Wednesday, March 20, 2013

Signs of Life: Experts on “Commercial Real Estate Show” Say Development Activity Finally Beginning to Pick Up



Michael Bull in studio
ATLANTA, GA – After years in a deep freeze, both the single-family and commercial development markets are showing some signs of a long-anticipated thaw.

 That was one of the observations of a panel of real-estate experts on the most recent episode of the “Commercial Real Estate Show” radio program, hosted by Michael Bull of Bull Realty. The show provided an enlightening look at the land and development market; topics included home-sale trends, commercial zoning tips and construction costs.

Brad Hunter
Some markets such as Phoenix and Las Vegas have experienced whopping 60 percent increases in single-family construction starts over the past year, and sales of existing homes are beginning to pick up velocity across the nation, particularly in close-in submarkets, said Brad Hunter, chief economist with MetroStudy.

 As single-family-home construction begins to ramp up, the supply of developed lots is declining, Hunter added. “Nationwide, you’ll see that there’s a 55-month supply of vacant, developed lots, but there’s only a 15- to 18-month supply in” certain submarkets in the Atlanta, Phoenix and South Florida areas, he said. “We have a very tight supply of lots [in those areas], and prices are going up very sharply as a result.”

Stephanie J. Toothaker
These trends will continue in the months ahead, Hunter predicted. “I think there’s going to be increased home construction, increased home sales and increased prices throughout 2013,” he said.

 Commercial development is picking up steam as well, according to show guests. “It’s no secret that during the downturn, development was completely dead … Planning and zoning boards weren’t even meeting because there was nothing on the agenda,” said commercial real estate attorney Stephanie Toothaker, a director with the Fort Lauderdale, Fla.-based Tripp Scott law firm.

 However, Toothaker and Michael Kaufman, CEO of Boca Raton, Fla.-based Kaufman Lynn Construction, both said they’ve recently seen an increase in rezoning applications for and the new construction of a variety of property types, including apartments, hotels, seniors housing and even country clubs.

Michael Kaufman
Despite the dramatically slower pace of new construction compared to the boom years just before the recession, construction costs continue to rise, Kaufman noted. The increase stems in part from the rising costs of commodities such as steel and PVC, and also from the higher wages contractors must pay to employees because of the smaller supply of construction workers. “We’re going to see construction costs continuing to rise,” Kaufman said.

 Even though real estate activity is beginning to quicken, lenders still remain cautious, Toothaker and Kaufman added.

 “From a development perspective, what my clients complain about is not that financing isn’t available,” Toothaker said. “It’s that the terms are not acceptable or that the banks will only lend on something that they perceive as a completely safe deal.”

The entire episode on the U.S. land and development market is available for download at www.CREshow.com. The next “Commercial Real Estate Show” will be available March 21 and will provide a detailed examination of commercial real estate auctions.

For a complete copy of the company’s news release, please contact:


Stephen Ursery
The Wilbert Group
Office: (404) 965-5026
Cell: (404) 405-2354
www.thewilbertgroup.com

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