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Seven Must Reads for CRE Investors Today (Feb. 22, 2023)

IPE Real Assets looks at how climate change is impacting the value of commercial real estate properties. New York multifamily developers are starting to consider building condos instead of rentals, according to Crain’s New York Business. These are among today’s must reads from around the commercial real estate industry.

  1. M&T: 20% of Bank’s Office CMBS Loans in Danger of Default “M&T Banks says it is conducting ‘stress tests’on the debt-service ratio of CMBS loans that make up its $5B office portfolio, disclosing that 20% of its office loans are criticized—banking jargon for in distress, potentially in default. ‘We’re going through all of the office portfolios and stressing both the vacancy rates and lease rates to see what the debt service coverage ratio is. We’re making sure that we’ve got adequate coverage,’ Darren King, M&T’s CFO.” (
  2. Climate Change Harming Value of Real Estate, Evora Survey Finds “Climate change is adversely impacting real estate transactions and investors are expected to closely examine the financial implications of climate risk on their assets, according to a survey by real asset sustainability consultancy Evora. Evora’s annual Insights Into Real estate Investment Sustainability Survey, which captured responses from investors with $3.3trn (€3.1trn) assets globally, found that 46% of the 102 real estate investors have witnessed the impact of extreme weather on their investments.” (IPE Real Assets)
  3. Life Storage to Public Storage Takeover Offer: At $11B, Forget It “Third time wasn’t the charm for Public Storage (PSA). After private offers in December and January that were rejected, the Glendale, CA-based self-storage REIT offered the smaller Life Storage (LSI) a proposed share swap at $129 per share, or a 19% premium, for a total of $11 billion. Life Storage got back to them with a flat no.” (
  4. Why Tech’s Troubles Might Not Be So Bad for Manhattan’s Office Market “Financial services and insurance have taken a greater percentage of the leases signed, according to statistics from brokerage Savills. For the full year of 2019, their combined share was 23.2 percent. For 2020 and 2021, it was 29.8 percent. And, for last year, it was 40.8 percent. At the same time, TAMI went from a 36 percent share of leasing activity to 24.7 percent to 17.5 percent, respectively. Financial services and insurance companies leased 4.3 million square feet in Manhattan in the third quarter of 2022, a post-pandemic peak, before falling off to 1.6 million in the fourth quarter, normally a slower quarter anyway.” (Commercial Observer)
  5. Multifamily Developers Mull Pivot to Condo Projects, Using Public Land as 421-a’s End Nears “The construction of multifamily housing in New York is at a crossroads: The city is facing a housing shortage, but developers are backing away from building because of exorbitant costs.” (Crain’s New York Business)
  6. Recession Proof Real Estate Investments: Industry Experts Insights “Pat Vassar: Proof is a bit of a misnomer in the sense that no investment is guaranteed. However, there are pieces of investing, including real estate, that tend to do better in recessionary environments. Real estate does well because it’s a physical asset that typically generates cashflows in rental income, dividends, or interest payments. These investment qualities are highly sought after when there seems to be an additional risk in the overall investing environment.” (Las Vegas Review-Journal)
  7. As Austin’s SoCo District Grows, Is It Losing its ‘Weird’? “South Congress is often compared to Abbot Kinney Boulevard, a mile-long strip in Venice, Calif., that GQ magazine once described as “the Coolest Block in America.” Grand avenues are crucial to retail and hotel chains looking for cachet, real estate experts say. Other prime urban corridors that are drawing national retailers include the Meatpacking District in New York, Lincoln Road in Miami Beach, the Gold Coast in Chicago and the Marina in San Francisco, according to a December report by the real estate services firm JLL.” (The New York Times)
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