Wake Forest named a top U.S. growth city

Triangle Business Journal

Wake Forest is one of the top high-growth communities in the country, according to a ranking compiled by research firm Gadberry Group.

Gadberry, which provides location information and household data for clients such as retailers, on Tuesday announced the top nine cities in its “from 2009” report.

Little Rock, Ark.-based Gadberry evaluated various metrics, including growth in households and income. Wake Forest placed sixth in the ranking. The city grew from 8,150 households in 2000 to 17,803 in 2009, a 118 percent increase, according to Gadberry’s analysis. The average annual household income for Wake Forest increased from $70,148, to $82,771.

The top city was Atlanta suburb Braselton, Ga., which saw its household income increase 67 percent from 2000 to 2009. Houston suburb Atascocita, Texas followed. Texas was well represented with four cities. Besides Wake Forest, no other North Carolina community made Gadberry’s top rankings.

“As a Wake Forest native, I’ve recognized the explosive growth that our community has experienced,” Don Stroud, Wake Forest Area Chamber of Commerce board co-chair said in a statement. “The Gadberry data will give us the quantitative tools we need to continue to draw new development to Wake Forest.”

Published: Sep 22, 2009 03:40 AM in The News & Observer

Mid- Year Review notes from 23 July 2009

 On the 23^rd of July a hundred or more real estate and associated business professionals attended the Mid-Year Space review held by the Triangle Business Journal at the Embassy Suites in Cary, NC. Here are a few notes I took on each section, along with the presenters name and subject.  Please see the attached slideshow from the presentation as a reference.

 Keith Crisco/Keynote Speaker:  North Carolina Secretary of Commerce.  He discussed how North Carolina is aggressively competing for new businesses against neighboring states in the region and how important tax incentives can be.  He also stated that these incentives are tied to performance and the ability of the incoming company to employ the number of people they projected.  So if a company does not employ 90% of their projected number of new jobs, they do not get the incentive for that year.  He also said that there have been 4500 new jobs created in the state since JAN 2009.

Matt Riggs/ Construction Costs: Vice President of Centurion Construction.  Construction costs are down 40% from OCT 2008.   He said there are a number of issues that will cause construction costs to increase in the future: Infrastructure building in China which will effect raw material costs, “Green” building concepts that may be integrated into building code,  the possibilities of companies being required to provide healthcare .

Mike Munn/ Regulatory Issues: Vice President of the John R. McAdams Company.  The proposed franchise Tax for LLC’s and LLP’s has not passed yet.  There has been some development extensions which extends permits for current developments (Bill  SB831).  The Jordan Lake rules became law on June 30,2009 and increase the standards for stormwater management.  The Falls lake rules are under revision and expect to see more changes as a result of the drought of 2007, which also resulted in a tiered water rate which increased water costs.  Expect to see a new term emerge called LID or Low-Impact Development which will be the next LEED.  Expect  to see new regulations that stress the importance of water quality and quantity.

Bernard Helm/Residential Market: Market Opportunity Research Enterprises (MORE).  New home sales down 30-40%.  The average price of a new home is down 8% when comparing 2Qtr 2009 with 2Qtr 2008.  Volume of home sales is down 30% when compared to the peak in 2006/2007.  Many lenders are holding large numbers of properties and many homeowners are holding on to their properties instead of selling right now.  On the positive side the rate of decline is slowing. www.morereport.com for more info and see TBJ SPACE slides.

Amanda Jones Hoyle/Real Estate By the Numbers: Real Estate Reporter, Triangle Business Journal.  The Flex market is stable right now with little increase or decline in vacancy rates with warehouse vacancies increasing.  Office vacancy topped 18% which is the highest it has been in the last 20 years.  Very little new space will be built over the next few years.

Rex Thomas/ Looking Ahead, What’s in Store: Chairman and CEO, Grubb& Ellis/ Thomas Linderman Graham.  Historically recessions have lasted about 3 years, but this is not a normal recession.  The vacancy rates are projected to peak in 4^th QTR 2010 or 1^st QTR 2011 with unemployment rates to increase through mid 2010.  Retail trends are going to change significantly since people have changed their spending habits.  The triangle is expected to emerge from this recession ahead of the National Market with the triangles population expected to double by 2025.  The accolades from National magazines have made this an attractive place to relocate to and start businesses.

Matt Rhoad/ Legal Trends: Lawyer, Smith Anderson.  The legal trends right now are toward more lawsuits and less deals.  There is an increasing importance on comprehensive community planning which tend to drive rezoning approvals.  Matt referred to the city of Raleigh 2030 draft plan (431 pages) that was released DEC 2008 and includes 17 different categories of future land uses and has a future land use map.  There is still some time to influence this plan since it will probably be voted on in SEP 2009.  After the comprehensive plan is voted on their will be an overhaul of the UDO(Unified Development Ordinance) and development regulations.

The auction method has advantages for every party in the event: the buyer, seller, all bidders and spectators.

Buyers often find rare items and can usually take home their purchase right away from an onsite auction, not waiting for shipping or incurring shipping costs after they have already purchased an item.

Sellers at auction can usually be assured that their property will sell on a certain day. Real estate sellers, in particular, like the fact that a sale on a specific day will end their carrying costs and they enjoy being able to set a minimum price they will accept at auction.

Bidders have a great time, even if they don’t always get their chosen item. They eagerly anticipate the item coming up for auction; they think about how high they will bid; they watch the competing bidders and often talk with them afterward.

Spectators at auction enjoy an exciting event and seeing what types of items are offered in auctions these days. Attendees don’t feel pressured to buy, and they can bring the whole family to see and learn about antiques, art, furniture and other items.

Auctions are a community event. People see friends and meet new people. Auctions have been a social gathering for thousands of years and continue to be the best way to determine current market price for items.

Here are a few other facts about auctions.

• A speedy process.
  There’s no doubt that an auction is the fastest sales process around. It’s quick and efficient and that’s what makes it attractive. We sell a multitude of items in a short time.
• You Set Your Own Price and Establish a Value.
  You are in control at an auction. You decide when to bid and how much to bid - how high or low you want to go.
• Certainty of Knowing What You’re Getting.
  Auctioneers deal with a wide range of merchandise. They are educated professionals who know value and price. Many have special certifications in personal property or estate appraisals.
• Fun and Excitement.
  There’s no doubt that an auction is entertainment at its finest. Crowds of people competing for unique property, combined with that lively and rhythmic auction chant make for some great entertainment and fun. It’s an event the whole family can enjoy.
• Honesty of the Transaction.
  Auctions are very organized and the rules are straightforward. Auctioneers who are members of the National Auctioneers Association, as I am, are bound by a code of ethics that protects consumers against unfair auction practices.

www.auctioneers.org

The metropolitan area is home to more than 1 million people after growing by more than 4 percent from 2007 to 2008. But that is slower than in previous years.

By Kristin Collins, Staff writer

As the national economy lost steam last year, the Raleigh area continued to attract residents, becoming the fastest-growing metropolitan area in the country.

According to census numbers released today, the Raleigh-Cary metropolitan area, which includes Wake, Johnston and Franklin counties, grew by 4.3 percent from July 2007 to July 2008, and is now home to close to 1.1 million people. It well outpaced its closest rival, the Austin, Texas, area, which grew by 3.8 percent.

The national average was just under 1 percent.

The Triangle has been near the top of the nation’s growth chart for more than a decade, as newcomers poured into the area to take jobs in technology, tourism and academia. The resulting building boom, and the jobs that came with it, drew hundreds of thousands of new residents.

Much changed in recent months as the economy fell into a deep recession. While the downturn took longer to arrive in North Carolina, the state’s unemployment rate of 9.7 percent is now well above the national average of 8.1 percent.

Next year’s figures may show a darker picture for the Triangle.

Even this year marks a slowdown for the area, despite its place at the top of the list. The growth rate was nearly half a point lower than the two previous years, when it was 4.7 percent.

The Durham-Chapel Hill metropolitan area, which includes Durham, Orange, Chatham and Person counties, didn’t make the Top 10, but its population continued to swell at a steady 2.5 percent, up slightly from the year before. Just fewer than 490,000 people live in that area.

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A few years ago it was too easy for a loan and now it is a lot harder to get a loan.  Time will tell if it gets to a happy median between the two extremes.

For those looking to get qualified in this tough market, please note the criteria below:

Fico Scores
These must be better than average (600+), and when the credit report is run there must be no Bankruptcy (BK), and likely no “collections” of accounts will be allowed.

Down Payments
Buyers must have some money to put down, no longer will the lenders approve 100% financing, most likely the lenders will require 10-20% down (except FHA which allows only 3% (3.5% in 2009)).

Ample Income
All income will need to be verified with pay stubs two year period and IRS and State tax filings for 2-3 years. Then they will calculate your debt-to-income ratios (looking to see that you can really make the payments). Each lender has different ratios they will pass or disqualify with. As a general rule, these days they are wanting to see much smaller debt-to-income ratios. In other words, the banks want to see borrowers with more income and less outstanding debt obligations.

Stated Income
This (with no verification) is no longer available, meaning quite a hardship on the self-employed, but lenders are very risk averse now. The only exception is if buyers have a very hefty down payment like over 30%.

Proof of Funds
A few months worth of recent bank account statements will be required to show that money is really available for closing costs and down payments.

Reserve Funds
Many lenders require that the borrower have reserve cash on hand to cover two to six months worth of payments.

Non-Occupants
If the property is not going to be the home of the borrower (like a rental) then most lenders will increase the interest rate on the loan.

Limited Holdings
Restrictions are also placed on many borrower that this property will not increase their rental holdings to more than 4 units. Lenders are very suspect of investors that might be over leveraging themselves.

Obviously, only very qualified people can meet the above criteria, and that is just what the lenders want in a time of uncertainty and massive losses. For the time being they can’t justify making any more high-risk loans. Hopefully, knowing what is needed in advance to get approved, buyers will understand that it is critical to prepare early and get their ducks in a row before starting the home buying process. For those lucky enough to be qualified in today’s market, a wide range of opportunity awaits them.

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CoStar recently reported on alternative tenant uses and strategies for filling vacant retail space.  Of particular interest in this article are the examples of Non-Traditional Tenants that can successfully fill these spaces and the emphasis on creativity and aggressive marketing necessary to target these alternative tenants.

GOVERNMENT USES

Examples: Department of Motor Vehicles, City Halls, Military Recruitment Centers, Libraries

Jones Lang Lasalle retail’s Bemis said there’s a “fairly large trend” of government entities opening in malls. CoStar has recorded at least 100 leases to government entities at retail centers over the last six months. “While they’re not ideal for upscale malls, they are willing to lease those difficult spaces — usually in mall wings that are close to the parking lot,” he added.

EDUCATIONAL USES:
Examples: Satellite Colleges and Universities, Massage / Beauty Schools, Daycares, Youth Private Schools

With the population of those laid-off from their jobs incessantly on the rise, many people choose to “go back to school” during this down economic period. That said, schools are a good candidate to backfill vacant junior anchor or anchor spaces at shopping centers. CoStar has recorded at least 60 university/college/vocational school leases over the last six months, as well as countless preschools/day care centers.

CHURCHES
While those interviewed cited a few examples of churches signing leases as an example of alternative retail tenants, the consensus among those we consulted was that it’s not a widespread trend. CoStar recorded at least 80 leases signed by churches at retail centers over the last six months.

MEDICAL USES
Examples: Doctor’s Offices (Vision, Dental, Chiropractic, General Practice, Pediatrics & More), Medical / Urgent Care Clinics, Outpatient / Physical Therapy, Dialysis Centers, Medical Supply, Hearing Aid Centers

Medical uses are becoming more and more common at U.S. shopping centers. According to Costar Tenant, at least 120 leases were signed in this category at retail centers over the last six months.

RECREATIONAL / FAMILY FUN USES
This category can get interesting. Bingo Halls or Bridge Clubs are not uncommon. Indoor children / family fun centers are also popular as replacement tenants — think bouncy houses, indoor mini-golf, roller skating, bowling, play structures and ball pits, arcades, laser-tag arena, birthday party centers and the like. These tenants are candidates for small spaces all the way up big box spaces. CoStar recorded at least 30 leases in this category over the last six months.

FITNESS USES
While often downplayed by brokers and store owners as “non-ideal”, fitness tenants have become a much more common fixture at shopping centers than in the past, said our experts. This category is widespread, from national and regional chains taking over vacant big box spaces, to local and franchise users opening up specialized fitness instruction spaces (dance, martial arts, personal trainers, and yoga are examples) and weight loss clinics. CoStar has recorded nearly 350 leases in this category over the last six months

SECOND-HAND / OVERSTOCK
Examples: Thrift Stores, Consignment Stores, Second-Run Cinemas, Used Furniture, Used Books/CDs/Video Games, Antiques, used sports equipment, Bakery Outlets, “Scratch-n-Dent” / Overstock item Retailers, Pawn Shops

With tightened pockets, consumers are much more willing to sell, trade, or buy their “gently-used” items; they still want to go to the movies, but are willing to view films that have been out for a while already, sit in older seats, and deal with below-par picture and sound; and being they’re on the lookout for a “great deal”, they don’t mind buying dented cans of food or “irregular” merchandise.

SEASONAL / TEMPORARY
Examples: Mall Kiosks, Holiday Goods Retailers, Annual Inventory Liquidators

With vacancy on the rise, landlords have become more willing to consider signing temporary tenants, as they look to generate at least some income while they continue to search for a permanent tenant. However, the number of potential tenants in this category continue to be limited, said our experts.

“At malls, this is called ’specialty leasing’, and often these tenants can help lead to growth as they’re converted into permanent tenants. However, the specialty leasing world has been hit with the rest of the leasing world in the scramble to find appropriate retailers for space,” said Bemis.

TRADITIONAL TENANTS

Surprisingly, there are still a few traditional tenants expanding, the deals are just fewer and farther between. Some categories continue to plug along with expansion, however.

Discounters are the standout across the board named by all interviewees. Dollar stores (this category is widespread from small shop local and franchised stores to the likes of Dollar Tree, Dollar General and Family Dollar), discount grocers (Aldi, Save-A-Lot, etc), big-box discounters (Target, Wal-Mart), wholesale clubs (Costco, BJ’s, Sam’s Club), and off-price brand retailers (TJ Maxx, Marshalls, Ross Dress for Less, etc) were identified.

Other common uses continuing to sign leases over the last six months include wireless phone/mobile device retailers (at least 350 leases in the last six months), video game retailers (at least 150 leases over the last six months), quick service restaurants (at least 800 leases signed in the last six months), drug stores, wine/liquor/cigar shops (38, 42, and 29 leases in the last six months, respectively), tax preparers, insurance (at least 150 leases over the last six months), real estate/construction (yes that’s right, at least 85 leases were signed in the last six months), hobby/craft retailers (approx. 50 leases over last six months), pet care/supplies (at least 60 leases over the last six months), salons/spas (at least 375 leases signed over the last six months), massage/ acupuncture (at least 80 leases over the last six months), financial services (at least 75 leases over the last six months), beauty supply (at least 80 leases over the last six months), copy/ship, sign makers, rental centers (at least 60 leases over the last six months), and more.

THINK OUTSIDE THE BOX

“Creativity is very important now,” stressed Bemis. As an example, Bemis cited JLL Retail’s work on the Crestwood Court mall just outside of St. Louis. “Half of this center is getting redeveloped in a few years, but in the interim, about half of the space was vacant. We approached the arts community and were successful in turning that vacant space into an artisan community,” said Bemis. At ArtSpace, local artisans rent space for studios where they can work on, display and sell their works; space for art classes, as well as live theatre is also on the premises. While ArtSpace was originally planned as a temporary use, Bemis said it’s caught on in the community and is “keeping the mall very vital and interesting” and as a result, might be considered as part of the Crestwood’s redevelopment plan.

Ralston takes an analytic approach. “I suggest exploring the detailed demographic reports available. Take a look at the NAICS codes for retail and restaurant use and scrutinize each trade and its subsets in order to identify tenants. Then cross-reference that with demographic data on the categories where people spend their money [national per capita averages in comparison to the same in a certain radius of the subject property], to identify uses that are underserved in a certain geography.”

Meanwhile Williams said that calls coming in from their “for lease” signs are “down about 40% nationally, so now it’s really important to use every avenue of advertising, as well as pounding the pavement and canvassing.”

Apartments are best positioned to weather the storm of a slowing economy. High construction costs and condo conversions have reduced new supply and a slowing housing market increases rental demand.

Owners can now flex their muscles with rent increases, and those who bought at high valuations may yet get the last laugh. 

If you’re considering selling, the time to name your price is past, but you’ll find plenty of interest at just-off-peak levels.

However, multi-family performance is highly sensitive to demographic shifts. Plainly stated, people live where they work, and a one-year lease makes it easy to move.  Wake County and the surrounding area is on a steady pace and should come out of the recession faster than most areas of the country.

Areas with declining employment and population will experience an acceleration of those trends, and investors will not acquire properties in such markets without good reason to believe a comeback is in the near future.