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Nine Must Reads for the CRE Industry Today (July 22, 2022)

Blackstone posts a loss in the second quarter amid market uncertainty, reports The Wall Street Journal. COVID-19, economic doubts continue to cast a long shadow over the office sector. These are among today’s must reads from around the commercial real estate industry.

  1. Blackstone Posts Loss as Market Turmoil Hits Private Equity Portfolio “Blackstone Inc. posted a loss in the second quarter as the value of its private-equity portfolio fell as the broader market tumbled. The New York firm reported a net loss of $29.4 million, or 4 cents a share, compared with a profit of $1.31 billion, or $1.82, during the same period last year. Blackstone said the value of its corporate private-equity portfolio fell by 6.7% in the quarter. The decline was smaller than that of the S&P 500, which slumped by 16.5%. Still, it was a far cry from a 13.8% increase a year earlier.” (The Wall Street Journal)
  2. The U.S. Housing Market Is Entering a ‘Deep Freeze’ as Surging Borrowing Rates and Sky-High Home Prices Hit Buyers, Moody’s Zandi Says “The US housing market is about to enter a "deep freeze," as surging borrowing rates and stubbornly high prices lock out a growing number of buyers, according to Mark Zandi, the chief economist of Moody's Analytics. Data on Wednesday showed a drop in existing home sales to a two-year low in June. The National Association of Realtors reported seasonally adjusted sales hit a rate of 5.12 million last month, the lowest since June 2020, and below expectations for 5.38 million.” (Insider)
  3. How Moderna’s COVID Vaccine Boosted Boston’s Real Estate Market “Moderna more than tripled its headcount in the Boston area as it raced to get millions of doses of the vaccine out the door. The company, which had approximately 830 employees at the end of 2019, added around 470 employees during 2020. The following year, it announced plans to double its production and lab space in Norwood in order to increase Covid vaccine production by 50%. By the end of 2021, Moderna had 2,700 employees with a median employee salary of $133,074, company financials show. Currently, Moderna employs north of 3,200.” (The Wall Street Journal)
  4. COVID Claims the Classic Chicago Office Skyscraper “With companies cutting back on space as remote work rises, developers wonder if the city has seen its last tall office tower.” (Crain’s Chicago Business)
  5. LA Office Activity Depressed as Economic Hits Keep Coming “The Los Angeles office market has a long road to recovery, hampered in part by uncertainty for streaming companies.” (Bisnow)
  6. Return to Office Plods Along as Tenants Vacate Space “Office occupancy ticks up, but still isn't in positive absorption territory.” (Bisnow)
  7. The Penn Station $7 Billion Fix-Up: Here’s What to Know “New York State officials on Thursday are expected to approve a sweeping redevelopment of Midtown Manhattan that would transform Pennsylvania Station, the busiest transportation hub in North America, from a run-down transit center into a city centerpiece. The plan calls for constructing 10 towers around the facility and providing an estimated $1.2 billion in tax breaks to developers.” (The New York Times)
  8. Fifth Wall Closes Half-Billion-Dollar Climate Fund to Decarbonize Global Real Estate “Fifth Wall, a venture capital firm focused on real estate technology, is tripling down on its bet that climate tech will become an integral driver in the real estate space. It just announced commitments of half a billion dollars to close its inaugural Climate Fund, which launched with $116 million in August of last year. It is the largest private fund formed specifically to decarbonize the real estate industry, according to the firm.” (CNBC)
  9. Entitlement and Construction for New Industrial Builds Are Dragging “The entitlement and construction process for new industrial builds is taking five months longer on average than it did pre-pandemic, impacting both developers and tenants alike. New research from Newmark notes that the delays have also caused a “significant backlog” of facilities in the construction pipeline.  Starts increased by a whopping 64% between 2019 and 2021 to meet a 120% increase in tenant demand—but deliveries ticked up by just 5.7% during that time.” (GlobeSt.com)
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