However, many industry watchers feared that the rise of former homeowners moving into multifamily developments would be offset by renters that would be forced to downgrade or move back home in droves. Some pundits even predicted that landlords would suffer huge losses while offering rental discounts and other freebies to keep units filled.

No matter how you looked at it, the multifamily housing industry seemed primed for financial disaster. But new research suggests that the multifamily housing industry has skirted drastic vacancy spikes and plunging rents.

According to a new study from Marcus & Millichap Research Services, apartment transactions totaled $7.1 billion in the second quarter, up 32% from a year earlier.

In another study, Real Capital Analytics reports that closed sales hit $2.6 billion in August, the highest month this year and the most active month since August 2008.

These findings are in stark contrast to a recent Fannie Mae survey which indicates that a major factor affecting the housing market is that many American’s are reluctant to buy. The number of people that think buying a home is a good or safe investment is in steady decline, falling from 67 percent in July, from 70 percent in January, and 83 percent in 2003.

So even though many homebuyers are sitting on the sidelines, multifamily-building sales are on the rise, reversing the slowdown that followed the financial market’s collapse two years ago

A lot of people in real estate find it difficult to believe that the recession is ending. The news is filled with tragic stories of people facing long term unemployment and the rising number of residential properties in foreclosure. It’s clear that people are suffering and the effects of the recession will be with us for quite some time.

Nevertheless, it’s important for us to note the small signs of economic recovery and have confidence that things are improving. For example, my last blog post noted how student housing continues to thrive in commercial real estate. In addition, improving lending conditions are an encouraging sign for commercial real estate and small business. The common denominator in these trends is that there are signs that confidence in commercial real estate is improving.

Recognizing small accomplishments tends to have a snowball effect on the big picture. At the end of the day, recessions and recoveries are all about confidence. For a recovery to gain steam, confidence has to build and build to the point that ultimately jobs are created and people are put back to work. That in turn causes consumer spending to increase further which leads to…well you get the picture.

Perhaps the news that the recession is officially over will result in more confidence. It should and I believe it will. But our government needs to do its part to help insure that businesses, especially small businesses, are incented to hire and not punished for being successful. Job creation is a good thing and it is important to all of us and our economy.

The commercial real estate market will certainly benefit from people having more faith in the economy and the industry will, as always, create its share of new jobs. Right now, we should all acknowledge and reflect on the small accomplishments that we are achieving. That will lead to bigger and better things happening for everyone who is connected to the economy.

Adequate student housing is as important to the college experience as textbooks and pizza. As noted in a previous post, the recession resulted in an increase of for-profit college student enrollments and an expansion of buildings designed to house classrooms and training facilities.

Education is more important than ever in this global economy and college enrollment numbers continue to rise. Since fewer high school students are choosing immediate employment over attending college, these students will need a place to live. In other words, there’s an increase in demand for student housing.

Banks are more likely to provide loans to builders when they know that there is a demand for student housing.  Banks are also more apt to provide the loans necessary to construct student housing as long as there is a continued demand. Like any successful real estate development, the project must command rents high enough to offset the cost of construction.  Investors in real estate investment trusts (REITs) are putting money into student housing and banks appreciate the stable occupancy rates.

The commercial real estate industry follows the law of supply and demand. In this economy, when things are uncertain, it’s comforting for investors to have a “sure thing.” While there are no “sure things” when it comes to investing, the student housing market comes close. As long as recent high school graduates seek to get an education and live independently from their parents, student housing should be a stable commercial real estate investment.

Since there is such a great opportunity to buy high quality buildings at fair prices, the market has seen a number of foreign investors and governments that have signed contracts and closed deals on U.S. commercial real estate.

According to research released this week by Jones Lang LaSalle, foreign investment in U.S. real estate has nearly doubled in the first half of 2010. Office buildings, condominiums and other properties continue to be prime targets for foreign investors who have helped to encourage a 176 percent increase year over year in the United States,

International transactions in the U.S. market jumped from $2.2 billion to $4.3 billion, making the U.S. the second most popular destination in the world for foreign real estate investment, just behind Germany. The research also indicates that the United Kingdom produces the highest amount of cross-border investments in 2010 with $7 billion invested.

Although this is a significant trend that will help to jumpstart the commercial real estate industry, commercial property remains at the bottom of the list of attractive U.S. assets. Foreign ownership of U.S. securities and corporate bonds and stocks are at 49 percent and 18 percent respectively. Commercial real estate has just 5 percent foreign ownership.

One of the reasons that foreign investment remains low is the Foreign Investment in Real Property Tax, which taxes foreign investors heavily when acquiring U.S. commercial real estate. Although the U.S. government earns more money with each investment, the act also prevents many would-be buyers who are turned off by the tax.

Regardless, global commercial real estate investment nearly doubled from $76 billion in the first six months of 2009 to $132 billion for the first half of 2010 – a good sign that confidence is growing in the market.

The study based on responses from more than 16,400 buyers who provided feedback after living in their home an average of four-to-18 months found that customer satisfaction averaged 826 on a 1,000-point scale —the highest level since they began publishing the study in 1997. This report’s findings mark the third consecutive year that customer satisfaction improved over the previous year

So why is current economy producing better homes?

The simple answer is that home builders have more time. Several factors regarding housing supply and demand have changed since the turn of the century. Home builders were busy building and renovating from 2000 to 2006. When the recession hit, the housing bubble burst and demand for homes plummeted. With fewer projects, builders were able to spend more time on each development. The result? Higher-quality homes.

The article notes that while much of the U.S. real estate market struggled during the recession, green building was just beginning to hit its stride. According to McGraw-Hill Construction, green building accounted for just two percent of new construction in the U.S. in 2005. Today, green building accounts for nearly one-third of new construction.

LEED certification was developed in 1993 by the U.S. Green Building Council. Since then it has done an excellent job of using LEED certification as a marketing pitch. After becoming certified, the building receives a plaque to show its status as a green building.

The certification process is based on a point system. Applying certain changes or using specific materials earns a designated amount of points. The total points you have then places you into a category or rating system. The ratings are as follows: basic, silver, gold or platinum.

Lauth Group has earned a LEED Gold Rating for the development of HSBC Mortgage Services’ Corporate Headquarters in the Greater Charlotte metropolitan area, and LEED Silver Ratings for the construction of the Recreation Equipment, Inc. (REI) building in Bedford, Pennsylvania and NASCAR® Plaza in Charlotte, North Carolina.

We are now pleased to announce the terms to this settlement as during the prolonged litigation, we were falsely accused of many things. In the end, however, we proved all of them untrue and we are happy to now move ahead.

Under the terms of the settlement agreement, Lauth Group will retain more than 5,000,000 square feet of commercial real estate, as well as 1,000 acres of commercial development land.

Below is a copy of the full press release that outlines the terms of the settlement agreement in greater detail.

INDIANAPOLIS – Lauth Investment Properties, LLC, (LIP) an affiliate of Lauth Group, Inc., today announces the terms of the settlement agreement reached with an affiliate of Inland American REIT last month. Both parties agreed to keep the details of the settlement confidential until it had been filed with the court today.

Under the terms of the settlement agreement, Lauth will retain 37 of the 43 properties totaling approximately 5,100,000 square feet plus approximately 1,000 acres of commercial development land. Inland will receive the remaining six properties totaling approximately 700,000 square feet. The U.S. Bankruptcy Court for the Southern District of Indiana is expected to formally approve the settlement later this month which will pave the way for LIP to exit bankruptcy.

Robert Lauth, Chairman of LIP stated, “We are very pleased with the terms of the settlement and we are glad to finally put this process behind us. We can now focus 100 percent of our time on maximizing the value of this large portfolio of “Class A” properties and providing exceptional value to our clients.”

Lauth added, “We believe the terms of this settlement will clear up the confusion that has resulted from this prolonged litigation, and we are happy to now move ahead. We also wish to thank all our many supporters who stood by us throughout this process, especially our lenders who never lost faith in us or our abilities.”

Based on the Federal Reserve Board’s latest bank lending survey, it appears lenders have begun to expand their lending to creditworthy businesses.

The survey results suggest that, on net, banks have eased standards and terms over the previous three months on loans in some categories.

For the first time since 2006, lenders are making it easier for companies with annual sales of less than $50 million (i.e. small businesses) to get “construction and industrial” loans. In a stark contrast to last year, lenders are opening (or at least cracking) their doors to small businesses seeking credit.

According to the survey, “around one-fifth of large domestic banks reported having eased lending standards for small firms.”

Big banks also claim to be taking more care to review loan applications, including letting borrowers appeal if they’re rejected.

As we noted in a previous post, it was only a matter of time before the economy reached a high enough degree of stability that banks begin lending to businesses once again. This, coupled with the federal reserve’s ‘super-easy’ monetary policy, is certainly an encouraging sign that we are returning to a normal lending environment. And a stable lending environment isn’t just great news for commercial real estate, it’s great news for everyone in business and a welcome step towards righting the economy.

It is the third option, the “short sale”, that we want to focus on today – not only because they are viable option for some homeowners facing foreclosure, but because their name is more than a little misleading.

When defining a short sale there are many aspects to consider. We are going to do so by outlining 3 P’s that play an important role in a short sale; parties, parameters and processes.

Parties

The parties involved in a short sale are the borrower and the lender. The borrower is the property owner who finds himself unable to pay the mortgage loan on his property. The lender is the bank that supplies the loan on the mortgage.

Parameters

In the case of a short sale, the borrower faces foreclosure of his home if some type of agreement is not made with the lender. A short sale takes place when the lender allows the borrower to sell his house at a discounted price and then hand over the proceeds, even though the proceeds fall short of the balance owed on the property’s loan (hence, the name).

In this sense, the borrower is able to escape foreclosure of his home as well as a damaged credit report, and the lender incurs a smaller financial loss than would be seen in the case of foreclosure. It’s important to note that in the case of a short sale, neither the borrower nor lender is doing the other one a favor, but rather it is the most economical solution to the problem.

Processes

A key feature of short sales is that both parties involved agree to the terms and consent to the transaction. This differentiates short sales from foreclosures which are forced by the lender. As a result, a short sale is a solution that can be sought out by either the borrower or the lender. Lenders often have loss mitigation specialists who evaluate potential short sale transactions, however, they are usually open to offers.

Since the proceeds of a short sale are less than originally owed to the lender, there is a resulting deficiency or balance. A short sale does not necessarily extinguish this balance owed to the lender and agreements vary regarding how this balance is dealt with.

In general, people often have an overly optimistic perception of short sales and this is mainly because of the name. People assume that because it is called a “short” sale it is in someway a quick fix to help troubled borrowers out of a bind. To the contrary, short sales are highly complex real estate transactions that require the guidance of knowledgeable and experienced professionals if they are to be successful. Unfortunately, short sale deals have a high failure rate, often not closing in time for the borrower to avoid foreclosure.

We are anxious to complete this process and get back to business as usual. We are also very pleased to announce that in October we will move our headquarters to 11595 North Meridian Street.

Please stay tuned for more information as soon as we can release it. Below, is a copy of the press release which went out today.

INDIANAPOLIS (July 29, 2010) – Robert M. Fishman, a member of the Chicago law firm of Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, the Special Mediator appointed by U. S. Bankruptcy Judge Basil H. Lorch III, today announced that Lauth Investment Properties, LLC and LIP Holdings LLC (an affiliate of Inland American) and their affiliates have reached a global settlement of their disputes in the cases now pending in the Bankruptcy Court.

Mr. Fishman was appointed by Judge Lorch in April 2010 as part of a settlement agreement between Lauth and Inland that ended pending litigation between them and resolved a motion to appoint a trustee.

Mr. Fishman mediated a resolution of all remaining issues between Inland and Lauth. The terms of the global settlement will remain confidential until the motion seeking approval of the settlement is filed with the Bankruptcy Court, which is expected to occur in about thirty days.

Under the terms of the global settlement and the April arrangement between Lauth and Inland, Lauth Group, Inc will relocate its headquarters to 11595 North Meridian Street. The Lauth Group relocation is expected occur in October.

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