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Eight Must Reads for CRE Investors Today (April 10, 2023)

CMBS issuance fell to a 10-year low in the first quarter, reports The Real Deal. The Green Street Commercial Property Price Index was down 15% year-over-year in March. These are among today’s must reads from around the commercial real estate industry.

  1. CMBS market plunges to 11-year low “Only 10 CMBS loans were issued last quarter. Among them, four conduit deals totaling $3.28 billion were recorded, a 67 percent decline from the nine transactions that totaled $9.91 billion in the first quarter of last year. Another six single-borrower CMBS loans were issued, totaling $2.7 billion, an 85 percent drop from the 26 deals totaling $18.61 billion a year ago.” (The Real Deal)
  2. Property Prices Down 15% vs. Last Year “The Green Street Commercial Property Price Index’ decreased by 0.2% in March. The index has fallen by 15% since property prices peaked a year ago. ‘Transaction volumes remain low, but our estimates put the bid price about 15% lower than it was a year ago,’ said Peter Rothemund, Co-Head of Strategic Research at Green Street.” (Green Street)
  3. 'There's A Cost': CRE’s Mental Health Struggles Hit Early Career Workers Hard “During the early period of the pandemic, when deals dried up and working from home caused significant strain and isolation, many employers in CRE responded with additional benefits, employee support, and a greater awareness of mental health and work-life balance, especially for their newer staff members…. But now, during a period of job losses and belt-tightening, some of the gains around workplace mental health are in danger of being lost.” (Bisnow)
  4. The coming commercial real estate crash that may never happen “To date, banks have had virtually no losses on commercial real estate, and companies are showing little need to default either on loans to banks or rent payments to office building owners. Even as companies lay off workers, the concentration of job losses among big tech employers, in Manhattan, at least, means that tenants have no trouble paying their rent, S.L. Green said.” (CNBC)
  5. Construction Industry Has Work, Needs More Workers “A robust nonresidential construction sector is offsetting home construction in the U.S. that has been weakening under the weight of higher interest rates. Contractors said spending on nonresidential projects hasn’t been diminished by higher borrowing costs that usually drive up the cost of financing construction work.” (The Wall Street Journal)
  6. Most of Wall Street is panicking about commercial real estate – but Goldman Sachs says there's little chance it triggers a financial crisis “Big names ranging from Bill Ackman and Elon Musk to Bank of America and JPMorgan have predicted that the troubled sector will be where the next cracks appear in the US financial system – but Goldman Sachs bucked that trend this week. ‘The risk of a vicious circle of large leveraged losses and undercapitalized balance sheets that would pose a threat to financial stability is still limited,’ strategists Lotfi Karoui and Vinay Viswanathan said in a research note published Monday.” (Insider)
  7. Elon Musk painted over the 'w' on Twitter's sign at its San Francisco headquarters, changing it to 'Titter' “Elon Musk appears to really want the sign outside Twitter's San Francisco headquarters to say ‘Titter’ — and he was ready to have some paintwork done to make it happen. In a tweet on Sunday, the social media platform's CEO posted a picture of the sign with the "w" painted over in white to blend in with the background.” (Insider)
  8. Hit by ‘double whammy,’ proptech firms pivot to profitability “Reffkin doesn’t shy away from the fact that the brokerage has received billions in venture capital and debt. The funding has allowed the firm to grow exponentially, de-throning residential real estate’s two biggest brokerages—Anywhere Real Estate and Berkshire Hathaway Homeservices—in just over a decade. He’s grateful for it, but also knows the days of red ink must end.” (Housing Wire)
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