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Stability for the USA Real Estate Market in 2017

The USA commercial real estate market is set for a stable 2017, with decent returns on offer for investors.

Steered ahead by strengthening demand in smaller markets, the National Association of Realtors forecasts stable ground for the commercial property sector.

Experts said that the USA economy is poised for slight improvement in 2017. Last year was the 11th year in a row of subpar GDP growth, but renewed corporate optimism leading to a focus on investment and a desperately needed boost in residential construction should pave the way for modest expansion this year of around 2.4 percent. Steady hiring and low local unemployment levels are finally supporting higher wages and increased spending, which in turn bodes well for sustained demand for all commercial property types.

National office vacancy rates are predicted to retreat 1.1 percent to 12.1 percent over the coming year, as job growth in business and professional services brings increased need for office space. The vacancy rate for industrial space is expected to decline 1.3 percent to 7.1 percent, and retail availability to decrease 0.7 percent to 11.2 percent.

Only the multifamily sector is predicted to have little change to its vacancy rate over the next year as new apartment completions keep openings mostly flat at 6.5 percent.

According to some sources, commercial property prices, especially in Class A assets in larger markets, surpassed pre-crisis levels last year because of aggressive bidding and lower inventory levels. However, with the Federal Reserve expected to raise short-term rates three times in 2017, a minor price correction may be in store this year as cap rates move higher.

Similar to the biggest ongoing challenges in the residential market, supply and demand imbalances continue to put upward pressure on commercial property prices as investors search for yield in smaller markets.

Realtors are increasingly citing inventory shortages as their top concern as the pace of new projects slows in large cities and middle-tier and smaller markets see a growing appetite for space.

The latest Realtors Commercial Real Estate Market Survey highlighted the strong underlying demand for commercial properties up to $2.5 million, where most transactions from NAR’s commercial members reside. Compared to last year, sales volume rose 12.9 percent, prices increased 5.5 percent and the average transaction value equaled $1.1 million.

Foreign investment in US commercial property is forecast to stay strong this year, as the country remains attractive to overseas investors. At the start of 2017, the interest rate environment is undoubtedly one of the largest influences on real estate capital markets. The election of President Donald Trump has bolstered confidence in the American economy, with the Federal Reserve Board raising interest rates at the end of 2016 for only the second time since the global financial crisis. The Fed Reserve expected to engage in three rounds of monetary tightening, increasing short-term rates this year. Longer-term interest rates should remain stable or increase only modestly.

Global capital flows into the US are expected to remain very strong, with the comparatively strong economy and a scarcity of high returns elsewhere keeping the US a favorite destination for foreign capital. China is again expected to be the biggest driver of international investment.



Projects from this area

10 Harbor, USA, Hollywood

10 Harbor will offer 10 exclusive luxury 3 bedroom townhome residences planned by Sunset Harbor Residences.

Each unit will be delivered with flooring throughout. Each residence will feature it’s own private boat/yacht slip, private elevator, and private 2 car garage as well as 3 full baths, a powder room for guests, wood cabinetry in the kitchens by Mia Cucina with high-end gas ranges and appliances, floor to ceiling high impact glass windows, oversized private terraces with private hot tub, summer kitchen, and sweeping views of the Intracoastal Waterway and Hollywood Beach.

LOCATION - 2800 N. OCEAN DRIVE, HOLLYWOOD, FL 33019.

10 Harbor is located on the Intracoastal Waterway in the fast-growing neighborhood of Hollywood. The property is in walking distance from Hollywood Beach overlooking West Lake Park and just 15 minutes from the Fort Lauderdale-Hollywood International Airport. It is also in close proximity to local attractions like Gulfstream Park, South Florida's premier race track, and Aventura Mall, one of Miami’s top destinations for high-end shopping and dining.

UNITS / FLOORS

10 units; 3-stories plus garage. Each unit ranging in sizes from 2,721 sq ft to 2,805 sq ft. Ceiling heights up to 11’-3” in some areas.

BOAT / YACHT

Private boat/yacht slip approximately up to 60' in length and 19' beam.

TIMETABLE

Construction should be underway in the second quarter of 2016 with completion slated for Fall 2017.

PRICE RANGE

Pre-construction finished unit prices starting from $1.419 million residences.

(Prices are subject to change without notice)

10 HARBOR

Nestled between Miami and Ft. Lauderdale, the city of Hollywood is known for its beautiful stretch of beaches and excellent outdoor attractions. From oceanfront hotels to the newly opened Margaritaville Resort, owned by Jimmy Buffet, visitors will find no shortage of accommodations for a weekend getaway or long stay. Experience unique shopping, beachfront restaurants and bars, and a host of activities from sightseeing to live music along

Hollywood's Boardwalk. Hollywood is also seeing a rapidly evolving arts and culture scene, which includes grand murals, art installments, galleries, and the booming Arts Park at Young Circle, which is becoming one of South Florida's premier weekend hot spots. The expansion of the area, from strategic urban development to walkable streets, is catching the attention of locals and out of out-of-towners alike. Those looking for delicious food and a vibrant nightlife will discover much to do in Downtown Hollywood, with its various options perfect for any budget and preference. To make it even easier to take in everything the city has to offer, trolley services are available to transport guests to and from Hollywood Beach to Downtown Hollywood.


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The Manhattan, USA

The Project:

Classic building on the following address: 351 East 82nd  . including 26 units for rent, with high  occupancy.

The project’s condition is required different levels of renovation.

The average rent price in this project is: $1830, comparing to the average rent price in the buildings in the neighborhood: $2590  (for 1 bedroom flat).

The location:

The Upper East Side is located between the 59th St. and  96th St. and is east to Central Park.

Well established classic neighborhood with a wealthy population (including families such as: Kennedy, Roosevelt, Rockefeller and others).

Culture and Leisure: The 5th Avenue, Central Park, The Museums area: Metropolitan, Guggenheim and many more.

Education and Health: The famous University and Hospital: Mount Sinai.

The classic buildings, the wide pavements and the relative quite area attract high quality tenants.

The average household annual income is: $147,000- among the highest in the city.

The Strategy:

1.       Each apartment will become vacant once contract is terminated.

2.       Cosmetic and Gut renovation of all units, bringing them to high end market standards.

3.       Completion of the upgrading process within 24 months.

4.       Realization of the property at updated value, and creating substantial capital gain.


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