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12 Must Reads for the CRE Industry Today (Nov. 21, 2022)

CFO looks at how a new push for corporations to cut expenses is reducing demand for office space. MBA Newslink conducted a roundtable with special servicers on what to expect if a recession takes hold. These are among today’s must reads from around the commercial real estate industry.

  1. Expense-Cutting Triggers Office Space Decisions “Higher costs from inflation, including wage pressures, and the possibility of recession have pushed some of these organizations to slash operating expenses. They need to preserve margins or slow down cash usage, and real estate leases of underutilized space are a prime target.” (CFO)
  2. What to Expect When Expecting Distress: A Special Servicer Roundtable “Once a recession hits, special servicers help determine the fate of loans secured by offices, shopping malls and apartment buildings when the bets placed on these properties go sour. With many pandemic-related challenges behind the industry, it is worthwhile to consider how far the industry has come and where things are headed. With interest rate hikes, recession talk and rising inflation defining themes for commercial real estate, MBA NewsLink asked three special servicing executives to get their takes on labor, property and capital market dynamics.” (MBA Newslink)
  3. Why Warehouse Giant Prologis Is Betting Big on Electric Vehicle Infrastructure “That’s why one of the largest industrial real estate landlords in the world, Prologis, is investing in new electric vehicle infrastructure meant to ease the transition to net zero for its supply chain and logistics tenants. This week, Prologis unveiled that it has installed electric truck charging stations at two Los Angeles County facilities occupied by warehousing and distribution company Performance Team, which is in the process of converting its trucking fleet to electric vehicles.” (Commercial Observer)
  4. Data centers facing existential crisis “Researchers at Virginia Tech estimated the average data center uses 300,000 gallons of water a day to keep cool, roughly equivalent to water use in 100,000 homes. As drought conditions spread, the ability to keep data centers cool — and operational — will dry up.” (The Real Deal)
  5. Amazon Looks to Sparrow to Carry its Robotics Ambitions “But the robotic device, known as Sparrow, is outfitted with suction cups and artificial intelligence software rather than the eyes and hands of human workers. It is the latest attempt by Amazon. com Inc. to automate more of its warehousing operations by turning some of the most physically challenging and repetitive tasks over to robots.” (The Wall Street Journal)
  6. Rental Price Growth Slows To The Lowest Level In 18 Months “Nationally multifamily rent growth slowed to 4.7% year-over-year, its slowest pace in 18 months, with the median rent hitting $1,734. Additionally, The Avail, by, 2022 fall landlord and renter survey found that while tenants are still struggling with affordability, the majority of landlords are planning increases in the next 12 months, albeit less than before.” (Forbes)
  7. Nuveen’s Carly Tripp Sees Increased Allocations to Real Estate “Nuveen’s Global Chief Investment Officer and Head of Real Estate, Carly Tripp, sat down with REIT magazine to discuss not only some of the challenges real estate and capital markets face during tumultuous economic times, but also some of the opportunities that might arise as a result of the inevitable downturns, disruptions, and highly volatile nature of a global economy.” (REIT Magazine)
  8. Mall Giant Wants to Bring Digital Native Brands to its Centers “Shopping malls are working to retain their occupancy and relevance. Simon Property Group  (SPG) - Get Free Report is finding a new way to innovate the shopping experience at its mall real estate across the globe including North America, Europe and Asia. Simon has a vested interest in over 250 retail locations globally.” (The Street)
  9. 'The Land Of The Giants’: Atlanta's Red-Hot Data Center Industry Could Face Growing Pains “Just over two years into Atlanta’s data center building boom, the region’s data center footprint is set to more than double as the market becomes one of the country’s most important digital hubs. Cloud and social media hyperscalers have driven this demand, sparking the emergence of a dense regional data center ecosystem that is continuing to grow as Atlanta becomes the digital infrastructure epicenter for the Southeast.” (Bisnow)
  10. Housing Industry Braces for a Downturn, but Investors Are Piling In “Such shares tend to be priced on expectations of growth far into the future, so they often soar or stagger in concert with moves in interest rates. For the housing industry, changes in rates don’t just swing stock-valuation models. They are a key influence on the outlook for business because shifting mortgage rates push buyers into or out of the market.” (The Wall Street Journal)
  11. Meet 'The Tenants,' The Video Game That Could Change What People Think They Know About Landlords “At its heart, it's a video game about time and resource management at a level so granular a player can choose the color of a toilet paper holder. But the subject matter makes the game stand out in a way that is refreshing, disorienting and serves up food for thought.” (Bisnow)
  12. Trump Family’s Newest Partners: Middle Eastern Governments “The deal is with a Saudi real estate company, which intends to build a Trump-branded hotel, villas and a golf course as part of a $4 billion real estate project in Oman. The agreement continues a practice that had been popular for the Trump family business until Mr. Trump was elected president — selling branding rights to an overseas project in exchange for a generous licensing fee.” (The New York Times)
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