Fielding Investments

Report: Commercial real estate outlook for 2016 solid

Real Estate outlook for 2016 solid

Real Estate outlook for 2016 solid

Recent numbers predict slow job growth for the Wichita area, but that hasn’t stopped NAI Martens from anticipating an uptick in the commercial real estate market next year.

In its annual forecast for 2016 released this week, the real estate firm referred to the general tone of the market as “optimistic,” adding that “virtually all economic indicators are positive” for next year.

That’s despite the prediction by Wichita State University economist Jeremy Hill at Thursday’s Wichita Economic Outlook Conference that the city would gain just 3,360 jobs in 2016, a number that would represent a 1.1 percent increase for its workforce.

“Commercial real estate and deal flow is outpacing the economy,” Tom Johnson, NAI Martens president, said during the conference at Century II. “Industrial has really kind of turned around. The manufacturers are more confident. Commercial aviation and their supply chain have done well.”

The industrial real estate market in Wichita is expected to be “solid” in 2016 with “gradual expansion,” according to the report. NAI Martens’ most-recent numbers show that the most expensive properties on average can be found on the southwest side of town ($4.63 per square foot) and the northeast side of town ($4.61). By far, the highest vacancy rate in the city is in southeast Wichita (20.6 percent).

Overall, NAI Martens is more bullish on the 2016 industrial outlook than it has been in years.

“The whole environment is much more positive,” Johnson said. “It’s nothing dynamic, just really solid going forward. In retail, we’re in good shape, there’s no downside. The concern is about how we diversify the economy.”

Partly due to growing consumer confidence as a result of low gasoline prices, the firm expects retail growth to carry over to 2016. While Johnson said some businesses could suffer because of more retail coming online, he noted the general forecast for the sector is positive.

“We have a lot of new development coming online,” Johnson said. “In northeast, the new parts at NewMarket Square, the Cadillac Lake area; the Greenwich Road corridor is very strong.

“We will have some winners and losers because we don’t have disposable income growth to support increased sales. You add new product, somebody’s going to have to suffer, but there’s going to be some interesting concepts, some things that are new to the market.”

Overall, NAI Martens is predicting higher occupancy rates for 2016 and “marginally” increased retail rents. The report notes that urban locations could prove fertile for growth, stating that “urban locations can emerge as the darlings of retail as millennials continue to migrate to the central business district.”

Johnson hinted that millennials — generally thought of as current adults between the ages of 18 and 34 — might also play a more important role in the further development of the Wichita economy.

“The challenge is to look at opportunities that we maybe haven’t uncovered yet,” Johnson said. “Where are the emerging technologies and industries that I think we have the opportunity to capitalize on?

“Who are going to be the emerging leaders now that make that happen? I think the big opportunity is to capitalize on this new millennial generation that is coming through and to identify some emerging leaders.”

The biggest challenge in commercial real estate in Wichita in 2016, according to the report, is in the office sector, where limited growth in financial, professional, technical and information services is expected to carry over.

“We have some excess inventory downtown,” Johnson said. “The accounting firms and law firms aren’t expanding, they’re just moving from one place to another. There’s good deal flow, but not much absorption.

“Our biggest problem is Class B downtown and it will continue to be. We have an aging inventory and it’s traditional office space — what we’ve had for 40 years. The demands of office tenants are changing — they want higher ceilings, more light, more open space.”

Overall, the firm thinks that Wichita is “well-positioned for growth through 2016 and 2017.”

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Six Trends in Commercial Real Estate to Watch for in 2015

While many variables will determine the course of  U.S. commercial real estate, here are six potential trends for 2015 based on the current outlook:

    • Increased allocations and capital flows. With most institutions—not to mention high-net-worth investors—still being underallocated to real estate, combined with the strong four- and five-year performance of both NCREIF and NAREIT, we can expect more investment capital coming into commercial real estate. The significant amount of capital would be vexing if not for the fact that real estate seems to offer some of the best risk/reward propositions around, particularly given the multiyear run-up in equity and bond values. Look for higher allocation targets, and more foreign and retail investor money to continue to push capital values up well beyond the 2007 peaks, which should be cause for concern.

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  • Continued low supply. New supply is at a historic low (see figure above), in part because market rents generally have not justified new construction and because financing has remained constrained. This leaves enormous upside potential in the property sectors to push occupancies and rents.
  • Increased appetite for risk. It has only been in recent quarters that investors have been willing to accept some additional risk to achieve higher yields. That has brought new activity to a number of secondary markets, including Philadelphia, Denver, Austin, and Charlotte, where well-priced Class A properties have come into play. In addition, there has been some “trickle out” through the marketplace into still-riskier placements in the suburban office arena, and into some Class B and C properties, where some investors are making strategic value plays. Finding the best investments in unfamiliar markets can be difficult. Class A office properties in one market are not always comparable to Class A office properties in another. The same is true across the spectrum of property sectors across the range of markets—from secondary markets to tertiary markets—anywhere in the country.
  • Investors continue to follow the jobs and people. Markets such as San Francisco, Austin, Seattle, and others have demonstrated advantageous population and job growth dynamics. Many of the jobs that are created in those cities are tied to technology as well as to energy and banking. Employment growth in the San Francisco area, for instance, outpaced the nation’s last year, with job gains exceeding 4 percent, and San Francisco is among the top tier of cities where a solid mix of job-creating industries is concentrated. Other Pacific Coast cities, including Seattle and Portland, also exhibit high concentrations of job-creating industries, driven in large part by technology. Other metropolitan areas, including Washington, D.C., with its still-substantial government employment base and growing financial services and technology sectors, and Houston, with its enormous energy sector and export machine, promise to be near the top of any list for investment—and not just in the office sector.
  • Multifamily still popular. Multifamily transaction volume has reached pre-recession levels, outstripping office transactions for the first time in ten years, as real estate investment trusts (REITs) and pension funds have fed a fierce appetite for the multifamily sector. The pace is unlikely to slow anytime soon. Apartment demand has been—and is expected to be—robust, supercharged by the shock waves of the recession and by strong demographic trends that are only beginning to manifest. And, as values moved ever higher, cap rates fell back toward 6 percent, close to where they stood in 2005 and 2006. Most deals have been concentrated in larger urban markets, such as New York, Washington, Los Angeles, and Chicago, with considerable focus on the echo boomers, who are partial to the amenities of an urban lifestyle, and their parents, who are realigning their housing needs toward walkable surroundings and mass transit.
  • Ongoing retail bifurcation. A confluence of factors including, especially, the economic recession and the inexorable wave of e-commerce has redefined the retail market equation. The day of the suburban mall, anchored by a mid-market department store, has probably passed. There will be no return. And, although the industry’s evolution continues, we are already beginning to see a deeply bifurcated mix of high-end urban retail destinations at one end of the retail spectrum with discounters at the other, and a scattering of local grocery-anchored strips in between. It may not be a formulaic trend, after years of consumer caution and austerity, but an improved housing market should lead to an improved retail environment. With home prices recovering and financial markets making strong gains, household wealth has risen to more than 5.5 times disposable income, the 20-year average. In addition, the annual expansion in retail sales, 6 percent per annum, is an indication that retail activity is well on its way to achieving a rate consistent with job creation and income growth.

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Brian Fielding Spotlights the American Kennel Club Canine Health Foundation

American Kennel Club Canine Health Foundation

American Kennel Club Canine Health Foundation

Brian Fielding is one of the top members of the real estate industry, offering all those who are hoping to buy or sell their home peace of mind during the process. But there is so much more this man is passionate about in life, and one of the most prominent things he is known for is finding ways to give back to the community.

Whether taking the time to be helpful or answer questions through contributions of his time, or finding charitable organizations out there that are worth people knowing more about, Brian Fielding hopes to do all these things and more to benefit society. The following charity strives to provide the best care and treatment for sick or abused animals, and best of all, they operate as not-for-profit organizations, so every dollar and cent spent goes to helping out rather than simply just going into someone else’s pocket.

The American Kennel Club Canine Health Foundation is an organization that strives to advance both the health and wellness of all dogs (as well as their owners) by funding research to help prevent, cure and treat canine diseases. They have worked on these goals since their founding in 1995, and have since become the largest organization that exclusively works towards canine health research.  Brian Fielding knows that their research teams work tirelessly to gain funding for their projects, and also hope to ensure that their funded research projects are of the highest quality and accuracy.

What better way to celebrate 20 years of canine health progress than to donate to their cause now? Brian Fielding shares everyone who does so isn’t merely helping out the animals in this case—upon visiting the AKC Canine Health website, visitors learn that this research benefits humans as well. There are many similarities between canines and humans, and this research often benefits information regarding human illness also.

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Fielding Investments Sheds Light on 3 Common Commercial Real Estate Mistakes

Fielding Investments is shedding light on some of the most common mistakes in the industry.

Fielding Investments is shedding light on some of the most common mistakes in the industry.

Fielding Investments knows that the commercial real estate industry can oftentimes be confusing and hard to understand. With so many terms, equations and so much money, it can be easy to make a mistake every once in a while. It is for this reason that the experts at this leading commercial real estate investment company have taken the time to share three mistakes that are commonly made and how they can be avoided.

  1. Failing to do one’s homework on a property.

When considering commercial real estate investment, it is of the utmost importance to do intensive due diligence. There are many different things that need to be considered including, but not limited to: the physical condition of the property itself, zoning, land-use, insurance, financing, tax laws, environmental conditions and so much more. Without the guidance of a seasoned veteran in the industry, beginners can be at great risk.

  1. Borrowing too much.

Few investors will have enough money to pay for the full investment of the property on their own and even if they do, it is usually not prudent to invest in one asset alone. Oftentimes, commercial real estate investing firm Fielding Investments suggests that first time investors seek partners with whom they can share risk and avoid seeking too much leverage for their purchase. While seasoned professionals do tend to borrow a significant portion of many acquisitions, they do so only after having established credibility with the credit markets, thereby allowing them to borrow a non-recourse basis (the investor does not personally guarantee the full borrowings, generally only being responsible for traditional “carve-outs”).

  1. Not knowing one’s market.

Perhaps the biggest mistake that investors make is not doing enough research and, therefore, not fully understanding the intricacies of that specific market. Fielding Investments has always maintained that individuals should invest in properties in their immediate area, because they have inside information that simply cannot be gained by virtually any other method. By living and working in these communities, investors can become knowledgeable about developments and plans for parts of the community including any efforts that are being made to improve specific areas with better roads, sewer and water infrastructure, and any new developments that are being considered. This gives investors a real advantage over out-of-state commercial real estate buyers.

For more information about commercial real estate investment and how to succeed in the industry, contact Brian Fielding today


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Brian Fielding Discusses the Differences when Investing in Commercial Real Estate vs. Residential Real Estate this summer

With investors looking for property this summer, commercial real estate advisor Brian Fielding of Fielding Investments looks at the pros and cons of commercial real estate vs. residential real estate.

With investors looking for property this summer, commercial real estate advisor Brian Fielding of Fielding Investments looks at the pros and cons of commercial real estate vs. residential real estate.

Brian Fielding of Fielding Investments has always maintained that one of the best moves that anyone can make to secure a steady stream of income is to invest in commercial real estate. While many people feel that investing in residential real estate is the answer, Brian Fielding is sharing this information about the different challenges and advantages each investment presents.

  1. Initial investment
    When it comes to investing in commercial real estate, it is important to note that not every bank will work with commercial real estate investments. Most major lenders will, but they will most likely want a larger down payment than would normally be required for an investment in a residential property. Brian Fielding shares that for a commercial property, a down payment of 30 percent or more is usually required; much higher than what it would be for an investment in residential real estate.
  1. Duration of the lease
    When investing in residential real estate, the time that the lessor is on the property can range from several months to several years. While this can be a steady cash flow for the duration of the lease, finding another tenant can be a long and arduous process. However, commercial real estate leases generally have a longer duration of a tenancy. In fact, in triple-net leases, the term of the lease is usually for 15 years or more, providing a much more stable and reliable cash flow reveals commercial real estate advisor Brian Fielding.
  1. Increased cash flow
    Besides having longer leases, which will automatically help the stability of the investor’s cash flow, commercial real estate investment also offers another perk. Because there are more tenants in a multi-unit commercial property than there are in a single-family household, the amount of money that an investor will collect is increased as well.
  1. Diversified risk to an investor’s portfolio
    When investing in residential real estate, losing a tenant can be devastating because there is only one tenant to collect monthly rent from. Brian Fielding of Fielding Investments shares that because of the multi-unit nature of most commercial real estate investments, losing one or two tenants will not be as much as a problem as it would be to a residential real estate investor. Therefore, investing in commercial real estate helps to diversify the risk in an investor’s portfolio.

For more information and tips on investing in commercial real estate today, visit property investment advisor Brian Fielding’s website at

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