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11 Must Reads for the CRE Industry Today (Aug. 26, 2022)

U.S. and Canadian pension funds are cutting back on their office investments, reports The Wall Street Journal. Companies including Apple, Honda and Mazda are looking at relocating their manufacturing facilities away from China, according to Fortune. These are among today’s must reads from around the commercial real estate industry.

  1. Pension Funds Are Selling Their Office Buildings “Major U.S. and Canadian pension funds are cutting back investments in office buildings, betting that prices will likely fall as the five-day office workweek becomes a thing of the past. Retirement funds are still buying property, partly in a bid to reduce the impact of inflation. But those investments are more focused on warehouses, lab space, housing and infrastructure such as airports. The shift is part of a broader transition away from traditional real estate holdings in offices and shopping centers as the Covid-19 pandemic has accelerated the rise of e-commerce and remote work.” (The Wall Street Journal)
  2. The U.S. Needs Millions More Apartment Homes. What Can Localities Do to Help Boost Supply? “Demand for apartments across the U.S. exceeds the number of units available for rent by 600,000, according to two industry groups. But the situation is going to get even worse: Research released in July by the National Multifamily Housing Council and the National Apartment Association shows that the nation needs 3.7 million new units by 2035 to meet demand. The industry groups point to local governments. They say multifamily builders are stymied by government regulations, which account for 40% of a new project’s development costs.” (Route Fifty)
  3. Explaining Volatile CMBS Market “Trepp’s Manus Clancy explains what’s going on in the volatile CMBS market.” (The Real Deal)
  4. SVN International CEO Kevin Maggiacomo Passes Away at 50 “Kevin Maggiacomo, president and CEO of commercial real estate advisory firm SVN International, has died in his sleep at age 50. Prior to his tenure at SVN, Maggiacomo had been a vice president at Boston-based RTE Group. He joined SVN in 2001 as a regional director before being appointed CEO in 2010. Magiacomo grew the company from a national firm with seven offices to an international enterprise with more than 200 offices and 2,000 advisors in eight countries.” (Commercial Property Executive)
  5. Texas ERS Raises Private Equity Investment Target “The Employees Retirement System of Texas expanded its capital allocation target for private equity to avoid having to pare down too much of its private-assets portfolio to maintain balance amid declines in public equities. At a meeting Wednesday, trustees of the $33.03 billion state pension system raised its target for private-equity assets to 16% of the total from 13%, acting on a recommendation from its professional staff. Private-equity returns topped all other asset classes over three, five and 10 years, according to documents prepared for the meeting.” (The Wall Street Journal)
  6. Apple, Honda and Mazda Reportedly Consider Diversifying Manufacturing Away from China After Supply Chain Chaos “Faced with COVID lockdowns, worsening U.S.-China tensions, and now an indefinite power cut in China’s heartland, companies are exploring how to divert their supply chains away from China. On Wednesday, the Japanese newspaper Sankei reported that carmaker Honda was considering building a parallel supply chain outside of China to lessen its dependence on the country. Forty percent of the carmaker’s production is currently done in China. A Honda spokesperson characterized the plan as “risk-hedging” in a statement to Reuters, but said it was “not quite the same” as decoupling.” (Fortune)
  7. Retailers Prepare for Unpredictable Holiday Shopping Season as Inflation Worries Persist “With inflation at a record high, retailers across the country are steeling themselves for less spendy shoppers heading into the crucial holiday shopping season. Lower-income shoppers have been hit harder by inflation than their wealthier counterparts, and that’s expected to make an impact on how they shop at the end of this year, Financial Times reported.” (Bisnow)
  8. Amazon Says It Will Shut Down Amazon Care, its Primary and Urgent Health Care Business “Amazon told employees in an email on Wednesday that it is shutting down Amazon Care, its in-house foray into providing primary and urgent health care. The move comes a month after Amazon announced plans to buy a much larger competitor, One Medical, in a $3.9 billion deal. Amazon for years has wanted to find its own ways to enter the health care industry, which company executives think provides a big opportunity for expansion.” (The New York Times)
  9. ‘Uncomfortable and Cold’: Brits Might Be About to Ditch Home Working as Heating Bills Soar “High heating bills and the prospect of working in a cold and uncomfortable house this winter might soon push more Brits to go back into the office. Of the 2,000 people surveyed by price comparison site MoneySuperMarket, 14% (280) plan to spend more time working from the office to reduce home energy bills. This figure increases to almost a quarter (23%) when looking at 18-to-24-year-olds.” (CNBC)
  10. Return-to-Office Reluctance vs. Recession: How Opposing Forces Could Impact Office “Recessions usually give employers the edge, but maybe not about return to office.” (Bisnow)
  11. N.Y. Medical Marijuana Giants Struggle to Break into Recreational Market “If New York were to legalize recreational cannabis, the medical marijuana companies would be well positioned to dominate the market, much as they have in states like Illinois and Arizona. But New York took a different approach, promising to put those who had been harmed by the war on drugs first in line for retail licenses, with the application process opening Thursday.” (The New York Times)
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