Real Estate Adds Stable, Long Term Growth to Your Investment Portfolio

Source: Realty Biz News Written by Brad Walker

Modern communication networks have effectively shrunk the size of the planet. Information can now travel in seconds rather than the hours, days or even weeks it took data to cross the globe just a couple of generations ago.

This rapid flow of information means that a “bargain” never lasts for long in today’s financial markets. Once a promising investment opportunity has been identified, the money flows that direction until the asset price reaches (or often exceeds) perceived value equilibrium.

When you throw in ultra-low interest rates and sluggish macroeconomic conditions in the US and Europe holding bond yields down and central bank stimuli overheating global equity indices, investors cannot find many low-risk, reasonable-return investments today.

Astute investors understand that the beginning of an interest rate cycle is not the time to be investing in bonds and that that the risk-reward ratio is simply not attractive with stocks at historic highs on the strength of smoke-and-mirrors political promises.

Fortunately, the alternative investment class has grown notably over the last decade or two to include private equity, futures, commodities/precious metals and real estate. Recent surveys also suggest that real estate is the fastest growing category of alternative investment, with sovereign investment funds worldwide projecting an almost 10% increase in real estate investments in their alternatives portfolio over the next five years (from 38% to over 41% of total alternatives portfolio).

Overview of 2017 US Housing Market by Region

Although millions of Millennials have been living with their parents for the last few years, many financial analysts say this trend is winding down. They argue that Millennials and even older Gen-Xers are just now reaching prime home buying ages, and that many of these now not-so-young adults will be moving into their own places over the next few years.

The analysts argue this bodes well for the US housing market, especially as the ongoing economic recovery is also producing more jobs and driving up wages.

Most well-known housing market analysts expect housing prices nationwide to be up by at least 3% in 2017. January clocked in with a 3.3% annual rate increase in existing home prices, so we are on pace to meet that projection. That said, growth will vary dramatically by region and by city, with many second-tier cities leading the way as growth slows down in major markets like San Francisco, LA and Boston.

With notable exceptions like NYC, housing price growth in the Eastern US and the Midwest is expected to lag growth in the other areas of the country listed below.

Southeast

The Southeastern US has been experiencing solid growth in home values for almost a decade. According to Zillow, Orlando, Florida is one of the hottest cities in the country, and will see home prices increase by an average of 5.7% in 2017. Knoxville and Nashville, Tennessee appear on Zillow’s top ten list with a projected home price growth of 4.4% and 4.3%, respectively.

Southwest

Utah is a housing hot spot in the Southwest part of the country. Zillow anticipates home prices in both Salt Lake City and Provo will move up by 4.3% in 2017. Denver is also seeing strong demand for housing, with home prices expected to climb by 3.2% this year.

West

Seattle continues to be an economic powerhouse and a magnet for new residents. Zillow is projecting that home prices in Seattle increase by 5.6% in 2017. Portland is just 170 miles south of Seattle, and Zillow is projecting housing prices move up by 5.2% in 2017 in this dynamic city. Sacramento, the capital of the Golden State, is also experiencing a real estate boom these days, with home prices expected to appreciate by 4.8% this year.

Medium to Long-term Investments Make Sense for Most Baby Boomers

Baby Boomers have different investment needs than earlier generations of retirees.

Up until the Great Recession, demographers and economists projected that most Baby Boomers would retire and move south much like the preceding generation. However, the stock market crash of 2008 decimated the retirement plans of many Baby Boomers as well as savaged their home values.

The net result is that a lot more Baby Boomers are working longer than they or the demographers expected to try and make ends meet. Related to this, an increasing number of boomers are staying in their family homes to remain near their jobs, children and grandkids.

Moreover, those Baby Boomers who are retiring are increasingly opting to stay in their homes rather than downsize. Part of the reason for this is their children (Millennials) have had a hard time finding decent jobs and moving out. Some surveys have suggested that 20% to 33% of the adult children of Baby Boomers are still living at home and one in three is still getting some kind of financial support.

These surveys also suggest that even when their children have moved out, BB parents want to have a big place for their kids and grandkids to come visit. For a large number of BBs, that means deciding to stay in the family home.

Whether you want to call it postponing retirement or reinventing it, it is clear that BBs have a different idea of how to spend their “golden years” than their parents and grandparents did. Given that pensions are disappearing, Social Security payments only cover a fraction of the cost of a middle-class lifestyle in a major city, and interest rates are so low, BBs have to think out of the box to support their “retirement”.

As mentioned above, many older Americans are choosing to stay in the workforce longer, but that’s not possible for everyone, and age does place limitations on the ability to work. Improvements in medical care also mean BBs can expect to live longer, so most can afford to take a longer-term perspective on their investments.

When you put all the pieces of the retirement puzzle together for BBs, a thoughtfully selected portfolio of real estate investments emerges as an ideal solution. No investment is risk free, but BBs who seek steady long-term income and appreciation have many low-risk real estate investment vehicles to choose from today.

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Southeastern U.S. Experiencing a Growth Spurt

Source: National Real Estate Investor By: Dan Wagner

Due to rapid growth, the Southeast is emerging as an economic powerhouse with a diversifying base.

With two international gateway markets in Atlanta and Miami—together accounting for more than 50 percent of the region’s international commercial real estate investment—and strong growth and educated workforces in smaller cities such as Charlotte, Tampa and Nashville, the Southeast region would form the sixth largest country in the world with a growth rate that would exceed any in the top five.

The Southeast boasts an industrial expansion fueled by both import and export activity, as well as increases in manufacturing employment and activity. Overall industrial vacancy is at a record low for the region. Atlanta, Orlando and Memphis provide strategic locations for e-commerce users, and Memphis has seen an excessive amount of distribution activity relative to the market’s size. The region benefits from port markets such as Savannah, Miami and Charleston as well, and industrial health will continue to strengthen with the widening of the Panama Canal.

The increase in population and employment growth, coupled with strong market conditions, could prompt an office construction boom throughout the region. Nashville in particular has accounted for one third of all office space constructed in the Southeast over the last two years, with 3.5 million more sq. ft. projected over the next two years. Additional construction in Nashville and throughout the Southeast could mitigate the leverage currently held by landlords, who have been able to lift rates consistently. In 2016, every market in the Southeast hit record highs for office asking rent, which rose by more than 10 percent, though the region still provides a great value compared to other U.S. regions.

Retail has followed the trend, with vacancies hovering near historic lows and asking rents near historic highs. Despite the increase in e-commerce, retail development is expected to continue, though it will be at a more conservative pace than pre-recession levels of construction. Markets with the largest amount of new retail development expected are Atlanta, Orlando and Tampa.

Atlanta and Orlando, along with Miami, are also poised for the most hotel development in the Southeast. With six consecutive years of U.S. economic growth, leisure and business travel have increased, stabilizing hotel performance. The revamp of leisure travel in Florida and along the coastal markets and business travel in Atlanta, Charlotte, Nashville, Miami and Orlando has increased the hotel demand.

Multifamily supply has caught up to the population surge in the Southeast, with deliveries outpacing absorption in 2016 for the first time since the recession. However, with 48 percent of the country’s net migration flocking to the Southeast, there is still a high amount of activity and interest in urban multifamily assets.

CBRE’s 2017 Southeast U.S. Real Estate Market Outlook touches on each city’s strengths in more detail.

Dan Wagner serves as Southeast research director for CBRE.

20 years ago, Alabama’s auto industry started rolling with first M-Class

Source: madeinalabama.com By:Dawn Azok

TUSCALOOSA, Alabama – Twenty years ago today, the first customer-ready M-Class SUVs began rolling off the Mercedes-Benz auto assembly line in Tuscaloosa County, launching new eras for both the automaker and the state of Alabama.

For Mercedes, the M-Class was the first mass market SUV, and its success helped spin off a full range of similar models for the premium German automaker while also influencing the offerings from competitors.

For Alabama, the start of M-Class production was also the start of the modern auto industry. Minivans, sedans, pickups and more SUVs have followed, as Honda, Hyundai, Toyota and hundreds of suppliers set up shop in the state.

“In the 20 years since Mercedes began producing vehicles in Alabama, our partnership with the company has grown stronger today than ever before,” Governor Robert Bentley said.

HudsonAlpha Breeds Serial Entrepreneurs

Source: Businessalabama.com Written by Nancy Mann Jackson

A flare for growing biotech companies is a characteristic of the genomic researchers of the HudsonAlpha Institute. The co-founder and one of his first associate entrepreneurs are good examples.

Nurtured in his science and business by HudsonAlpha Institute’s founder Jim Hudson, Jian Han has followed Hudson’s footsteps as a serial entrepreneur of biotech firms.

Nurtured in his science and business by HudsonAlpha Institute’s founder Jim Hudson, Jian Han has followed Hudson’s footsteps as a serial entrepreneur of biotech firms.

When the HudsonAlpha Institute for Biotechnology opened in Huntsville in 2009, it promised to boost genomic research, economic development and educational outreach.

The institute has delivered on all three counts, bringing together some of the world’s leading thinkers in genomics with innovative entrepreneurs and educators. Together, they are working to improve human health and quality of life by participating in ongoing genetics research and developing products, services and companies that make that research accessible and available to improve people’s lives.

HudsonAlpha’s campus spans 150 acres and now includes three buildings housing 27 growing companies and approximately 300 employees in the companies and the nonprofit research center. While the institute’s success relies on strong research and viable products and services, the most important ingredients are passionate entrepreneurs who have a vision and dedication to see it through. With a number of successful startups under its belt, HudsonAlpha has become a breeding ground for visionaries who often start not just one company but many companies in succession. Here’s a look at two of those prolific business-makers and what keeps them going.

Jim Hudson

Born and raised in Huntsville, Jim Hudson was the son of an entrepreneur. His father was his partner in Hudson’s first businesses, which were an iron and aluminum foundry and an antenna company. But Hudson’s first love was science, and after selling those businesses in 1981, he returned to school to pursue a master’s degree in molecular biology.

“While I was a scientist first, I was always looking for business opportunities that tied in with my research,” he says. Eventually, he founded Research Genetics, a Huntsville company that produced arrays of artificial DNA for use in genetics research. As the company grew, Hudson began working toward incubating other biotechnology companies. He would encourage his employees to launch their own businesses and in return for being a co-founder of those companies, he provided office space, supplies and business services at no cost.

When Hudson sold Research Genetics in 2000, it had grown to 260 employees and $28 million in revenue. When the new owner relocated Research Genetics to California in 2002, many of those employees were laid off.

After spending so much time and effort to build a strong community of biotechnology professionals in the Huntsville area, Hudson didn’t want to watch it fall apart. He formed the Partnership for Biotechnology Research to “keep the community together,” bringing in speakers from all over the world for quarterly meetings.

As a founder of HudsonAlpha Institute for Biotechnology, Hudson continues to invest in new companies and serve as a mentor and supporter of other companies based on genomics research. “I’m a scientist by nature, but I have a desire to take my education and use it in business,” Hudson says. “I continue to believe that biotechnology is second only to electronics in its potential to improve life for all of us.”

Garrett Dunn, a lab technician, loads cartridges into a reader in Han’s lab so the software can process data from it.

 

HudsonAlpha’s unique combination of nonprofit research and commercial businesses makes it an ideal place for biotech entrepreneurs, and past success seems to be building a generation of serial business owners.

“When you experience success and make enough money so that you’re no longer worried about your own financial picture, then you want to start more companies to make a difference in the world,” Hudson says.

“We believe capitalism is the best way to bring our research to make a difference for the most people. Here, we have a truly dynamic, supportive environment. We meet together every week and share ideas and root for each other.”

Jian Han

Growing up in China, Jian Han was the son of a leading Chinese physician and researcher. His father introduced many new technologies in China surrounding infertility treatments and genetics testing. For instance, he invented
chorionic villus sampling (CVS), a prenatal genetics screening procedure.

Because of his father’s passion, Han decided to come to the United States to study medicine. After his father’s death, while Han was a student at the UAB School of Medicine in Birmingham, he felt driven to launch a company to bring the work of his father’s lifetime to the marketplace.

While still at UAB in 1996, Han launched Genaco, which commercialized the technology his father developed and earned Chinese FDA approval. As the business grew, it drew the attention of Hudson, who owned Research Genetics at the time. “He asked me to come to Huntsville and offered free space, free Internet access and other perks,” Han says. “You can’t get much better than free.”

Han relocated Genaco to Huntsville and, in 2006, sold the business to Kiagen, a German company. By then, he was hooked on Huntsville and on biotech entrepreneurship. In 2007, Han launched iCubate Inc., a molecular diagnostic company, to market his proprietary technology that allows users to rapidly detect multiple pathogens in one test. Two years later, he launched iRepertoire, which commercializes applications of arm-PCR technology, which Han developed for infectious disease diagnosis and immune repertoire analysis.

“Most people who start several businesses have a passion to solve a problem; they recognize the need in the marketplace and feel driven to do something about it,” Han says. “For me, it started as a way to finish the story my father started.”

And the Huntsville community and HudsonAlpha have been instrumental in Han’s continued work to build and grow biotechnology-based companies. “Huntsville has a lot of business activity and entrepreneurial spirit, and a nice angel network,” he says.

Han says it’s almost a tradition in Huntsville to invent a technology, get it recognized by a larger company, and then sell it, satisfying investors and freeing the entrepreneur to move on to the next big thing.

“It’s like raising a pig,” he says. “Once you grow a company to a certain size, you let it go.”

Nancy Mann Jackson is a freelance writer for Business Alabama. She lives in Huntsville.

Silicon Valley’s Real Estate Crunch Is A Golden Opportunity For Other American Cities

Silicon Valley’s Real Estate Crunch Is A Golden Opportunity For Other American Cities

huntsville-alabama

When Curse CEO Hubert Thieblot told his employees last year that he was moving the company’s San Francisco headquarters to Huntsville, Alabama last year, they thought he was crazy.

About 20 of his employees quit because they didn’t want to relocate.

“It was very controversial,” said Thieblot, who had lived and run the company out of San Francisco for at least five years. “A lot of people did not like me for that decision.”

But today, the profitable, 110-person person company operates out of an Alabama city with a population of just under 200,000 people and the highest number of Ph.Ds per square mile given Huntsville’s history with NASA as the nation’s “Rocket City.” Curse just closed $16 million in funding earlier this week too from the China-centric venture firm GGV Capital.

“If you want to build a long-term company, you might have a better chance of keeping people outside of San Francisco,” Thieblot said. “The job market is too crazy here.”

Indeed, the cost of living and commercial real estate is also pricing smaller startups out of San Francisco. I’m seeing bootstrapped founders, who have yet to a take full round of funding, trickle into surrounding cities like Oakland, Daly City and the Bayview neighborhood of San Francisco, if they’re not considering urban hubs in other parts of the country altogether.

Jon Wheatley, a British entrepreneur who co-founded DailyBooth, wrote a good post about this when he decamped for St. Louis, Missouri to dream up new projects.

“If you’re trying to bootstrap, being based in San Francisco is awful,” he said. “The leading cause of startup death is running out of money. Moving to a cheap city and doubling (or more!) your company’s runway will more than likely vastly increase your chances of eventual success.”

Are we supposed to cry for these entrepreneurs, like the teachers, public servants, artists and the elderly who have already faced several decades of gentrification in San Francisco?

Um, no. Not really.

From a national perspective, it’s a good thing to see these job opportunities become more geographically diversified. (I mean, did you see the first quarter U.S. GDP numbers?! The economy contracted at an annualized pace of 2.9 percent.)

net-total-migration

While the rest of the country is only starting to see the kind of job recovery that may make the Federal Reserve finally raise interest rates later this year, the San Francisco Bay Area is bursting at the seams.

The city is at its highest employment levels ever and the population is expected to reach 1 million people by 2032. The city grew by 32,207 people between 2010 and 2013, but only added 4,776 housing units in the same period. Hence, our housing crisis.

Screen Shot 2014-07-10 at 8.52.20 PM

Similarly, commercial rents are nearing dot-com period highs. The Information reported last week that the average price per square foot for so-called Class A office space in San Francisco is $64.45, just shy of the dot-com bubble peak of $67.20 in the third quarter of 2000.

Commercial real estate developers are all scrambling to get their projects entitled as quickly as possible before they run into a nearly twenty-year-old San Francisco law called Prop M, that caps the amount of office space that can be built in a given time period.

Many startups are coping by operating distributed teams, with one founder here in Silicon Valley and another working with engineers in a different part of the country (or world).

Jason Citron, a veteran founder who sold OpenFeint to GREE for $104 million two years ago and is backed by Benchmark in his new hardcore tablet gaming company Hammer & Chisel, works in Burlingame while his co-founder Brandon Kitkouski is based around Dallas.

“His family’s in Texas. He’s got a nice house. If he had it in the Bay Area, it would cost millions of dollars,” Citron said. “He was commuting for awhile, but that was hard. The Bay Area is at capacity. It’s freaking expensive.” (And by the way, why is housing affordable in Texas? Houston had more housing starts than all of California in the first quarter of this year. Am I saying we should be Houston? No. I’m just pointing out policy trade-offs.)

Similarly, Jen Lu, who started YC-backed toy company ZowPow, splits her startup between San Francisco and Portland. Her co-founder Brian Krejcarek moved back to Oregon after living in San Francisco for many years.

“It’s been a good thing for us,” she said. “We’ve been looking to hire engineers and it’s just really hard to do it here because it’s so competitive and expensive. But he has a network and is able to find talent there.”

Screen Shot 2014-07-10 at 9.02.57 PM

Some of the Valley’s best-known investors are also encouraging geographic diversification. Andreessen Horowitz is incubating a startup called Teleport, which will help knowledge workers improve their quality of life by moving to places that maximize the difference between their cost of living and take-home pay. Marc Andreessen recently published an essay in Politico, arguing that other regions across the U.S. should remove regulatory hurdles around specific technologies they want to attract — be they self-driving car, stem cell or Bitcoin-related startups.

Is this bad for the Valley over the long-run?

Between giants like Google, Facebook and Apple and then later-stage companies like Uber, Square, Dropbox and Twitter, the region has a healthy mix of employers.

Yet the heated real estate market favors capital-rich, growth-stage companies right now, often at the expense of other kinds of creative experimentation, be it a longstanding artist’s collective or a not-yet-Ramen-profitable entrepreneur. The cost of living and the competition for talent simply doesn’t give startups a lot of time to find product-market fit here unless they’ve raised a lot of capital.

In contrast, Google, founded in 1998, and Facebook, founded in 2004, came of age when the Valley was weathering slower economic times and it was easier and cheaper to form a cluster of AAA technical talent inside any single company.

Is that worrisome? Maybe a little. When you look at other cities that have historically been dependent on a single industry like Detroit, the population declines started after power consolidated to a handful of companies like GM, Ford and Chrysler, which then began distributing their plants around the country in the 1950s to avoid the risk of production disruptions from worker strikes. (These changes predated competition from Asian auto manufacturers by at least a generation.) Ideally, you want a mix of firm sizes, and younger and older companies.

But ultimately, these things come and go in waves, and the Bay Area is an undeniably attractive place to live no matter what. A decade ago, the world’s leading mobile OS was built out of Helsinki by Nokia. Today, both of the world’s leading mobile OSs, Android and iOS, are here in Silicon Valley.

Cities have to maintain a certain equilibrium between people moving out and people moving in. Right now, the escalating costs and sheer limits of Bay Area’s housing and transit infrastructure are tilting that balance back out to the rest of the country.

So if you’re a mayor of another U.S. city and you want to attract jobs, now would be a good time to drop by a Y Combinator or 500 Startups demo day to make a pitch.

We have our hands full.

First Lady Dianne Bentley Domestic Violence Prevention Legislation

The First Lady Dianne Bentley Domestic Violence Prevention Legislation aims to modernize domestic violence laws, increase state funds toward lifesaving services for victims and their children, and strengthen victim protection through law enforcement and judicial provisions.

Thank you to Mrs. Dianne Bentley for having lunch with us today in Huntsville and for continuing to bring domestic violence issues in Alabama to the forefront of concern.

Our State is a better place because of you. God bless you.

Thank you to Mrs. Dianne Bentley for having lunch with us today in Huntsville and for continuing to bring domestic violence issues in Alabama to the forefront of concern. Our State is a better place because of you. God bless you.

Mrs. Dianne Bentley Visits Downtown Huntsville – Pictured: Nicole Jones and Dianne Bentley

Sincerely,

Nicole Jones

City of Huntsville – The Big Picture (Comprehensive/Master Plan) Update

Yesterday evening the City of Huntsville hosted The Big Picture Annual Update and discussed the evolving vision for our city in the areas of transportation, education, neighborhood reinvestment, quality of life, workforce development, and economic development (which encompasses all of the preceding topics).

We are all part of The Big Picture. Thank you to all of the stakeholders who participated, and continue to participate, in this process!