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12 Midweek Must Reads for Real Estate Investors (May 31, 2023)

The latest Urban Land Institute forecast looks into when investment sales might rebound. Office owners are starting to dispose of lower quality office buildings, reported The Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. When Will CRE Deals Rebound? “As concerns about a recession grow and headwinds for some CRE investors turn into downturns, the Urban Land Institute’s latest semi-annual Real Estate Economic Forecast provides a longer-term view than most such forecasts. And despite high inflation, much of the forecast is positive—though there’s more pain in the meantime. For example, ULI’s analysis predicts that GDP growth and CRE transaction volume, both currently under their long-term averages, will be exceeding those averages by 2025.” (Commercial Property Executive)
  2. The Latest Problem for Office REITs: Credit Downgrades “Real estate investment trusts (REITs) have already lost some of their credibility in the stock market, and now they’re losing it with lenders. Office REITs have faced slow leasing, high interest rates and dwindling stock prices, but now several have had their credit ratings downgraded over the past year and more could be on the way, with Moody’s Investors Service placing SL Green Realty’s rating on watch for a downgrade May 22, thanks to its high debt load and large New York City office holdings.” (Commercial Observer)
  3. RREAF CEO: ‘Banks Are Pulling Out of the Commercial Real Estate Space’ “With the significant run-up of interest rates, persistent recession fears and a regional bank crisis triggering a lending clampdown, commercial real estate developers and investors face economic headwinds that show few signs of easing soon. Against that backdrop, Kip Sowden and his son, Graham Sowden, see both opportunities and threats for Dallas-based real estate development and investment firm RREAF Holdings, which focuses on multifamily, hospitality, and more recently, RV park acquisition and redevelopment.” (Dallas Business Journal)
  4. Credit Funds Eye a CRE Distressed Market “Commercial real estate financing faces some intense pressure, and it looks like private credit funds are taking notice for potential profit. In the May 2023 Financial Stability Report, the Federal Reserve noted that since the Global Financial Crisis, “private credit funds have experienced substantial growth, as the privately negotiated loans that they extend have become an increasingly important source of credit for some businesses, particularly middle-market companies.” (
  5. Real Estate vs. Stocks: Which Has Higher Returns? “Investors frequently compare real estate and stock investing in terms of their returns. According to a Gallup poll published in May, 34% of Americans believe that real estate is the best long-term investment, while only 18% say that stocks or mutual funds are the best long-term investment strategy. The truth is that both tactics have their merits and drawbacks. Stocks, for example, offer greater liquidity and higher profit margins over a shorter time horizon. Purchasing real estate may be more suitable if you want consistent returns and tax advantages.” (U.S. News & World Report)
  6. Office Owners Dump Lesser Buildings for Whatever They Can Get “Some of New York’s best known real-estate developers are unloading their least viable office buildings at deep discounts, cracking open a sales market that had all but closed in the first quarter. RXR defaulted on the $240 million loan on its 33-story office tower in lower Manhattan. The developer, which owns and manages dozens of commercial and residential properties in the New York City area, has said that it will turn over ownership of the office tower at 61 Broadway to whoever buys the defaulted debt. That mortgage is being marketed by commercial real-estate services firm JLL and will likely go for about half the $440 million valuation of the building in 2016, market participants said.” (The Wall Street Journal)
  7. Commercial Property’s Big Resent Will Present Opportunities “Real estate markets are now being confronted by multiple negative factors.” (Financial Times)
  8. Here’s How Much Warehouse Rent Could Increase This Year “While vacancy rates have crept up, here’s where they could go in the next 18 months, according to Prologis.” (Sourcing Journal)
  9. American Cities Are Starting to Thrive Again. Just Not Near Office Buildings. “While office towers sit empty and nearby businesses struggle to pay their bills, residential neighborhoods in America’s biggest cities are bustling again. The pandemic and remote work have done little to dent the overall appeal of cities such as New York, Chicago and Los Angeles, foot-traffic and rent data show. Instead, the pandemic has shifted the urban center of gravity, moving away from often sterile office districts to neighborhoods with apartments, bars and restaurants.” (The Wall Street Journal)
  10. LA Could Expand Office-to-Home Conversions Across City “The City of Los Angeles may expand a policy that helped create 12,000 homes out of old office buildings in Downtown. The city aims to expand a 1999 adaptive reuse ordinance credited with an explosive growth of homes Downtown by allowing the conversion of vacant office buildings into housing everywhere, Urbanize Los Angeles reported. As the city faces a state mandate to accommodate 255,000 more homes by 2030, the policy could be extended from Sylmar to San Pedro.” (The Real Deal)
  11. Related’s Surprise Addition to Casino Bet: Office Space “Related Companies’ casino bid for Hudson Yards includes a hotel, office space, a public school and a Wynn-branded gaming facility.” (The Real Deal)
  12. Who’s Lobbying for Each New York Casino Bid? “What do a gay rights activist, a Brooklyn pastor, and Lin-Manuel Miranda’s father have in common? They’re all lobbying for the real estate giants and gambling companies seeking to win a downstate casino license.” (Crain’s New York Business)
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