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Property Trends • Business Costs • Business Tech

Property Trends: Commercial property still offering hot opportunity
Business Costs: Metals prices are falling
Business Tech: Digital mapping coming into its own

Property Trends
As the residential market chills ...
Commercial property remains hot.
But fat price gains are now past.
Odds are against a housing-like slump. Pockets of oversupply exist in some regions and property segments, notably non-mall retail. But overall, future demand for warehouses, offices, and other space will match likely gains in supply, buoying property values and rents.
Steady economic growth will help.
And building is still playing catch-up after a three-year dip early in this decade.
The bubble risk is low, in contrast to housing. Developers and investors are avoiding spec projects. Steep raw materials and labor costs mean the payoff is too risky. Meanwhile, regulators are whispering to lenders to not go overboard on commercial real estate.
But building owners face new challenges getting a high payback on property investments. Opportunities for quick appreciation are fewer. So higher returns will require raising rents.
Gains by real estate investment trusts will shift into lower gear after a spectacular four-year run. That said, REITs focused on offices are likely to outperform those specializing in industrial or retail space.
Still, many investors, notably foreigners, see longer-term profits in U.S. commercial real estate and accept making a bit less on it for now. Population increases, with the U.S. outstripping other industrial nations, make investors bullish about future demand for commercial space here.

Growth in commercial construction will slow to 10% next year, for a total of $330 billion, following a robust 20% increase this year.
Trade will fuel demand for more warehouses.
Energy is sparking factory building. In September, four new ethanol plants were completed.
Hotels are in demand, especially mid-tier chains attractive to businesses cutting travel costs.

A 5% average gain on office rents is on deck for next year ... from the high single digits in Seattle to flat in Detroit and San Diego.
For warehouses, 3.7% ... much more near ports.
And hotel room rates should jump 7% on average, though the increases will be more like 12% in N.Y.C.; Washington, D.C.; and other big cities.

Business Costs
Figure on pockets of relief next year on the metals price front:
The average cost of nickel will slide by about 15%, to $8.80/lb., as new supplies arrive and weaker global economic growth cools demand.
For aluminum and copper...small drops of 2% and 3%, respectively.
But zinc will rise roughly 14% to about $1.60/lb., carried higher by scant new supplies and brisk demand for batteries and stainless steel.
Titanium prices are poised to climb about 10% as defense uses gobble up domestic supplies and other users are forced to tap imports.

Business Tech
Digital mapping is coming into its own for business applications. Technological advances, lower prices and easier-to-use products are yielding new tools with help from Global Positioning System receivers.
Retailers can get help with site selection, locating competitors and related businesses using Google Earth Pro maps costing $400 a year. Get a neighborhood’s demographics, median income, buying patterns, etc., from ESRI’s ArcPad Application Builder for between $25 and $150 per map.
For builders and developers: Speed up construction progress with computer maps integrating various parts of the building equation ... pipes, roads, foundations, terrain, etc. Changes in a single variable automatically spur adjustments needed in others. The program is available with the Autodesk Map 3D software package at a cost of about $5,250.

A clearer picture for videoconferencing is on the horizon.
Voice over Internet Protocol (VoIP) technology will lead the way. Next year, phone companies will beef up high-speed Web connection lines, allowing VoIP operators to move videos and voice at the same speed on the same line. It’ll make for better-synchronized picture and audio that can be easily transmitted over several employees’ computers.
Prices are reasonable. Vemics charges $100 a month per computer for unlimited use. From WebEx ... pay as you go at 33¢ per minute per user.