The Ida Group

2018 Archive



Third Quarter

Research

Robust Economy Drives E-Commerce; Rising Shipping And Delivery Costs Influence Supply-Chain Strategies

August 31; INDUSTRIAL OUTLOOK - Economic growth surpassed 4 percent in the second quarter, lifted by strengthened consumption and business investment. The new tax law has stimulated the economy by increasing after-tax earnings and pushing consumer and business confidence to near-record levels.

second quarter

Briefs

Economy Drives Increased Spending; Housing-Related Consumption Rising

June 22; RETAIL BRIEF - Retail spending posted another strong month with help from an incredibly tight labor market. The 3.8 percent unemployment rate has placed upward pressure on wages as many companies compete for quality employees.

Booming Economy Prompting Hawkish Fed Policy; Global Financial Markets May Complicate Future Action

June 21; FEDERAL RESERVE BRIEF - The Federal Reserve increased the federal funds rate by 25 basis points, lifting the overnight lending rate to a range of 1.75 percent to 2 percent. Citing stronger consumer spending, and a highly optimistic business community, the Fed laid out the potential for two additional rate hikes in 2018.

Competition for Staff Invigorates Office Space Demand; Labor Shortage Could Emerge in Second Half of Year

June; EMPLOYMENT BRIEF - For the first time on record, the number of job openings exceeds the number of people out of work and seeking employment. At the end of April, job openings stood at 6.7 million while the number of unemployed sat at 6.3 million.

Millennials Driving Force Behind Home Sales; Affordable Suburban Locations Gaining Popularity

June 13; HOUSING BRIEF - For a fifth consecutive year, millennials led home purchase activity, comprising 36 percent of the buyers in 2017. The oldest millennials are now 37, and as this generation ages and starts families, a wave of potential new buyers are moving into the market.

Heightened Consumer Confidence Remains Driver Behind Strong Spending, Improving Outlook for Retail

May 23; RETAIL BRIEF - The confluence of several factors contributed to another month of steady spending. Core retail sales increased 4 percent year over year in April, the third straight month of at least 4 percent annual growth.

Continued Job Creation Bolsters Household Formations; Supports Space Demand For Commercial Real Estate

May 17; EMPLOYMENT BRIEF - Employment additions in the first four months of 2018 outpaced the previous two years over the same time frame, with 799,000 jobs added.

Retail Sales Trend Up As Discretionary Income Advances; Retailers Refine Strategies to Sustain Growth

April 24; RETAIL BRIEF - Increased discretionary income stemming from tax cuts and a tight labor market are starting to materialize. Inflation-adjusted core retail sales recorded a 2.5 percent year-over-year increase for the fourth straight month, following an average of 2 percent expansion the previous 18 months.

Home Price Appreciation Widens Affordability Gap, Sustains Strong Apartment Housing Demand

April 3; HOUSING BRIEF - Robust housing demand spurred by steady employment gains and wage growth ticked up the homeownership rate by 60 basis points to 64.3 percent at the end of 2017. The increase was driven by a 220-basis-point advance in the homeownership rate for those under age 35 to 36.4 percent.

 

Research Reports

High-Skill Employment, Housing Shortage Power Bay Area Rentals

August; MULTI-FAMILY RESEARCH - The resilient Bay Area economies, spurred by exceptional growth in tech, semiconductors and biotech, have generated unemployment rates that were last recorded in the late 1990s.

Broad Pipeline to Test Office Demand; Economic Growth Remains Elevated

June; OFFICE RESEARCH - Benefiting from a host of Fortune 500 companies and a vibrant startup scene, the Bay Area metros have witnessed an upswing in office demand throughout the current cycle.

Lack of Housing, Tight Unemployment Driving Incredibly Low Vacancy

June; MULTI-FAMILY - While household formation has remained rapid, a general lack of housing, both single-family and multifamily options, has driven apartment vacancy to extremely low levels.

New Tax Rules Could Inspire Strategy Change for Owner-Users; Additional Sale-Leaseback Investments Could Surface

May 24; RETAIL SPOTLIGHT - The convergence of several factors has increased the appeal of sale-leaseback options for companies that own and occupy retail space. The evolving retail climate has pressured many retailers to adopt creative strategies to increase their profitability.

High Demand for Stabilized Assets With a Long-Term Lease Boosts Investor Interest in Industrial Sale-Leaseback Deals

May 15; INDUSTRIAL SPOTLIGHT - The convergence of three factors has sparked increased interest in sale-leaseback options for companies that own and occupy industrial space. The extended growth cycle and emergence of e-commerce has spurred demand for industrial space nationwide, pressuring vacancy rates to their lowest levels on record.

10-Year Treasury Breaks 3 Percent; Higher Rates a Positive Sign for Commercial Real Estate?

April 30; 10-YEAR TREASURY RATE - The 10-year Treasury rate inched past 3 percent for the first time since late 2013 following the “taper tantrum.” Though many investors fear the rising rates will erode their investment yields, they must consider the strength and durability of the current economic cycle and how it will continue to support commercial real estate performance.

Tight Labor Market, Enhanced Spending to Continue; Tenants Adapt by Combining Physical and Online Retail

April 25; NET-LEASED RETAIL - Retail sales will continue to grow this year as discretionary income ascends. Bolstered spending can be linked to advancing wages from a competitive employment market, along with increased take-home pay from the revised tax plan.

1st Half 2018 Commercial Real Estate Investment Outlook

April 24; TAX REFORM BOOSTS INVESTOR SENTIMENT - Details are still unfolding on some of the finer points of the recently passed Tax Cuts & Jobs Act. The country is still waiting for guidance from the IRS and the Treasury Department on exactly how the new rules will be applied in a variety of situations.

Toys R Us Downfall Reiterates Changing Retail Climate; Potential Retail Replacements to Emphasize Experiences

March; TOYS R US LIQUIDATION - Well-established brands shuttering stores have become a common theme in recent years as companies who fail to adapt to the new retail reality operate with outdated strategies. The company’s weakened balance sheet hampered efforts to make investments to modernize its business model and compete with Amazon, Walmart and Target.


First Quarter

Briefs

Economic Strength Spurs Fed Rate Increase; Potentially Widens Investor Expectation Gap

March 23; FEDERAL RESERVE BRIEF - While the Fed noted that the inflation outlook had moderated in recent months, an upgraded economic forecast factoring in recent tax cuts and a rollback in regulation strengthened growth projections for the next two years.

Robust Gain in Retail Spending Reiterates Positive Commercial Real Estate Outlook

March 21; RETAIL BRIEF - Steady spending across an array of categories led to an advancement in core retail sales. The profusion of new households into the market is expected to keep apartment vacancy low despite this year’s elevated apartment completion pace.

Strong Employment Gains Reinforce Outlook For Positive Real Estate Space DemanD

March 14; EMPLOYMENT BRIEF - The employment market pointed to an economy on firm footing in February as employers added the most jobs since July 2016 with 313,000 positions filled. 

Rising Wages Set the Stage for Economic Acceleration, Expanding Commercial Real Estate Demand

February 7; EMPLOYMENT BRIEF - Meaningful wage growth has been a missing ingredient in the expansion for the past eight years. Employers are finally feeling the pressure to increase wage hikes to attract and maintain their human capital.

Tax Law Changes Could Usher in New Challenges For Housing Market, Reinforce Renter Demand

January; HOUSING BRIEF - While many of the factors contributing to a restriction in sales velocity remain the same, changes to the tax code remove some of the incentives to homeownership, and anticipated interest rate increases this spring will bring additional challenges to the future of the housing market.

Research Reports

Tax Reform FAQs

March; Tax Reform FAQs - The tax reform recently signed by President Trump has brought up many questions regarding real estate.

New Tax Law Holds Favorable Prospects for Commercial Real Estate; Potential to Boost Space Demand and Capital Flows

January; TAX CUTS AND JOBS ACT - The highly anticipated tax reform recently signed into law by President Trump retained numerous key commercial real estate provisions.