CBRE Report identifies Phoenix, others as “new cities of finance”

Phoenix, AZ – The U.S. financial services industry, faced with heightened regulations and competition for skilled labor from technology companies, increasingly is finding the workers it needs by expanding to cities like Phoenix, according to a new report from CBRE Group, Inc.

In its inaugural annual report on the financial services industry, CBRE examines markets across the U.S. for their availability and cost of highly skilled workers, particularly those with technology backgrounds.

CBRE found that less expensive, “active” markets have posted significant growth in financial services employment since 2010. The “active” markets that have above-average growth in financial-services employment, according to the CBRE report, are:

San Antonio                                    Columbus, Ohio

Nashville                                         Phoenix

Dallas/Fort Worth                           Jacksonville, Fla.

Salt Lake City                                 Tampa

Richmond, Va.                                Charlotte

“New economic realities, continued regulatory pressure and the threat of technology disruption are unrelenting forces driving changes in the financial services industry,” said Julie Whelan, CBRE’s Head of Occupier Research in the Americas. “Firms are shaping their real-estate strategy in response to these trends and a number of ‘new cities of finance’ are emerging across the U.S.”

“As the report states, talent is always a primary consideration of companies examining location strategy – particularly for industries that require very specific skill-sets like financial services,” said Kevin Calihan, senior vice president in the firm’s Phoenix office. “Phoenix is a stable and low-cost location for companies with high-skill requirements. The metro area offers low costs of living, affordable wages and a diverse and – this is key – scalable workforce. With one of the deepest financial services labor pools in the county, this is a market that can offer firms cost effective and sustainable growth. Phoenix is the second most active market for financial activities employment growth, with a 15.2 percent increase since 2010; and, Phoenix is seventh in overall FA employment with 103,700 financial activities jobs.”

The report further identifies five “next-generation” markets that, according to proprietary analysis by CBRE’s Labor Analytics group, offer affordable real estate and expanding pools of skilled labor even though the financial-services industry has, as yet, as smaller footprint in each. Included among those are Boise, Idaho, and Provo, Utah.

Based on CBRE’s examination of skilled-labor availability, labor costs, real-estate costs, market education levels and other factors, many of these active and next-generation markets scored highly as ideal recruiting and employment centers for the types of workers sought by the industry.

• Salt Lake City, Tampa, San Antonio, Phoenix and Columbus rank highly among cities offering the best mix of labor availability and cost for shared services jobs, which include back-office roles such as accounting, human resources, legal and finance.
• Columbus, Charlotte and Phoenix rank as ideal recruiting grounds for risk and compliance workers, such as quantitative analysts, mathematicians and compliance officers.
• Provo (Utah), Salt Lake City and Charlotte are among those atop the list of cities providing a balance of labor availability and cost for financial-services technology jobs such as software developers, web developers and information-security analysts.

“Financial services companies are continuing to seek out new and emerging locations that provide them with access to talent at affordable rates,” said Kristin Sexton, CBRE’s Managing Director of Labor Analytics. “Labor is the driving force behind the growth of the financial services industry in these smaller, ‘active’ markets.”

To view the full report, click here or here:transformation-americas-financial-services-industry-and-office-markets-report.

Phoenix, AZ — The Arizona chapter of NAIOP, the commercial real estate voice for the state, elected its 2017 officers and board members at its annual board meeting held November 1.

2017 NAIOP-AZ officers are Chairman of the Board, Larry Pobuda, Opus Group; Vice Chairman, Matt Mooney, Cousins Properties; Programs Chair, Andrew Cheney, Lee & Associates; and Secretary, Molly Carson, Ryan Companies US, Inc. Tammy Carr of Mortenson will remain as Treasurer.

“We recently hosted a very successful national conference where our state and local chapter were presented in a positive light,” said 2016 Chairman Bob Hubbard of LBA Realty. “Coupled with a strong increase in net membership and overall revenue, we are very excited that Larry is taking over as chairman. Larry is poised to take our chapter to the next level.”

New officers and new or re-nominated board members include Bryon Carney, Cushman & Wakefield; Keith Earnest, VanTrust Real Estate LLC; Tom Jarvis, Willmeng Construction; Rusty Kennedy, CBRE; Tom Knoell, Catellus Development Corporation; Anthony Lydon, JLL; Chris Marchildon, CBRE; Darren Pitts, Velocity; Danny Swancey, ViaWest Group; Chuck Vogel, VEREIT, Inc; Jim Wentworth Jr., Wentworth Property Company; and Tom Johnston, Savills Studley, and Hubbard, who also serve on the executive committee by virtue of being past chairmen.

Phil Breidenbach of Colliers International was elected to a new 3-year term.

NAIOP, a 15,000+ member organization in North America, advocates responsible commercial real estate development and advocates for effective public policy. It is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP provides unparalleled industry networking and education, and advocates for effective legislation on behalf of our members.

Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz of the day will be.

The Dow Jones industrial average lost 77.46 points, or 0.4 per cent, to 17,959.64. The Standard & Poor’s 500 index lost 13.78 points, or 0.7 per cent, to 2,097.94 and the NASDAQ composite fell 48.01 points, or 0.9 per cent, to 5,105.57.

Benchmark crude oil sank $1.33 to $45.34 a barrel in New York. Brent crude, the international standard, fell $1.28 at $46.86 a barrel. In other energy trading, heating oil fell 5 cents to $1.47 a gallon, wholesale gasoline fell 4 cents to $1.45 a gallon and natural gas fell 11 cents to $2.792 per 1,000 cubic feet.

Fed leaves key rate unchanged but hints at upcoming hike — The Federal Reserve left interest rates unchanged Wednesday, six days before Americans choose a new president, but hinted again that it would likely raise rates soon. The Fed said that the case for a rate hike has “continued to strengthen” but that it had decided to await more evidence of progress toward its objectives. Most Fed watchers expect a rate increase at the central bank’s next meeting in mid-December.

Survey: US businesses add just 147,000 jobs in October — U.S. companies added the fewest jobs in four months in October, as construction and manufacturing firms continued to shed workers, a private survey says. Payroll provider ADP said Wednesday that businesses added 147,000 jobs, down from 202,000 in September, a figure that was revised strongly higher. October’s hiring, while below last year’s healthy pace, is enough to lower the unemployment rate over time. With the U.S. population aging, not as many jobs are required as in the past to keep up with population growth. WASHINGTON (AP)

Vornado to Spin Off DC Portfolio in $8.4B Merger with JBG “Calling it a ‘key milestone’ in its value creation strategy, Vornado Realty Trust is spinning off its Washington, D.C.-area portfolio and merging it with The JBG Cos. in what will be a regional commercial real estate ‘powerhouse’ worth $8.4 billion. In the tax-free spin-off, Vornado will merge the business known as Vornado/Charles E. Smith with the operating company and certain assets of JBG, a leading Washington, D.C., real estate company that controls more than 22 million square feet of urban-infill commercial and multifamily properties and a valuable land bank for future development. The combined company will be named JBG Smith Properties and will the largest, market-leading, best-in-class, pure-play Washington, D.C., real estate company with 79 assets, including 50 office properties totaling about 11.8 million square feet. It will also own 18 multifamily properties with 4,451 residential units and 11 other properties in some of the region’s top submarkets including Crystal City, Pentagon City, the Rosslyn-Ballston Corridor, all in Virginia, and Bethesda, Md.” (Commercial Property Executive)

Economy Watch: Construction Spending Drops in September “The Census Bureau reported on Monday that U.S. construction spending during September came in at an annualized rate of $1,150 billion, or 0.4 percent below the August total. The September 2016 figure is also 0.2 percent below the September 2015 total, the bureau said. Both private spending and public spending decreased in September. Spending on private construction projects was down 0.2 percent month-over-month, while public construction spending dropped even more, by 0.9 percent. Private construction spending gained 2.4 percent for the year, but public construction dropped by a sizable 7.8 percent. Spending on power, public safety, transportation, water and sewage projects all dropped by double-digit percentages since a year ago. In the private sector, spending on new multifamily projects gained 2 percent for the month and 9.1 percent for the year, while single-family spending barely moved for the month (up 0.1 percent) and lost 2.9 percent for the year.” (MultiHousing News)

State Treasurer, State of Michigan Boosts Stake in Apollo Commercial Real Estate “State Treasurer, State of Michigan increased its position in Apollo Commercial Real Estate Finance (NYSE:ARI) by 28.5% during the second quarter, according to its most recent 13F filing with the SEC. The firm owned 2,980,768 shares of the real estate investment trust’s stock after buying an additional 661,768 shares during the period. State Treasurer State of Michigan owned approximately 4.42% of Apollo Commercial Real Estate Finance worth $47,901,000 at the end of the most recent quarter. Several other hedge funds also recently made changes to their positions in ARI. Renaissance Technologies LLC raised its position in shares of Apollo Commercial Real Estate Finance by 3.5% in the first quarter. Renaissance Technologies LLC now owns 1,352,600 shares of the real estate investment trust’s stock worth $22,047,000 after buying an additional 46,200 shares during the period.”

Discount grocery Aldi heads into wealthier areas “Are suburban consumers ready to give up the familiar grocery experience for bare-bones stores where they have to do their own bagging and leave a quarter deposit for a shopping cart? That’s what Aldi and other deep-discount chains are betting as they make a big expansion push across the U.S. Up until now, the German chain and competitors like Lidl and dollar stores have mostly attracted cash-strapped customers. Now they’re moving into wealthier areas as Americans of all stripes get more budget-conscious and their traditional low-to-middle-income niche gets crowded with competitors. Aldi is going even further in appealing to upscale tastes by stocking some fancier goods, such as organic foods.” (MarketWatch)

Texas mall re-do to include a performing arts center “Starwood Retail Partners’ $100 million renovation of The Shops at Willow Bend in Plano, Texas, will add genuine life to its re-imagined entertainment component. North Texas Performing Arts and its Plano Children’s Theatre will make its new headquarters in a 23,000-sq.-ft. space at the mall, which is also getting eight chef-driven restaurants and a  30,000-sq.-ft. fitness center. ‘By bringing the theatre to the center, we’re not only forging a closer connection with the community, but also a connection with education and the arts,’ said Ed Coury, Starwood senior VP and director of leasing. ‘The Children’s Theatre has been a great influence on the lives of kids in the area for 25 years. We estimate that 200,000 people will come to the center to attend shows or wait for their kids while they’re rehearsing.’ Coury says the theatre group, which was extended a reduced rent, will re-brand itself as the Willow Bend Center for the Performing Arts.” (Chain Store Age)

Public and private institutions kicked off $4.6B in construction projects last year: report “Public and private institutions initiated $4.6 billion worth of construction projects last year, the highest seen in New York City since at least 2009. According to the latest report by the New York Building Congress, construction projects started by public and private institutions — including schools, hospitals, cultural facilities and courts — reached a seven-year high last year. Project starts increased by 22 percent from 2014, when $3.8 billion worth of projects were started. The report also notes that public and private construction starts totaled $26.1 billion over the last eight years — from July 2008 to June 2016. Of that volume, $9.6 billion was for school projects and $8 billion was for hospitals and healthcare facilities. Construction starts in the first half of 2016, however, only reached $1.4 billion, less than half of the construction started during the same time period last year. But, according to the report, last year’s numbers were boosted by the construction of a few major projects, like the Memorial Sloan Kettering Cancer Center on the Upper East Side.” (The Real Deal)

New laws could unlock tens of thousands of apartments “The city has been pushing development on recalcitrant communities while ignoring policy solutions that could ease the housing crisis without costing a dime, housing experts said Tuesday at a Crain’s panel discussion. The city is on track to reach 9 million people by 2040, which translates into a need for 350,000 more apartments. While the de Blasio administration has called for new towers around transit nodes, panelists said allowing more basement apartments and moving tenants into appropriately sized units would house many additional New Yorkers… Legalizing so-called granny flats was mentioned in Mayor Bill de Blasio’s housing plan in 2014, but has taken a backseat to other policy objectives. While the proposal faces opposition, notably in Queens, Perine believes the process should be part of conversations about how the city could make housing more affordable by occupying and developing units more efficiently.” (Crain’s New York)

How housing would fare under Clinton, Trump “Unlike the candidates’ housing policies, the housing market’s issues are clear. How will the next administration tackle reforming mortgage giants Fannie Mae and Freddie Mac? They still back the bulk of the mortgage market and are highly profitable, but they are still under government conservatorship, paying the U.S. Treasury Department every cent of profit. How do we bring private capital back to the mortgage market? How do we manage the enormous growth of nonbank lenders, which now make up more than half of all new originations? How do we insure safety for borrowers who use these lenders? And how do we create more affordable housing, both rental and owned, for underserved communities?” (CNBC)

Influx of foreign dollars continues to power commercial real estate “Look at the biggest commercial real estate deals across the country. The odds are high that investors from overseas purchased these key office towers, retail centers or apartment projects. And the importance of foreign capital to the U.S. commercial real estate market is only increasing. Midwest Real Estate News recently spoke with Greg Warsek, senior vice president and senior regional manager with the Chicago office of Associated Bank, about how important foreign dollars have become to the health of the local real estate market.” (Realestatejournals.com)

Vornado post-Roth? “‘Don’t be jerky,’ Steven Roth told Gary Barnett. ‘It’s not even close.’ Sitting among other industry titans at Bloomberg LP’s headquarters last spring, Roth was in full troll mode. Barnett had dared to suggest that One57, his cathedral for the 0.1 percent, was better than Roth’s luxury condo tower in the works at 220 Central Park South. And when Jeff Blau spoke about the upcoming condos at Hudson Yards, Roth quipped that his firm, the Related Companies, was ‘selling to the suckers.’ Of his lender at 220 CPS, the Vornado Realty Trust chairman and CEO said: ‘I’m in the suck-up business to the Bank of China.’ The chiefs of public companies tend to be careful to a fault about what they say in public. Not Roth, who is one of the last in a line of brash hustlers running blue-chip real estate investment trusts — very much in the vein of Sam Zell, whom he’s referred to as a “bald-headed chicken fucker.” At the same time, Roth has shown remarkable patience in turning Vornado, once a developer of New Jersey industrial properties and strip malls, into the $40 billion behemoth, with more than 30 million square feet of New York City holdings, it is today.” (The Real Deal)

Facebook beats Street 3Q forecasts — Facebook Inc. on Wednesday reported third-quarter earnings of $2.37 billion. The social media company said it had profit of 82 cents per share. Earnings, adjusted for one-time gains and costs, came to $1.09 per share. The results exceeded Wall Street expectations. The average estimate of 15 analysts surveyed by Zacks Investment Research was for earnings of 97 cents per share. The social media company posted revenue of $7.01 billion in the period, also surpassing market forecasts. MENLO PARK, Calif. (AP)

Broadcom buying Brocade Communications in $5.5B deal — Chipmaker Broadcom is buying Brocade in a deal valued at approximately $5.5 billion. Brocade shareholders will receive $12.75 per share, a 13 per cent premium to the Tuesday closing prices of the computer networking company. The deal also includes $400 million in debt. Broadcom Ltd. plans to sell Brocade’s IP Networking business, which includes wireless and campus networking, data centre switching and routing and software networking solutions. Brocade CEO Lloyd Carney said the company will work with Broadcom to try to find a buyer for the IP Networking business. NEW YORK (AP)