Statement on FHFA's Fannie Mae and Greddie Mac Strategic Plan - ABA (Washington DC)

By Frank Keating, president and CEO, American Bankers Association

"The Federal Housing Finance Agency's strategic plan for the GSEs, released earlier this week, is a milestone that deserves further recognition.

"The plan outlines a constructive path to meaningful reform of our mortgage finance system. It addresses the need to build new infrastructure, encourages the return of private investors to shift away from direct government funding and continues efforts to maintain credit availability and prudent underwriting. In many ways, the plan is consistent with and a step forward from ABA's proposal of more than a year ago. (/Issues/Issues_FannieFreddie.htm)

"The plan also focuses on the changes needed to ensure availability of mortgage credit for future generations. Unlike several proposals of recent months, the plan differentiates between the urge to stimulate markets and the need to build functional markets. If we fail to heed this difference, we are likely to fail in both objectives.

"Comprehensive GSE reform is essential to the long-term housing and economic recovery."

New Book Appraisal Institute Helps Determine Value of Convenience Stores - AI (Chicago, IL)

Convenience stores represent a complex and fascinating retail channel that has responded to the economic challenges of the last decade by embracing new ideas, according to a new book by the nation’s largest professional association of real estate appraisers.

The second edition of “Convenience Stores and Retail Fuel Properties: Essential Appraisal Issues,” published this week by the Appraisal Institute, is intended to help appraisers of convenience stores keep up with these changes and understand how real estate value is created and estimated in the industry.

“This book should prove to be a valuable reference not only for real estate appraisers, but also for eminent domain attorneys, convenience store operators and corporate managers,” Appraisal Institute President Sara W. Stephens, MAI, wrote in the book’s foreword.

Among the more than 146,000 convenience stores across the United States, more than 117,000 sell motor fuel. In fact, 80 percent of all motor fuel sold in the United States is sold through the convenience retail channel. The Appraisal Institute’s new book discusses this business model of motor fuel sales combined with a limited selection of high-turnover merchandise.

Convenience stores are special-built properties that are designed to make money in only one way. They are not easily adapted to other uses. The fundamental determinant of value for a convenience store property is its ability to generate earnings.

The new edition of “Convenience Stores and Retail Fuel Properties: Essential Appraisal Issues,” compiled by author Robert E. Bainbridge, MAI, SRA, contains updated statistical data and information on important recent developments in the convenience industry, such as reduced fuel profits, competition from hypermarkets and an increased focus on food service. Newly added chapters discuss the fundamentals of economic theory as applied to convenience retail real estate, eminent domain issues and highest and best use essentials for convenience store sites.

The book also presents a prototype of a working commercial property automated valuation model. Links to online digital content, including interviews with experts and practical field examples, are also provided to illustrate the concepts discussed.

The second edition of “Convenience Stores and Retail Fuel Properties: Essential Appraisal Issues” (ISBN: 978-1-935328-23-0) is a 316-page soft cover book. It is available for $55 ($45 for Appraisal Institute members). Click here or call 888-756-4624 to order.

Commercial Real Estate VAcancy Rates Improving, Rents Firming - NAR (Washington DC)

According to the National Association of Realtors® quarterly commercial real estate forecast, all of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord’s market commanding bigger rent increases. These trends also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey.

Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. “Sustained job creation is benefiting commercial real estate sectors by increasing demand for space,” he said. “Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”

NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.

“Household formation appears to be rising from pent-up demand,” Yun said. “The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term.”

The Society of Industrial and Office Realtors® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.¹

The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.

Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market – an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.

Office and industrial space remains a tenant’s market – 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.

Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers’ market for development acquisitions; prices are below construction costs in 78 percent of markets.

Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.

NAR’s latest Commercial Real Estate Outlook² offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc.,³ a source of commercial real estate performance information.

Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.

The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.

After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.

Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.

Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.

Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.

Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.

Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.

Multifamily Markets
The apartment rental market – multifamily housing – is likely to see vacancy rates drop from 4.7 percent in the first quarter to 4.5 percent in the first quarter of 2013; multifamily vacancy rates below 5 percent generally are considered a landlord’s market with demand justifying higher rents.

Areas with the lowest multifamily vacancy rates currently are New York City, 1.8 percent; Minneapolis and Portland, Ore., each at 2.5 percent; and San Jose, Calif., at 2.7 percent.

After rising 2.2 percent last year, average apartment rent is expected to increase 3.8 percent in 2012 and another 4.0 percent next year. Multifamily net absorption is forecast at 209,900 units this year and 223,600 in 2013.

The Commercial Real Estate Outlook is published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.

The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, Realtors® Land Institute, Society of Industrial and Office Realtors®, and Counselors of Real Estate.

Approximately 78,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 232,000 members offer commercial real estate services as a secondary business.

NAR Collaborates with US Treasury on Short Sale "Help for Homeowners" - NAR (Washington DC)

A new National Association of Realtors® collaboration with the U.S. Department of the Treasury will help Realtors® better assist homeowners who are struggling to sell their homes in a short sale.

Realtors® who attend upcoming Making Home Affordable “Help for Homeowners” outreach events, sponsored by the Treasury Department, will learn insights to help them navigate the short sale process and have the opportunity to meet directly with loan servicers on their clients’ behalf for assistance with difficult transactions.

“As the nation’s leading advocate for homeownership and housing issues, Realtors® are working hard to keep more people in their homes, and when a family is absolutely unable keep their home, Realtors® are there to help homeowners by facilitating a loan modification or short sale,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “I encourage our Realtor® members to participate in these new events so that they have the tools and information to help distressed homeowners achieve the best possible outcome.”

Help for Homeowners community events will take place throughout the year; the first sessions are in Miami today and Tampa, Fla., on February 24. Additional events are scheduled in Chicago, Indianapolis, Los Angeles, and Sacramento, Calif.

At the events, Realtors® can attend workshops to hear directly from lenders and loan servicers about executing short sales in today’s challenging market. They’ll learn tips on how to navigate the short sale process, effectively negotiate short sale offers and expedite transactions. Realtors® will also hear from Treasury officials about various foreclosure prevention programs, and specifically the Home Affordable Foreclosure Alternatives (HAFA) short sale program. Live webinars from the workshop will be available to real estate professionals who can’t attend in person.

The sessions for real estate professionals are not open to homeowners, but borrowers who are in financial distress and concerned about losing their home to foreclosure are encouraged to attend the free homeowner sessions. Homeowners who are having difficulty paying their mortgage will be able to meet one-on-one with loan servicers and housing counselors to explore foreclosure prevention options and work toward solutions to their mortgage problems. Real estate professionals are encouraged to invite homeowners and their clients to the events and are welcome to accompany their clients in conversations with the servicers.

“Realtors® embrace the opportunity to partner with the Treasury Department and drive participation at upcoming “Help for Homeowners” events. Working together we can improve the success rate for short sale transactions, which will reduce the overall number of foreclosures and benefit sellers, lenders, buyers and the entire community,” said Veissi.

Additional information for consumers about the “Help for Homeowners” events is at www.makinghomeaffordable.gov/get-assistance/homeowner-events/Pages/default.aspx. Real estate professionals can get more information or register to attend at www.hmpadmin.com/portal/resources/eventinfo.jsp.