Happy Labor Day | Commercial Real Estate Wausau Wisconsin
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For your Commercial & Investment Real Estate needs, hire the Commercial Broker.
Grubb & Ellis | Pfefferle
Independently Owned & Operated
The ONLY National Commercial Real Estate Brokerage located in North Central Wisconsin.
Local Presences | Global Reach
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Ark Rhowmine | Commercial Real Estate Advisor | Broker
Grubb & Ellis | Pfefferle
P.O. Box 865 | Wausau | Wisconsin | 54402-0865
C: 715.297.1953 | F: 715.355.6044
ArkR@gepwi.com
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Serving: Marathon County, Portage County, Wood County, Lincoln County, Langlade County, Clark County, Taylor County, Oneida County, Shawano County, Chippewa County, Eau Claire County and other points of Wisconsin.
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The Long Slog: The Bureau of Labor Statistics Released… | Wausau, Wisconsin
The Long Slog: The Bureau of Labor Statistics released its anticipated monthly employment report this morning, revealing a modest gain of 83,000 private sector jobs in June and a top-line loss of 125,000 total nonfarm jobs. The Census Bureau laid off 225,000 temporary workers last month who were hired for the 2010 Census, causing the large gap between total and private sector jobs. April and May data were revised slightly higher by 25,000 total jobs and 15,000 private sector jobs. Other key points in the report:
- The unemployment rate fell from 9.7 percent in May to 9.5 percent in June, but this was largely because 652,000 people left the labor force, reducing the labor force participation rate from 65.0 to 64,7 percent. More people became discouraged and stopped looking for work.
- Average hourly earnings and the average workweek length were unchanged indicating that incomes have been slow to ramp up.
The June report reveals a labor market that is expanding slowly, and it confirms other recent economic reports on retail sales, manufacturing and housing showing that the recovery has lost some momentum. Reasons for this include European debt woes, the waning effects of the stimulus, lingering caution on the part of both businesses and consumers, and severe deficit problems in state and local governments.
Private hiring clearly has not yet reached the velocity needed to make the recovery self-sustaining, but the June report does suggest that the labor market and the broader economy continue to move forward. The odds of a double dip recession have increased; the question is being asked more frequently in the current environment than it was a few months ago, but the jury is still out. If the economy continues to lose momentum, then a double dip is more likely. But if the economy can stabilize even at this lower level, the recovery will remain intact. We’ll know more over the next few weeks.
Source, Robert Bach , SVP, Chief Economist , Grubb & Ellis , 312.698.6754
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For your Commercial and Investment Real Estate needs hire the professionals. Grubb & Ellis | Pfefferle is the ONLY National Commercial Real Estate Broker in North Cenrtal Wisconsin. Independently Owned and Operated
View Ark Rhowmine’s Commercial Listing.
________________________________________________
Ark Rhowmine | Commercial Real Estate Advisor | Broker
Grubb & Ellis | Pfefferle
P.O. Box 865 | Wausau | Wisconsin | 54402-0865
C: 715.297.1953 | F: 715.355.6044
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For more Commercial Real Estate Market Issues:
Financing for Commercial Real Estate is Starting to Thaw
Bellwethers – FedEx, Considered a Bellwether for the Economy
Halftime Pep Talk | Commercial Real Estate Market | Wausau Wisconsin | Real Estate Ambassador
Halftime Pep Talk | Commercial Real Estate Market | Wausau Wisconsin
Halftime Pep Talk : We are at the midpoint of 2010, and the economy and the commercial real estate markets are trudging ahead. It’s not a V-shaped recovery, unfortunately, nor does a double-dip recession appear likely – see the chart below showing GDP forecasts from economists at three large financial institutions. Real Capital Analytics says that property sales volume year-to-date through May is 56 percent higher than the same period last year though sales remain low by historic standards. Demand is focused at either end of the quality spectrum – core assets in primary markets or deeply discounted troubled assets. Broad pricing metrics such as cap rates and repeat-sale property indexes have stabilized. Leasing market fundamentals have stabilized for apartments while the office, industrial and retail markets are nearing a bottom.
Early in the year, the economy appeared to be firming rapidly and the stock market surged ahead, so it looked like the recovery would proceed quickly. But in the second quarter Europe swooned, the U.S. economy hit some speed bumps and Wall Street fizzled. When you average it out, we’re getting exactly what most analysts expected at the beginning of the year – a gradual recovery.
It doesn’t feel like a recovery, but neither did it feel like a recovery in 2002 and 2003 though the prior recession ended in November 2001. Nor did it feel like a recovery in 1992 and 1993 despite the fact that the prior recession ended in March 1991.
One big difference between now and the early 1990s is that today there is plenty of capital chasing commercial real estate or waiting on the sidelines to do so. The industry retains its popularity as an investment asset class, which was not really the case in the early 1990s when word on the street was that the market would not need any new space until after the millennium, a forecast that proved far too pessimistic.
Fear not, readers; though the economy is not roaring ahead, commercial real estate is attracting more investor interest than we could have hoped for a year ago while the leasing market is finding its footing. The recovery is going according to plan.
Have a great weekend.
Source: Robert Bach ,SVP, Chief Economist ,Grubb & Ellis , 312.698.6754
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For your Commercial and Investment Real Estate needs hire the professionals. Grubb & Ellis | Pfefferle is the ONLY National Commercial Real Estate Broker in North Cenrtal Wisconsin. Independently Owned and Operated
View Ark Rhowmine’s Commercial Listing.
________________________________________________
Ark Rhowmine | Commercial Real Estate Advisor | Broker
Grubb & Ellis | Pfefferle
P.O. Box 865 | Wausau | Wisconsin | 54402-0865
C: 715.297.1953 | F: 715.355.6044
For more Commercial Real Estate Market Issues:
Financing for Commercial Real Estate is Starting to Thaw
Bellwethers – FedEx, Considered a Bellwether for the Economy
Bellwethers – FedEx, considered a bellwether for the economy | Grubb & Ellis | Wausau Wisconsin
Bellwethers – FedEx: Bellwethers – FedEx, considered a bellwether for the economy, yesterday reported strong results for its fiscal fourth quarter ending May 31st. The company made a profit of $419 million or $1.33 a share on revenues of $9.43 billion, up by 20 percent from the year-ago quarter. FedEx forecasted earnings for its new fiscal year of $4.40 to $5 a share. Notably, it reported no slowdown in its European business despite the financial turmoil and economic concerns clouding the outlook for the region.
Another bellwether, the Conference Board’s index of leading indicators rose 0.4 percent in May while April’s reading was revised from -0.1 percent to flat – so no sign of a double-dip recession.
Have a great weekend.
Source: Robert Bach , SVP, Chief Economist , Grubb & Ellis , 312.698.6754
Personal Note From Ark:
For those of you who are receiving ”Good News Friday” for the first time, and those who have been right along, approximately a year ago Robert Bach, Senior VP, Chief Economist of Grubb & Ellis, started writing GNF to help readers find GOOD in the economy. Some days it has been a little difficult for him. But all-in-all he has been able to share good news with us. With permission, I have picked this up and have been forwarding GNF on to my friends and business contacts for about year now. I have received positive feedback from many of you. I hope to continue this service and that you continue to enjoy and gain from it.
If you would like to receive Good News Friday, please feel free to contact me direct at arkr@gepwi.com and I will place you on the distribution list.
Thank you for allowing me into your office,
Ark Rhowmine
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For your Commercial and Investment Real Estate needs hire the professionals. Grubb & Ellis | Pfefferle is the ONLY National Commercial Real Estate Broker in North Cenrtal Wisconsin. Independently Owned and Operated
View Ark Rhowmine’s Commercial Listing.
________________________________________________
Ark Rhowmine | Commercial Real Estate Advisor | Broker
Grubb & Ellis | Pfefferle
P.O. Box 865 | Wausau | Wisconsin | 54402-0865
C: 715.297.1953 | F: 715.355.6044
For More Good Morning Friday Articles:
Financing for Commercial Real Estate is Starting to Thaw
Where Will the Jobs Come From? | Grubb & Ellis | Wausau Wisconsin
Where Will the Jobs Come From?
Many people I speak with are skeptical that the labor market recovery is real and sustainable. It’s true that the 573,000 net new payroll jobs created year-to-date is merely a down payment on the 8.4 million jobs lost in 2008 and 2009, but the trend is moving in the right direction. A particularly hopeful sign is that new business creation surged to a 14-year high in 2009. “Challenging economic times can serve as a motivational boost to individuals who have been laid-off to become their own employers and future job creators,” according to the Kauffman Foundation, the study’s author. Entrepreneurship is strongest in the West and South. Click here to view a summary of the study, and click here to listen to a story from American Public Media’s “Marketplace” radio show.
What kinds of jobs are being created? Moody’s Economy.com reports that the following sectors will see the biggest percentage gains in jobs added this year:
- Medical Services
- Industrial Services
- Computer Software & Services
- Restaurants
- Biotechnology
- Environmental Services
- Retail Stores – General
- Banking
- Medical Supplies
- Retail Stores – Specialty Lines
The American free enterprise system is working as advertised.
Have a great weekend.
Source: Robert Bach, SVP, Chief Economist , Grubb & Ellis , 312.698.6754
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For your Commercial and Investment Real Estate needs hire the professionals. Grubb & Ellis | Pfefferle is the ONLY National Commercial Real Estate Broker in North Cenrtal Wisconsin. Independently Owned and Operated
View Ark Rhowmine’s Commercial Listing.
________________________________________________
Ark Rhowmine | Commercial Real Estate Advisor | Broker
Grubb & Ellis | Pfefferle
P.O. Box 865 | Wausau | Wisconsin | 54402-0865
C: 715.297.1953 | F: 715.355.6044
Commercial Real Estate Forecast | Wausau WI
Commercial Real Estate Forecast: The first quarter of 2010 is now behind us and there are signs of improvement of all major economies. The US growth is finally trending up which could be contributed to many different reasons. Within the four major areas of commercial real estate, each are showing some up swing. However, each area will return at its own pace.
- Industial – The industrial market appears to have bottomed out and a recovery is expected to be in full swing the second half of this year. In fact a few markets across the U.S. have already began to come back. Rents are expected to increase again in 2011.
- Office – The office market is expected to begin its recovery mid-year as well although much of it will depend on job growth.
- Retail - Retail development has slowed considerably. However, neighborhood and local centers are starting fill with tenants.
- Multifamily – Multifamily demand will supersede supply in 2011 with families having to relocate from their single family homes. This shortage will continue through 2014 due to the downward trend in home ownership.
To view other commercial properties listed by Ark Rhowmine , Commercial Real Estate Broker, please click here.
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Ark Rhowmine | Commercial Real Estate Agent | Broker
Grubb & Ellis | Pfefferle
P.O. Box 865 | Wausau | WI | 54402-0865
C: 715.297.1953 | O: 715.355.6060 | F: 715.355.6044
Changes in Lending and Obtaining Commercial Financing | Commercial Real Estate | Wausau WI
Changes in Lending and Obtaining Commercial Financing: The following are notes taken at a presentation by a regional bank to Grubb & Ellis | Pfefferle Commercial Brokers on December 8, 2009
Profile of Banking Past:
- Assumption that bank funding will be available
- Little to no equity
- Push for limit or no personal guarantee
- High appraisal values
- Many banks actively lending – - multiple bank competition for new projects
- Lack of a strong dialogue and good communication between all parties
- 2nd Mortgages as collateral to support projects
- Mini perm loans with no principal payments for up to 3 years
- Short lead times to obtain financing
- Project only cash flow’s
- Transactions done based on projections
Profile of Banking Present:
- Need to plan, discuss, interview and strategize prior to seeking financing
- Owner’s equity is a critical part of funding a project – equity needs to be cash
- Personal guarantees are part of the banking terms. Limited guarantee structures can be negotiated
- Fewer banks active in lending
- Capital costs are low – - historically low rates
- Great opportunity for developers and bankers to collaborate
- Many alternative low interest rate programs like the Midwest Disaster Act tax-exempt bonds for Winnebago County and 504 debenture bonds. Both programs are designed for owner-occupied projects.
- Global cash flow’s required
- Debt service requirements of at least 1.15 on new projects
- Very few, if any, loans are being done on projections
- No more interest only loans
What can be done:
- Early communication with lenders
- Present deal to multiple financial institutions
- Be realistic in your loan request
- Foster good relationships with lenders of all types
- Coach and educate both buyers and sellers as to the changing landscape
- Become knowledgeable of government loan programs
The Commercial Environmet:
- Regulatory crack down on commercial real estate lending. Developer and investor loans can no longer exceed 300% of a bank’s capital position.
- Community banks have historically obtained significant amount of their growth via CRE financing. With new regulations, the ease of financing for some projects is expected to decline.
- Commercial Mortgage Backed Securities markets and other alternative lenders are gone or have become less attractive.
- $1.4 trillion in CMBS financing maturing over the next few years. This could lead to significant sales activity.
- Sellers’ expectations are still in excess of where the market is today. I would expect that over the next 6-12 months they will reset their expectations closer to market conditions.
- Clients are now questioning their banks and their ability to continue to service their needs.
- Some banks’ capital position has deteriorated to where they must shrink their loan portfolios or significantly increase pricing at renewal to achieve new required return levels.
- Expectations for some of the marginal/average deals to experience difficulty in renewal. This may force an injection of capital to “right size the deal” or encourage sales.
- At tenant renewal time, rent reductions are being negotiated due to the tenants seeing a reduction in their revenue, increase in CAM charges and overall deterioration in their business operations. Landlords are more likely to accept lower rents versus a tenant loss. Typical negotiation includes lower rent with a longer-term lease (or exercising of option).
- Appraised values have seen approximately 30% decline in values compared to 2007 levels with an expectation for further decline. 5/10% additional drop in investment values; larger drops in industrial properties.
- From 2007 to the end of 2010 will see in the area of a 50% drop in values of industrial buildings from the 2007 levels.
- Speculative commercial financing, residential lot development and project redevelopment financing is essentially dead for now.
- Banks are seeing 9-10% cap rates on 5-year lease terms.
- Expectation of more stress in the commercial real estate industry. New development will be minimal as vacancies are expected to increase.
- Retail Sector should obtain some clarity upon completion of this Christmas time –Potential for additional shake out.
- Industrial Sector should continue to see some contraction as company’s look to bring as much internally to reduce outside rental costs.
- Office Market remains soft with tenants able to drive their rental rates.
- As we continue in this economic cycle, those with liquidity and/or low leverage will be able to capitalize on opportunities within the marketplace.
- Assessed valuations are not indications of values.
To view commercial properties listed by Ark Rhowmine , Commercial Real Estate Broker click here.
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Ark Rhowmine | Commercial Real Estate Agent | Broker
Grubb & Ellis | Pfefferle
P.O. Box 865 | Wausau | WI | 54402-0865
C: 715.297.1953 | O: 715.355.6060 | F: 715.355.6044
First In, First Out | Commercial Real Estate | Wausau WI
First In, First Out? The housing sector, which led us into the woods in the first place, is slowly leading us out. New and existing home sales increased in July by 9.6 and 7.2 percent, respectively, buoyed by the $8,000 tax credit for first-time buyers and competition for entry-level homes between first-time buyers and investors. The months’ supply of new homes on the market is headed down at a brisk pace, ending July at 7.5 months versus a balanced market of five to six months. The supply of existing homes, at 9.4 months, also is trending lower but at a more leisurely pace. According to the closely monitored Standard & Poor’s/Case-Shiller 20-city home price index, the seasonally adjusted average price of a single-family home rose 0.7 percent from May to June, the first increase since May 2006. (The index is based on a three-month moving average, i.e. the three months ending in June compared with the three months ending in May.)
Like housing, the long-suffering manufacturing sector is poised to break out of its multi-year slide. Durable goods orders surged 4.9 percent in July, its biggest gain in two years. Orders for civilian aircraft led the way.
One particularly hard-hit corner of the manufacturing sector, the recreational vehicle industry, is on the mend. Northern Indiana has been among the hardest-hit regions in the country, prompting President Obama to visit the city of Elkhart on three occasions. But several RV manufacturers in the region are adding jobs, and one new company is being launched. (Click here for article.) Can cash-for-campers be far behind?
Source: Robert Bach, SVP, Chief Economist, Grubb & Ellis
Commercial Real Estate & Investment Properties listed by Ark Rhowmine click here.
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Ark Rhowmine | Commercial Real Estate Agent | Broker
Grubb & Ellis | Pfefferle
PO Box 865 | Wausau | WI | 54402-0865
C: 715.297.1953 | F: 715.355.6044 | E-mail: ArkR@GEPwi.com
Gimme Shelter – Housing Market Grabbed Attention | Commercial Real Estate | Wausau WI
Gimme Shelter – The housing market grabbed attention this week as the latest indicator to suggest the economy is at or near the bottom.
- The closely watched Standard & Poor’s/Case-Shiller 20-city home price index reported a 0.5 percent gain in the average price of a single-family home from April to May, the first increase in 34 months. Prices in 15 of the 20 cities in the survey increased or remained stable. On a seasonally adjusted basis, the composite price fell 0.2 percent, the smallest decline in 27 months. (The index is based on a three-month moving average, i.e. the three months ending in May compared with the three months ending in April.)
- Existing home sales in June rose to an annualized rate of 4.89 million, the third consecutive monthly gain according to the National Association of Realtors. The months’ supply of available inventory on the market fell to 9.4 from a peak of 11 months one year ago.
- New home sales also increased for a third consecutive month, rising to an annualized pace of 384,000 in June according to the Census Bureau. After peaking in January at 12.4, the months’ supply has fallen to 8.8.
- Housing starts jumped 3.6 percent in June to an annualized rate of 582,000, the fastest pace since November. Although construction remains weak, it’s another sign that the market is stabilizing.
The housing slide triggered the credit crisis and the recession, and a housing recovery is necessary for the economy to grow again. Recent news suggests this is beginning to happen.
Source: Robert Bach, SVP, Chief Economist, Grubb & Ellis
Commercial Real Estate & Investment Properties listed by Ark Rhowmine click here.
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Ark Rhowmine | Commercial Real Estate Agent | Broker
Grubb & Ellis | Pfefferle
PO Box 865 | Wausau | WI | 54402-0865
C: 715.297.1953 | F: 715.355.6044 | E-mail: ArkR@GEPwi.com
Good News Friday | Commercial Real Estate Wausau WI
Big Picture
Let’s take a moment to consider how far the financial sector has come since the credit crisis passed through its darkest period from September 2008 through March 2009.
- Analysts debated whether the government would end up owning the major banks and a good chunk of the entire financial sector, but that discussion has receded along with the likelihood of such an outcome. (From September through March, the words “nationalize” and “banks” appeared in an average of 17.5 media articles per day. From April through Thursday of this week, the two words have appeared in 5.6 articles per day.)
- Much criticism was heaped on the bank stress tests conducted by federal regulators, i.e. that the criteria were too lenient, or that the additional sums of capital required were too onerous (from the banks’ perspective), or that publicizing the results of the tests could, perversely, destabilize the banking system. Nevertheless, the stress tests laid the groundwork for banks to raise private capital. As a result, 10 of the nation’s largest financial institutions gained approval this week to repay $68 billion in TARP funds. Twenty-two smaller banks already have repaid their TARP funds.
- The TED spread, a measure of risk-aversion in the credit markets, has receded to pre-crisis levels, signaling that credit is more available. Click here to view an interactive graph of the TED spread from Bloomberg. (The TED spread is the difference between interest rates on 3-month Treasury bills, considered risk-free, and 3-month dollar Libor, a widely used index for lending between banks and for business and mortgage loans.)
- The commercial real estate industry is still in the early innings of recapitalization of both debt and equity, but publicly traded markets are giving commercial real estate a vote of confidence. So far this year, REITs have raised nearly $15 billion through 45 public equity offerings. Moreover, REIT share prices have rallied by 60 percent from their low on March 6th.
There is much work left to do, but the financial system is in the process of righting itself, and the economy is showing signs of bottoming out. Consequently, the macro-environment in which the commercial real estate industry operates is becoming more hospitable.
Source: Robert Bach, SVP, Chief Economist, Grubb & Ellis
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Ark Rhowmine | Commercial Real Estate Agent
Grubb & Ellis | Pfefferle
P.O. Box 865 | Wausau | WI
D: 715.297.1953 | O: 715.355.6060 | F: 715.355.6044 | E-mail: ArkR@GEPWI.com
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