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11 Must Reads for the CRE Industry Today (June 15, 2022)

Private investors are showing bullishness on retail properties, reports The Wall Street Journal. The New York Times looks at how Houston got 25,000 people off its streets and into their own homes. These are among today’s must reads from around the commercial real estate industry.

  1. Private Investors Buy Up Retail Real Estate as Bigger Players Remain Cautious “Private investors are snapping up shopping centers and other bricks-and-mortar real estate, a bullish sign for the beleaguered retail property sector as it emerges stronger than expected from the Covid-19 pandemic. While many real-estate investment trusts and other big players remain cautious, retail property sales are increasing to family offices, wealthy individuals and small private investment firms. These buyers, who are more nimble than big companies, were responsible for nearly three-quarters of retail-asset acquisitions in 2021, a 30% increase from the 10-year historical average, according to real-estate services firm JLL.” (The Wall Street Journal)
  2. Silver Lake to Invest $500 Million to Build Soundstages “Private-equity investor Silver Lake is investing $500 million in soundstages, hoping to capitalize on a supply issue that has emerged as studios and streaming services shell out billions of dollars in film and TV production: There isn’t enough space to go around. The half-billion dollars is going toward the expansion of Shadowbox Studios, a production-facility company with stages in London, Atlanta and the Los Angeles area where movies such as Walt Disney Co.’s ‘Jungle Cruise’ and Sony Pictures Entertainment’s ‘Jumanji: The Next Level’ were made.” (The Wall Street Journal)
  3. Council Post: Reports of Office Real Estate’s Death Were Greatly Exaggerated “Since the beginning of the global crisis, the perceived fate of commercial real estate (and office real estate in particular) has ranged from grim to hopeless, depending on who you asked. However, new circumstances provide a less alarmist outlook, and it appears that the sky isn’t falling after all. Essentially, reports of office real estate’s death were greatly exaggerated.” (Forbes)
  4. Welcome to Negative Leverage in CRE “Negative leverage has reared its ugly head in CRE investing, as interest rates have risen, and cap rates have remained compressed. One of the most important axioms of a successful real estate investment and development program is to acquire or build real estate with positive leverage. Positive leverage occurs when the cap rate is greater than the cost of debt, which means the return on equity will be greater than the cap rate. Negative leverage is just the opposite and defined as when the cap rate on a property acquisition is less than the cost of debt or debt constant.” (
  5. Office Return Worries Drive Vornado Stock to a New Low “CEO Steven Roth needs the Penn Station plan to materialize fast.” (Crain’s New York Business)
  6. American Businesses Are Coming Home. Innovators in Logistics Will Reap Massive Rewards. “Businesses are prioritizing supply chain visibility and resilience more than ever. If the animating concern of the China-based supply chain was cheap prices, tomorrow’s supply chains will be optimized for reliability–even if it comes at a higher cost. Managers want insights into every step of their supply chain to better forecast the future. To do so, they’re relying on digitization, better data practices, connected warehouses, and other technologies that already exist.” (Fortune)
  7. Tenants, Landlords Sound Off at Raucous Rent Guidelines Board Ahead of Final Vote “The Rent Guidelines Board, which sets the rents for more than one million rent-stabilized apartments, is considering increases of between 2% and 4% for one-year leases, and between 4% and 6% for two-year leases — some of the biggest spikes in a decade. Tenants held signs and burst into chants of “no rent increase,” sometimes shouting down landlords trying to make their cases during more than three hours of public testimony. Tenant groups and advocates are calling for the board to hold rents flat, given the rising cost of household goods, flat wages, and a city unemployment rate that is still stubbornly higher than pre-pandemic levels.” (Gothamist)
  8. Hotel-to-Industrial Demolition Plan Shows Strength of Demand for Warehouses “The hotel likely sold more for its opportunity for redevelopment than its status as an active hotel.” (Bisnow)
  9. How Houston Moved 25,000 People from the Streets into Homes of Their Own “During the last decade, Houston, the nation’s fourth most populous city, has moved more than 25,000 homeless people directly into apartments and houses. The overwhelming majority of them have remained housed after two years. The number of people deemed homeless in the Houston region has been cut by 63 percent since 2011, according to the latest numbers from local officials. Even judging by the more modest metrics registered in a 2020 federal report, Houston did more than twice as well as the rest of the country at reducing homelessness over the previous decade.” (The New York Times)
  10. Developers Embrace Passion for Pickleball “Eatertainment is particularly appealing now because customer wants have changed during the pandemic, with families seeking large gathering spaces for leisure time, said Seunghyun Park, an assistant professor in hospitality management at St. John’s University. Eatertainment facilities may not be the most appealing locales for dedicated players, though. Pickleball’s demographics skew heavily toward retirees, and players have gained a reputation for being a prickly, territorial bunch.” (The New York Times)
  11. Five Questions with NYU’s Sam Chandan at CREFC 2022 “As someone who has been attending the CREFC conferences for the past 15 years, Sam Chandan is a big fan of the organization. As the new head of NYU Stern’s Center for Real Estate, he has been encouraging all his students to become members of the trade association, too. Chandan chatted with Commercial Observer at our booth in the New York Marriott Marquis. He shared his view on recession concerns, the multifamily sector, and why New York City will always keep its crown as the leading finance and real estate market.” (Commercial Observer)
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