Industry predicts strong year for local real estate

Source: The Business Journal
Written by George Lurie

  The spotlight shone brightly on the Valley’s real estate market Thursday night at the Fresno County Economic Development Corporation’s 12th Annual Real Estate Forecast event. From multi-family, residential and retail to industrial, commercial, ag and investment, a procession of local experts provided snapshots of current market conditions — and their best crystal ball readings of where the market is headed. The event, which drew about 400 people to the Fresno Convention Center, kicked off with a moving, 20-minute tribute to Charles Tingey, founder of Colliers International and also a founding member of the Fresno County EDC. A pivotal and charasmatic figure for many years in Valley real estate, Tingey died several months ago at the age of 74. Bobby Fena, one of the principals at Colliers and a long time associate of Tingey’s, said, “Chuck was a mentor to all. He was a delight to be around and made a lot of people successful in this industry.” John Brelsford, Tingey’s former partner, said, “Chuck was like a magnet. He could draw people in from all areas of life.” Following the tribute to Tingey, Lee Ann Eager, EDC president and CEO, turned the mic over to Matt Renney and Doug Cords, who served as emcees for the evening. The first expert to take the podium was Robin Kane of Hendricks-Berkadia, introduced as “the maestro of multi-family.” Kane said that in 2014, multi-family sales in the Fresno-Clovis area “almost doubled” those of 2013. Citing a “perfect storm” that includes historically low interest rates and continued growth in so-called “urban centers,” Kane predicted another strong year for the sector in 2015. With home ownership rates for Californians at their lowest levels since 1990 — just above 50 percent — Kane said recent rent increases “have been eating away” at renters’ available equity to purchase a home. Predicting that the apartment industry “will continue to benefit from a dysfunctional housing market,” he also said that stagnant wages and “difficulty arranging financing today” continue to be factors keeping more Valley residents renting rather than owning. At the same time, he added, multi-family construction across the country “has just gone nuts.” He predicted “2015 will be another record-setting year” for the sector. Kane’s short presentation was followed by upbeat speeches by Colleen Wiginton of the Fresno Association of REALTORS, Ethan H. Smith and Brett Visintainer from Newmark Grubb Pearson Commercial, Brett Todd of Colliers International, Stanley Kjar from Pearson Realty and Peter Orlando from Retail California. Keeping with the evening’s “Rock and Roll” theme, all of the evening’s speakers confirmed that real estate fundamentals in the Fresno area continue to improve. “Two years ago, distressed sales represented 50 percent of the market activity,” said Wiginton. “Today, that number is down to just 17 percent. And it continues to fall.” “We’ve officially hit the reset button,” she added. “Compared to other parts of the state, Fresno is still a very affordable place to live.” Wiginton said first-time homebuyers currently comprise 41 percent of the local market and the pace of new home construction in the area should average about 1,800 single-family homes per year for the next decade. “All of the fundamentals are in place for a healthy 2015,” she added. Smith characterized Fresno’s industrial real estate sector as “pretty tight,” with current commercial vacancy rates hovering around 6.7 percent. He said new incentives from Fresno County as well as the cities of Fresno, Clovis, Sanger and Kingsburg would spur additional construction of industrial buildings in those areas. Smith’s prediction for 2015: Vacancy rates will continue to drop. Land prices will rise. And construction of the high-speed rail line will “create uncertainty and opportunity” in the market. Ag broker Kjar began his presentation by noting that farm real estate values hit an all-time high in 2014. “Commodity prices drive the price of farmland,” Kjar said, “and right now, almonds are leading the charge.” Predicting both the drought and a strong dollar could put a damper on growth in 2015, Kjar added, “Farm properties in areas with better water conditions will still be in demand.” Todd said he expects commercial construction to “ramp up” late in 2015 and early 2016. “We are bullish and expect the market to continue to flourish,” he added. Echoing those sentiments, Visintainer said, “more demand than supply” and “prolonged low interest rates” would continue to provide real estate investors with positive returns. “This could be one of the strongest years ever,” he added. The final speaker of the night, Peter Orlando, said the area would only see the opening of two major new shopping centers in 2015 — Campus Pointe near Fresno State and Park Crossing in north Fresno. He said the shopping center industry was “poised for growth” going forward and noted technology was playing an increasingly more important role in retailers’ courtship of consumers. “The success of online retail has forced developers to create higher-quality shopping environments” in order to compete, he said, adding that outside-oriented environments were beginning to replace traditional, enclosed malls. Orlando also predicted “social networks will serve more and more as shopping networks” and that Hispanics and millennials will “continue to heavily influence” retail shopping trends.

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