INDUSTRIAL MARKETS / LOW-INCOME HOUSING / TAXES / GOVERNMENTAL TRENDS & ISSUES

2012 Industrial Real Estate Market Outlook: Occupy Big Box

http://www.areadevelopment.com/EconomicsGovernmentPolicy/January2012/industrial-real-estate-2012-outlook-565522.shtml

In 2011 there was a demand for large Class A warehouse and distribution centers, especially in major U.S. logistics markets adjoining large population centers. Companies with strong balance sheets secured large block lease deals before conditions turn more owner-friendly. Distribution centers for major retailers, consumer good companies and third-party logistics firms were the most active, followed by firms in the food and beverage market. E-commerce companies like Amazon emerged as an important part of the industrial demand, leasing multiple facilities across multiple markets. Demand is expected to continue in 2012 with the focus remaining on New Jersey, Chicago and Dallas. The coast inward recovery that began at U.S. ports is expected to continue, with real estate values and demand continuing to increase around top seaports where the average vacancy is around 8.5%. As cargo volume increased in 2011, so did leasing volume and demand for warehouse space in the area. The Panama Canal expansion is due to be completed in 2014 and U.S. ports are gearing up in preparation to receive the larger post-panamax ships. With an increase in port traffic in coming years, pressure on portside industrial space is likely to ensue. New inland ports are being developed with intermodal distribution centers connected to the seaports via a Class I railroad and located in close proximity to at least three million people. These inland ports will have foreign-trade zone status and an abundance of warehouse and industrial space. Freight costs may be a major factor in future industrial development. As transportation costs continue to escalate, companies will be forced to re-evaluate their supply chain network strategies and we may see more U.S. manufacturers on-shoring to cost-effective locations.

It seems that the industrial market may a good investment, or least worth researching and learning more about. The question has been asked many times, is manufacturing dead in the United States. Here is another reason why manufacturing will never completely disappear – transportation costs.

High Tech Hubs, Gateways Will Lead Real Estate Recovery

http://www.globest.com/news/12_256/orangecounty/industrial/-317036.html

Demand for industrial real estate is expected to continue in 2012 with the top ten prospects being markets serving seaports or inland ports that benefit from growing international trade. Los Angeles tops the list with the largest port complex in the nation, followed by Houston, Inland Empire, Dallas-Fort Worth, Chicago, Miami, Oakland-East Bay, Atlanta, Philadelphia/Central Penn and Phoenix.

Research Area: Housing

http://www.urban.org/toolkit/issues/housing.cfm

The Urban Institute monitors and assesses housing market trends, affordable housing, homelessness, federal housing assistance, racial disparities and housing discrimination and community revitalization. The housing crisis hit the poorest Americans the hardest, leaving more families homeless. The need for affordable housing is even greater due to the long-term economic down-turn. Incomes are stagnant while rents are rising, resulting in an increase of renters with housing hardships. It is reported that only 25% of the households eligible for government aid in the form of rent subsidies, tax credits or block grants receives any assistance. In addition, most subsidized housing is found in distressed neighborhoods with high crime rates, poorly performing schools and few jobs. Public-private partnerships have been successful in a limited number of areas and need to be replicated on a wider scale.

Rental Market Stresses: Impacts of the Great Recession on Affordability and Multifamily Lending

http://www.urban.org/publications/1001550.html

Abstract

Analysis of the conditions of rental markets in the wake of the Great Recession reveals a troubling forecast for multifamily properties and the households that inhabit them. Despite increasing rental vacancies since the beginning of the housing bust, the number of low and extremely low income renters swelled, resulting in notable increases in households paying over acceptable levels on rent. Further, even as the rental property climate improves in some metropolitan areas, tenuous rental income and increases in operating costs will expose marginally viable properties to increased financial risks. For renters, this amounts to deteriorating physical conditions and a lower supply of decent, affordable housing.

How Italy’s Taxes Could Boost NYC Real Estate

http://blogs.wsj.com/metropolis/2012/01/04/how-italys-taxes-could-boost-nyc-real-estate/

Italian nationals must pay an additional 0.76% tax on the value of second homes they own in other countries, but they may also write off the property taxes paid in those other countries. For Italian investors who own property in New York where the effective tax rate is relatively high compared to most European cities, investors will not be affected by the additional tax. Some brokers are predicting an influx of buyers seeking a stable tax rate and stable currency. Investors see an inherent risk in keeping their money in Euros in Italy and will net more in New York than in Paris or Berlin.

Prop 13: The Building-Sized Loopholes Corporations Exploit

http://www.sfweekly.com/2012-01-04/news/prop-13-one-market-plaza-assessor-real-estate-money-taxes-california/

Proposition 13, passed in California in1978, changed when the value of a property was reassessed. Prior to Proposition 13, property was appraised annually and taxed based on that valuation. The impetus behind Proposition 13 was the thought of “indigent grandparents being taxed into the streets.” With the passing of Proposition 13, property values are frozen at the year the owner obtained the real estate and only reassessed when it changes hands. Usually, a very straight forward procedure, except if you are a corporation. In the U.S. Corporations have the same rights as individuals and access to more resources, especially legal advice. Companies effectively change hands many times over, but never in a way resulting in a deed going to the assessor’s office and buildings’ tax bases remain at levels from the Carter administration. No wonder California is going broke! Another example of how the wealthiest and most powerful exploit tax loopholes to grow wealthier and still more powerful. “Loopholes large enough to push a building through”

How the Government Can Solve the Housing Crisis

http://www.urban.org/publications/901462.html

Abstract

Foreclosed homes are a major drag on the housing market and a reason why housing prices continue to fall and new housing construction is stalled. Institute fellow Robert Lerman and Brooklyn College’s Robert Cherry explain, in a commentary for CNN.com, an innovative way a million of these properties could provide families with housing instead of sitting empty, take pressure off rental rates, and boost construction jobs. The key to most of the programs offered in this article is a partnership between the non-profit sector and government. Phasing out the Low-Income Housing Tax Credit which offers a reduction in tax liability of property owners and private investors who develop low-income housing is recommended. The program has yielded high profits and relatively few units for low-income families. Turnkey programs that take advantage of unused existing housing stock and hire and train local unemployed workers to do the renovations seem to be the solution these authors like best. I have seen a few of these programs and the biggest impediment is getting the lenders on board to either donate the vacant properties or sell them at a reasonable price that a non-profit can afford.

After Fannie and Freddie, A Role for Government In Mortgages?

http://www.urban.org/publications/1001518.html

Yes, there is a role for government in mortgages as long as the role of government is clearly defined, taxpayers are protected by charging premiums for government backing and rigorous oversight of any private firms that get a guarantee and not on the hook for any hedge fund type activity, There should also be an avenue to support affordable housing. A fully private system is beyond any political reality because government should support the mortgage market in times of crisis. At the same time, the role of regulation should be to avert the types of activity that are known to result in a crisis but not stymie the free market.