Before I get into the meat of this discussion, full disclosure is required. I don't have a tattoo. Neither does my wife or any of my kids for that matter. I am writing this as a commercial real estate broker who has noticed some trends in this country about tattoo shops that are interesting. It can't just be me that sees these trends.

In the last 10 years or so, tattoo establishments have sprung up in business zones all around McHenry County as government officials have let go of their old attitudes and the general public sporting tattoos has become mainstream. According to a Harris Interactive Poll, one in five Americans now have at least one tattoo. In 2008, the number was one in seven. The single fastest demographic group seeking tattoo service is middle class suburban women...your sister, your Mom and even your Grandma.

It is common folklore that a silver bullet will stop a werewolf in his tracks.  In the CRE industry this was analogous to what the economy shot us with in 2007.  Fortunately many, but not all of us, survived.  

Now we have another, yet more familiar, threat to deal with.  Tax reform.   This week the National Real Estate Investor reported, in late 2013, Senate Finance Committee Chairman Max Baucus (D-MT) released a series of tax reforms including the elimination of "like-kind" exchanges.  This Sec 1031 tax practice has been an essential catalyst to commercial real estate sales since its creation.

So how bad could the extinguishing of "1031s" be?  Many would say this could be disastrous on commercial brokerage community.  One simply needs to look to Canada, where there is no tax instrument such as the like-kind exchange. CRE transaction volume in Canada is significantly lower than here in the U.S. 

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Demand for apartments remains strong four years after the recovery began, even as construction activity has gradually been increasing. Not even the seasonal weakness normally observed during the fourth quarters of calendar years had much if any impact on the market dynamics.

Vacancy declined by 10 basis points during fourth quarter to 4.1%, in line with last quarter's 10 basis point decrease. Over the last year the national vacancy rate fell by 50 basis points. The national vacancy rate now stands 390 basis points below the cyclical peak of 8.0%, recorded right after the recession ended in late 2009.

Shrugging off the seasonal weakness that is typically observed during the fourth quarter of calendar years, demand for apartments remained resilient. In 2013's fourth quarter, the sector absorbed 50,627 units, the largest figure since the fourth quarter of 2010. For 2013, the sector absorbed almost 165,000 units, ahead of 2012 but below the incredibly robust demand of 2010 and 2011.

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