Bradley Company today announced the grand opening of the $8 million Studebaker Lofts luxury residences. Located in the heart of downtown South Bend, Studebaker Lofts occupies the top six floors of the mixed-use redevelopment project at the historic JMS Building.
Studebaker Lofts are the first luxury apartments to be developed in downtown South Bend and will anchor the Main Street residential corridor that will total over 150 high-end apartments by the end of next year. The forty-six thoughtfully designed and fully-appointed apartment units offer one, two, and three-bedroom urban residences with quality finishes and an amenity package including a resident lounge, exercise facility, storage lockers, bicycle room, dog run, and the first fully automated package room in South Bend.
The renovation of the 107-year-old JMS Building, bringing new retail, office, and residential uses to the city, is the result of the collaborative efforts of Great Lakes Capital, Bradley Company, Centier Bank, HGR Construction, and the City of South Bend. The renewal of the long-time community landmark builds on recent efforts to revitalize the downtown area, attracting young, professional residents and new commercial tenants including Centier Bank and the soon-to-open Lark Martini Bar.
“The forward momentum in downtown South Bend is unquestionable and we are thrilled to be located in the center of it,” said Kristen Sawdon, Director of Asset Management for Great Lakes Capital.
JLL Indianapolis Capital Markets announced the company completed the sale of Intech Ten in Indianapolis. JLL represented the seller, Colony Northstar. Priam Capital, of Nashville, Tennessee, bought the property and is their second purchase in Indianapolis. The JLL team of Rebecca Wells, Kevin Gillihan and Jack Hogan led the sale of the asset.
“A surge in the technology sector is pushing tech employment to record highs in Indianapolis,” says JLL Capital Markets Executive Vice President Rebecca Wells, CCIM. “Colony Northstar chose the right time to maximize their opportunity by selling Intech Ten, which is part of the only privately-held certified technology park in Indiana.”
Recently named one of the fastest growing technology markets in the United States, Indianapolis is attracting tech and traditional companies alike, as evidenced by the recent strong leasing velocity at Intech Ten. The Class A suburban office building consisting of approximately 116,248 square feet is 93.7% occupied.
Located in the northwest submarket of Indianapolis, Intech Ten is minutes from downtown Indianapolis, the Indianapolis International Airport, as well as surrounding interstates. The prominent suburbs of Zionsville and Carmel are nearby, drawing a talented and educated workforce. The building is an exceptional environment for tenants. Aside from the fully renovated lobby and common areas, the property is connected to Eagle Creek Park, a public park with 1,400 acres of water and 3,900 forested acres.
JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether a sale, financing, repositioning, advisory or recapitalization execution. In 2016 alone, JLL Capital Markets completed $136 billion in investment sale and debt and equity transactions globally. The firm’s Capital Markets team comprises more than 2,000 specialists, operating all over the globe.
EDITOR’S NOTE: Come hear directly from Rebecca Wells at the Indiana Real Estate Journal Capital Market Conference
Berkadia announced the recent sale of Abbey Court, a 250-unit multifamily complex located in Evansville, Indiana. Chris Bruzas and Alex Blagojevich of the Chicago office exclusively listed the property and completed the sale on August 31st. Bruzas and Blagojevich represented the Seller, Samaritan Companies of Indiana. Add that to the 100-unit La Casa Estates in Elkhart, a 74 unit in Nappannee, and the 320-unit Chapel Oaks in Fort Wayne and the Berkadia team, run by Blagojevich, is having a productive couple of months. “There is tremendous demand from investors to purchase large assets with value-add upside. Cap rates continue to compress in strong markets like Indianapolis, Evansville, and Ft Wayne,” according to Bruzas.
“Samaritan Companies saw this asset as a geographic outlier in their portfolio. BAM saw the asset as a great opportunity to add to their value add portfolio and expand in the region.” Said Bruzas “Both the Buyer and Seller are sophisticated HUD borrowers, which made the assumable HUD loan and TPA process very smooth. The property is in excellent condition, despite its 40 plus-year-old age. BAM plans on implementing their strong management platform as well as renovating the remaining units to the asset.”
Over the past 30 years, Samaritan Companies has been involved in developing, purchasing and managing numerous commercial, residential and multi-family communities in the Midwest as well as hotels and self-storage facilities. A company with a wide range of experience, and a strong vision for the future. The various entities within the umbrella of Samaritan Companies are involved with Development, Management, Insurance, Financing, and Realty Services.
The Buyer was Barratt Asset Management of Indianapolis, IN. Barratt Asset Management is headquartered in Indianapolis, IN, and specializes in the acquisition and management of multifamily apartment communities. BAM provides an array of real estate services, utilizing the knowledge and strengths of its employees and local market expertise to achieve maximum benefit for community residents as well as investors. From humble beginnings, BAM has grown from the management of a few small properties to over 100 million in total assets under management and ownership.
Year-to-date returns on the FTSE NAREIT Index show that the REIT categories that are leading the pack this year are data centers and infrastructure.
Investors searching for alpha returns in a maturing real estate cycle are looking beyond the mainstream REITs to some of the outliers, such as data centers, cell towers and manufactured housing.
“We’re seeing a lot of non-core REIT sector outperformance,” says Haendel St. Juste, senior REIT analyst at Mizuho Securities USA. The core real estate sectors aren’t as interesting for a number of reasons, including slowing growth, as well as bigger headwinds facing some individual sectors, he says.
Year-to-date returns on the FTSE NAREIT Index show that the REIT categories that are leading the pack this year are data centers and infrastructure, with total year-to-date returns as of Sept. 8th at 31.9 and 31.3 percent respectively. Manufactured homes also have been strong at 19.0 percent and industrial at 19.8 percent. On the flipside, those sectors that are at the bottom of the pack include retail at a loss of 9.8 percent; lodging/resorts at a loss of 2.4 percent and office at a loss of 0.9 percent.
“Investors have had to migrate outside of those core sectors to create alpha returns this year,” says St. Juste. “That is a dynamic that will probably continue in the near term, because many of those sub-sectors continue to have a growth advantage.”
Some of the traditional mainstays have struggled this year. Office has been flat and there is not a lot of excitement from investors about that sector, notes St. Juste. “Retail is a subsector where people just don’t know what to make of it and are approaching it with a lot of apprehension,” he adds.
Retail REITs are getting hit by weaker performance, as well as a more negative perception of the space. “We are clearly over-retailed in the U.S. and the growth in e-commerce is really not helping brick-and-mortar stores,” says Joi Mar, an analyst at research firm Green Street Advisors. That being said, retail is a mixed bag in terms of performance. Top class-A malls and well-located grocery-anchored centers are out-performing the class-B and -C malls and big box-anchored power centers. “Particularly among the low-quality malls, we think several hundred malls will close over the next 10 years or become irrelevant retail destinations,” says Mar.
Industrial has benefited from the growth in e-commerce and more demand for the distribution and fulfillment of those online orders. Import activity is also up, which is driving more demand for industrial space, while new supply has remained in check, notes Mar. “We expect rent growth to exceed inflation over the next several years for industrial,” she adds.
According to the latest Green Street Commercial Property Price Index for August, the industrial sector has seen the biggest increase in values over the past 12 months at 10 percent, while malls, strip retail centers and self-storage all posted drops in values, with malls at -6 percent; strip retail at -5 percent and self-storage at -3 percent.
There could be some improvement in the multifamily sector with new supply that is being absorbed and a slowing development pipeline. “We like apartments, but it certainly seems like the edge continues to be in those non-core real estate subsectors,” says St. Juste.
One non-core sector that may see its stellar performance fading is self-storage, with a year-to-date return at 1.7 percent, according to the FTSE NAREIT Index. The category has enjoyed a strong run over the past several years. However, its recent decline in performance is due to a number of factors beyond just a sector that is nearing its peak and experiencing slower growth, notes Mar. Secular demand drivers are also weakening in terms of shifting consumer trends, notes Mar. People are buying less stuff and relying more on technology. For example, as people continue to embrace digital technologies, they have less need to store things such as books, photographs and documents.
The bigger picture points to slower growth for REITs in general. According to the FTSE NAREIT All REIT Index, the total year-to-date returns as of Sept. 8th averaged 8.0 percent, which is lagging the S&P and Dow Jones Industrials indexes at 11.5 percent and 12.3 percent respectively.
Investors are not abandoning the REITs, but they are being more selective, notes St. Juste. There are concerns about late-cycle decelerating growth and more issues popping up in specific real estate sectors. The silver lining is that interest rates remain low, which is good for REITs, he says. REITs also tend to be viewed as a safe harbor for people who are seeking shelter in a more volatile economic and geo-political environment. So that could also help the sector, adds St. Juste.
This summer, for the first time in several years, student housings beds were not leasing as quickly as the year before.
Student housing properties leased up more slowly this year, thouth they still started the academic year fully-occupied on average, according to several industry sources.
“The student housing market moderated this year,” says Taylor Gunn, student housing analytics lead for data firm Axiometrics, a RealPage company. “This was anticipated to occur at some point after several consecutive years of record performance.”
The data is still coming in from the fall lease-up period, but early reports show the student housing sector is still very strong, just not as strong as it has been.
“The space is becoming more competitive with new operators and investors, more supply and universities revitalizing their housing. A lot of these factors can be expected with a growing industry, but can prove to be a challenge for some going forward,” notes Gunn.
Good, not great
Student housing properties still filled up quickly this year. Given the numbers for June, it’s likely that the average student housing property is now fully occupied.
However, this summer, for the first time in several years, student housing beds were not leasing as quickly as the year before. As of June, 84.1 percent of student housing beds had been pre-leased. That’s below the pre-leasing level in June 2016, though just by 30 basis points, according to Axiometrics.
Pre-leasing fell behind both 2015 and 2016 levels, even though many managers of student housing gave themselves a head start.
“In the past, most properties in most markets started pre-leasing in mid-to-late October,” says Fred Pierce, president and CEO of Pierce Education Propertie, an investor in and developer of student housing communities. “This year the norm was to start pre-leasing in early October. However, the earlier starts are not necessarily translating to different ending occupancies.”
Leading student housing operators contacted for this story say they are starting the academic year with solid occupancies. “The pace of the lease-up was a little slower, but we were able to finish above plan,” says Mike Schwaab, senior director for TH Real Estate, a real estate investment management firm, which started the school year with 97 percent of its student housing beds occupied and its overall rent roll larger than 2016.
“Most of the markets we are currently in have trended at or above forecasted occupancy,” says Michelle Fuller, managing director for multifamily giant Greystar.
The shadow of overbuilding hangs over many student housing markets, but many new developments are performing well, despite competition for residents. “In total, CA Student Living properties are trending in line with, or slightly ahead of, previous years. We are 95.5 percent leased overall and 97 percent leased on our 2017 developments,” says JJ Smith, president of CA Student Living, a student housing development and investment firms.
Developers were expected to deliver 46,000 new student housing beds for the fall 2017 semester, though some of those bed have surely been delayed, potentially into 2018, according to Axiometrics. That’s roughly the same number of beds developers opened in 2015 and 2016.
Axiometrics has already identified 41,700 beds to be delivered for fall 2018, including nearly 12,000 beds still in the planning stages.
Outlook for the future
Looking ahead, student housing developers are struggling to keep their new properties affordable, so they don’t price themselves out of the reach of too many students or suffer from too much competition from other luxury student housing properties.
“Oversupply at the top end of the market is also something we’re closely monitoring,” says Smith.
Some operators are looking for efficiencies that can help them keep their rents down. “Operational efficiency and optimal pricing will grow increasingly more important given today’s environment,” says Gunn.
Developers are also planning to build new projects at a somewhat lower price point. “The broader market remains stable, with enrollments continuing to grow,” says Schwaab. “We intend to appeal to a wider demographic by delivering some new middle-of-the-fairway developments.”
Ohio based Generative Growth II announced today that it will be rebranding and converting 14 former
Marsh Supermarkets to Needler’s Fresh Market. One remaining store located in Van Wert, Ohio will adopt the
already established Chief Supermarket brand. Generative Growth purchased 15 of the Marsh stores in June for $8
The new exterior and interior store branding will be completed by the end of October. Customers will begin to see
the new branding appear on advertising September 15th. “Customers can expect a clean, fresh look with our
marketing and communication”, said Julie Anderson, Vice President of Marketing and Partner in Generative Growth
The Indiana Marsh stores receiving the new branding are located in New Palestine, Marion, Indianapolis (2),
Columbus, Hartford City, Elwood, Tipton, Pendleton, Richmond and Greensburg. Three Ohio stores receiving the
new store banner are located in Troy, Middletown, and Eaton.
Generative Growth II is owned by Ohio third generation grocers, Michael S. Needler, Jr. and Julie N. Anderson.
“Needler’s Fresh Market truly represents who we are as a family and as an operator.”, said Michael Needler, Jr.,
CEO of Fresh Encounter, Inc. and Partner in Generative Growth. “My sister, Julie, and I have grown up in the grocery
business and look forward to bringing our genuine family values to the former Marsh stores. I know customers will
begin to experience the pride we feel serving our friends and neighbors every day.”
Needler’s Fresh Market will place added concentration on sourcing local fresh produce, and providing high quality
in-store made products in the bakery and deli. Needler adds, “Our fresh meat offering is second to none. Customers
will enjoy premium angus beef, all-natural pork and Miller Amish Country poultry. It’s a real privilege to serve these
communities and Needler’s have been doing it in Indiana and Ohio for nearly 100 years.”
Marsh, a one-time industry leader in grocery innovation, filed for protection under Chapter 11 of the U.S. Bankruptcy
Code in May after closing 19 stores
CurrentinCarmel.com recently published a story about the Greenway expansion in which the Mayor is quoted as calling it Carmel’s version of “Beachfront Property”. Not all residents agree with the Mayor’s Urban Vision. One reader argued that he moved to the suburbs for a suburban feel. What do you think? Is the Monroe Expansion good for commercial real estate and the residents of Carmel?
According to Preqin’s June 2017 survey, 73 percent of survey respondents plan to maintain their current level of investment in real estate funds or increase their allocations over the next 12 months.
Real estate continues to be viewed as an attractive alternative asset class by global institutional investors, and they plan to funnel more money into the sector over the next 12 months, according to a recent report from London-based research firm Preqin.
According to research conducted by Preqin in June 2017, 95 percent of surveyed institutional investors indicated that their real estate investments met or surpassed their expectations over the past year. As a result, 73 percent of survey respondents plan to maintain their current level of investment in real estate funds or increase their allocations over the next 12 months. That figure is down slightly from 76 percent who planned to do so in December 2016, but up from 70 percent in December 2015.
In terms of the strategies that investors plan to pursue with their real estate allocations over the next 12 months, core-plus assets and debt seem to have become significantly more attractive since June 2016. In June 2017, 42 percent of survey respondents indicated they plan to go after core-plus assets, compared to just 25 percent last year. Another 26 percent of investors will focus on real estate debt, vs. 18 percent who indicated they planned to do so in June 2016.
On the other hand, the percentage of investors planning to pursue opportunistic plays went down to 47 percent from 53 percent last year. The interest in core, value-add and distressed strategies remains roughly the same.
Unlisted funds will be the preferred method of investment for the majority of survey respondents, at 77 percent. Fifty-four percent will target direct investments in real estate, and another 36 percent plan to use listed funds.
Pricing and valuation will be the key issue for the real estate sector over the next 12 months, according to 72 percent of surveyed investors. Already, 52 percent feel that it is harder to find attractive opportunities than it was a year ago. Another issue that ranks high on investors’ concern list is deal flow, with 36 percent identifying it as a potential challenge in the next 12 months. Concerns about asset performance ranked third, cited by 30 percent of investors.
The percentage of investors who have an overall negative view of real estate as an asset class rose from 7 percent in December 2016 to 14 percent in June 2017. The percentage of investors who view real estate positively went down from 50 percent to 44 percent during the same period. However, the figure is still higher than 37 percent who viewed the asset class positively in December 2014. Roughly the same percentage of investors—42 percent vs. 43 percent in December—remain neutral on the sector’s attractiveness.
The results of the survey come from interviews with 540 global institutional investors that took place in June of this year. Respondents to the Preqin survey included, in order of prevalence: public pension funds, family offices, private sector pension funds, asset managers, insurance companies, endowment plans, foundations, investment companies, banks and companies that identified as “other.” Approximately 36 percent of respondents are based in North America, 33 percent are based in Europe, 26 percent are in Asia Pacific and 5 percent are based elsewhere.
Tikijian Associates announced this week the completed sale of Lake Castleton, a 1,261-unit apartment community located on Indianapolis’ popular north side. From the perspective of total sale price, the transaction represented the largest apartment sale in Indianapolis history.
Tikijian Associates represented the seller, an affiliate of Mt. Auburn Capital, a Los Angeles-based Private REIT. Founded in 2004, the company now owns approximately 10,000 units throughout the country. Bluestone Properties, the seller’s affiliated management company, had managed the property for the seller since its acquisition from AIMCO in 2009.
The community has been exceptionally well maintained and had a history of high occupancy. The seller had successfully begun implementation of a unit upgrade program with renovated units achieving significantly higher rents.
The buyer is an affiliate of Sterling Group, a well-respected developer, owner and manager based in Mishawaka, Indiana. Founded in 1976, Sterling Group owns and manages apartments and storage facilities in fifteen states in the Midwest and South. The buyer plans to upgrade a significant number of units and to enhance the property’s two clubhouses and amenities.
WORLD CASINO NEWS:
Tropicana Evansville General Manager, John Chaszar, announced on Tuesday night the opening date for the new land-based casino and entertainment facility is October 20th.
During the live news conference, Chaszar thanked the Indiana General Assembly, which in 2015 passed new land-based legislation making the transformation from riverboat possible. The casino’s GM went on to say that the move to land, after having operated on a riverboat for 20-plus years, brings Tropicana Evansville on an “even playing field” with their competitors in neighboring states.