A report from Arlington Now in Virginia. “This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based realtor. Question: Did the volume of homes listed for sale recover after a slow spring/summer? Answer: There has been a surge of new inventory coming to market since July. For condos, it has been historically high, by a wide margin. In July, I predicted that a lot of the ‘missing’ inventory from March-June would be listed from July-October, which would result in a delayed spring market. As it turned out, the number of condos listed from July-October FAR exceeded the amount of ‘missing’ inventory from March-June, by nearly 3 times!”
“Just how extreme have the last four months of listing volume been in the condo market? There were 801 condos listed for sale from July-October. Prior to that, the highest four-month listing volume was 650 units from April-July 2004.”
From Bisnow New York City. “Vornado is cutting dozens from its staff and making a host of changes in the C-suite as it embarks on a plan to reduce overhead by $35M each year. Last quarter, the REIT pulled in nearly $53.2M in profit — down from $322.9M in the third quarter of 2019. Vornado wouldn’t have taken a substantial loss in the quarter if not for $591M in quarterly condo sales at its luxury 220 Central Park South condo tower. It has already written down the value of its share of a major portfolio of Fifth Avenue and Times Square retail by $409M this year.”
From Bisnow South Florida. “For some retailers, nabbing the best location means being in Florida. The state has strong demographic trends with nearly 1,000 people per day moving in. Attorney Aleida Martinez Molina is partner and chair of the Insolvency and Creditors’ Rights Practice Group at Weiss Serota Helfman Cole & Bierman, and she deals with retail bankruptcies and related issues. She said Chapter 11 reorganization filings in South Florida were up 70% this October compared to the year prior.”
“‘Bankruptcy is a lagging economic indicator,’ Martinez Molina said. ‘The spring closures and downturn will likely not appear as actual new bankruptcy or reorganization filings until the end of 2020 or, more likely, the first quarter of 2021.’”
“Tony Arellano, managing partner of Miami-based DWNTWN Realty Advisors, likewise predicted more business failings. ‘We will certainly see more retail evictions in 2021,’ he said. ‘This is not over by any stretch. Some of the tenants that barely held on during the pandemic will unfortunately reach a breaking point, leaving landlords without any other option.’”
“Potential sellers and buyers have so far been too far apart on pricing expectations, PEBB Enterprises President and CEO Ian Weiner said. ‘But I do see opportunities coming in early 2021,’ he said. ‘The hands of some sellers will be forced, and the pricing gap will start to narrow.’”
The Wall Street Journal. “Struggling shopping malls are finding an unexpected boost from bargain-hunting retail operators. In October, home-furnishing company Safavieh purchased Town Center mall. Safavieh plans to open a home-design center and relocate its nearby home furnishings store to the mall, said Arash Yaraghi, whose family runs the Port Washington, N.Y.-based company. But, he added, ‘price is always the deciding factor.’ Safavieh paid $20 million for a property that was appraised at $64 million last year, according to a Stamford government website.”
The Boulder Daily Camera in Colorado. “This week, the Boulder City Council will review plans to convert Macy’s into office space. It could have been a straightforward approval. But taking cues from a divided Planning Board, some councilmembers appear to be spoiling for a fight about housing on the site. It’s good politics, of course. But from a step removed, the extra scrutiny looks cynical — like the kind of symbolic gesture that too often covers for inaction elsewhere. Beware of housing theater, which is an art in Boulder.”
“Clearly, Boulder will have to reckon with a glut of retail space in the coming years. And with work from home becoming routine, demand for office space may also decline. We’re losing population, too. So if flogging Macy’s spurs substantive conversations about yes-but-not-actually housing policies, we may still come out ahead.”
From AM 740 in Texas “Office buildings are losing tenants due to the Covid-related work-at-home protocols of many Houston area businesses. ‘The Work-at-Home era has changed commercial real estate,’ says Real Estate expert Michael Weaster. He doesn’t see things changing any time soon because companies are finding success with remote working while saving money on rent. 2021 Houston could look very different. ‘Some of the older-type buildings will be torn down and something else goes into its place.’”
“Weaster believes working next to co-workers will never go away – but rents will be lower than when the growth was coming. ‘I see it all across the board of business types and I don’t think big full office buildings will ever see a comeback now that business managers know that they can direct their employees from home without paying high rent for office spaces.’ This summer, many office building loans fell into delinquency.”
The San Jose Spotlight in California. “San Jose has issued far fewer residential building permits this year — and it could signal a severe economic downturn. ‘It looks like a slowdown is coming,’ said Will Smith, business agent for the IBEW 332 electricians union. ‘We’re potentially heading into a recession.’”
“Smith’s observation is backed up by the latest numbers released by San Jose’s Housing Catalyst team, part of the city’s Economic Development department. According to the city, San Jose has issued 994 building permits for new residential units so far this year, less than half of last year’s. Rich Truempler, a senior vice president at CORE Companies, said the main obstacle to residential building this year is the fact that rents have fallen while the cost of construction remains high. ‘We have not realized any savings in costs,’ Truempler said. ‘That makes projects very tough to finance right now.’”
“Smith said IBEW 332, which represents about 3,700 local electricians, regularly monitors upcoming projects to estimate the likely workload and determine how many new apprentices to hire for the following year. He said all of the union’s larger projects are ending next year, and there are no large projects starting after those are completed. ‘Unless things change,’ Smith said, ‘it looks as though 2021 is going to be the start of the downturn.’”
From KPIX in California. “As COVID cases climb and the exodus from the Bay Area continues, rents are falling with some of the biggest declines in the South Bay. The continued drop since April is due to the departure of remote working techies, creating opportunity for steep discounts near Silicon Valley tech giants. Keller Williams real estate broker Myron Von Raesfeld showed KPIX 5 a newly renovated unit at 1400 White Drive in Santa Clara, just off El Camino Real that became vacant during the pandemic.”
“‘We used to – a place like this we would when it first goes on the market place, we’d have 15, 20 calls in the first day or two,’ said Von Raesfeld. If it were available in the same condition last year at this time, it would have rented for about $2,150 within 2 weeks of hitting the market. It’s been sitting empty for 4 months. The rent now – $1,900 and the first month is free.”
“A new report by Zumper found that in the Bay Area, Mountain View saw the largest decline in rent since this time last year at 23.8%. In San Francisco and Menlo Park rents dropped 22.6% while in Santa Clara they have dropped 20.7%. ‘I do hear my friends who want to actually move out from here, and buy or rent a bigger place,’ said Baljeet Kundo of San Jose.”
The Los Angeles Times in California. “Snowboarder Shaun White has racked up a record 15 X Games gold medals over the course of his career, but his recent Malibu home sale is slightly less historic. The 34-year-old just sold the coastal estate for $8 million — nearly $5 million less than he was originally asking, and $2.75 million shy of the price he paid for the property in 2016.”