Features

San Francisco Multifamily Trends: The Downside of Demand Inelasticity

by Sarah Daniels August 13, 2020

In economics, the sensitivity of aggregate demand for a product or service to changes in price is defined as its “elasticity.” The elasticity of demand for nonessential goods or goods with a number of ready substitutes is high. Even a small increase in price will produce a large decrease in demand. Conversely, a relatively large price change in the cost of an essential or prized luxury good for which few substitutes exist may have little effect on demand for it. San Francisco real estate is a highly inelastic good. The Bay Area’s potent combination of natural beauty, sublime climate and unique culture make it one of the most coveted destinations in the world. By the same token, its compact size, high population density, seismic risks and antipathy to development constrain supply. For all practical purposes, housing prices are limited by the income that residents can expect to earn rather than the normal interplay of producers and consumers. The innovation and wealth creation generated by the high tech industry added a complex new variable to the equation. More wealth was created during the last 10 years in the 40 miles that lie between the Golden Gate and San Jose than in …

August 13, 2020

Features Office

Why Coworking Space Will Survive COVID-19

by Taylor Williams August 11, 2020

By Charlie Tanner, Director of Real Estate & Development, Firmspace The COVID-19 pandemic has proven that many companies can operate successfully while working remotely. This out-of-office trend has spurred many discussions about whether coworking spaces, a relatively new concept in commercial real estate, may already be a thing of the past. However, these workspaces represent an important part of doing business and developing relationships with colleagues and clients, particularly in the commercial real estate industry. Moving forward, while many aspects of working in an office will change, real estate professionals will continue to rely on a new kind of coworking space to support their operations and employees. Here’s what the coworking landscape will look like in the months and year ahead: Health, Safety Emphases At the start of the first quarter of 2020, 70 percent of all office spaces in the United States had at least a partially open design plan. As major companies have scrambled to erect new walls and plexiglass desk dividers, offices that were originally constructed to facilitate private work have risen in demand. Much has already been written about the return of the cubicle, and those who prefer to work in private, soundproof rooms with doors …

August 11, 2020

Features Industrial Texas Texas & Oklahoma Feature Archive

Warehouse Sector Reaches New Heights as User Demand for Flexibility, Variation Increases

by Taylor Williams August 6, 2020

By Nazir Khalfe, Principal, Powers Brown Architecture Having designed multiple millions of square feet of speculative and build-to-suit industrial buildings in my career, I’ve witnessed some striking trends over the past two decades, especially with the advancements made in tilt-wall construction. The ability to go higher and store and ship more product with today’s technology is creating an ever-changing landscape for industrial product. We have witnessed the boom of e-commerce, advancements in logistics and automation, and all the while tried to keep up with the dynamic market forces that produce a successful industrial park. Since the Great Recession, demand for industrial space has been at a premium, not only in Texas but also in most markets throughout the United States. Out of necessity for how our lives are changing, the industrial market has become the darling of the real estate industry. In 2020, thanks to the exponential growth of e-commerce activity and manufacturing jobs, we are breaking new ground on how a standard industrial park looks, feels and operates. While COVID-19 has not changed the expansive, open-space feel of warehouses where social distancing is inherently built-in, the pandemic has started to impact the industrial world on the development side. Developers …

August 6, 2020

District of Columbia Features Loans Multifamily Southeast Southeast Feature Archive

US Multifamily Originations to Decline 20 to 41 Percent in 2020, Says Freddie Mac

by John Nelson August 4, 2020

WASHINGTON, D.C. — In its midyear multifamily outlook report, Freddie Mac predicts U.S. multifamily loan originations will drop severely for all of 2020 due to the outbreak of COVID-19 and the big blow the virus has dealt the U.S. economy. The gross domestic product from April to June plunged 32.9 percent on an annualized basis, according to the U.S. Commerce Department. The government-sponsored enterprise (GSE) is projecting that loan volume will decrease 20 to 41 percent across the multifamily sector this year compared with the total dollar amount of loans closed by lenders in 2019, which Freddie Mac estimates was $374 billion. Heading into this year, Freddie Mac expected that loan originations would increase 5 percent in 2020 to $390 billion. Depending on the overall strength of the U.S. recovery and the further spread of COVID-19, Freddie Mac outlined two scenarios for how the year will play out. The more optimistic scenario calls for the unemployment rate to fall just below 8 percent by the end of the year. The U.S. unemployment rate, which stood at 11.1 percent at the end of June, will be updated Friday when the Department of Labor releases the nonfarm payroll employment report for July. …

August 4, 2020

Content Partner Features Multifamily Northeast Feature Archive Walker & Dunlop

Coronavirus & Capital Markets: Opportunity in the Midst of Caution

by Sarah Daniels August 3, 2020

Lenders and investors may be a little wary when approaching deals under the shadow of COVID-19, but opportunities to employ capital strategically when market prices are low can make for long-term opportunities. Many in commercial real estate hope to lay significant groundwork, strengthening their economic trajectories whenever the market recovery begins. Keith Kurland, senior managing director at Walker & Dunlop, serves as co-head of the company’s New York Capital Markets practice and spoke to REBusinessOnline about the business of sourcing and structuring debt and equity financing in the midst of coronavirus. Kurland joined Walker & Dunlop in January of this year, after the company acquired AKS Capital Partners, which was co-founded by Kurland in 2019. Coronavirus Conditions & the Impact on Lender and Investor Interest “Given our diverse and multi-sector client base, we are still actively financing almost every product type,” Kurland says. “While some sectors and deal types may be more challenging than others due to the impact of COVID-19, we are still tasked with supporting our clients to make sure that they’re either being defensive or offensive, depending upon the lifecycle of the projects that they’re currently invested in. Our team is currently marketing and under application with …

August 3, 2020

Features Multifamily Southeast Feature Archive Walker & Dunlop

Walker Webcast: Steady Apartment Rent Collections Buoyed by Unemployment Benefits

by Kristin Harlow July 31, 2020

BETHESDA, MD. — Several industry professionals are predicting that a second stimulus bill will be a $1.75 trillion package approved by Aug. 15. The comments came on a “Walker Webcast” webinar, entitled “All Eyes on Washington: What Will the Next Stimulus Bill Do for CRE?” that took place on Wednesday, July 29. Commercial real estate finance firm Walker & Dunlop hosts the webinar series. Willy Walker, chairman and CEO of Bethesda, Md.-based Walker & Dunlop, spoke with Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA); Doug Bibby, president of the National Multifamily Housing Council (NMHC); and Jeff DeBoer, president and CEO of Real Estate Roundtable. The three guests conversed on a variety of topics, with the possible extension of the eviction moratorium being one of the most discussed issues. Bibby of NMHC equated the moratorium to rent control. The notion sounds good because the consumer is protected, but it can have devastating effects on the owner, particularly in the multifamily space where a lot of landlords are smaller owner-operators. “They [multifamily owners] could lose everything with an eviction moratorium because they have mortgages, property taxes, insurance and payroll to pay,” said Bibby. Over 40 percent of apartment …

July 31, 2020

Portland Multifamily Rent Occupancy460x345

Content Partner Features Lument Multifamily Oregon RED Capital Group Western

Portland, Oregon Multifamily Fundamentals Wobble, but Remain Healthy Overall in June

by Sarah Daniels July 30, 2020

Five months into the pandemic, fissures are beginning to form in the foundation of the multifamily market. Through the spring leasing season, liquidity from enhanced unemployment insurance benefits and a yearning for stability in uncertain times were enough to maintain occupancy near pre-coronavirus levels and to provide something of a buttress for rents. As spring turned to summer, however, winds seemed to change direction, tenant patience began to fray and property performance waned. West Coast cities with high technology exposure were the first to exhibit material revenue attrition. Reduced employment and income prospects led many renters to reconsider the efficacy of paying the highest rents in the country. Many tenants chose instead to relocate to more affordable areas when leases expired (as many do during the spring leasing season) or simply vacated and broke existing leases. Rents in the San Francisco Bay Area have declined by about 4 percent since the beginning of the year, and as much as 9 percent over the last 12 months. More affordable markets, including Portland, also experienced softening, but to a lesser degree. While fleeing tenants apparently generated a “renter’s market” in San Francisco, absorption in a sample of 919 Portland properties surveyed by …

July 30, 2020

Features Texas Texas & Oklahoma Feature Archive

Attention Texas Owners: Beware of Property Tax Increases During COVID-19

by Kristin Harlow July 28, 2020

By Darlene Sullivan, Popp Hutcheson PLLC As if a global economic contraction and an unfolding recession across the United States were not enough, many commercial real estate owners across Texas have seen their taxable property values increase this year. While many of these owners are calling for property tax relief to offset the financial burden they are suffering due to stay-at-home orders and business closures triggered by the COVID-19 pandemic, they may be unsure of potential remedies to pursue or arguments to make. Given that the date of valuation is Jan. 1, 2020, property owners searching for relief are limited as to the information that appraisal districts will consider for this tax year. Potentially limited relief in 2020 does not mean taxpayers lack options, however. There are three key strategies that commercial property owners need to implement in 2020 if they want to maximize reductions in taxable value for this and future years. 1. Consider filing a 2020 appeal — even if the taxable value did not increase from the prior year. The state was already shutting down nonessential activities as appraisal districts were preparing to mail out their 2020 Notices of Appraised Value. Most appraisal districts delayed the mailings …

July 28, 2020

Florida Leasing Activity Restaurant Retail Southeast Southeast Feature Archive Video Webinar

Webinar: South Florida Retail Outlook: What is the Impact of COVID-19 on South Florida’s Retail Sector?

by Sarah Daniels July 27, 2020

(Panelists, clockwise from top left) Adam Tiktin, Tiktin Real Estate Investment Services; Rod Castan, Courtelis Company; Lyle Stern, Koniver Stern Group; Philip Rosen, Becker (moderator); Duane Stiller, Woolbright Development. Last week, Shopping Center Business and Southeast Real Estate Business hosted “South Florida Retail Outlook: What is the Impact of COVID-19 on South Florida’s Retail Sector?” Listen as a panel of retail experts discusses their gameplans: working with tenants and their employees as the industry seeks to adapt. Hear about attitudes towards loans, rent reductions, property value, next steps and more. See a list of some topics covered and their timestamps below: (07:00): How are restaurants and experiential tenants faring? (09:29) Adapting for the challenges of COVID-19 (17:28) South Florida retail rent trends over the next 180 days? (24:32) What can owners do today to position themselves to succeed? (36:00) When might we start to see real loan defaults and real distressed assets? (42:55) Lessons learned from 2007-2008 financial crisis (53:56) Decisions made in the pre-COVID-19 world that have carried over well into our current environment Hear how South Florida retail professionals are approaching industry challenges and evolving to meet the needs of retailers. Panelists: Philip Rosen, Becker (moderator) Adam Tiktin, …

July 27, 2020

Features Florida Retail Southeast Southeast Feature Archive

First Inning: South Florida Retail Market Resets as COVID-19 Throws a Curveball, Says SCB Webinar

by John Nelson July 23, 2020

The outbreak of COVID-19 has had an outsized impact on South Florida. According to Johns Hopkins University School of Medicine, the region’s three primary counties rank in the top 20 of confirmed COVID-19 cases as of Wednesday, July 22. At 92,345 cases, Miami-Dade County is No. 4 on the list. Broward County comes in at No. 9 with 43,747 cases, and Palm Beach County is No. 20 with 27,506 cases. The surge in cases has had a pronounced effect on the area’s retailers as citizens have resumed their caution in public settings for fear of contracting the virus. “There is a tremendous amount of distress across South Florida’s economy, and especially in retail,” said Philip Rosen, shareholder and real estate chair of law firm Becker. Rosen’s comments came during South Florida Retail Outlook, a webinar hosted by Shopping Center Business that discussed the impact of COVID-19 on South Florida’s retail sector. Rosen moderated the panel discussion, which had 337 registrants. The pandemic’s effect is not all negative as grocers, drugstores and hardware stores have enjoyed increased sales activity amid the crisis. However, the bulk of retail categories are suffering from extended closures and operating at limited capacities. Restaurants in particular …

July 23, 2020

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