Inventory - City of Blue Springs, MO

Transcription

Blue Springs
Developers Training Workshop
February 8, 2007
Integra Realty Resources
National Real Estate Market
Presented by Kenneth Jaggers, Managing Director – Integra Realty Resources
Growth Continues
2006 marked a year of a robust economy, real
property values increasing while sales
volumes are contracting
GDP growth expected to be about 3%
The Economy
The data shows that the economy is
rolling along:
• 2006 CPI – 2.7%; Core CPI 3.2%
• Unemployment – 4.5%
Yield Curve
2006 ended with an inverted Yield Curve
January 2007
October 2005
Inversion Point
7/31/06
July 2004
7
9/ 0
6
5/ 0
6
1/ 0
6
9/ 0
5
5
5/0
1/ 0
5
4
9/0
4
1/ 0
Federal Reserve Bank of Kansas City
4
FFR
1 year
2 year
3 year
4 year
5 year
6 year
7 year
8 year
9 year
10 year
5/ 0
Percent
1/ 0
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Yield Curve Update
• Will long term treasuries rise?
• Will short term treasuries fall?
• Volatile oil prices will play a part in the
pricing of short and long term money for
the foreseeable future
Employment
(unemployment was 4.5% at year end)
7
600
400
Thousands of jobs
5
200
4
0
3
Nonfarm payroll employment change
2
-200
-400
1995
1
1997
1999
2001
Federal Reserve Bank of Kansas City, October 2006, Updated by IRR
2003
2005
0
2007
Unemployment rate
(Percent)
6
New and Existing Home Sales
New Home Sales
Existing Home Sales
New and Existing Home Sales
Thousands
Thousands
1400
Thousands
3-m onth m oving average
6400
Thousands
existing home sales
New home permits
1300
6000
1200
5600
new home sales
1100
5200
1000
4800
900
4400
Jan-04
Jul-04
Jan-05
Jul-05
Source: Federal Reserve Bank of Kansas City
Jan-06
Jul-06
New Home Permits and Starts
New Home Permits and Starts
Thousands
Thousands
2000
2000
3-m onth m oving average
new home starts
1800
1800
1600
1600
new home permits
1400
1400
1200
1200
1000
1000
Jan-04
Jul-04
Jan-05
Jul-05
Source: Federal Reserve Bank of Kansas City
Jan-06
Jul-06
Fortunately, Gasoline and Crude Oil Prices
Have Fallen
$/Gallon
$/Barrel
3.5
80
3.0
70
60
2.5
Retail Gasoline Price
50
2.0
40
1.5
Crude Oil Spot Price
1.0
0.5
30
20
10
0
0.0
1/03 5/03 9/03 1/04 5/04 9/04 1/05 5/05 9/05 1/06 5/06 9/06 1/07
Inflation
Percent
Percent
5.0
5.0
4.5
CPI inflation, 12-month percent change
4.5
4.0
4.0
Overall CPI
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
Core CPI
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
2001
2002
2003
2004
2005
2006
Fuel GDP
0.8%
Historical Real GDP Trend Growth
& IRR Forecast
(IRR expects GDP to grow to about 3%)
Percent
Percent
10
10
Real GDP Growth
8
8
6
6
Percent change
from year ago
4
3%
2
2
0
-2
4
0
IRR
Forecast
Percent change from previous quarter, AR
1996 1997
1998
1999
2000
2001
2002 2003 2004
-2
2005
Federal Reserve Bank of Kansas City, October 2006, Modified by Integra Realty Resources
2006 2007
Review of 2006
Trends
Forecast of 2007
Trends
• Unemployment will
• Yield curve inverted
range from 4% to
• Unemployment holds
4.5%.
steady.
• IRR believes GDP will
• Inflation remains in
grow to about 3%.
check.
• Inflation will pose
• Oil prices have
problems, thus putting
decreased almost $20
pressure on the FED
per barrel.
to raise rates.
Externalities Could Alter Our Forecasts
• Volatility in oil prices. With a $12 trillion economy,
and oil imports of 4.5 billion barrels, each $10 per
barrel oil increase effects the GDP by 0.4%!
• Pressure on the Fed to control inflation.
• Foreign investors must continue to have an appetite
for U.S. treasuries. Currently, over 50% are owned
by foreigners.
• Terrorism could slow the economy.
Economy’s Effect on Real
Estate
Quarterly Sales Volume
Office, Industrial, Retail, Apartment, $5 mil +
$90
one-off
Billions
portfolio
privatization
$80
$70
$60
14%
$50
$40
$30
$20
$10
$0
1 2
'01
3
4
1 2
'02
3
4
Source: Real Capital Analytics
1 2
'03
3
4
1 2
'04
3
4
1 2
'05
3
4
1 2 3*
'06
Year over Year Change in Sales Volume
Jan – Sept. 2005/06
Change in Sales Volume
9 mos 2005 vs 9 mos 2006
ltd svc hotel, 59%
office - CBD, 24%
office - sub, 23%
full svc hotel, 17%
warehouse, 17%
all , 12%
nnn retail, 8%
flex, 7%
urban retail, 6%
garden apt, -3%
mid/high apt, -10%
strip center, -20%
regional mall, -53%
-60%
-40%
-20%
0%
20%
40%
60%
Price Appreciation
Price Appreciation
US Apt
US Office
US Ind
US Retail
1.9
1.8
1.7
Percentage
1.6
1.5
1.4
1.3
1.2
1.1
1.0
0.9
Quarter
Year
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
01
02
03
04
4 1 2 3 4 1 2 3
05
06
Price Appreciation vs. Construction Costs
Through 3Q 2006
Property Values
vs Construction Costs
175%
property*
150%
steel $/cwt
125%
materials
cement $/ton
100%
lumber $/mbf
75%
2001
2002
Sources: ENR, *RCA/MIT
2003
2004
2005
2006
Cap Rates and Interest Rates
10 yr. Treasury
Apartment
Office
Industrial
Retail
11.50
Percentage
10.50
9.50
8.50
7.50
6.50
5.50
4.50
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
3.50
Source: IRR Viewpoint
Risk Premium
Cap Rate to 10 Year Treasury, Basis Points
Apartment
Office
Industrial
Retail
600
Basis Points
500
400
300
200
100
Source: IRR Viewpoint
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
19
94
0
Cap Rates by Market Size
Office, Industrial, Retail, Apartment, $5 mil +
Cap Rate
top 10 mkts
top 25 mkts
all other mkts
10.00%
9.50%
All Other Markets
9.00%
Top 10 Markets
8.50%
Top 25 Markets
8.00%
7.50%
7.00%
6.50%
6.00%
2001
2002
2003
2004
2005
2006
Buyers of Core Properties by Deal Size
avg cap rate
inst'l
foreign
4%
13%
7%
14%
$10 -$20
10%
6%
$5 -$10
5% 3%
8%
< $5 mil 4%1%3%
12%
6%
16%
14%
10%
10%
5%
3%
7%
4% 3%
11%
6%
7%
3%2% 8%
16%
13%
23%
29%
17%
40%
16%
54%
12%
65%
5%
14%
12%
18%
6%
16%
pvt - local
18%
4%
7%
9%
23%
3%
pvt - nat'l
1% 10%
17%
3%
1%
12%
TIC/pvt REIT
21%
14%
8%
20%
$40 -$50
condo cvtr
12%
23%
$50-$100
$20 -$30
user
31%
$100+ mil
$30 -$40
pub REIT
6.0%
6.5%
7.0%
Publicly Traded REITS
Total Equity Capitalization ($ billions)
Equity Cap
$450
$401
$400
$350
$302
$300
$275
$250
$205
$200
$128 $127 $118
$150
$134
$147 $151
$78
$100
$11
1992
1994
$9
$29
1993
$6
1991
$50
1990
$50
$26
Source: NAREIT
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
$-
Private Equity Funds
Cumulative Fund Equity Raised ($billions)
Equity Raised
$250
$225
$215
$200
$175
$162
$150
$125
$100
$75
$50
$25
Source: Ernst & Young and San Jose Business Journal
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
19
93
$0
Alternative Investments
The NCREIF and the NAREIT outperform stocks yet again.
The CMBS Market
Another Record-Breaking Year
Source: Viewpoint 2007
2006 Cap Rates & Trends
2006 Discount Rates & Trends
Office Market Cycle
Retail Market Cycle
Apartment Market Cycle
Industrial Market Cycle
IRR’s Expectations for 2007
• Bullish for the real estate sector in 2007.
• The trend of privatizing REITS should
continue
• The apartment sector will remain strong, with
concessions gone and rents increasing.
• There should be upside in the office sub
sector, with the market cap at 114% of NAV.
Office
Kansas City
Office Market
Office Vitals
Major Submarkets
CBD
Plaza
South
Northland
South
JOCO
North
JOCO
Inventory
13,550,000 SF
Inventory
3,550,000
SF
Inventory
5,500,000
SF
Inventory
2,100,000
SF
Inventory
11,500,000
SF
Inventory
2,700,000
SF
Vacancy
20%
Vacancy
12%
Vacancy
18%
Vacancy
22%
Vacancy
13%
Vacancy
15%
Kansas City MSA Totals – All Submarkets
Inventory: 58,000,000 SF
Vacancy Kansas City: 15% - Suburban, 20% - CBD
18% - Overall
IRR National Average: 13.5% - Suburban, 12.3% - CBD
KC Aviation Department
•
Farmland Building 12200 N.
Ambassador
•
260,140 SF rentable
•
10% occupied at sale
•
Current rent $13 Full
Service
•
Sale price of $18,300,000 or
$70/SF
•
Cost new $35,000,000 or
$135/SF
Deal or No Deal
Cleveland Chiropractic
• Farmland Industries
– Northland
– No Deal
• Sanofi Aventis
– No Deal
• Farmers Insurance
Group
– Deal
Corporate Woods
• 2006 sale
• 1996 sale
• Private REIT Buyer
• Pension Fund
• $275,250,000 excludes
excess land
• $163,050,000 excludes
excess land
• $127/SF Rentable
• $99/SF Rentable
• Cap Rate 7.5%
• Cap Rate 8.9%
Cerner Expands to
South Kansas City
•
443,652 SF
• Lease now
Buy later
•
Cap Ex and Code
Issues $$$$$
•
Can’t make a mole
hill out of a
mountain.
Bargains Galore ?
• Cleveland
Chiropractic
– Likely buyers
for current
building (s)
American Century
• American
Century buys
H&R Block HQ
• $125/SF
• Leaves a 80,000
SF hole in One
Main Plaza
How does KC Measure Up
Capitalization rates and sales volume
KC vs…..
•
•
•
•
•
St. Louis
Minneapolis
Denver
Indianapolis
Detroit
Sales Volume - $ Millions
Detroit, $460
Minneapolis, $1,530
Denver, $2,900
Indianapolis, $590
Kansas City, $510
St. Louis, $690
Detroit
Minneapolis
Indianapolis
St. Louis
Kansas City
Denver
Kansas
KansasaCity
Cityvs…..
vs.....
7 .8 0%
7.
40
%
$140
7.
10
%
$100
7 .6 0%
$80
$60
7 .4 0%
7.
00
%
$120
7 .2 0%
7 .00%
$40
6 .8 0%
$20
$0
St. L
ouis
De nv
er
polis
Minn
ea
s
na po
li
Ind ia
De tro
it
Ka ns
as C
it
y
6 .6 0%
$/SF
Cap Rate
What is to come
RETAIL
Kansas City Retail Market
Retail Overview
Plaza/
Midtown/
Downtown
South
KC
Eastern
Jackson
Northland
South
JoCo
North
JoCo
Kansas
City, KS
INVENTORY:
2,000,000 SF
INVENTORY:
4,250,000 SF
INVENTORY:
7,750,000 SF
INVENTORY:
5,700,000 SF
INVENTORY:
10,000,000 SF
INVENTORY:
4,000,000 SF
INVENTORY:
2,000,000 SF
VACANCY:
120,000 SF
6%
VACANCY:
850,000 SF
20%
VACANCY:
930,000 SF
12%
VACANCY:
486,000 SF
9%
VACANCY:
500,000 SF
5%
VACANCY:
380,000 SF
9.5%
VACANCY:
200,000
10%
Kansas City MSA Totals
• Inventory: 35,705,000 SF
• Vacancy: 3,493,000 SF or 9.8%
IRR National Average: 6.87%
Current Projects
Square Feet
850,000
390,000
90,000
160,000
270,000
625,000
350,000
Spring 2007 Status
Open
Open
Open
Crate & Barrel Open
Partially Open
Pending Opening
Partially Open
Power and Light District
425,000
Corbin Park
The Falls at Crackerneck
Antioch Center
Merriam Pointe
Merriam Village
Prairiefire at Lionsgate
Liberty Triangle
The Gateway
Summit Fair
Shoal Creek Expansion
Plaza at the Speedway
Adams Farm
TOTAL
1,100,000
850,000
515,000
150,000
304,000
348,000
350,000
485,000
550,000
300,000
865,000
575,000
9,552,000
Under Construction
Vertical Construction
Spring 2007
In Development
In Development
In Development
In Development
In Development
In Development
In Development
In Development
In Development
In Development
Approval Process
Current Projects
The Legends at West Village
Olathe Point
Briarcliff
One Nineteen
Conerstone of Leawood
Bass Pro (Johnson County)
Blue Ridge Mall
Tenants Announced
T-Rex, Banana Republic, JC Penny
Marshalls, Off Broadway, Granite City
Tivol Jewlers, Restaurants
Crate & Barrel
Plaza III, Cheeseburger in Paradise
Bass Pro Shop
Wal*Mart
Cosentinos, JoS. A. Bank, Gordon
Biersch Brewery
Von Maur, Best Buy, Barnes & Noble,
Lifestyle Fitness (open)
Bass Pro Shop
----Lowes, Starbucks
---Wal*Mart
--
Adams Farm, Blue Springs
RED Acquired First National’s Development Rights
575,000 square feet
Metro North Mall
Metcalf South
Blue Ridge Mall Redevelopment
• Wal*Mart opens its first “high-efficiency” store
– Goals:
• Use renewable energy
• Create less waste
• Sell products that sustain our resources and environment
– Meeting the Goals
• Use of skylights to cut down on artificial lighting
• Motion detectors on frozen-food cases that triggers the light
when customers near the cases
• Sell more organic foods and organic clothes
The Falls at Crackerneck
Including Bass Pro Shop – Independence
Will this finally be a reality?
2006 Trends
• What’s Hot
–
–
–
–
Lifestyle Centers
Class A Malls
Power Centers
Mixed-Use Urban
Centers
– Centers with New
Concepts (ex.
Corona, Starbucks
drive-through)
• What’s Not
– Unanchored
Retail
– Wal-Mart shadow
anchored strip
– Older Malls Sales
< $250 per SF
INDUSTRIAL
Kansas City Industrial Market
INDUSTRIAL VITALS
2006 – By County
Jackson
Johnson
Wyandotte
Northland
Inventory:
93,100,000 SF
Inventory:
47,000,000 SF
Inventory:
32,500,000 SF
Inventory:
47,400,000 SF
Vacancy:
8,700,000 SF
9.3%
Vacancy:
3,000,000 SF
6.3%
Vacancy:
2,400,000 SF
7.4%
Vacancy:
3,400,000 SF
7.1%
(up 1.3%)
(down 1.5%)
Kansas City MSA Totals
• Inventory: 220,000,000 SF
• Vacancy: 17,500,000 SF or 7.9%
National Average: 8.64%
(up 1.4%)
(down 1.2%)
(Source: Viewpoint, 2007)
Composition of Industrial Space
Manufacturing
7%
Distribution
58%
Distribution
Manufacturing
Office/Flex
Underground
Office/Flex
24%
Underground
11%
Pacific Sunwear
167th & Lone Elm, Olathe
400,000 SF Warehouse
Musician’s Friend
Highway 210 at Norfleet
702,000 SF
Jackson County Industrial Activity
• Stadium Industrial Park
52,500 SF Spec Building
For Lease
• Pfizer in Lee’s Summit
Closed
271,000 SF on 23.6 acres
To Be Razed
Forecast 2007
• Which way in 2007?
• Who will build
speculative space?
• Intermodal?
Mixed-Use
Kansas City Mixed-Use Market
Ridgeview Falls
Ridgeview Falls
119th Street Elevation
Ridgeview Pedestrian Plan
Multi-Family
Kansas City
Multi-Family Market
Market Status
• Single family housing permits for KC Metro
are down 20% from 2005
• Occupancy increasing
• Concessions disappearing
• Cap rates go lower
• Condo conversions of rental inventory in
CBD will offset supply growth
Has Kansas City Missed The Bus?
• Recovery lagging other markets
• KC ranked 37th of 42 multi-family markets
by Marcus & Millichap
Is Kansas City Going Private?
• REIT sales activity in Kansas City was
twice the national average
• Private investors accounted for 61% of
buying activity vs. 42% nationally
• Transaction volume $636 million in 2006
Transaction Volume by Market
$2,500
475,000
$ Volume (Millions)
425,000
Inventory (Units)
$2,000
375,000
325,000
$1,500
275,000
225,000
$1,000
175,000
125,000
$500
75,000
Source: Real Capital Analytics, Viewpoint 2007
bu
s
Co
l
um
s
St
.L
ou
i
is
In
di
an
ap
ol
Ci
ty
Ka
ns
as
in
ne
ap
ol
is
M
Ch
i
ca
go
25,000
De
nv
er
$0
Johnson County
Selected 2006 Activity
Property
Transaction
Units
Price Per Unit
Cap Rate
Plaza Gardens South
Sold
250
$102,600
7.0%
Enclave at Town Center
Sold
193
$95,855
5.9%
AMLI at Regents Crest
Sold
476
$91,050
5.6%
AMLI at Regents Center
Sold
424
$87,264
5.6%
Signature Place
Sold
232
$71,230
6.25%
Plaza Gardens South
AMLI at Regents Center
Signature Place
Northland
Property
Transaction
Units
Barclay Club (85% occupied)
Sold
400
$69,188
8.13%
Manor Homes of Fox Crest
Sold
272
$117,647
6.50%
Barclay Club
Price Per Unit Cap Rate
Manor Homes of Fox Crest
Eastern Jackson County
Property
Transaction
Units
Cornerstone
Sold
420
Price Per Unit Cap Rate
$89,286
6.5%
New Supply
AMLI at Longview
March 2007 completion
Cornerstone
206 units
SINGLE FAMILY
and DEMOGRAPHICS
Blue Springs and Kansas City MSA
# Sales
Sales Volume
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Missouri
2000
2001
2002
2003
2004
Year
Heartland MLS
2005
2006
Kansas
All
Areas
Single Family Building Permits 2002-2006
1400
1200
Permits
1000
800
600
400
200
0
Blue Springs
2000
2001
2002
2003
2004
2005
Year
Hom e Bu ild ers Association of G reater Kan sas City
2006
Independence
Lee's Summit
Liberty
Olathe
Shawnee
Median Price
Median Single Family Home Price
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
2000 2001 2002 2003 2004 2005 2006
Year
Heartland MLS
Missouri
All Areas
Kansas
% Sold within 60 Days
% Sold
66
%
%
55
%
61 6
% 1% 6
0% 5
8%
53
%
57
%
58
%
60
%
63
%
Heartland MLS
71
%
86
%
64
%
67
90%
85%
80%
75%
70%
65%
60%
55% 64% 61
% 61%
50%
58
45%
% 55
%
40%
2000
2002
2004
Year
50
%
M
2006
Al
lA
iss
ou
ri
re
a
Ka
ns
as
s
Missouri
All Areas
Area
Kansas
% owner occupied
78.44%
Lee's Summit
76.80%
City
Shawnee
74.69%
Blue Springs
74.39%
Liberty
73.26%
Olathe
68.14%
Independence
60.00%
Claritas Compiled by IRR
65.00%
70.00%
75.00%
80.00%
Lee's Summit
Independence
10
0,
00
0
80
,0
00
60
,0
00
40
,0
00
20
,0
00
Claritas compiled
by IRR
0
Olathe
11
11
0,
2,
07
70
6
0
Shawnee
12
0,
00
0
58
,5
39
Blue Springs
81
,3
24
Liberty
49
,2
52
28
,7
74
Population
4%
9%
9.
6
Liberty
03
%
15
.
Lee's Summit
23
97
%
%
Blue Springs
2.
4
Independence
-2
.8
4%
2000-2006 Growth
21
.
Olathe
0%
0%
0
0
.
.
Claritas compiled
-5 by IRR 0
21
.
Shawnee
0
5.0
%
1
0%
0
.
0
1
0
5 .0
%
.00
0
2
%
2
0%
0
.
5
2000-2006 Growth
Integra Realty Resources
Developers Training Workshop
Thank you very much

Inventory - City of Blue Springs, MO

Transcription

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