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Virginia Economic Roundup: Credit Will Be Available for Commercial Real Estate Projects

June 20, 2018

Panelists at a discussion sponsored by the Greater Richmond Association of Commercial Real Estate said that credit will be available for commercial real estate projects, but that applicants should be prepared to provide more equity and third-party market data.

The panelists — investment banker John Levy, developer Lawrence Gray and bank executive Barry Musselman — gave an overview of what they expected in the commercial real estate market in 2013.

Musselman described 2012 as a year of “prudent credit” and said that the biggest change his industry made was increasing the requirements for equity. His employer, Birmingham, Ala.-based Regions Bank, now expects 25 to 35 percent down from an applicant, depending on the project.

“When you come in and ask for a loan now, we ask for a lot more information,” he said. “What other properties do you own? When is the debt due? We want to make sure that you are not out there stretching yourself too thin and guaranteeing too much debt.”

Gray, the CEO of Gray Holdings LLC in Richmond, said that none of the commercial market sectors have rebounded in value to the high-water marks in 2006 and 2007, except for apartments, and noted the effect of a drop in financing available from government-controlled mortgage financing firms Freddie Mac and Fannie Mae.

“A couple of years ago, 85 percent of the money was coming from Freddie and Fannie. Now it’s 50 percent,” Gray said.

Levy said that the commercial mortgage-backed securities (CMBS) market is expected to rebound and offset that trend. He predicted $60 billion in business for the CMBS market in 2013, well above the $11 billion mark in 2010, but far below the high-water mark of $230 billion in 2007.

Virginia Unemployment Rate Holds Steady at 5.6 Percent

Virginia’s seasonally adjusted unemployment rate remained at 5.6 percent in January after a three-month decline, according to new data from the Virginia Employment Commission (VEC).

The rate was slightly below the January 2012 rate of 6 percent, and below the national rate of 7.9 percent for January 2013. The VEC noted that the labor force added 11,627 people and expanded for the sixth consecutive month.

Virginia’s unadjusted unemployment rate, which does not factor in seasonal swings in the labor market, increased 0.7 percent to 6.2 percent for January. That mark was 6.4 percent in January 2012.

State Revenues Collections Down 2 Percent in February

Virginia’s revenue collections for February declined by 2 percent from February 2012, partially due to one fewer deposit day.

On a year-to-date basis, total revenue collections were up 5.5 percent through February, higher than the annual forecast of 3.6 percent growth.

Withholding collections were down 5.7 percent in February, while nonwithholding collections were down 14.5 percent. Sales tax revenues rose 10.3 percent in February, and total state revenues grew 5.1 percent through February when accounting for the accelerated sales tax program.

Hybrid Fee Applies to Electric Mopeds

Due to an interaction with the road funding bill approved last month, the new Virginia moped law will impose a $100 fee on certain mopeds.

That fee comes from the $100 registration surcharge on alternative vehicles such as hybrids, part of HB 2313, the omnibus transportation bill. Since mopeds would be classified as state-registered vehicles, those with electric motors would qualify for the fee, compared to $14 for combustion-engine mopeds.

"This is just one more example of why the consequences of the $100 hybrid tax have not been completely thought through," Del. Scott Surovell (D-Fairfax) said.

Virginia Sen. Steve Newman (R-Lynchburg), the sponsor of SB 1038, the moped bill, has asked Gov. Bob McDonnell to fix the problem. A McDonnell spokesman told The Virginian-Pilot that “he will ensure that no final legislation requires owners of electric mopeds to pay a $100 annual fee.”

McDonnell has not indicated whether he will veto the $100 fee on other alternative vehicles, which was part of his original transportation bill.

Graduate Programs at Virginia Universities Get High Marks from U.S. News

The latest lists of top business-related programs from U.S. News & World Report have Virginia schools near the top of the charts.

The University of Virginia’s (U.Va.) Darden School of Business placed 12th among full-time graduate business schools. Virginia Tech’s (VT) Pamplin College of Business was 75th on that list, while Tech ranked 34th among part-time Master of Business Administration (MBA) programs.

Other Virginia graduate programs made the cut as well:

  • VT graduate engineering program: 24th
  • U.Va. graduate engineering program: 38th
  • VT graduate civil engineering program: Tied for 7th
  • U.Va. law: 7th
  • Washington & Lee University law: 26th
  • College of William & Mary law: 33rd
  • George Mason University law: 41st
  • University of Richmond law: 53rd
  • U.Va. medicine: 26th
  • Virginia Commonwealth University (VCU) medicine: 68th
  • U.Va. primary care medicine: 18th
  • Eastern Virginia Medical School (EVMS) primary care medicine: 44th
  • VCU primary care medicine: 71st

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