4 Ways that Data is Changing the Way We Transact
Due diligence practices are adjusting rapidly as investors examine their target acquisition through modern lenses that affect the way asset information is collected and used, as well as new key KPIs related to long-term asset performance.
What's Changed in CRE Sales Trends
Prices per square foot, cap rates, and occupancies were some of the top trends during May 2024.
Crexi's National Commercial Real Estate Report for May saw some overall positive changes for property owners.
At the top, they saw the asking price per square foot climb by 3.76% across the marketplace, accompanied by a cap rate compression from 6.82% to 6.6%. While that is good news on the surface, asking rents aren't necessarily what tenants pay.
Tampa Industrial Tenants Face Significant Rent Increases
Asking Rents Up Nearly 70% Since 2019
Asking rents averaged less than $8 per square foot in 2019 and are now above $12.60 per square foot on a triple net basis. Industrial asking rents increased an incredible 68% for the Tampa region since the end of the second quarter of 2019, with several areas surpassing even that.
CRE on the Chopping Block Among Companies Worried About Inflation
There are economists who insist that the US is not yet in a recession and economists who say it is, or at least will be soon. Business executives can't delay their actions for the final ref's call, so they're making plans, many of which involve cutting expenses, including real estate.
Ten Issues That Will Impact CRE for Rest of 2022
LaSalle is expecting a high-impact second half of 2022, according to its Mid-Year Update.
The firm provided the top 10 issues it believes could steer commercial real estate's direction, including those related to bonds, returns, capital flows, expenses, energy, construction and central banks.
59% of Small Retailers at Risk of Shutting
Small businesses say inflation is a bigger challenge than pandemic, half say they'll cut holiday ordering.
Nearly half of small business owners, including 59% of retailers, say they are at risk of shutting down in the fall, up 12% from last year's survey, according to a new report from Alignable, an online referral network for small businesses.
Cap Rates Might Finally Start to Rise Again
According to a First American Financial Corporation analysis, cap rates might finally start to recover some of their value.
The firm's potential capitalization rate (PCR) model for the first quarter of 2022 "estimates capitalization rates based on the historical relationship between interest rates, rental income, prevailing occupancy rates, the amount of commercial mortgage debt in the economy, and recent property price trends.
8.6% Inflation Means Serious Planning for CRE
The CPI calculation—consumer price index, or what’s commonly called inflation—was expected to run warm, but not like a Miami August afternoon on the beach without an umbrella for shade.
“A Labor Department inflation report proved many traders were wrong with identifying peak inflation,” wrote Edward Moya, senior market analyst for the Americas at OANDA, in a note.
How The Pandemic Really Impacted CRE Asset Classes
Just two years ago, more than 20 million people lost their jobs at the onset of the COVID pandemic. Companies were scrambling to transition their workforces to remote work, toilet paper was in relentlessly short supply, and the outlook for in-person businesses was bleak at best.
Mixed-Use Properties May Help Solve Retail and Office Challenges
While industrial and multifamily sectors quickly soared after the onset of the pandemic, not all did. Office was hurt and is still limping. Certain types of retail held its own, like those anchored by a grocery store; many didn’t.
But reports about the two different sectors come to the same conclusion: mixed-use may be a way for retail and office to help one another.
Small Companies Face Pressure to Act on Sale-Leasebacks
Sale-leaseback transaction volume will continue to accelerate as owners rush to lighten balance sheets and hedge against risk from a rising cost of debt before cap rates expand and spreads widen later this year.
What Those Rate Hikes Really Mean For CRE
The recent rate hike by the Fed will “ultimately benefit” commercial real estate on a long-term basis, according to a pair of industry experts.
“The fundamental intent is to reduce the risk that elevated inflation will become entrenched, forcing the Fed to hike rates more aggressively in the future and potentially sparking a recession, which would clearly be a worst outcome for many sectors including property,” Cushman & Wakefield economists Rebecca Rockey and James Bohnaker write in a new analysis.
Strap In, Building Materials Prices Head Up Again
Leaders in January were lumber and paint. At this point in the building supply chain miseries, if it’s any month, this must be a time for rising prices. That’s what January brought, according to the National Association of Home Builders.
Boat Sales Boost Marina Business During Pandemic
The second-largest owner of U.S. marinas is acquiring the third-largest owner, creating a new powerhouse in this niche real-estate business as boat sales surge during the pandemic.
Centerbridge Partners LP said it is paying about $400 million for Westrec Marinas, which the investment firm will absorb into its own Suntex Marinas.
Valuations of Cold Storage Facilities Are Surging
CommericalEdge reported that plenty more product is under construction, particularly in Dallas-Fort Worth.
Selling 40% higher per square foot than the national CRE average, cold storage properties continue to outperform due to recent lifestyle changes and other factors related to the COVID-19 pandemic, according to CommercialEdge.
Higher Inflation Means More Competition for CRE Assets
There are three factors driving inflation right now, including a housing shortage.
Supply chain problems, labor shortages, and the housing shortage are all fueling inflation to eye-popping levels – and for CRE investors, that will mean greater competition for assets.
U.S. Inflation Seen Hitting Fastest Pace in Four Decades
Economists estimate consumer-price index climbed at fastest pace since 1982 as supply-chain constraints, high demand drove up costs
U.S. inflation is on track to have closed out 2021 near its highest level since 1982 as robust consumer demand exacerbated pandemic-related supply shortages.
Freight Costs Prompt Permanent Changes
Businesses rattled by high logistics costs and freight bottlenecks are extending the workarounds they adopted during the pandemic and taking on new strategies to ease their supply-chain pain in the new year.
Inside the Rise of the Dark Store
Leading dark store companies have raised more than $8 billion in capital over the last few years.
Food delivery services are ubiquitous, but I'm beginning to buy the grocery as a service model now too.
Dollar General is going all-in on a new store concept aimed at more affluent shoppers
Dollar General plans to open 1,000 more upscale stores in chase for wealthier customers
The prolific discount retailer, which operates 18,000 stores across the U.S., plans to roll out 1,000 locations of its pOpshelf concept by the end of fiscal 2025, CNBC reports.