2A — March 11 - 24, 2016 — M id A tlantic
Real Estate Journal
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MAREJ A dvertising D irectory 1031 Corp................................................................. 16A 1031 Crowdfunding................................................. 19A Barry Isett & Associates, Inc. ................................ 15C Bridge Development Partners................................ 11B Bussel Realty Corp.....................................................1B Campbell Commercial Real Estate............................9C Capstan.......................................................................3B CIRC............................................................................9A Concannon Miller.................................................... 15C Congress Asset Exchange. ...................................... 22A Cooper Horowitz.................................................... BC-A CREW NJ................................................................. 17B Curchin. ................................................................... 18A Cushman & Wakefield. ..............................................7B Deerwood Real Estate Capital...................................3A DesignPoint.............................................................. 15C Earth Engineering, Inc.. ............................................6C Environmental Systems.......................................... 25A Exchange Solutions................................................. 21A Fowler Companies................................................... 25A Gebroe-Hammer Associates.......................................9B Harvey, Hanna & Associates.....................................7A Heidenberg Properties Group....................................4A Hillcrest Paving & Excavating............................... 25A Hinerfeld Commercial Real Estate...................25A, 1C Ideal Development USA.......................................... 25A Investment Property Exchange Services............... 17A Investors Real Estate Agency................................. 25A Kaplin | Stewart...............................................3A, 20A Kearny Bank...............................................................2B Landmark Commercial Realty. .................................8C Marcus & Millichap....................................................4A MBW. ....................................................................... 13A Med-Tex. .................................................................. 12A Mericle.................................................................... BC-C Meridian Capital Group.......................................... 15B Moonstone Environmental...................................... 15C NAI Summit................................................................2C National Realty & Development Co....................... 12B NorthMarq Capital.....................................................8B Penncap Properties. ................................................ 25A PHFA........................................................................ 11C POA......................................................................... IC-B Poskanzer Skott Architects........................................6B Provident Bank...........................................................1A RBVetCo......................................................................4C Real Property Capital.................................................3A Red Marketing Communications...............................4B Regal Bank............................................................... 24A Richard Burns & Company..................................... 12A Rittenhouse Appraisals........................................... 16C Rittenhouse Realty Advisors. ....................................3C Rock Commercial Real Estate. ............................... 10C SADV........................................................................ 12A SEBCO Laundry Systems..........................................2B Subway..................................................................... 25A The Berger Organization. ..................................... BC-B The Kislak Company..................................................4B The Prestige Group. ...................................................2C Warner Real Estate & Auction..................................5C WCRE....................................................................... 14B William Yetke Real Estate...................................... 25A
Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Associate Publisher ................................................................ Steve Kelley Associate Publisher .............................................................Alissa Aronson Associate Publisher ..........................................................Barbara Holyoke Associate Publisher ..............................................................Eric Ballenger Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant/Graphic Artist ...........................................Julie King Office Manager .................................................................... Joanne Gavaza Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 312 Market St. Rockland, MA 02370 USPS #22-358 | Vol. 28 Issue 5 Subscription rates: $99 - one year, $148 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
Mid Atlantic Real Estate Journal
10 Markets with Rapid Price Growth in 2016 Anna Son A Syed Ali Khan new year approaches, and along with it comes new opportunities for buyers to procure the products and services their business requires more strategically. Businesses must be vigilant of changing market conditions to achieve cost savings, ac- commodate for cost increases and plan efficiently. This rings true particularly for buyers of legal, transportation and construction services, which are displaying rapid price growth. Using it’s proprietary Procurement Data Wizard tool, IBISWorld has identified several markets within these sectors in which prices are forecast to grow more rapidly than the national inflation rate in 2016. To soften the blow of price increases, procurement professionals can leverage their knowledge of key market characteristics to minimize costs and win strategic deals. Legal Services Regardless of their core busi- ness, most companies need le- gal counsel. In fact, IBISWorld estimates that 66.1% of rev- enue generated by industries in the legal service sector is derived from business and cor- porate clients. Legal markets expected to exhibit the highest price increases in 2016 include immigration law, criminal law and employment law. A strengthening economy has given way to rising corporate profit and expanding business activity, lifting demand and prices for these services. Prices for immigration law services, for example, are forecast to rise 3.7% in 2016 on the back of steady immigration into the United States and employers increasingly recruiting talent from overseas. The average price of criminal law services is also projected to rise in 2016. The increasing rate of cybercrime and the continued susceptibility to crime such as fraud will pressure prices upward at an estimated rate of 3.3%. Furthermore, the price of employment law services is forecast to rise 3.2% in 2016 as the number of employee law- suits rises and pushes demand for these services upward. Nev- ertheless, buyers can leverage low market share concentra- tion in the aforementioned markets to facilitate price
continued on page 14A Transportation Services Prices are forecast to rise rap- idly for various transportation and logistics services, which are essential for buyers in various manufacturing indus- tries. As consumers loosen up their purse strings and spend more, the volume of goods that need to be transported will increase in step. Rising con- sumer spending will also en- courage businesses to produce more goods, further bolstering transportation activity. Given that fuel makes up a large operating cost for suppliers, an anticipated upswing in fuel prices will result in higher fuel surcharges as suppliers seek to maintain healthy bottom lines. Transportation services that are projected to display strong price growth in 2016 include air cargo transportation ser- vices, rail cargo transportation services and deep sea cargo transportation services. IBIS- World estimates that prices for these services will trend upward anywhere between 3.0% and 4.0%. Although buy- ers will ultimately pay higher anticipated to increase 5.9% and 3.4%, respectively, next year. In addition to skyrocket- ing demand, higher prices for raw inputs such as gypsum building materials, coatings and paint will further propel price growth for construction services as suppliers seek to compensate for heightened purchase costs. While buyers cannot com- pletely avoid future price hikes, they can reevaluate their pur- chasing strategies to maximize cost savings. In fragmented markets with high competi- tion, buyers can pit suppliers against one another by sourc- ing multiple bids, including blind bids, to elicit more com- petitive prices. In order to lock in lower prices, buyers should consider purchasing these services sooner rather than later or entering into contract agreements.
competition between suppliers during the negotiation process and enhance buyers’ chances of obtaining a favorable deal. To avoid the risks associated with hefty legal costs, arbitra- tion clauses have become a staple of conducting business for many companies. Unfortu- nately for buyers, with busi- nesses increasingly turning toward arbitration, the price of alternative dispute resolu- tion (ADR) services is forecast to rise 3.0% in 2016. Buyers should be aware, however, that the Consumer Financial Protection Bureau is consider- ing putting forth regulation that bars the use of arbitration for class action disputes and requires that companies dis- close the arbitration claims and compensation or other award issued. If such regulations were implemented, demand for ADR services may fall and result in tempered price growth. Buy- ers with an ongoing need for these services should consider establishing a professional re- lationship with an ADR firm to secure favorable pricing terms and rates in the future. Construction Services The construction sector is also poised for strong growth in 2016. With an improving eco- nomic outlook and more avail- able cash on hand, businesses will continue their expansion plans, thereby bolstering over- all construction activity. Swell- ing demand for new healthcare and educational facilities, of- fices, hotels and retail stores is projected to strengthen con- struction activity in the com- mercial building market. As a result of this surge in demand, prices for a number of construc- tion services are projected to increase rapidly. For example, the price of plastering and drywall services, which are widely used in commercial and construction projects, is forecast to jump 7.7% in 2016. Similarly, prices for painting services and landscape archi- tecture and design services are
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