Mergers & Acquisitions: How Real Estate Can Play A Key Role

With M&A activity on the rise, a company’s occupancy terms can be a hidden asset, or an unexpected liability. On one hand, prevailing obligations might serve as a competitive advantage that contributes to greater profitability.  On the other, they might add significant debt and thereby constrain the capacity for growth. Since facilities costs are typically the second or third largest spend category, the impact could be major.  M&A events can be great opportunities to reevaluate the real estate function and how it supports the overall business goals.

Kansas City CRE Investments: The Office Market

Last year, the Kansas City commercial real estate investment market came back to life.  Sales activity rose to levels not seen since the first part of 2008. Low interest rates, the pressure to place equity, and the fear of missing out on good pricing, made commercial real estate investment activity rebound. However, these three factors alone would not have increased activity without sellers and buyers changing their mindset in 2011 as it relates to pricing and expected returns.

In all investment classes, the activity pace in Kansas City heightened in 2011. In actuality, the number and quality of sales completed outpaced prior year projections. Kansas City continues to have a large number of institutional buyers that have invested locally.

KCI / Airworld: Minor Submarket With Opportuniy For Major Growth

Though  the KCI/Airworld Industrial submarket is a minor component of the overall Kansas City industrial market, it is an important submarket, due to its close proximity to Kansas City International Airport (KCI). KCI is the preferred location for air-cargo transporters in a six state region and is already a key player in the region’s distribution and logistics sectors. The location of the submarket does place it fairly far from some of the more active industrial parks, like North Kansas City’s Paseo Industrial and Kansas City, Missouri’s Executive Park. However, the excellent proximity to I-29 and I-435, allow easy access to all points in the city.

The 2012 Multifamily Market

Commercial real estate remains in vogue with investors despite marginal gains in the overall economic outlook and concerns stemming from the European debt crisis.  For these investors, the multi-family market emerged as the clear favorite among the traditional four commercial property types in 2011, a trend that is expected to continue well into 2012.  While office, industrial and retail grapple with weak demand, a strong fundamental recovery in rental housing demand has propelled apartments to a broad recovery in occupancy, rental rates and investor pricing. 

With more than 3 million foreclosures since 2009, profound shifts in demographic, economic and social patterns have changed the way many Americans, particularly those of the millennial generation, feel about home ownership. This, combined with the entry of the first wave of “echo boomers” graduating from college, has resulted in the addition of an estimated 1.4 million renter households.

Leveraging For Success In 2012

Although we have no crystal ball or the ability to peek into the future, we do understand an organization that is fully prepared with superior market knowledge has the ability to anticipate and quickly adapt to the market. While we anticipate the economic climate and general market demand to remain challenging, BRES would like to share some insight into leveraging opportunities to maximize the financial outcomes for clients in 2012.