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Seven Must Reads for Real Estate Investors Today (April 4, 2023)

Alternative lenders may step up to substitute for regional banks amidst troubles in the banking sector, reports Commercial Observer. The Real Deal looks at how Donald Trump’s indictment might impact his property company. These are among today’s must reads from around the commercial real estate industry.

  1. Alternative Lenders Spy an Opportunity in Banking Crisis “Take a moment and think about this: Imagine an alternate timeline where Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell chose not to coordinate a federal response to seize Silicon Valley Bank and Signature Bank amid their sudden collapse during the second weekend in March. It’s a scary thought, but the likelihood is that, absent that federal backstop, more regional banks with heavily leveraged long-term debt securities portfolios — such as First Republic Bank, Zions Bancorporation and Pacific Western Bank — would also have failed.” (Commercial Observer)
  2. Bank Failures Likely to ‘Exacerbate the Existing Liquidity Crunch’ Within Commercial Real Estate “Long before these bank failures, commercial real estate on the office space side was already struggling with rising vacancies and falling property values as workers resisted returning to their 9-to-5s. Those commercial real estate troubles could be exacerbated if in the aftermath of bank failures lenders decide to tighten lending standards for commercial real estate [CRE] loans. Experts in the commercial real estate space didn’t mince words when speaking with Fortune: Buckle up, they say, for more CRE defaults and delinquencies.” (Fortune)
  3. Government Sector’s Office Policies Put $26B in CMBS Debt at Risk “A new report from Trepp found that roughly $26 billion of outstanding CMBS loans are tied to 1,365 national properties occupied by workers employed by federal, state or municipal governments. But as hybrid work becomes increasingly popular and return-to-office policies remain in flux, especially for federal employees, a number of metropolitan areas with billions of dollars in CMBS exposure predicated on government office tenants could face economic headwinds.” (Commercial Observer)
  4. 2023 U.S. Life Sciences Outlook: Rising Uncertainty Amid Burgeoning Scientific Discovery “After record years in 2020 and 2021, growth of the U.S. life sciences industry has returned to a more normal pace in 2023, although demand for lab/R&D space remains well above pre-pandemic levels. Life sciences employment reached a record high at the start of 2023, although the rate of growth slowed. The San Francisco Bay Area, Boston/Cambridge and Seattle were the fastest-growing markets last year.” (CBRE)
  5. America Has Too Much Parking. Really. “For decades, American cities have had a parking problem: too much of it. Countless residential parking spots go unused, and many downtown garages sit half empty. Ride-sharing and the rise of remote work during the pandemic have aggravated the trend. The average American drove 4% fewer miles in 2022 than in 2019, according to government statistics. Recognizing this, cities are shrinking the number of spaces, freeing up the land for other uses, with far-reaching consequences.” (The Wall Street Journal)
  6. How Donald Trump Indictment Affects His Real Estate Empire “Former president Donald Trump’s indictment on criminal charges could throw a wrench in the Trump Organization’s real estate business.” (The Real Deal)
  7. Why the Suburbs Are at the Center of New York’s Housing Debate “The plan does not single out suburbs. It calls for each community in the state to make way for more residential development. But some of the most significant effects could be felt in towns and villages on Long Island and in Westchester County that have mass transit stations but have allowed relatively few homes to be built over the decades. By one measure, Westchester County and Suffolk and Nassau Counties on Long Island have allowed fewer homes to be built per person in the past decade than the regions around nearly every other major U.S. city, including Boston, San Francisco and Washington.” (The New York Times)
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