50th anniversary with a renewed focus on sustainability and growth. Their 21 million square foot real estate portfolio is valued at over $ 4 billion, spans eight states, and serves more than 2,500 clients. St. John Properties is one of the top five LEED space developers in the country and intends to continue to lead the way in sustainability innovations, with a mission to deliver buildings that produce more energy than they use and processes to improve indoor air quality refine quality while increasing the well-being and productivity of employees.

“Preserving energy and natural resources, as well as the continued need to develop and renovate green buildings, have become a priority in attracting new tenants,” said Edward St. John, Founder and Chairman of St. John Properties. “We have become the gold standard in formulating and implementing a feasible and sustainable plan for green architecture and will continue to evolve in the future.”

St. John Properties was one of the first organizations to introduce a Leadership in Energy and Environmental Design (LEED) program in 2009. The company has now built 87 buildings covering more than 5 million square feet of LEED certified space and aims to have 100 LEED certified commercial buildings totaling six million square feet by 2023.

Another sustainability goal is to roll out a scalable and economical solar approach to all building types and to deliver buildings that naturally produce more energy than they consume in order to create a net positive. Read the detailed LEED strategy here.

St. John Properties will pursue its long-term plan to establish independent offices in emerging and economically diverse markets across the country. The company’s innovative four-year partner-in-training program provides candidates with in-depth training and education in all disciplines of the commercial real estate process, including development, construction and sustainability, marketing, leasing, tenant fitout and property management.

The company expanded to Colorado and Wisconsin in 1987, opened a regional office in Frederick, Maryland to serve Central Maryland and Northern Virginia in 1996, and entered the Louisiana market in 2000. In 2012, the company acquired the 1 million square foot Harrisburg Mall in Harrisburg, Pennsylvania, and started its gaming division with Boomtown Casino’s Reno, Nevada. In 2014, St. John Properties opened its newest regional office in Utah. Read the full growth plan here.

In 2018, NAIOP, the Commercial Real Estate Development Association, named St. John Properties Developer of the Year – the association’s highest national award.

View the full press release here: http://sjpi.com/50years

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Why Is My House Taking So Long To Build? The Global Supply Chain

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Stepping into a home improvement or furniture store these days can feel like the last person in the grocery store before a blizzard with dozens of desperate shoppers rummaging through half-empty shelves. But it’s not due to an impending natural disaster or a zombie apocalypse.

From large appliances like ovens and dishwashers to lumber to the smallest pieces of pipe, items needed to build or repair homes are excruciatingly difficult to come by because of global supply chain problems. The unavailability or delays in obtaining critical parts, materials and labor exacerbate the already severe housing shortage and make it difficult for people to repair their homes. And while it has the most directly devastating effects on new builds and home renovations, the effects can be felt in every corner of the property.

So what’s really behind the big slowdown – and how long will it last?

The Realtor.com® data team decided to dig deep into the causes of the major downtime and which items are most affected by the heavily congested supply chain.

Supply chain problems, or problems moving a product from the manufacturing stage to its final destination, affect “everything including the kitchen sink” Robert Dietz, Chief Economist for the National Association of Home Builders. “It is literally the be-all and end-all of building a house.”

This helps drive new home prices soar – the average sales price for a new home in October was $ 407,700, according to the US Census Bureau. That’s a 17.5% increase from the same point in time a year ago and significantly higher than the average list price of all homes last month, which was $ 380,000, according to Realtor.com listing data.

So what’s up? What we found was a perfect storm of problems exacerbated by COVID-19. Many companies around the world, unsure of how the pandemic would affect buyer behavior, cut production and laid off workers early. Others were affected by home stay orders and sick workers. But as lockdowns forced more people to stay in their homes, instead of buying less, many people bought more while upgrading their homes or looking for larger ones.

“As people spent more time at home, they bought more and more things – from electronics to art supplies,” says Ali Wolf, Chief economist at the construction consultancy Zonda. “The change in consumer behavior came when factories struggled with COVID outbreaks, limited access to raw materials, temporary shutdowns, and a labor shortage.”

While factories have largely reopened and production ramped up, supply chain bottlenecks have made it much more difficult to get items into the U.S. And what it does through the ports has become more expensive. A lack of shipping containers and customs duties on goods lead to delays and make consumers more expensive. The lack of port workers and drivers to get the items to their final destinations further slows things down.

Looking ahead, economists predict these problems will persist for at least the next year – maybe get worse before it gets better.

“Consumers must expect continued frustration with delays and rising prices,” says Wolf. But as the virus wears off and people’s buying habits return to normal, things should be better by 2023.

“The demand pressure on manufacturers should ease and give ports and factories time to catch up better,” says Wolf.

Until then, says Dietz, one should plan accordingly. “Consumers need to be patient and strategic.”

We know – easier said than done. So let’s take a closer look at why things are so glued together.

Timber prices, measured per 1,000 board feet, skyrocketed in the aftermath of the pandemic.

(Scarlett Kuang for Realtor.com)

Wood prices skyrocketed at the start of the pandemic, in part because closed borders due to COVID-19 made it harder to get supplies from Canada (where the United States sources most of its wood). Tariffs on Canadian exports before the pandemic meant that the wood was already expensive. As the demand for new buildings and renovations skyrocketed, prices skyrocketed.

At one point, the cost of wood was so high that it increased the cost of building a new home by about $ 36,000, according to the National Association of Home Builders. While wood prices are well below their summer highs, they remain well above what people paid before the pandemic.

Meanwhile, any relative savings will be offset by other items that have increased in price.

“These declines in wood prices have had a positive effect, but they haven’t completely decreased,” says Dietz. “And the prices for almost everything else have gone up.”

Supply chain problems have resulted in a backlog of orders for large equipment.

(Scarlett Kuang for Realtor.com)

One of the biggest problems home builders – and renovation-conscious owners – are currently struggling with are long delays in the arrival of large appliances, says economist Dietz.

Homeowners whose stove or washing machine has stopped working will have to wait months for a replacement. Home builders need dishwashers and dryers for installation in the homes they plan to sell.

Global supply chain problems have resulted in nearly $ 3 billion backlog of goods ordered but not yet shipped, according to U.S. census data. Even if the device is made in the United States, many use parts and computer chips that are made overseas. So if these are held up in the supply chain, the devices cannot be manufactured and keep the whole system going for everyone.

“Whether it is a renovation or a new building, delays in the supply chain have an effect here on the housing market,” says Dietz.

Natural disasters in Texas in 2020 and 2021 crippled chemical processing plants and made paint more expensive.

(Scarlett Kuang for Realtor.com)

Would you like to paint your living room in a new color? Beautiful! But that will cost you.

The price of painting a room or the facade of a house has increased significantly recently. Paint prices have increased 15% since 2019 as key ingredients become harder to come by. The already rising costs were exacerbated by the extreme weather in Texas last year. A cold snap and multiple hurricanes damaged chemical processing facilities there in 2020 and 2021, causing manufacturers to slow or temporarily stop production.

Suppliers can’t pump out enough paint as builders try to build new homes asap. As more and more people started working from home during the pandemic, many decided they were tired of their old paint colors.

Meet high demand, low supply. Ask?

“Builders are busy building new houses, while existing owners concentrate on upgrading existing properties,” says economist Wolf. As a result, paint prices are going up as companies can’t make enough for all the people who want it.

“This increased demand comes at a time when suppliers are struggling to keep up,” adds Wolf.

The shortage of wood and foam made the manufacture of furniture difficult and expensive.

(Scarlett Kuang for Realtor.com)

Another industry that is affected by high wood prices is furniture. Wood scarcity makes it harder to make things like coffee tables, bookcases, or even wooden sofa frames. Foam or fillings to make mattresses and couches are also hard to come by, as they are often made from materials made by the same Texan chemical plants that were shut down due to extreme weather events.

There are also international shipping delays. Since much of the furniture bought in America is made in Asia, people have a harder time getting what they want.

Those who order furniture now have to wait months instead of weeks for their items to be delivered.

This double blow of material scarcity and global supply chain, as well as the higher demand for house renovations, are causing furniture prices to skyrocket.

The number of construction workers has grown steadily since the Great Recession, but the industry is still short of hundreds of thousands of workers.

(Scarlett Kuang for Realtor.com)

Even if that material and equipment shortage has subsided and inflation has normalized again, there is another bigger problem that has plagued the housing market for nearly a decade. There just aren’t enough construction workers to build houses or take on renovation projects.

This is partly due to the increasing disinterest in the job, says Larry Wigger, Professor of Supply Chain Management at the University of Missouri-Kansas City.

“We have kind of stigmatized the workers here in the US,” says Wigger, as more and more people have been encouraged to go to college over the past few decades. “It has narrowed the pipeline of young people entering these careers. and [as] When people retire, there are fewer older generation workers in this workforce. “

According to the National Association of Home Builders, foreign-born workers now make up about a quarter of all workers in the construction industry. But a decline in immigration since president Donald Trump‘s administration, tightened by COVID-19 restrictions, means the industry is short of hundreds of thousands of workers, Dietz says.

This labor shortage is one of the reasons the US is missing more than 5 million homes in June, according to the Realtor.com business team. To make up the difference in the next five years, builders would have to build houses three times as fast as they do now.

“If you look back on the Great Recession, housing construction lost one and a half million workers due to the dramatic decline in housing construction,” says Dietz. This is because many builders went out of business after the housing bankruptcy and the workers found other jobs. The industry has not yet fully recovered.

“We got back about 1 million of these, but it was a long process.”

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Campaign cash, real estate money fueling City Council runoffs

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District 7 Albuquerque City Council candidates Tammy Fiebelkorn, left, and Lori Robertson

Copyright © 2021 Albuquerque Journal

The real estate industry and Democratic politicians are pouring money into the Albuquerque City Council runoff, helping the four candidates who are still in the running to raise nearly $ 180,000 in a month.

Heading into the last week of the campaign, District 7 hopefuls find themselves in financial manslaughter, Tammy Fiebelkorn, a Democrat, and Lori Robertson, a Republican. Each raised around $ 44,000 total during the settlement cycle and has a current balance of nearly $ 33,000, according to financial reports filed with the city.

In the runoff of District 9, Democrat Rob Grilley has a financial advantage over his Republican opponent Renee Grout. Grilley, who outperformed Grout by about 14%, still has nearly $ 33,000 on hand, compared to her $ 25,265, records show.

Next Tuesday’s runoff election will settle the two remaining council competitions and, although the races are technically impartial, set the political balance of the city’s nine-member legislature. The winners will join four Democrats and three Republicans.

Robertson, a real estate agent, has raised money in the real estate and construction industries. Her top donors – each donating $ 1,499 – include Clay Azar of Metro Commercial Realty, Deborah Harms of Sun Vista Commercial Real Estate, Dale Armstrong of TLC Plumbing, and the commercial real estate development association NAIOP New Mexico. She has also received large donations from the oil industry, including $ 1,400 from Harvey Yates and another $ 1,400 from Jalapeño Corp.

The Candidates for District 9 Albuquerque City Council, Rob Grilley and Renee Grout

Grout has received support from similar donors, including $ 1,499 each from NAIOP and Armstrong and $ 1,400 from Jalapeño Corp. She also reported $ 1,499 each from The Auto Clinic (her family’s auto repair shop), James Grout, and Jeree Hindi Tomasi.

Fiebelkorn and Grilley have meanwhile deposited cash from the campaigns of other Democratic officials. Governor Michelle Lujan Grisham’s campaign gave Fiebelkorn and Grilley $ 1,499 each. The campaign for New Mexico Senate President Pro Tem Mimi Stewart gave $ 1,000 each, as did the campaign for House Majority Leader Javier Martínez, Albuquerque.

Jim Collie, a former Democratic member of the Bernalillo County Commission, also gave $ 1,000 each. Other donors made by the two Democratic council candidates include businesspeople Paul Blanchard, Steven Chavez, and Charles Fresquez, who each donated $ 1,499 to Fiebelkorn and Grilley.

Grilley also received $ 1,499 from the Albuquerque Area Firefighters Union.

There are also several political action committees that raise and spend funds in the council’s runoff elections, reports show:

– Healthy Economies Lead to Progress – Propelled by Real Estate Money – Work to vote Robertson and Grout. It raised $ 42,200 during the runoff and has $ 60,212 left due to carryovers from the regular elections.

– ABQ Workers First, a union-backed PAC that supports Fiebelkorn and Grilley, raised $ 62,500 during the runoff and still has $ 10,034 available.

– The PAC of the Democratic Party of New Mexico, which also supports Fiebelkorn and Grilley, has raised $ 25,360 and has a current balance of $ 10,137.

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