A report from Boston Real Estate Times in Massachusetts. “The 2019 Greater Boston condominium market stabilized from what has been a five-year run of price escalation, absorption and diminished supply, according to a report from the Collaborative Companies. The current oversupply at the high-end of the market has resulted in a change from a seller’s market to one benefiting the consumer. ‘With many more units scheduled to come onto the market with price points in excess of $2 million, competition at the high end will continue to be fierce,’ the report said. ‘The highest successes will be for those developers who are strategic and creative, understand the depth of the consumer capabilities and are aggressive with opportunities. It’s a tale of two markets – highest price versus highest volume, and it’s unlikely both will succeed simultaneously.’”
The Phoenix New Times in Arizona. “The guy I’m there to meet, a writer named Joey Robert Parks, moved in last July, after which he began emailing me a laundry list of tenant troubles: electrical failures in multiple units, dead air conditioners, brown tap water, leaky water lines. Soon, I was hearing from other tenants, all of whom were enraged by the building’s lack of security, which led to squatters in empty apartments, and by the lousy communication from Avenue5 Residential, the Seattle-based property management firm that runs the place. And especially by a recent decision to turn two floors of the building into a rent-by-night Airbnb free of tenant background checks, which has brought a new transient element to the building.”
“The Stewart, which opened last spring, has problems. And while busted AC units and brown tap water from a broken water heater might be expected from a just-built high-rise, there are prevailing conditions that have residents convinced they got rooked, that they’re trapped in what one former Stewart employee likened to ‘one of those 1970s disaster movies, where everyone is pretty and the building is even prettier, but bad things keep happening and no one feels safe.’”
“Angry to find the main entrance U-locked one November morning, a homeless person demolished the glass door by throwing a rock through it. That’s around the time, Parks figures, that things went from bad to worse. Unit rentals have been so abysmal — during a Valley-wide housing shortage, less than half of The Stewart is currently occupied — its management is now renting out the 13th floor and part of the fourth to Sonder.com, a high-end Airbnb-type company. Although residents of The Stewart are not allowed to sublet their apartments, Avenue5 has turned a big chunk of the building into a glamorous hotel.”
“‘And they’re doing this without any background checks,’ says Parks, as we step off the elevator and head toward the rooftop pool. He’s watched a parade of Stewart employees quit these past several weeks. Last month, a stranger on the elevator offered to sell him drugs. He’s been collecting reports from neighbors about their encounters with drunk, belligerent Sonder guests, and found empty pizza boxes and dirty clothing left behind by squatters who ‘borrowed’ empty units on several floors.”
From The Real Deal on New York. “Madison Equities and Gemdale Properties’ supertall condo at 45 Broad Street will be delivered shorter and later than expected, The Real Deal has learned. A spokesperson for the developer confirmed that the condominium project is being put on hold due to ‘market conditions.’ It’s not clear when the development team will revive the project.”
“Sales in FiDi sank almost 45 percent quarter over quarter at the end of 2019, according to a market report from Platinum Properties. There were 26 deals in the final quarter, the report showed, compared to 47 the previous quarter and 32 in the same period one year ago. The wider Manhattan market is also grappling with an oversupply of luxury inventory that could take more than six years to sell.”
“Confirmation of the delay at the 45 Broad Street follows years without a clear timeline for completion. In 2015, Robert Gladststone’s Madison Equities acquired the site for $86 million, securing a $55 million mortgage from Mack Real Estate, according to public records. In 2016, Gemdale — one of China’s largest developers — paid $69.9 million for an 81.3 percent stake.”
From NBC Bay Area in California. “San Jose had the smallest rent increase in the Bay. As new construction went up, so did the number of people who decided things got too expensive and moved out. Prices haven’t gone down, but rental prices are allowing down after years of going up an average of 10% each year. ‘The biggest contributor is that there’s a lot of inventory hitting the market right now,’ said Matt Dinapoli, real estate professor at Santa Clara University.”
“Dinapoli said more housing built means cheaper housing. Another factor is that more people are leaving the Bay Area. ‘You have people leaving San Jose, often going to other areas, trying to find housing that’s more within their affordability,’ said Dinapoli.”
“Though prices are slowing, experts say not to expect big drops any time soon.”
From Globe St. on California. “‘Year-over-year rent growth in L.A. is currently 0.4%, trailing the national average of 1.4% and representing a notable cool down in rent growth compared to recent years,’ Christopher Salviati, housing economist at Apartment List, tells GlobeSt.com. ‘This cool down is likely attributable in large part to new construction. The number of new multi-family housing units permitted in the L.A. metro surpassed its pre-recession peak in 2015, and despite slowing down a bit since then, it has maintained a robust pace. As these units hit the market, the new supply helps to ease constraints on a tight housing market.’”
The Sun Sentinel in Florida. “RentCafe says some areas saw relief: When it took a look at 37 cities across South Florida, 23 of them posted lower prices than the national average of $1,474. The rise of rent prices ‘has been slowing down in South Florida ever since the peak of December 2014,’ says Irina Lupa, an analyst for RentCafe. One reason the rate of South Florida rent increases may have slowed is that nearly 11,000 apartments were built last year, Lupa said.”
“Ken Johnson, a real estate economist at Florida Atlantic University, said it’s possible that more apartments opened for business ‘than perhaps we have been led to believe.’ Another factor, he said, is that potential tenants can only pay so much before the apartment becomes too expensive for them.”
The Wall Street Journal. “New warehouse construction across North America is expected to outstrip demand over this year and next, according to a new report that suggests a yearslong boom in industrial space fed by e-commerce growth may be shifting in favor of tenants. Developers are expected to deliver about 301 million square feet of new warehouse space in the U.S., Canada and Mexico this year, while tenants will lease about 242 million square feet, according to a new report from Cushman & Wakefield PLC.”
“The real-estate firm projects builders will deliver another 272 million square feet in 2021, outpacing projected demand of 218 million square feet. Cushman & Wakefield said in its report that builders added more space in North America in 2019 than tenants could take on, the first time since 2009 that has happened.”
“‘Overbuilding is definitely something we need to keep an eye on,’ said Carolyn Salzer, the head of logistics and industrial research for the Americas at Cushman & Wakefield.”
The Arkansas Democrat-Gazette. “Three major Little Rock shopping centers have fallen steeply in value in the past decade. The troubled retail centers range from Park Plaza, a fixture in what now is the midtown section of the state’s largest city and Little Rock’s only enclosed mall, to the newer and more posh Promenade at Chenal, a 340,000-square-foot open-air lifestyle center in west Little Rock.”
“Both have plans to reverse their fortunes, which include increasing the mix of restaurants and other entertainment options to reflect a shift in consumer preferences and, in the case of the Promenade, at least, an injection of capital. Park Plaza’s difficulties stem from declining sales and rents, according to a recent Morningstar report. As a result, its owner may have trouble making payments on a $78.6 million commercial mortgage-backed security loan, the report said.”
“‘Sales in 2018 were $319 per square foot, down sharply from $419 per square foot in 2011, which could hamper the borrower’s efforts to pay off the loan before it matures in April 2021,’ the report said. Meanwhile, the high-end Promenade at Chenal recently changed hands for $10 in cash and other unspecified considerations ‘in lieu of foreclosure,’ according to real estate documents maintained online by the Pulaski County clerk’s office. The Promenade opened in 2008 with a $79 million price tag.”
“A third shopping center, Shackleford Crossings, also in west Little Rock, sold last month for $10.5 million, a quarter of the $42 million price tag when it last sold in 2011. The development at Interstate 430 and South Shackleford Road is anchored by two prominent retailers — a Walmart Supercenter and a JCPenney — but 40% of the remaining 288,745 available square feet for lease is empty, according to Loopnet.com.”
“Retail shopping centers and malls nationwide are facing strengthening headwinds. Last year, U.S. retailers announced plans to shut more than 9,300 locations, according to Coresight Research, a global research firm focusing on retail. The 2019 total is up more than 50% from the 5,844 announced closures in 2018, Coresight said. The previous high was 8,069 announced store closings in 2017. Bankruptcies continued to be a driving force, according to Coresight.”