11 Must Reads for the CRE Industry on Oct. 5, 2022 - Wealth Management

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WMRE Staff | Oct 04, 2022

Retail Real Estate Is Enjoying its Biggest Revival in Years “U.S. retail vacancy fell to 6.1% in the second quarter, the lowest level in at least 15 years, while asking rents for U.S. shopping centers in the quarter were 16% higher than five years ago, according to real-estate services firm Cushman & Wakefield. More stores opened than closed in the U.S. last year for the first time since 1995, according to an analysis by Morgan Stanley, and some analysts say they expect that trend to continue this year even with recession fears rising.” (The Wall Street Journal)
Apple Suppliers Add Manufacturing Sites in U.S., with Focus on California “Apple Inc. suppliers added manufacturing operations close to the Cupertino, Calif.-based tech company in fiscal 2021, a sign of how the pandemic and geopolitics are beginning to reshape supply chains. Of Apple’s more than 180 suppliers, 48 had manufacturing sites in the U.S. as of September 2021, up from 25 a year earlier, according to a supplier list released by Apple this week. More than 30 sites were in California, compared with fewer than 10 a year earlier.” (The Wall Street Journal)
Micron Pledges Up to $100 Billion for Semiconductor Factory in New York “Micron announced on Tuesday that it planned to spend as much as $100 billion over the next 20 years or more to build a huge computer chip factory complex in upstate New York, the latest move by a major semiconductor maker to invest in the United States. The commitment by Micron is a sign that the federal government’s prodding and package of generous incentives is helping to steer investment decisions. Legislation that passed in August, the CHIPS and Science Act of 2022, provides $52 billion in grants and subsidies for companies to build and expand computer chip factories in the country.” (The New York Times)
Hurricane Ian’s Impact on CRE Insurance Rates “The costs of wind damage on residential and commercial properties is estimated to be some $22 billion to $32 billion, while the storm surges have destroyed another $6 billion to $15 billion in real estate assets, according to a report by CoreLogic. Damages of this magnitude can push more insurance companies into insolvency, as many have already done. ABCNews reported that since January 2020 at least a dozen Florida insurance companies have gone out of business, with another 30 experiencing instability.” (Commercial Property Executive)
Nuveen’s Team Sees Opportunities in Private Markets—But Disagrees on How Much “In its fourth quarter outlook released Monday, the asset manager’s global investment committee — made up of heads of various asset classes — split into two camps over the extent to which private assets will “reflect the pain felt in public assets.” Those who advocated for a greater allocation to the private markets cited the space’s attractive return potential and its ability to shield portfolios from the effects of market volatility. Their more wary colleagues pointed to the fact that many asset owner portfolios are already overweight private assets as a result of public market pullbacks.” (Institutional Investor)
What Reviving America’s Manufacturing Could Mean for Real Estate “Bringing manufacturing back to the U.S. has been talked about for a while, but the push is finally beginning to get real momentum.” (Propmodo)
Prologis Acquisition of Duke Realty Is Done Deal “The much-anticipated acquisition of Indianapolis-based Duke Realty Corporation, a sustainable industrial real estate development and the largest domestic-only logistics REIT (Real Estate Investment Trust) by San Francisco-based real estate investment trust company Prologis became a done deal earlier today, according to Prologis. Under the terms of the deal, the all-stock transaction, which Prologis said is valued at approximately $23 billion and was approved by Prologis and Duke shareholders.” (Logistics Management)
Governor Hochul Announces Six New Partners Selected in Empire Building Challenge to Advance Climate-Friendly Buildings in New York State “Governor Kathy Hochul today announced that six new real estate partnerships will join the State’s $50 million Empire Building Challenge to help advance a climate-friendly building stock in New York State. The partnerships, consisting of real estate teams made up of best-in-class building owners, engineers, and solution providers, will develop highly repeatable approaches to reduce carbon emissions in the heating and hot water systems for 5.6 million square feet of existing high-rise buildings – including 316 affordable housing units – that are advancing through the Empire Building Challenge.” (governor.ny.gov)
Manhattan Nabs Strongest Quarterly Office Leasing Numbers Since 2019 “Manhattan posted its strongest quarterly office leasing volume since year-end 2019 in the third year with a 26% increase to end the quarter at 9.23 million square feet, according to Colliers. Year-to-date leasing volume totaled 24.17 million square feet, a nearly 50% increase over the 16.34 million square feet leased during the same period in 2021 and Colliers expert say that if leasing volume were to continue at the same pace for the remainder of the year, 2022’s full-year leasing volume would surpass 2021’s full-year total (24.96 million square feet) by 29.1%. Net absorption clocked in at a positive 4.13 million square feet.” (GlobeSt.com)
Falling Construction Wages Send Mixed Signals “If you didn’t notice: Construction wages in some CRE sectors are falling, sending mixed signals. Nick Grandy, construction and real estate senior analyst with RSM US LLP, tells GlobeSt.com, ‘We are at an inflection point in the construction labor market as the market is beginning to soften with the continued challenges from inflation and expectations for a recession.’ In July, residential construction wages dropped to $29.13 from $29.41 in June, while non-residential construction wages were flat for the month at $34.87 and specialty trades saw wages grow to $32.14 from $32.” (GlobeSt.com)
Feud Between Owner and Operator Keeps NYC’s Four Seasons Hotel Shuttered “More than two years after the start of the pandemic, the Midtown outpost of the Four Seasons Hotel is still shut, and it may not reopen any time soon. The owner of the luxury hotel, located at 57 East 57th St., is in a standoff with hotel management over operating costs and profitability, the New York Post reported.” (Bisnow)