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| 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.
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| 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.”
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| 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.
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| 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.
Stephen Ursery
The Wilbert Group
E-mail: sursery@thewilbertgroup.com
Office: (404) 965-5026
Cell: (404) 405-2354
www.thewilbertgroup.com
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