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8-Story Building Proposed In Allapattah

A developer has proposed an 8-story self-storage facility in the Allapattah neighborhood of Miami.

The city’s Urban Development Review Board on Wednesday will consider plans for the 16,706-square-foot site at 760 N.W. 21st St. Mlab International LLC, managed by Ricardo Ordonez and Luis Farjardo in Miami, purchased the property for $875,000 in 2020. It previously had an automotive business.

Farardo said he is the developer and will handle construction, while Ordonez is his partner. He said Public Storage will manage the facility.

The building would total 103,819 square feet, with 2,138 square feet of ground-floor retail and the rest of the space for self-storage. There would be 12 parking spaces.

Blitstein Design Architects in Coral Gables designed the project. Marin Mitrasinovic of Canada was hired to create a mural on two sides of the building.

The occupancy of self-storage facilities in the area is 98% and rental rates continue increasing, Farardo said.

“As more and more multifamily projects are delivered in Wynwood and Allapattah, demand grows,” he said. “Additionally, many residential units delivered are smaller in size, including several micro units.”

Many experts say Florida is among the top markets in the nation for self-storage.

According to RentCafe, there was 4 million square feet of self-storage space set to come online in South Florida in 2022, a 30% increase over deliveries in 2021. That compares to 40 million square feet of existing self-storage space. Rents have surged 17% over the past 12 months with an average cost of $168 for a 10-by-10-foot unit.

South Florida has the fifth-most self-storage construction in the nation.


Source:  SFBJ

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CRE Values, Yields Forecasted To Increase Next Year

Experts are doing more than wishing the commercial real estate industry a prosperous New Year—they are promising it.

In a recent 2022 outlook webinar from Green Street, Michael Knott estimated that commercial real estate values and yields would increase next year. Values are expected to increase 11%, while yields will average 6%, according to his research.

On the value side, self-storage, industrial, retail and apartment values are going to be up the most. The reason for the boost in values is simple: real estate is cheap compared to the corporate bond market, and it is attracting a lot of attention and capital. The competition is driving asset pricing. According to Knott, the analysis compares real estate returns to corporate bonds, which are 22% higher that commercial real estate assets.

“That is a very bullish signal for commercial real estate in our analysis,” Knott, managing director and head of US REIT research at Green Street, said in the webinar, adding that the analysis also considers REIT pricing. “The REIT signal, which we think is typically predicative of changes in private market values. So, the REIT signal is much more sanguine. When we blend those two indicators, we come up with a roughly 10% higher real estate value.”

This isn’t a new trend. Real estate values have appreciated rapidly in 2021, and that momentum is carrying into 2022.

“We have all experienced a lot of real estate value appreciation in 2021. It is a buoyant time for commercial real estate values, and we expect that to continue,” said Knott.

In terms of the fast appreciating sectors, they are the usual suspects: single-family rentals, industrial and manufactured housing, which Knott said has been a favorite for a long time and the outlook is still positive. Self-storage is also at the top of the list.

“Self-storage has had an unbelievable run in terms of move-in rents, market rent and NOI growth,” he added.

At the bottom of the list is also the typical line-up, including office, malls and lodging.

The increase in asset pricing will deliver a 6% unlevered return to investors, on average.

“The important thing about this analysis is that the expected returns for commercial real estate are forward looking over the last 35 years. That gives some really valuable insight into what the spread is between expected returns at any given time and bond yields prevailing at the time,” explains Knott.

At the end of his forecast, he noted that commercial real estate generally acts as a solid hedge against inflation. “If inflation picks up, commercial real estate should do okay,” he said. “If it doesn’t real estate is still cheap compared to prevailing bond yields, so it feels like a favorable spot for commercial real estate.”


Source:  GlobeSt.

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What Secondary Asset Classes Will Be Popular With Investors In 2022?

The four major “food groups” of commercial real estate — office, multifamily, industrial and retail — occupy most of the headlines around investment and development.

Another one, life sciences, is becoming a mainstream real estate class of its own, given its dominance in markets like Boston, San Diego and the Bay Area. But the Covid-19 pandemic has also diverted investors’ attention and investment into more niche, but downturn-proof, real estate sectors.

“There’s a continued chase for yield, where investors are trying to uncover stability and trying to create and capture predictability of income streams,” said Aaron Jodka, director of U.S. capital markets research at Colliers International Group Inc. (NASDAQ: CIGI). “That has led to growth in areas such as self storage, single-family rental and medical office.”

Here are some of the non-mainstream asset classes seeing renewed interest from capital sources, in 2021 and heading into next year.

Cold storage
Although still a specialized subsector of the broader industrial market, cold storage real estate is heating up in direct response to pandemic-induced trends.

Additionally, much of the nation’s refrigerated and freezer inventory is outdated or even obsolete, propelling — for the first time in awhile — speculative cold-storage development.

Self storage
The pandemic started with the self-storage sector actually oversupplied. Developers had, in the years leading up to 2020, been developing self-storage facilities at a rapid clip, which led to double-digit vacancy in some markets.

But shortly after the onset of Covid-19 in March 2020, lease-ups of storage units started to occur.

Medical office
Another generationally-driven commercial real estate subsector: medical office. The space saw some loss of momentum in 2020 as elective medical procedures were put on hold but has started to come back this year.

In 2020, medical-office building sales fell by 12.7%, according to CBRE Group Inc. (NYSE: CBRE) research from April. But, CBRE noted, the medical office sector came back quicker than other property types during the global financial crisis.

Data centers
A recent investor survey conducted by Colliers International found investors are bullish on two alternative, or specialty, property types more than any other: life sciences and data centers.

Global capital sources are flocking to data centers as connectivity and infrastructure have become more paramount through the Covid-19 pandemic, Jodka said. In the first half of 2021, data-center absorption in the United States was 273.6 megawatts across 13 markets, according to Jones Lang Lasalle Inc. (NYSE: JLL) research.

Construction is ramping up, too, from 611.8 megawatts at the end of 2020 to 680.8 megawatts in the first half of 2021.


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