When you combine strong data with a solid investment discipline you get sustainable results. The proof is that our commercial real estate funds have been consistent, top performers over the last two decades.
In 1983, we established RealData Information Systems, Inc.℠, to track and analyze the trends in key real estate markets across the United States. Over the years, many leading banks, brokerage firms, and institutional investors have accessed this research on a subscription basis.
Today, RealData℠ tracks 50 commercial real estate markets in the United States, and uses proprietary econometric models and analytic tools to rank the 25 markets we consider most favorable for investment. RealData℠ also issues periodic reports on key factors such as occupancy, absorption, and rental rates, as well as market momentum and emerging trends.
When Blumberg Capital Partners acquires real estate assets, RealData℠ plays a key role in the due diligence process, and provides periodic USPAP1 compliant asset valuations during the period of ownership.
In addition to helping our fund managers decide when to buy, sell, or hold properties, the information from RealData℠ helps our leasing and asset management divisions to maximize income and value on both our properties and those we manage for others.
RealData Proximity Maps offer a snapshot of the conditions within each market as it relates to other major markets and the US as a whole. The conditions are measured in terms of occupancy rates for the given period and the change in average rental rate over the past 12 months. The metros can be plotted using historical, current or projected data, but each map represents a static snapshot as of the specified period. The occupancy rate for each market is plotted on the horizontal axis and the change in rental rate is plotted on the vertical.
The heavy black vertical line represents the national average occupancy rate. It separates the metros with occupancy rates above the national average to the right from those that are below the national average to the left.
The heavy black horizontal line represents the change in the national average rental rate over the past 12 months. It separates the metros that have had changes in average rental rate greater than the national average from those that are below the national average, or in a down market, it separates those that have suffered less of a decline than the nation from those that experienced a greater decline than the nation as a whole. The better performers are above the line and the laggards are below the line.
With the “boundaries” as described above, the graph is segmented into quadrants. Each quadrant offers a signal as to the conditions within in each market. By examining Realdata Proximity Maps over several periods as to a metro’s quadrant location an indication of market tendencies and future direction starts to emerge. Each quadrant is briefly described below.
The metros to the upper left, in quadrant 1, are holding rental rate as of the current quarter, but have an occupancy rate below the national average. The implication is these markets are temporarily over-supplied, otherwise the rental rate would have fallen more significantly. Alternatively, the decrease in vacancy may have been relatively sudden and so rental rates have yet to respond. This is a signal to exam the trends and expectations of these markets for a better understanding of their likely future direction.
The best performers are the metros to the upper right, in quadrant 2. They exceed the national average occupancy rate and have had a greater increase, or in a down market, have suffered less of a decline than the nation as whole. As of the current quarter, these markets are “out-performing” the overall market. The closer a market is to the upper right corner of the quadrant the better and stronger is its performance. With that understanding the relative performance of each market as of the effective time period may be easily compared. The question to consider for these markets is whether this superior performance will be sustained. Are new building completions expected that would substantially affect a market’s occupancy rates and rental rates? How long has the metro been out-performing the nation as a whole and how long is it expected to do so?
The worst performers for the specified quarter are metros to the lower left, in quadrant 3. They have an average occupancy rate below the national average and have had a lower increase, or in a down market, have suffered a greater decrease in rental rates than the nation as whole. As of the current quarter, these markets may be “falling behind” the overall market. The closer a market is to the lower left corner of the quadrant the weaker is its performance. The question to consider for these markets is whether this poor performance is temporary or the onset of a long-term trend. Are some metros significantly overbuilt? How long have these metros been under-performing and how long are they expected to remain so?
Metros to the lower right, in quadrant 4 are likely, as of the given quarter, experiencing a market correction. They have an average occupancy rate above the national average, but have had a lower increase, or in a down market, have suffered a greater decrease in rental rates than the nation as whole. As of the current quarter, these markets may be “falling behind” the overall market. The closer a market is to the lower left corner of the quadrant the weaker is its performance. The question to consider for these markets is whether this poor performance is temporary or the onset of a long-term trend. For example, is the metro significantly overbuilt? How long has it been an under-performer and how long is it expected to remain so?