Institutional Real Estate Americas

January 1, 2015: Vol. 27, Number 1

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From the Current Issue


Retail rents continue to rise globally

Despite battling the rapid expansion of e-commerce and near stagnant economic growth in many regions, retail rents rose by an average of 2.4 percent worldwide in the 12 months to September 2014, and rose or remained flat in 83.9 percent of the 330 global markets surveyed for Main Streets Across the World, a report by Cushman & Wakefield. 


CalPERS plans expansion of infrastructure program

There is an unofficial rule in poker, sports and investing: Play the hot hand. In the case of the California Public Employees’ Retirement System, that hot hand is its infrastructure portfolio, which returned 22.8 percent for the year ended June 30, 2014. The program has had an even greater five-year return of 23.3 percent annually, beating its 6.7 percent benchmark by 16.6 percent.


Class B office sees rent growth in some CBDs

When Plan A is not working out, there is always Plan B. Some real estate investors are embracing that logic these days. With limited space and heavy competition for class A office space among tenants in major central business districts, class B office rents have seen massive growth in crowded CBDs, including year-over-year growth of 29.5 percent in mid-market San Francisco, according to new data from JLL.


Dark data: Real estate investors can do more with their digital information

While the term “big data” captures the imagination, it is poorly understood outside of the realm of data science and those instances where it exists. Real estate investors typically do not have big data but — unless they have already addressed it — most certainly do have a data opportunity or “dark data.” There is value to be found in addressing the data opportunity — in finding the dark data and putting it to work.


The emerging manager: Some case studies that illustrate what it takes to succeed

Imagine that you had the opportunity to invest with one of the industry’s most astute and successful real estate investors (pick your favorite master of the universe). Instead of managing a multibillion-dollar vehicle investing across the globe, this star manager would invest only $200 million to $300 million and a significant percentage of this allocation could be yours. In addition, this manager might offer you an exclusivity agreement guaranteeing that he or she would effectively spend the entire time managing only one strategy — yours — while at the same time offering a significant fee break and strong control provisions. We believe this scenario would be the best of both worlds — unprecedented investment talent with highly focused and dedicated resources providing investor-favorable terms and governance.


Industrial heats up in some parts of United States

Industrial vacancies in the United States reached 7.2 percent at end of third quarter 2014, lower than the prior trough in 2008, and JLL expects the rate to be even lower when year-end 2014 data is available. Furthermore, the sector’s sales volume is on pace to reach between $55 billion and $60 billion, just below the peak volume of $61.7 billion set in 2007, according to Real Capital Analytics.


The future of urban agriculture in U.S. cities

The U.S. population is more than 316 million. In less than 40 years, the U.S. Census Bureau projects, we will reach 450 million, a 42 percent increase. Where is this population going to live? The answer to that question appears relatively clear. America’s urban population increased by 12.1 percent from 2000 to 2010, outpacing the nation’s overall growth rate of 9.7 percent for the same period. Today, more than 82 percent of U.S. citizens live in urban areas.


Pace of multifamily investment poised to break record

A mere 25 years ago, multifamily housing was not even considered an institutional-grade property type. Today, it is on pace to attract more than $105 billion from institutional investors, setting a new investment record for the property class.


Report cites five pension industry trends

Pension systems might have a reputation for being hamstrung by politics and bureaucracy, but it does not mean they are incapable of change. Indeed, a global survey conducted by State Street Corp. found that changes are afoot at pension funds and they are reshaping “almost every aspect” of how they are managing their investments.


Finally, real estate gets some respect

Real estate’s days as the Rodney Dangerfield of asset classes are coming to an end. The business simply got no respect from organizations such as the S&P 500 Index, which did not even consider real estate its own asset class.


REITs find their niche: The performance of specialty REITs has been mostly good so far, but there are concerns aplenty

Does the real estate securities sector’s budding embrace of highly specialized equity REITs suggest pension systems and other institutions will soon be placing multimillion-dollar bets on publicly traded casino companies? The answer appears to be at least a tentative “yes.” But the motivations underlying plans by three large gaming companies to establish new REITs illustrate both encouraging and dubious drivers of niche REIT formations.

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