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Wednesday, December 12, 2018

CRE executives see their future roles as more strategic, data-driven

By Brian Bellew (Chicago)

Global real estate executives gather for Avison Young’s inaugural North American CRE Forum.

Commercial real estate (CRE) executives believe their roles will change dramatically in the future.

Executives who attended Avison Young’s inaugural North American CRE Forum expect their roles to become increasingly strategic and financially focused.  Specifically, they predict that more analytically focused skills will increase in importance relative to some traditional property-related abilities.

According to a survey of forum participants, more than 90% of CRE executives also believe that data analysis will be the key skill sought when they are recruiting for their teams, while 72% predict that business planning and reporting expertise will be crucial for future job performance. Overall, the CRE leaders who attended the forum believe that being able to use data intelligently will be positive for CRE staff compensation.

More than 80% of forum participants expect that new technologies will reduce their teams’ workflows, allowing professionals to focus more on cross-functional collaboration as well as operational/predictive analysis that will increase the agility of their businesses. Lastly, these leaders predict that maximizing, and investing in, emerging technologies will become a shared responsibility between property owners and tenants.

The forum, held November 8 in Rosemont, IL, included executives from across a wide range of industries, including energy, financial services, healthcare and telecommunications.

Two industry experts, Amy Erixon, a Principal of Avison Young and Managing Director of Investment Management; and technology consultant Frank Adelman discussed the impact of emerging technologies on corporate real estate. The CRE Forum also included a panel discussion and roundtable dialogues/reports from the assembled group of more than 30 professionals.

For more information regarding the North American CRE Forum, please contact Brian Bellew at brian.bellew@avisonyoung.com.

(Brian Bellew is a Principal of Avison Young and the firm’s Managing Director of Enterprise Solutions. He is based in Chicago.)

Tuesday, November 20, 2018

Baby Boomers and Millennials Fueling Multifamily Sector

By Rand Stephens (Houston)

Although baby boomers and millennials are in opposite phases of their lives, they share a common desire – to reside in a care-free, amenity-rich condo/apartment environment. In fact, these two generations may be the driving force of multifamily development around the country. As one generation looks to settle into their glory years of retirement, another looks to kick off their adulthood of career and family – and both are seeking the conveniences and concierge services of apartment-living.

Freddie Mac recently released a survey, “Profile of Today’s Renter” that revealed results that bode well for the multifamily sector.  All generations of renters believe renting is more affordable than homeownership, more than 5 million baby boomers are likely to rent instead of buy their next home and more than 60% are not only satisfied with their rental experience, but plan to continue renting their next residence.

Prior to Hurricane Harvey, Houston’s apartment market had a tremendous amount of inventory due to the overbuilding boom of 2015 and 2016. During that period, developers added 41,600 units when the area was suffering job losses. Relocations due to Hurricane Harvey flooding were able to absorb the surplus and a year after the Harvey bump, units are still full and the market has stabilized.

Courtesy of Astoria
Millennials may be the largest living generation according to Pew Research, but baby boomers have the upper hand when it comes to purchasing power and they tend to stay in one place longer than any other demographic. Millennials have exceeded baby boomers in Houston and are quickly filling up trendy apartments such as Modera Shepard, The Pearl Washington and Elan Heights.  Expensive condos like Arabella and Astoria in the River Oaks area are more appealing to baby boomers with more disposable income than the younger generation.

With Houston’s robust economy, population growth, high employment rate and target demographic ready to move into turnkey hi-rises and luxury apartments, why haven’t developers ramped up activity? Project development costs continue to escalate and many prime locations are not viable due to affordability of rents. Construction lenders are also cautionary.  They do not want to see oversaturation of the market and have a repeat of 2015-16. Continued rental rate growth is the key for new development but what the market can afford is the key question.

Saturday, November 17, 2018

Avison Young to acquire U.K.-based GVA in transformational deal


by Mark E. Rose (Toronto)

Avison Young was thrilled to announce last week that we have entered into a definitive agreement to acquire U.K.-based GVA in a transformational deal that will reposition Avison Young on the global commercial real estate services stage. (The transaction is expected to close in Q1 2019.)

This is a game-changing event that underpins our ambition and intent to significantly expand our footprint in Europe and beyond, and we are thrilled to welcome GVA to Avison Young.

GVA is a multi-disciplinary business working with occupiers and owners covering transactions (leasing and sales), property management, project and construction management, and consultancy, as well as planning, development and ratings. GVA covers all major property types and has 15 offices in all major U.K. markets as well as a presence in Ireland and Poland. GVA is also a founding member of GVA Worldwide Ltd., an international organization of licensed affiliate commercial real estate companies with offices across 25 countries. Including GVA Worldwide, our combined operations will have 5,000-plus professionals in more than 120 offices across 25 countries.

This acquisition adds gravitas, weight, coverage and profile to our international operations as we continue to solidify our global platform while preserving our culture as a Principal-led company. Avison Young’s U.K. business will now be a genuine challenger brand firmly established among the top commercial real estate advisors in the U.K., North America and the world. 

You can read the press release here:

The acquisition will establish our Canadian-based company as the only privately held, Principal-led, global, full-service commercial real estate services firm. More than 5,000 Avison Young professionals and affiliates – aligned with our clients – will now be delivering the next generation of solutions through our innovative, non-siloed and collaborative platform and approach.

We are excited by the international collaboration potential and the opportunity to continue to build our unique partnership model. Joining forces with GVA will provide us with a greater level of scale and capabilities to service our clients globally, and to fuel Avison Young’s continued aggressive growth.

This transaction is a monumental achievement for a company that embarked on a global growth strategy just 10 years ago. Even more significant, the fact that a company of GVA’s prominence and reputation is joining forces with our vision and strategy is a testament to the power of our culture.

Having just spent time with GVA CEO Gerry Hughes, his management team and staff, along with Avison Young’s U.K. leader Jason Sibthorpe, in London, there is an energy and an uncommon sense of partnership at these early stages. We look forward to working with new Principals and Avison Young family members.

As always, we thank our clients, partners and employees for their continued support.


(Mark E. Rose is Chair and CEO of Avison Young)

Tuesday, October 16, 2018

Autonomous Vehicles on the Fast Track

By Rand Stephens (Houston)

In April, I discussed the oncoming tidal wave of autonomous vehicle technology and its impact on traditional mass transit systems. I made the case for municipalities to embrace the innovations being made in transportation rather than continuing to invest in traditional mass transit infrastructure. It is increasingly apparent that these transit systems will become obsolete as autonomous vehicle options develop into viable alternatives.

Photo:GM
Fast-forward six months to October. GM has requested regulatory permission for as early as 2019, to deploy vehicles without manual controls such as steering wheels and pedals and Honda recently announced its $2.75 billion investment into GM’s self-driving vehicle startup, Cruise. The 12-year deal includes an immediate $750 million and another $2 billion for development and deployment as agreed upon by GM and Honda. Another major collaboration on self-driving cars is Toyota and Uber. Toyota will invest $500 million in Uber Technologies for the launch of Uber’s ride-hailing network in 2021.

Do you think the driverless wave will become reality in just a few short months? Years? Or, are we still decades away? Let us know what you think in the survey below, we'll post the results on the November blog.



Click here if the embedded survey isn't working.

(Rand Stephens is a Principal of Avison Young and Managing Director of the company’s Houston office.)

Friday, October 5, 2018

Tenants: Don’t lose your rights – seek professional advice before it’s too late

By Louise McElarney (London)

It’s so simple. As a tenant, you have rights. Know these rights and exercise them – because not doing so could cost you dearly.

At Avison Young, we advise on both sides of the coin – for landlords and for tenants - and will always seek the best deal possible for our client in each case.

The U.K. lease advisory team at Avison Young, which operates nationally, recently acted for a landlord client on a lease renewal in the Midlands. As the tenant failed to serve a formal notice – in order to protect the tenant’s right to a new lease when the original lease expired – the landlord was able to secure a new tenancy agreement and, therefore, pocket an extra £250,000 over the length of the lease. Of course, that meant the tenant in question was now out of pocket to that tune.

The tenant lost its negotiating position through not exercising its right to a new lease. If the tenant no longer wanted to occupy the premises, that would have been absolutely fine. However, the tenant was over a barrel, so to speak. It was crucial for the tenant to stay put. As a furnishing company using a large warehouse, it did not want to leave. Therefore, when the landlord raised the rent, the tenant had no choice but to accept the terms. If the tenant had planned early and exercised its right to a new lease and sought professional advice, it could have negotiated a better deal.

Property costs are still the largest outlay for businesses after staff costs. Taking on or dismissing a staff member is a decision not taken lightly, and this should always be the case for your property requirements. It is advisable to diarise important dates in a lease contract and seek guidance early from a professional who can advise on the rights of both the landlord and tenant to avoid sticky situations – and ultimately, improve your firm’s bottom line.

(Louise McElarney is Director, Lease Advisory in Avison Young’s London West End office, specializing in landlord and tenant representation in the industrial/logistics sector.)

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