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

Fitch Ratings warned about the danger stagflation posts to commercial real estate values. Investment sales volume was up 10 percent in the second quarter, according to CBRE data. These are among today’s must reads from around the commercial real estate industry.

  1. CRE Investment Volume Climbed 10% in Q2 “U.S. commercial real estate investment volume rose 10 percent year-over-year in the second quarter of 2022, to $167 billion, with industrial and logistics investments providing nearly $32 billion of the total and office $24 billion, according to a recent CBRE report. Trailing four-quarter volume totaled a record $881 billion.” (Commercial Property Executive)
  2. US Commercial Real Estate Values Threatened by Stagflation “Changes in nominal CRE values are typically accompanied by similar directional movements in NOI, and values increase in most sustained rising interest rate periods. During these periods of rising long-term interest rates, property-level cash flows tend to keep pace with, or grow faster than, the increase in cap rates tracked by the American Council of Life Insurers. However, stagflation could result in a prolonged period of elevated cap rates, which would likely result in declines in CRE values.” (Fitch Ratings)
  3. Landlords backing off big rent hikes “In New York, a report by landlord rating site Openigloo found the average rent hike on a renewed lease was 11.2 percent in July. That’s down over 2 percentage points from June and was the fifth straight monthly decline since peaking at 22.5 percent in February.” (The Real Deal)
  4. Newmark's CEO On Why The Brokerage Mega-Merger Is Dead For Now “Newmark is the nation's fourth-largest brokerage and has been making ‘bolt-on’ acquisitions of smaller firms and broker teams across the country and in Europe, rather than chasing a big M&A deal, Gosin said on the call. Industry analysts told Bisnow this week they expected the other large, publicly traded firms, which include CBRE, Colliers and Marcus & Millichap, to follow the same course.” (Bisnow)
  5. Real estate firm turns over documents in Trump civil probe “A commercial real estate firm said Monday that it has turned over to the New York Attorney General's office some 36,000 documents on its appraisal of Trump Organization properties. Cushman & Wakefield was held in contempt last month and ordered to pay a fine of $10,000 a day after it failed to turn over documents subpoenaed by Attorney General Letitia James in an investigation into former President Trump's business.” (Axios)
  6. Trump Pleads The Fifth In Real Estate Valuation Probe “Former President Donald Trump is declining to answer questions in the case investigating whether he obtained fraudulent valuations on his company's real estate assets, the latest development in a three-year legal saga in New York.” (Bisnow)
  7. How the Real Estate Industry Is Addressing ESG Compliance “A group at Harvard University is working to develop what it hopes will become a standardized accounting system. It’s being designed to ascribe monetary values to ESG factors, as well as reward ESG successes and create consequences for ESG transgressions. The work is of paramount importance to companies’ ongoing (if slow-moving) adoption of ESG principles, says Ronald Cohen, a Harvard professor who chairs the Impact Weighted Accounts Initiative.” (CFO)
  8. A day in the life of a Blackstone real estate associate “Serena graduated from Cambridge University with a degree in Land Economy. Having completed an internship in the investment banking division of UBS in her penultimate year, she joined Blackstone’s London office as an off-cycle intern in 2018. She became a full-time analyst in 2019 and was promoted to associate in 2021.” (efinancial careers)
  9. What’s It Like at the Most Expensive Motel 6? Actually, Pretty Nice “The 52-room motel is best known as the first Motel 6 in the country. It opened 60 years ago this summer with $6 room rates. (That’s nearly $59 in 2022 dollars.) But it also holds another, unofficial distinction: It’s the priciest Motel 6.” (The Wall Street Journal)
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