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VCU
Real Estate Trends Conference Brings Big Names to Virginia
Introduction
Virginia Business has partnered with VCU's Real Estate
and Land Development Program to sponsor the 13th Annual
Real Estate Trends conference on Tuesday, October 21st
at the Greater Richmond Convention Center. The program
presents nationally recognized experts covering topics
of importance to the business community. I hope you
consider attending this year's conference to further
your understanding of current real estate trends in
the Commonwealth.
Doug
Forshey
Publisher, Virginia Business
Related
links:
- PRIME REAL ESTATE: VCU’S
REAL ESTATE AND LAND DEVELOPMENT PROGRAM HITS IT BIG
- CIRCLE OF EXCELLENCE
By
Lauren Hall
Special Correspondant
Predicting
real estate trends is much like predicting the weather,
but when some of the best minds in the business get
together, you can expect a fairly accurate forecast
for the future. Such will be the case when Virginia
Commonwealth University’s Real Estate and Land
Development Program holds its 13th Annual Real Estate
Trends conference on October 21st. This year’s
conference features a prestigious line-up of speakers
including Ken Riggs of the Real Estate Research Corporation,
Tad Philipp of Moody’s Investors Services, and
Petch Gibbons of Advantis Real Estate Services.
Jan
Alpert, president of LandAmerica Financial Group, says
her company has been a sponsor of the Real Estate Trends
Conference for several years because it has become the
“go-to” event for everyone involved in the
real estate industry in Central Virginia. “Everyone
who attends the conference walks away with information
they can utilize in operating their business and fine
tuning future strategies. It is also the who’s
who of real estate networking,” says Alpert. “This
year’s conference looks to be the best yet. And
while the benefit to individual participants is extremely
important, the conference provides financial support
to the outstanding VCU Real Estate Program.”
Outlook
‘04 - As area business leaders converge on
the Richmond Convention Center, Ken Riggs, CEO of Real
Estate Research Corporation, will unveil RERC’s
forecast for the commercial real estate industry for
2004 and beyond. The RERC National Forecast is widely
used by appraisers, attorneys, lenders, investors, and
others to benchmark their real estate investment decisions.
Riggs
will present an in-depth analysis of the economic factors
impacting the real estate market industry, focusing
on the lack of job growth and business investment and
how they affect supply and demand. The disconnect between
performance data and investor expectations will be examined,
along with the conflicting trends among real estate
capital, space markets, and pricing. Riggs also will
review market fundamentals and investment conditions
by property sector and present RERC’s overview
of real estate risks, rewards, and expectations in our
technology-driven world.
Riggs’
presentation will be based in part on RERC’s current
real estate survey research, which shows that real estate
investors continue to lower their return expectations.
In fact, second quarter 2003 pre-tax yield rate expectations
for all property types, as described in the summer 2003
RERC Real Estate Report, were lower than they’ve
been in the last two years. Likewise, RERC’s going-in
and terminal capitalization rate expectations have been
declining over the last year, with second quarter 2003
rate expectations falling 10 to 30 basis points from
last quarter’s rates.
Expectations
in the Richmond market, one of RERC’s newly covered
real estate markets and where RERC Principal Robert
Gray is based, will also be discussed.
Copies
of the RERC National Forecast, Cycles and Industry Outlook
for Real Estate: 2004, will be provided to attendees
of the conference.
COMMERCIAL
MORTGAGE BACKED SECURITIES
Tad Philipp, Managing Director of Moody’s Investors
Services in New York, will discuss his evaluations of
various markets and property types. His quarterly report,
CMBS: Red-Yellow-Green Quarterly Assessment of US Property
Markets, uses a scoring system that is based on four
weighted components for each market. They are the current
vacancy level; changes in vacancy over one year; amount
of supply added to existing stock; and construction
in progress compared to expected demand. Expected demand
is based on a complex economic model that takes into
consideration, among other things, a market’s diversity,
employment growth, office occupancy per square foot,
and other factors.
In
Moody’s report, the status of markets are described
in traffic lightcolors: red (0-33, under stress), yellow
(34-66, warrants monitoring), and green (67-100, not
under imminent stress). These ratings are critical because
they can impact loan pricing, no matter whether a loan
is securitized or not. For the first time, the Central
Virginia Market will be scored along with an evaluation
of the top real estate markets.
PENTURBIA
- Petch Gibbons, president and CEO of Advantis/GVA,
will address what is widely believed to be the next
migration trend in America, penturbia. Originally coined
by Dr. Jack Lessinger at the University of Washington,
the term penturbia refers to the anticipated shift of
population and industry to tier two and three markets
in temperate climates with a great quality of life and
a lower cost of living.
According
to Gibbons, we are now on the brink of the next major
population migration fueled by the same incentive that
drove us to the suburbs: an affordable, high-quality
lifestyle.
“The
next migration is not merely about financial profit,
rather it is fundamentally a lifestyle opportunity,”
says Gibbons.
So
what are the winning characteristics of the best penturbia
communities? Small communities with temperate climates
in the mid-Atlantic and southeastern states stretching
from Virginia to North Florida are primed for penturbia.
Americans are flocking to areas that offer natural beauty,
rivers, lakes, greenery and open space, near the beach
or mountains. Communities that offer good medical facilities,
universities and airports are highly desirable. Safe
areas with a good quality of life, a relatively low
cost of living and good schools are the most desirable
to relocating individuals, families and corporations.
Gibbons believes the migration to penturbia has accelerated
for a variety of reasons: Baby boomers are feeling the
effects of their mid-life crisis; business can be done
anywhere thanks to increasingly affordable technology;
and, post-9/11, many big city dwellers are more concerned
about terrorism and security issues.
Gibbons
has seen first hand the increased interest in secondary
and tertiary markets. While his company has operations
in large markets such as Washington, Atlanta, Orlando
and Tampa, it also serves smaller markets like Jacksonville,
Tallahassee and Panama City, Florida, and Norfolk, Newport
News and Richmond.
“Brokers
in our mid- and small-sized markets have seen a definite
up-tick in interest from outside businesses and investors,”
says Gibbons. “State and local incentives in these
markets, combined with improved quality of life, are
making the move away from large markets increasingly
more attractive. A perfect example is Phillip Morris’
recent relocation to Richmond.”
“In
general, our penturbian markets didn’t experience
the wild boom of the late 1990s, so they weren’t
as affected by the bust that followed,” Gibbons
notes. “That factor of economic stability looks
very attractive right now.”
Again,
much like the weather, it appears that the upcoming
real estate forecast will be a “mixed-bag”
of both clouds and sunshine. Neil Kessler, a partner
at Troutman Sanders and chairman of Real Estate Trends
‘03, believes attending this year’s conference
is a great way to be prepared. “Providing area
business leaders with access to the brain trust we have
compiled for this event is an outstanding opportunity,”
says Kessler.
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