Nonprofit Blog

[[{"type":"media","view_mode":"media_large","fid":"1431","attributes":{"alt":"","class":"media-image","height":"199","style":"float: right; margin: 10px;","typeof":"foaf:Image","width":"300"}}]]The Atlanta ZIP code, 30363, was recently ranked number 10 among America’s ‘Top 10 Boom Towns,’ according to Realtor.com. The improving local economy is fueling new construction, lower vacancy and higher rents in the area. Millennials are also a large part of this improving economy.  

News and predictions surrounding interest rates have dominated industry headlines for quite some time. The Federal Reserve’s first interest rate hike since 2006, which arrived in mid-December after months of speculation, should act less as a cause for alarm than as a bellwether of even better things to come for the economy as a whole, as well as the CRE industry.

In recent years, tax-free spinoffs under Sec. 355 involving REITs became popular among corporations with real estate holdings. The essence of REIT spinoffs is that valuable real estate leaves the corporation and moves tax-free into the favorable REIT tax regime. New tax legislation that took effect December 7, 2015, severely curbs this tax planning strategy.

Throughout 2015, metro Atlanta experienced vibrancy and resilience in most sectors within the commercial and residential real estate markets. Office vacancy rates across the city have reached their lowest levels since 2008, while home prices rose 11 percent from December 2008 to November 2015 (S&P/Case-Shiller U.S. National Home Price Index) . The Atlanta real estate market is expected to thrive in 2016 through new developments, job growth and a growing housing market.

Real estate industry CEOs and CFOs were the highest paid across eight major industry sectors during 2014, according to The BDO 600 CEO and CFO Pay Study. Last year, real estate CEOs and CFOs were the second most compensated, falling right behind executive leaders from the energy sector. The analysis was conducted by BDO’s dedicated Executive & HR Practice, and examined proxy statements of public real estate companies with annual revenues between $25 million to $1 billion.

Deal activity in the commercial real estate sector is growing amid soaring property values and an increased appetite for risk, according to the Wall Street Journal. While many post-crisis investments have focused on core properties—fully leased buildings—some investors are now looking for funds that buy into new developments and other riskier assets, often looking for 20 percent yield or more. Morgan Stanley, hit especially hard by the last housing crisis, recently raised a $1.7 billion higher risk fund, marking a recovery from the downturn, the Journal reports.

[[{"type":"media","view_mode":"media_original","fid":"1021","attributes":{"alt":"","class":"media-image","height":"125","style":"float: right; margin-left: 5px; margin-right: 5px;","typeof":"foaf:Image","width":"250"}}]]Not so many years ago, Cobb County was considered “up there” - an almost-country cousin of Atlanta. With an ongoing recovery from the recession and a boom-like expansion more recently, you’ll now find just about everyone including Cobb County as a major part of “Atlanta.” Never mind that a piece of Cobb County has always been in Atlanta, what the county has known for a long time is now common knowledge: proximity to the Atlanta city limits with just enough distance for a buffer, easy interstate and surface street access combined with plenty of room for home and commercial growth means Cobb is an ideal place for growth. Some sources show that Cobb County home values have gone up almost 7% over the past year and that median sales prices are up as much as 24% since their low in 2012.

Purchasing power and capital distributions are at record highs in 2015 for real estate private equity funds. By mid-year 2015, private equity funds had increased 37 percent over year-end 2014. Additionally, Preqin reported a record $187 billion dollar return to investors in 2014. With countless new opportunities, private equity real estate funds are positioned to close out the fund cycle they began before the Great Recession.

Smith & Howard was pleased to sponsor and participate in Bisnow’s real estate program, “The Future of Downtown Atlanta.”   With Mark Abrams moderating not one, but two panels of real estate all-stars, we heard many great insights and stats on the future of Downtown Atlanta. 

An investment in commercial real estate, as with any investment, is a bet on future events and circumstances. Since the value of the acquired property can change if its location's demographics and economy shift over time. That's why it is critical to determine at the start of your search how much and where to invest in order to hedge your real estate bet.  There are certain basic factors that real estate investors generally consider when assessing the viability of an investment in a specific property or region. A proper assessment of these factors will result in a determination of where to invest and what type of property to invest in.