Home sales increased moderately across most Fed districts, but commercial activity remained at a low level, with reports of mixed or deteriorating conditions — although most tenants reportedly paid rent in June, according to the Federal Reserve's latest Beige Book released July 15. Investment activity was slow to nonexistent across the board.
Commercial and multifamily mortgage bankers are expected to close $248 billion in loans backed by income-producing properties this year, a 59 percent decline from 2019’s record volume of $601 billion, a new Mortgage Bankers Association forecast said.
Total multifamily lending alone, which includes some loans made by small and midsize banks not captured in the overall total, is forecast to fall by 42 percent to $213 billion in 2020 from last year’s record total of $364 billion. MBA anticipates a partial rebound in lending volumes in 2021, with activity rising to $390 billion in commercial/multifamily mortgage bankers originations and $308 billion in total multifamily lending.
Demand for office space is intrinsically linked to the economy; generally in a downturn, office demand drops off as employment levels fall and corporates move into cash preservation mode. The global pandemic has undoubtedly pushed us into a global recession and in the short term this will have a direct impact on office demand. However, in light of the success of wholescale working from home, the question is now being asked – over the longer term, will this be the catalyst for the end of the office?
This is not the straightforward equation it is often portrayed as; increased working from home does not directly equal less demand for office space. There are a myriad of other factors which need to be looked at, including density, financial returns, productivity and technology. Before examining these factors, it is worth taking a step back to look at the function and purpose of the office from both the employer and employee perspective.
By Scott Baltic
National economic upheaval and surging unemployment will push U.S. office market absorption into negative territory through the second quarter of next year. That’s according to the NAIOP Research Foundation’s Office Space Demand Forecast for the second quarter.
By Dean Boerner
As public equities-laden pension funds reel from massive hits leveled by stock market volatility this year, commercial real estate will likely continue growing in importance for institutional investors in the long term, experts say.
The federal banking agencies on April 14 issued an interim final rule to temporarily defer appraisals and evaluations under the agencies' interagency appraisal regulations. Certain appraisals and evaluations for residential and commercial properties are deferred for up to 120 days after closing a loan transaction. The interim rule excludes transactions involving acquisition, development, and construction of real estate.
By Michael Tucker
The real estate impact of coronavirus will likely be limited in the short-term, but it could grow should the virus aggressively spread, analysts said.
By Sebastian Obando
E-commerce and last mile logistics tenants are fueling additional demand for industrial space expansion in the U.S., spurring midsize space users to dominate the industrial market.
The nation’s largest professional association of real estate appraisers vigorously condemned today’s action by the National Credit Union Administration, calling the NCUA’s decision to effectively reduce the number of appraisals required for commercial real estate loans irresponsible, radical and dangerous.
“This is an outlandish scenario for anyone who cares about the safety and soundness of the nation’s commercial real estate lending system, and it could recreate conditions that led to the financial crisis of the late 2000s,” said Appraisal Institute President Stephen S. Wagner, MAI, SRA, AI-GRS. “The NCUA’s ill-conceived, damaging decision shows overwhelmingly the need for immediate, rigorous congressional oversight.”
By Erika Morphy
The general consensus about Opportunity Zones has been that while interest in these areas is intense, there has been little activity. Most of the capital poised to invest in Opportunity Zones, so the theory goes, is waiting on the sidelines until the Treasury Department clarifies more regulations. Indeed, a recent report by Reonomy found that investment levels and prices in Opportunity Zones are actually declining, as investors wait for more clarity.
By Michael Tucker
Despite steadily growing new office supply, robust absorption held the sector's vacancy rate steady at 13.7 percent in April, said Yardi Matrix, Santa Barbara, Calif.
By Michael Tucker
U.S. commercial real estate prices rose 0.8 percent in April, led by industrial property price growth, reported Real Capital Analytics, New York.
By Erika Morphy
A significant shift is underway for the US restaurants and grocery industries and the real estate these operators occupy, according to a new CBRE analysis. These changes include a greater push for convenient, prepared foods, a growing millennial influence, and the emergence of inner-ring suburbs as the industry’s hottest market.
The Small Business Administration issued revised guidance March 26 stating that an appraisal may be needed to evaluate the creditworthiness of commercial real estate loans below $500,000. New legislation that aligned SBA regulations with those from the federal bank regulatory agencies eliminated the appraisal requirement for commercial loans below the half-million-dollar threshold.
By Matt Grossman
A merger between two of the country’s most active debt-advisory shops is set to create the largest commercial real estate debt practice in the country.
By Michael Tucker
Three themes anchor the U.S. commercial real estate investment outlook: U.S. economic performance, cycle maturity and the monetary policy outlook, said Cushman & Wakefield, New York.
By Adam Descanctis
Steady commercial real estate markets, along with equity and debt availability, are expected to keep commercial and multifamily mortgage originations roughly on par with the volumes seen the past two years, according to the Mortgage Bankers Association's 2019 Commercial/Multifamily Real Estate Finance Forecast, released here today at the 2019 Commercial Real Estate Finance/Multifamily Housing Convention & Expo.
By Michael Gerrity
According to JLL's latest research, Flexing Their Muscles: Markets to Watch in 2019, the U.S. office market is poised to take on significantly more office flex space in the coming year.
"The world's top companies recognize there is no one-size-fits-all flexible approach, just like there's no one type of worker," said Doug Sharp, President, JLL Corporate Solutions, Americas. "Flexible space options allow workers and teams to select the right space to perform work each day in a location that will help realize their company's mission and their own ambitions. This is one of the reasons we see so much runway for flex space in U.S. office markets - it addresses several core needs for employers and employees alike."
Flexible space inventory (including coworking space, incubators and other short-term space options) has grown at an annual rate of 23 percent since 2010. In 2018, flexible space accounted for nearly two-thirds of the country's office market occupancy gains. JLL predicts it will comprise approximately a third of the market by 2030, compared to less than 5 percent today.
Mortgage banking and investment sales experts at Berkadia are preparing for interest rate hikes and adopting new technologies this year, according to the firm’s 2019 Outlook Powerhouse Poll. The proprietary poll, conducted in December 2018, collected insights from over 150 Berkadia investment sales brokers and mortgage bankers across 60 offices to assess 2018 commercial real estate activity and opportunities for the year ahead.
Despite four interest rate increases throughout 2018, investment sales brokers and mortgage bankers alike agree that the commercial real estate industry ended the year on a high note—82 percent said that deal volume either met or exceeded their expectations for the year. However, Berkadia’s professionals are keeping a close eye on interest rates in 2019. Eighty-one percent of mortgage bankers and 83 percent of investment sales brokers have it on their radar for the year ahead.
Commercial real estate activity was modest to moderate in most Federal Reserve districts, while residential activity was reported to be mostly flat or declining — although the majority of districts reported increased home prices, according to the Fed Beige Book released Dec. 5.
