December, 2019 - Sachse Construction

Logistics, E-commerce Bolster Sustainability

The ever-evolving logistics sector continues to thrive due in no small part to e-commerce, and the sector is taking a leadership position in the ongoing greening of commercial real estate, also due in no small part to e-commerce. Prologis’ new research report, Logistics Real Estate and E-commerce Create Sustainability Advantages, tells the story.

Prologis points to research from such entities as MIT and GRESB that concludes that e-commerce is more sustainable than the conventional brick-and-mortar retail method, with transportation being the central factor. Transportation is the largest source of emissions for the U.S., and e-commerce decreases transportation requirements through consolidated delivery. According to academic studies, the transportation element of e-commerce’s impact on the environment is less than 50 percent that of in-store shopping.

Top 40 Religious Facilities Sector Construction Firms for 2019

RANK COMPANY 2018 RELIGIOUS SECTOR REVENUE
1 STO Building Group (formerly Structure Tone) $120,900,000
2 Crossland Construction $76,525,292
3 Consigli Building Group $35,665,128
4 Hill & Wilkinson $34,469,337
5 Whiting-Turner Contracting Co., The $28,407,278
6 Turner Construction $25,564,552
7 DPR Construction $24,823,000
8 Rogers-O’Brien Construction $23,744,390
9 Del Amo Construction $15,159,884
10 CORE Construction Group $15,047,703
11 Brasfield & Gorrie $14,749,623
12 Layton Construction $14,653,324
13 LeChase Construction Services $14,299,204
14 Nabholz $14,133,145
15 Skender $13,781,577
16 McCownGordon Construction $11,876,171
17 Suffolk $9,560,573
18 Shawmut Design and Construction $9,500,000
19 Millie and Severson General Contractors $9,048,833
20 Joeris General Contractors $7,864,624
21 Haselden Construction $7,712,323
22 Kaufman Lynn Construction $6,395,090
23 Weitz Company, The $5,863,000
24 Walbridge $4,621,743
25 DeAngelis Diamond Construction $4,348,000
26 Boldt Company, The $3,578,000
27 Gilbane $2,925,000
28 Sachse Construction $2,800,000
29 PCL Construcrion Enterprises $2,545,868
30 W. M. Jordan Company $1,798,733
31 W.E. O’Neil Construction $1,685,031
32 Balfour Beatty US $1,493,251
33 Manhattan Construction Group $1,322,270
34 Skanska USA $1,276,820
35 James McHugh Construction $1,107,820
36 Wohlsen Construction $803,000
37 Kinsley Construction $621,990
38 Jacobs $580,000
39 Yates Companies, The $541,000
40 Batson-Cook $317,281
41 JE Dunn Construction $306,498
42 Austin Commercial $80,000
43 BlueScope Construction $55,877
44 Brownstone $34,000

Yardi Matrix Reports: 2010s Will Be a Tough Act to Follow

As the decade concludes, real estate practitioners can look back on one of commercial real estate’s best runs ever. Since the end of the Great Recession, slow, consistent growth has defined both the macro economy and the commercial real estate market. While property values and rents initially outpaced macroeconomic and wage growth, both have steadied to a comfortable 2 to 3 percent range over the past several years. Most metros have seen healthy growth at some point, led by coastal gateway markets, followed by some 25 emerging secondary markets that have enjoyed growth spurts of their own during the past five years.

Demographics is the main driver of the multifamily boom. Millions of Millennials have taken their first jobs since 2010, joining a workforce in which much of Baby Boom generation remains on the job. The tightest labor market in 50 years continues to drive demand for housing. That trend, coupled with undersupply, has powered a remarkable growth trajectory. While apartment development has returned to pre-crisis levels, single-family home development remains at roughly half the pace of the mid-2000s. Overall, supply has failed to keep up with demand. Prices of both rental and for-sale inventory have increased faster than wages, and that disconnect is pushing new calls for regulatory action. By late 2019, three states had implemented rent control, and others are considering it.

Commercial real estate has not enjoyed the same heady gains as multifamily, yet demand remains elevated in most major markets. Office assets have steadily increased in value as rents and occupancies improve. Office-using employment has outpaced overall job growth during this cycle, and as a result, office properties have thrived despite pressure exerted by the rise of coworking, smaller office footprints, demand for highly amenitized space, and telecommuting.

The industrial sector has been another darling, thanks largely toskyrocketing demand for e-commerce distribution and logistics facilities. Warehouses are being built on spec in multiple markets, and leasing continues to outpace development. With no signs of a slowdown in e-commerce sales, the industrial asset class is poised for a continued high growth.

To be sure, the economy is hardly trouble-free; issues such as a soft manufacturing sector, a yield curve inversion, and trade disputes bear close watching. Still, the employment market and consumer confidence continue to bolster an expansion that has now passed the 10-year mark. In the coming years, we expect commercial real estate to continue its slow but steady upward rise commercial real estate.

Long, Short-Term Obstacles to Senior Housing Development

With the overbuilding of senior housing and low occupancy levels, developers are now readjusting their expectations as they respond to sagging demand from older generations. There are ramifications for this in both the short and long term.

Short Term

First, US demographic trends going into 2020 indicate that senior housing occupancy levels still won’t be strong because absorption of these units isn’t happening fast enough.

“Seniors used to move into senior housing in their 70’s and now they aren’t moving until into their 80’s. So developers need to be astute to that,” says Laura Dietzel, partner and real estate senior analyst at RSM, an audit, tax and consulting services firm, tells GlobeSt.com. “Due to current technology which an adult child can use to monitor the day-to-day life of their elderly parents, developers certainly have a problem in the short term.”

Long Term

In the long term, however, while technology can keep seniors in their homes longer, it is still a poor substitute for personal, human interaction. Developers and operators can create communities where seniors will go to belong, not only to stay safe or remain healthy.

“Mentally, seniors tend to age faster in an old person’s home. They don’t want to live in “graveyard-ish” communities and are increasingly seeking places where they can live near families and their kids but also have access to senior-exclusive activities,” explains Dietzel.

Provide Opportunities to Age-in-Place

Keeping the aging tenant in mind, developers can construct new units with larger bathrooms, easy-open windows and single story floor plan layouts which can help seniors stay in their housing longer.

“Builders are making homes easier to accommodate wheelchairs, lower counters, etc. Allowing that flexibility to families is very important and becoming very popular,” says Dietzel.

Through a master planned community, which accommodates senior housing, seniors are able to not only be near their families but also attend senior road trips and various senior-centric activities. Developers are constantly seeking ways to capture that aging, independent demographic, Dietzel says.

Developer Affordability

With development costs sky high and land construction and labor costs also high, it is a challenge for developers to construct senior housing.

Some are finding more efficient ways for senior housing build-outs including modular construction where the housing is assembled in a factory and then transported to a site.

“With modular construction, there is no weather/safety variability which helps to expedite the construction,” says Dietzel. “Some hotels and box structures are using this construction method.”

Senior Affordability

Seniors typically finance their senior living expenses by selling their assets. As they try to determine their next steps, it’s increasingly hard to offload their luxury or upper middle class homes to downsize to something smaller due to the urbanization of millennials.

“Millennials are renting longer and are delaying their life milestones while still living in cities,” observes Dietzel. “As a result, seniors are seriously encountering a number of obstacles as they try to sell their assets to move into senior housing.”

Specialty Manufacturer Relocates Michigan HQ

Exotic Automation & Supply reports it has relocated its headquarters and ParkerStore from Farmington Hills, MI to newly constructed space in New Hudson, MI.

The 135,000-square-foot facility is located at 53500 Grand River Ave. A total of 35,000 square feet of the new facility is dedicated to office space and the remaining 100,000 square feet is designated for manufacturing and warehouse workspaces.

The relocation to the new facility establishes the potential for future growth and expansion for the Parker Hannifin distributor. The specialty manufacturing firm serves multiple industrial sectors that require automation, motion control, material handling, gasket and sealing solutions.

The facility features a state-of-the-art training room, which will offer customers free training and development courses ranging from hose crimping techniques to cylinder sizing basics. The Parker Hose & Fitting Store features custom made hose assemblies, couplings, fittings and more for hydraulic, pneumatic, industrial and mobile applications.

“New Hudson was an easy choice for our location. We remain close to our customer base and the location right off I-96 provides quick access for our customers and direct routes to our other 9 Michigan locations,” Tom Marino, president said.

Exotic has 12 retail store locations throughout Michigan and Indiana including a recently opened ParkerStore in Livonia to accommodate customers in the Wayne County area.

“When we made the decision to relocate to New Hudson, we knew a ParkerStore in Wayne County was a must to ensure our mission of always being right where our customers need us,” Steve Orlando, VP of sales and marketing said. “Our network of ParkerStores and 24/7 mobile support representatives throughout Michigan and Indiana is unparalleled and allows us to provide customers with exceptional service and product solutions.”

Top 95 Reconstruction Work Construction Firms for 2019

RANK COMPANY 2018 RECONSTRUCTION SECTOR REVENUE
1 Gilbane $2,939,088,000
2 STO Building Group (formerly Structure Tone) $2,567,525,000
3 DPR Construction $2,351,836,400
4 PCL Construction Enterprises $2,265,785,779
5 Whiting-Turner Contracting Co., The $2,097,890,209
6 HITT Contracting $1,266,837,803
7 Skanska USA $1,265,950,394
8 Clune Construction $1,052,074,848
9 Consigli Building Group $1,025,321,446
10 Hensel Phelps $984,913,273
11 JE Dunn Construction $935,806,867
12 J.T. Magen & Company $915,241,512
13 Balfour Beatty US $903,625,988
14 Shawmut Design and Construction $845,100,000
15 Pepper Construction Group $693,010,000
16 McCarthy $677,301,340
17 Messer Construction $653,000,000
18 Barton Malow Company $620,349,756
19 Level 10 Construction $481,584,590
20 Lendlease $476,468,100
21 Hathaway Dinwiddie Construction $472,485,000
22 JLL $416,901,209
23 Mortenson Construction $383,409,000
24 Robins & Morton $380,501,658
25 Andersen Construction $361,369,289
26 LeChase Construction Services $334,739,957
27 Skender $327,663,256
28 Suffolk $327,484,303
29 Leopardo Companies $312,834,897
30 Yates Companies, The $288,107,000
31 Executive Construction $270,000,000
32 CORE Construction Group $253,529,912
33 Manhattan Construction Group $251,669,418
34 W.E. O’Neil Construction $245,213,425
35 Holt Construction $242,320,000
36 James G. Davis Construction Corporation $241,242,393
37 Kraus-Anderson Construction Company $239,000,000
38 Kitchell $238,744,546
39 C.W. Driver Companies $237,049,932
40 Holder Construction $221,000,000
41 Boldt Company, The $208,356,000
42 McKinstry $208,000,000
43 Plaza Construction $203,000,000
44 Cortland Build $198,632,810
45 Choate Construction $196,659,836
46 Walbridge $194,912,856
47 Hoar Construction $183,830,000
48 Rogers-O’Brien Construction $183,223,683
49 Paric $181,637,862
50 McCownGordon Construction $169,579,511
51 dck worldwide $155,061,000
52 Sachse Construction $153,358,000
53 Hill International $150,002,557
54 Crossland Construction $147,485,557
55 Fortis Construction $146,914,000
56 Power Construction $139,000,000
57 DeAngelis Diamond Construction $115,000,000
58 W. M. Jordan Company $114,075,033
59 Austin Commercial $111,306,322
60 Hunter Roberts Construction Group $109,000,000
61 Graycor $108,761,030
62 Del Amo Construction $102,727,505
63 Digney York Associates $100,000,000
64 Parrish Construction $99,677,550
65 Bernards $99,050,000
66 VRH Construction $91,909,554
67 Walsh Group, The $90,937,958
68 Webcor $90,000,000
69 Weitz Company, The $88,473,789
70 Donohoe Construction $88,421,000
71 Salas O’Brien $80,421,170
72 Kinsley Construction $76,135,273
73 Wendel $74,582,530
74 CNY Group $70,412,000
75 Hill & Wilkinson $68,576,640
76 Doster Construction $67,279,869
77 Harkins Builders $67,000,000
78 S. M. Wilson $63,294,583
79 KBE Building Corp. $59,146,850
80 Wohlsen Construction $58,525,000
81 Haselden Construction $57,994,620
82 Dickinson Cameron Construction Company $57,840,000
83 Weis Builders $48,902,304
84 Stalco Construction $42,050,000
85 Benchmark Construction $38,437,740
86 Sundt Construction $27,364,820
87 Millie and Severson General Contractors $24,239,947
88 CSI Construction $16,000,000
89 Guernsey $13,578,500
90 Arc Building Partners $13,204,054
91 Absher Construction $11,790,000
92 Campus Construction Management Group $11,000,000
93 Kaufman Lynn Construction $6,941,365
94 Cordogan Clark & Associates $5,950,000
95 Juneau Construction $4,206,372

DOD Will Start Requiring Contractors to Meet Cybersecurity Standards Next Month

The Department of Defense (DOD) will roll out its Cybersecurity Maturity Model Certification (CMMC) in January 2020 so that it can ensure contractors on government projects have the necessary cybersecurity practices in place to protect the controlled unclassified information (CUI) to which they are privy. The type of information the DOD is trying to protect includes data pertaining to critical infrastructure, nuclear, proprietary business information, procurement and acquisition.

All DOD contractors must be certified through the third-party provider of their choice at the contractor’s expense. Certification levels range from basic to advanced, and in June 2020 contractors will start seeing references to CMMC requirements in Requests for Proposals. Some higher-level assessments may be performed by the DOD, the Defense Contract Management Agency or the Defense Counterintelligence and Security Agency.

The loss of CUI, the DOD said, poses risks to the United States’ economic security and national security, so the department is trying to better secure this information. The Executive Office of the President’s Council of Economic Advisers estimated in 2016 that malicious cyber activity cost the nation’s economy between $57 billion and $109 billion.

The DOD released the latest draft version of the CMMC for public review earlier this month. In that document, the DOD delves deeper into the levels of certification.

  • Level 1 – the contractor demonstrates basic cyber hygiene as defined by Federal Acquisition Regulation
  • Level 2 – the contractor demonstrates intermediate cyber hygiene and has established standard operating procedures, policies and plans for all its practices.
  • Level 3 – the contractor demonstrates good cyber hygiene and effective NIST SP 800-171 Rev 1 (Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations) security requirements and reviews its activities for adherence to policies and procedures.
  • Level 4 – the contractor demonstrates a substantial and proactive cybersecurity program, reviews activities for effectiveness and informs management of any issues.
  • Level 5 – the contractor demonstrates a proven ability to optimize capabilities in an effort to repel advanced persistent threats, standardizes its activities across all applicable business units and shares identified improvements.

In addition, some areas that contractors will be required to address in the certification process are:

  • Access control policies
  • Identification and authentication procedures
  • Media protection strategies
  • Protecting physical access
  • System and communication protection
  • System and informational integrity

As construction industry contractors continue to take bigger steps toward technology adoption, cyberattacks are not the only issue that should concern them. A rise in the popularity of wearables —  heart rate monitors, location trackers, fall and fatigue detectors — and detect falls, and hard hat inserts that check for fatigue —  has also raised questions about data collection and privacy.

The Safety Equipment Association has started preliminary discussion around a standard that would protect worker privacy when it comes to wearables, but that process could take years. In the meantime, contractors should start thinking about “the potential for abuse and misuse,” attorney Michelle Schaap with Chiesa Shahinian & Giantomasi PC told Construction Dive earlier this year. “Any company that adopts these tools,” she said, “must consider all of the value-adds and the potential risks before implementing these new technologies.”

Three Predictions for Retail Relevancy in 2020

Heading into a new decade, savvy retailers are firming up their strategies for success — especially when it comes to driving customer engagement at store-level.

As 2020 approaches, retailers are ready to innovate and adopt new concepts — from innovation to immersive experiences — to improve their customer relevancy going forward. Many of these concepts will be front and center at Chain Store Age’s SPECS 2020 conference, held March 15-17 at the Gaylord Texan.

From localization and collaboration to new methods of customer engagement, here are the strategies that retailers expect to play a bigger role in 2020:

Retailers will repurpose existing space with new services. As customers’ needs continue to change, retailers are looking for new ways to keep them engaged. For many, this includes reconfiguring existing physical stores with new services.

Brands are exploring different opportunities, from store-within-a-store pop-ups to buy-online-pick-up-in-store (BOPIS) departments, as well as revamped front end solutions augmented by self-checkout technology and new service offerings. For example, when Staples began moving larger, bulkier inventory out of stores and into warehouses to await online order fulfillment, it had to find a way to fill newly emptied square footage. For Staples this new opportunity was the addition of a co-working concept.

“Instead of losing sales per square footage, we found a way to offer a new service and leverage available space in stores across our network,” David Schulman, Staples’ VP of real estate, said this month at the ICSC New York Deal Making Conference in New York City.

The retailer unveiled its co-working concept, called Staples Studio, in June. Designed for small businesses, entrepreneurs and commuters, the new format offers an environment where “businesses can focus on creating, collaborating and connecting in shared workspaces and private or shared offices,” according to the company.

The spaces, which also feature community kitchens stocked with beverages and snacks and meeting rooms, also give users access to a podcasting studio, and unlimited black and white printing. Members are also entitled to 500 color printed business cards and TSA pre-application program enrollment.

The first Staples Studios opened in three stores in Massachusetts (Brighton, Danvers and Norwood), and the company planned to open additional locations in Boston-area sites.

Similarly, Office Depot debuted a similar concept last August, at its store in Los Gatos, California. It followed up the effort in April, by opening a Workonomy Hub coworking space at its stores in Lake Zurich, Illinois, and Irving, Texas.

Localization will become increasingly important. Retailers that can immerse themselves into their local communities have a better chance of improving their relevancy among shoppers and creating long-term relationships. Shake Shack uses this strategy to “become a partner in the marketplaces we operate in,” Carren Coston, director real estate, Shake Shack, said at the conference.

For Shake Shack, this includes creating new burgers that reflect the history of the community, or using locally-sourced ingredients. The burger chain also invests in technology that enables local customers to easily order, pick up or pay for meals based on their preferences or buying patterns.

Collaboration between landlords and retailers will be a must. As retailers strive to innovate their brands, shopping center landlords could be retailers’ most strategic partner going forward. Retailers are always in search of ways to stand out from the competition, and enlisting the help of property owners could be the key to their success.

“Retailers that create a partnership with landlords are interested in growing and being successful in the long-term,” David Krueger, Ulta’s senior VP, growth and development, shared at ICSC.

“Brands are often interested in hearing a property owner’s strategies to ensure their retail centers can become vibrant community destinations, and the role the retailer can play in this plan,” he said. “It’s all about both parties having mutual respect for each other and building a relationship.”

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