| Here's a look at today's Real Estate briefing. - Apartments completions in 2023 reached a 36-year high in 2023.
- Leasing activity in LA declines by 28% QoQ.
- Bank CRE loan originations fall by $2.2B in Q3 2023.
Thank you. Sudarshan
p/sudarshan | |
| 1 | | As per a recent RealPage report, apartment supply in the U.S. reached a 36-year high last year. 
What the data says: A record 440,000 apartment units were completed in 2023, and 671,000 units are set to be added this year. However, completions are expected to drop in the upcoming years because of a slowdown in construction starts. In the fourth quarter of this year, net absorption stood at 58,200 units, making it the third-strongest 4th quarter in 25 years. However, the net absorption for last year was just one-third of an all-time high set in 2021. Following the record addition of new units, apartment occupancy was at 94.1%, dropping by 80 basis points YoY, and rent grew at a slow pace of 0.3%. Relevance: The report raised the question of whether rent growth will continue to remain flat this year, with apartment completions expected to surpass 2023 figures. RealPage predicted supply to exceed demand in 2024, adding to the list of challenges apartment investors face under current economic conditions. |     | |
| 2 | | A Savills report revealed that, in Q4, leasing activity in Los Angeles plunged by 28% QoQ. Leasing activity in the past quarter was nearly 2.2 million sq. ft., down from 3 million in Q3, and the total leasing activity for 2023 stood at 10.5 million sq. ft., declining by 15% YoY. More: - In 2023, LA's office space availability grew to 26.7%, and downtown's availability rate increased to 29.7%.
- Meanwhile, the availability rates in Glendale, Culver City, El Segundo, and Miracle Mile surpassed 30%.
- The overall asking rent was up by 2.1% YoY to reach $3.93 per sq. ft. per month, with Century City being the most expensive submarket at $6.83 per sq. ft. per month.
- Savills expects leasing activity to improve this year with Hollywood strikes coming to an end.
| | | |
| 3 | | In the RCLCO's Sentiment Survey, respondents predicted the Real Estate Market Sentiment Index (RMI) would increase between 29.7 and 45.17 points in the next 12 months. RCLCO prepared the report based on responses to a survey from experienced real estate professionals, developers, and builders across the U.S. More: - 29% of respondents believe the U.S. is less likely to enter into recession in the next two years. However, nearly a quarter (23%) believe we are currently in a recession, and 37% anticipate one in the next year.
- Respondents indicated that the for-sale housing market has entered a downturn due to a lack of demand amid record-high interest rates but expect a recovery in the next 12 months as rates drop.
- Respondents predicted most other real estate sectors to be in some stage of downturn, apart from nice sectors like self-storage, industrial, and lifestyle.
- Among all asset classes, office asset types are expected to see the largest overall value decline of 16.6%.
| | | |
| 4 | | According to Trepp, commercial mortgage origination volumes for bank-held CRE loans declined by $2.2B in Q3 of 2023. CRE loan originations across property sectors declined from $4.7B in Q2 to $2.5B. More: - Among all asset classes, the office sector saw the least origination volume compared to the pre-pandemic 2019 quarterly average.
- Trepp added that the mortgage underwriting terms for new originations exhibited increased weakness in contrast to previous quarters.
- Bank loan performance indicated heightened distress in net charge-offs, delinquency, and occupancy rates, primarily in the office sector.
- CRE mortgage delinquencies experienced a steeper increase in Q3, reaching a delinquency rate of 1.5%, increasing from 1.2% in the previous quarter.
| | | |
| 5 | | TailoredSpace is planning to open eight new locations in Southern California this year. The coworking solutions provider intends to capitalize on the increasing demand for alternative workspace in the region. More: - The next locations on the company's list for expansion include Laguna Niguel in Orange County and Santa Clarita in northwestern Los Angeles County.
- The company's co-founder, Drew Sanden, said it is exploring several suburban locations across California.
- TailoredSpace differs from WeWork by entering into service contracts instead of traditional leases.
- Along with its sister company SimplerSpace, TailoredSpace currently operates ten locations, including Carlsbad, Placenta, and San Juan Capistrano, which were added this year.
| | | |
| 6 | | The SEC has filed a lawsuit against Rishi Kapoor for allegedly defrauding investors and misappropriating funds. The Miami-based developer has been under scrutiny for his relationship with Mayor Francis Suarez. More: - The SEC accused Kapoor of improperly funneling funds between projects, providing false budgets, and embezzling funds.
- A district judge granted permission to freeze Kapoor's assets to prevent him from dissipating, concealing, or transferring them from the court's jurisdiction.
- He has two weeks to provide a sworn accounting of his assets, including all his bank accounts and his home in Coral Gables.
| | | |
| 7 | | Quick Hits: - Need to close more deals, faster? See 6 tips on how Calendly helps sales & marketing teams automate the meeting lifecycle and grow revenue. Read the blog.*
- In a regulatory filing, Smith Douglas Homes said it is seeking $1.08B in valuation through its U.S. IPO offering.
- CBRE Group acquired the full ownership of CBRE Raleigh, which previously functioned as a joint venture between CBRE and an independent entity owned by Raleigh and Triad-based partners.
- According to Cushman & Wakefield, the vacancy rate of logistics storage spaces in Shangai increased from 9.8% in Q3 to 15% in Q4.
*This is sponsored content. | | | |
| Upcoming Events | | JAN
30 | | Join TruEra for an expert discussion about the impact of the EU AI Act on US and Canadian firms | | | | | | * This is a sponsored event | | | |
 | Analyst | | Sudarshan lives in Toronto, Canada, and is an engineering graduate. He is passionate about business, tech, entrepreneurship, and politics. FUN FACT: Sudarshan worked for the election campaign teams of two heads of state in India. When he is not busy with work, he enjoys hiking, playing cricket, and cooking. | | This newsletter was edited by Vibha Chapparike | |
| |
| |
Comments
Post a Comment