Investing in Commercial Real Estate in 2013-2014
October 24th, 2013 by Diane Moore
Commercial real estate shows signs of improvement at a moderate pace with the office market witnessing occupancy growth as well as rent hikes, as mentioned by Jones Lang LaSalle. Industrial space is also in an expansion mode as the number of deliveries has increased compared to the previous years. There is more absorption in the retail space than construction.
However, there’s lot to be worried about. Spending on retail space has only jumped by 4.4% in the last 12 months, while the figure a year back was 6.2%. The good side for property owners is the very low rate of interest for commercial mortgages. Owners who are eligible pay a negligible interest and make it look that the deal is nearly free.
The interest of investors investing in the commercial real estate sector at present remains robust. It’s meaningless to make investments for your future based on present gains or losses. However, that’s the trend a majority of investors seem to be following. For contractors for the period between 2013 to 2014, office construction seems to be beneficial than retail.
Investment volumes in commercial real estate in European nations touched around $5.9 billion in Q4 2012 as stated by property consultants, Cushman and Wakefield, which was the highest quarterly level since 2007. Despite the crisis of the euro zone, a broad ambit of players from Asia, Europe, North America and the Middle East have been heavily investing in Europe’s commercial real estate market.
High street commercial properties in areas such as Moscow, London and France fetched yields of around 4%. Moscow seems to be the most active market at present. The place has an extremely powerful tenant demand along with strong development, which eventually results in great returns.
Here is a list of some brand new commercial real estate properties both in the US and Europe, which were launched in the last few years and which investors may be interested in.
BG Group Place (Texas)
BG Group Place is a skyscraper of height 630 feet in Downtown Houston, Texas. The structure which underwent completion in 2010 has 46 floors and a sky garden on its 39th floor. It has a total space of 940,000 square feet. The naming of this commercial real estate building was done when BG Group Place went on to become an anchor tenant and eventually leased out 164,000 square feet of space.
An interesting feature of the building is the top floor, which is fully gardened and soaks up rainwater. The water condensed in the air-conditioning system of the property is utilized to irrigate the plants. The ceilings, which are of 10 feet in height, make room for more sunlight, thus reducing the requirement for electric bulbs.
Each floor on an average is spread in an area of 27,000 square feet and can contain a maximum of eight full corner offices.
The Shard (Western Europe)
The Shard is the tallest commercial real estate building in Western Europe which stands at a height of 310 meters. It contains, high-end offices, three affluent restaurants-Hutong, Oblix and Aqua Shard, the 5-star Shangrila hotel, great residential apartments and the highest public viewing gallery of the capital-The View from The Shard.
It’s well-connected and exhaustively serviced by the transport infrastructure of Central London with excellent amenities and facilities. This property which was launched in 2013 is set to redefine the skyline of London and become a representation of the capital, recognized all over the world.
Eurasia Tower is a skyscraper of height of 308.9 meters in Moscow which underwent construction in 2013. It was designed to house apartments, offices, an affluent hotel and other forms of entertainment.
The commercial real estate property is based on a three-tier podium which has a fitness center, shops, restaurant and entertainment. This building is spread over an area of 207,542 square meters and is basically an office and recreational space. The other areas are distributed as follows-residential apartments occupy 21,185 square meters while office space takes up 106,231 square meters.
The bottom of the building can accommodate more than 1000 cars. The outside of the skyscraper has a scenic elevator that allows individuals to enjoy magnificent views of the city while making their way up and down.
Mercury City Tower (Moscow)
Mercury City Tower is a skyscraper of 75 stories located in Moscow International Business Center. The construction on this project commenced in 2009 and by 1st November, 2012 the building stood at 338.8 meters, surpassing The Shard to emerge as the tallest structure in Europe.
The commercial real estate building is an eye-catching illustration of Moscow’s dramatic change from extreme shabbiness to flourishing prosperity-the majority of which is driven by revenues from oil and natural gas.
Igor Kesavey, an eminent member of the Mercury Company says that Mercury City shows the business activity levels in Russia. He further adds that Russia is on a par with nations from the euro zone and will continue to develop and move forward.
The structure houses commercial offices and residential condominiums in a total area spanning 180,160 meter square.
Woodfield Mall (Illinois)
Woodfield Mall is a massive shopping mall located in Illinois at the intersection of Interstate 290 and Golf Road. It’s the largest shopping hub in the state of Illinois besides being one of the largest shopping complexes in the United States. The place pulls in 27 million visitors annually.
The total retail space of this commercial real estate property is a staggering 2.2 million square feet. It has a total of 300 stores and restaurants and is a major tourist hub in the state of Illinois. Some renowned retailers here include Johnston & Murphy, Stride Rite and The Limited.
The center is anchored by Lord & Taylor, J.C. Penney and Macy’s. Its parking lots are always crowded no matter the season. The hub features a heady mix of eating, shopping and various other entertainment options.
Mall of America (Minnesota)
The Mall of America (MoA) is a shopping hub owned by the Triple Five Group in Bloomington, Minnesota. At present, it’s ranked the best mall in the US with around an amazing 40 million visitors annually. Launched in 1992, the place pulls in visitors from Minnesota, Iowa, Wisconsin, Canada and Ohio among others.
The commercial real estate hub which spreads over an area of roughly 2,500,000 square feet employs approximately 12,000 individuals.
The Triple Five Group announced an initiation of an expansion project in the mall that would cost $200,000,000. At present Mall of America remains 4% vacant while the nearby Southdale Center is 18% unoccupied.
Kamppi Center (Helsinki)
Kamppi Center is a commercial hub based in the Kamppi district in Helsinki. It was opened in 2006 and has a total retail space of 37,000 meter square. The main designer behind the project was Juhani Pallasmaa. Currently, this commercial real estate establishment is regarded as the commercial and residential hub of Helsinki.
Some features of this property include the following:
- Bus terminal at the center for local buses
- Underground long traffic terminal
- Kamppi metro station which is underground
- Underground internal parking area
- Underground freight depot.
- Shopping center of 6 floors with shops, nightclubs, restaurants and various service points.
- High-end residential apartments and offices.
Fontainebleau Resort (Las Vegas)
Fountainbleau Resort is a 68-story commercial property in Las Vegas and houses a hotel, condominiums and a casino. It’s built on an area of 24.5 acres at a cost of $ 2.9 billion. The total area of the property has been divided as follows-a casino of 95,000 square feet, a spa of 60,000 square feet, a performing arts theater of 3,300 seats, 1018 units of condo-hotel, retail space of 180,000 square feet, a conference space of 400,000 square feet, nightclubs and 24 lounges and restaurants.
The commercial real estate property underwent an elaborate renovation recently which cost more than $ 200 million. This included the construction of a 36-story tower and a new entry, with panoramic views.
One World Trade Center (New York City)
One World Trade Center is the main building of the new World Trade Center located in Lower Manhattan, New York City. The skyscraper with 104 stories is built on the location of the original 6 World Trade Center. This commercial real estate property is bounded on the south by Fulton Street, to the North by Vesey Street, to the east by Washington Street and to the west by West Street.
The steel structure of the tower topped out on 30th August, 2012. The final constituent of the building’s spire was installed on 10th of May, 2013. This resulted in the commercial real estate structure as the tallest skyscraper in the Western Hemisphere besides being the fourth tallest in the world in terms of pinnacle height.
The initial construction cost of this structure as on February 2007 stood at $ 3 billion or roughly $ 1,150 per square foot. By April, 2012 the total cost of the tower touched $ 3.9 billion. The top floor of the building is designated as 104 and 86 usable floors above ground level. Out of these 78 will be allotted as office space, which will cover around 240,000 square meters. The offices will start from the 20th floor and run through the 63rd floor. A sky lobby will be present on the 64th floor following which the office floors will reoccupy between the 65th and 90th floors. There are plans to construct a restaurant at the top of the structure.
City of Capitals (Moscow)
The City of Capitals is a multifunctional center, which includes twin tower skyscrapers, based in the Moscow International Business Center, Moscow. The tower underwent construction in 2009 and has a height of 301.6 meters.
The top floors of this commercial real estate building are occupied by large apartments, office suites and entertainment complex. The property consists of two towers. These are the Moscow Tower of 76 levels and St. Petersburg Tower of 65 levels. The 17th and 18th floors of both towers house offices.
The structure sits on a lobby which consists of 4 floors above the ground and 6 underground for public space. The offices in this complex are designed based on the latest international standards.
The total floor area here is 288,680 meter square with a parking space that can accommodate nearly 2000 vehicles.
Marquis is a tall skyscraper in Miami based in northeastern Downtown. The tower stands at a height of 700 feet and has 67 floors, which makes it the structure with the highest number of floors in all of Miami. At present, it’s the third tallest commercial real estate property in Miami.
The first three floors are used by the hotel and retail. Hotel units, parking and amenities occupy floors 5 to 14, while the residential units take up floors 15 to 67. This is one of the most expensive properties in the downtown region with some units carrying a price tag of $ 7,000,000.
In addition to the above mentioned commercial buildings, construction is going on in full swing on some structures both in Europe and the US.
Some of these are as follows:
- One 57 (New York City)
- Met 3 (Miami)
- 360 Tenth Avenue (New York City)
- One Bayfront Plaza (Miami)
- 181 Fermont Street (San Fransciso)
- CityLife (Milan)
- Riverside South (London)
- DC Towers (Vienna)
- Tour D2 (Paris)
With the improvement in the economy, there seems to be a surge in construction activity all across the US and Europe. New York City heads the list with $ 17.2 billion worth of fresh construction projects in 2011. Moscow is heading the pack among the European nation with many new construction projects completed and some more which are in the developmental stages.
Texas is another state that is welcoming new commercial constructions. Dallas roped in $ 9.5 billion, while Houston and San Antonio welcomed $ 8.8 and $ 3.3 billion respectively in new startups in 2011.
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