A report from ABC 7 News in California. “San Francisco had the biggest drop for a one bedroom apartment in the entire country. Rents are down 23 percent. Oakland is down 19 percent and 15 percent in San Jose. Jenny Zhao owns a few condos in the South Bay. She her husband lost his job due to the pandemic. With renters behind on payments, she says her family is suffering. ‘We have to pay mortgage, we have maintain, do repairs for the buildings. So, how do we survive?’ says Zhao.”
The Real Deal on New York. “Johanna Trujillo invested $20,000 in what seemed like a sure thing — a piece of Manhattan real estate. She and her mother bought into a co-working development with meditation rooms and views of Park Avenue South. That was the draw of Prodigy Network: It allowed regular people to make real estate investments that were usually accessible only to the rich and well connected.”
“Instead, she has found herself part of an unfortunate club, a network of people all over the world who collectively invested an estimated $690 million in a company that no longer seems to exist. Where has their money gone? Investors say they don’t know. And many, like Trujillo, doubt they’ll see any of it again. ‘I wish I could say it was a surprise,’ said Ian Ippolito, an investor who writes about the real estate crowdfunding industry. ‘The things they said just never made sense. They never added up.’”
The Commercial Property Executive. “Paramount Group has completed the sale of 1899 Pennsylvania Avenue in Washington, D.C., a 190,955-square-foot Class A office property, for $103 million. The transaction, which marks Paramount’s exit from the D.C. market, brought a $12 million discount from the previously announced price, first reported in early March. According to Paramount, the price reduction was spurred by the ongoing COVID-19 pandemic. The property last traded in 2010, when the current seller acquired it for $151.1 million.”
From KTRH in Texas. “Many area companies are finding out they work just fine – and cheaper – having much of its staff work remotely. They need so much less office space. Houston area Real Estate expert Michael Weaster says all you have to do is spot the for-lease signs. ‘Driving around Houston – I see more and more ‘For Lease’ signs every day. I see signs in areas that I had never seen signs before.’”
“Once the champion of the real estate world, the quarantining and lock-down reaction to the Covid-19 pandemic has made commercial real estate something only for bargain hunters. Weaster says there are now totally empty buildings in Houston and it’s spreading. ‘I have seen so many vacant buildings in Pasadena. I never seen much vacancies in Pasadena before.’”
The Wall Street Journal. “Office landlords may soon be competing with their own tenants as companies sublet space they no longer need. Rents typically begin to fall when this secondhand supply reaches 30% of total office vacancy, according to Green Street. Sublet offices are offered at a discount, pressuring landlords to slash rents in the primary market. Subleasing activity is already at this 30% threshold in San Francisco, numbers cited by Green Street show, while tenant-controlled space on offer in Austin, Texas, and Seattle is more than double the rate both cities recorded at the peak of the global financial crisis. So-called grey space is approaching one-fifth of vacant supply in Manhattan.”
From Senior Housing News. “The pandemic broke the senior living mold. Expect the initial period of recovery to give way to more pain, starting in the latter stages of 2021. That’s because weaker providers will be temporarily propped up as the economy restarts and move-ins tick up, but businesses that lacked the operational chops or the capital to keep improving and innovating in the midst of their Covid-19 response will soon start to struggle again.”
“Owners understandably can’t give unlimited latitude to operators. Even with a vaccine in hand, operators have a long and hard road ahead of them, especially if pent-up demand is weak. They already are in price wars in some markets, as some communities resort to discounting to drive occupancy — at the expense of net operating income.”
From CTV News in Canada. “CTVNews.ca chatted with real estate agents and experts in Vancouver, Calgary, Toronto and Montreal. All the experts agreed that small one-bedroom condos in downtown cores have already seen a price hit in 2020, and these prices aren’t expected to quickly rebound in early 2021. That’s bad news for condo owners looking to sell. As for a price collapse, Vancouver agent Mark Wien agrees that 2021 isn’t the year, pointing to the high demand. ‘A bubble burst is not imminent. It’s just not going to happen. It’s really not.’”
“The reason Calgary is facing challenges has a lot to do with the oil industry, said Calgary-based agent Justin Havre. ‘We experienced a bit of a double whammy because we’re very reliant on the energy sector here in Calgary, and we’ve been in a downturn since 2014, 2015 when oil prices collapsed. And so when they collapsed again, we were like, ‘Come on.’”
“The biggest drop in prices has been seen in the downtown condo market and luxury real estate over $1 million, Havre said. In one case, a house that sold for $11 million a few years ago sold in 2020 for $6 million — a staggering drop that Havre said suggests luxury buyers are simply not interested in making a move. Looking ahead, he expects 2021 will be another tough for Calgary, with more struggling homeowners facing foreclosure in the first half of the year.”
“‘The writing is on the wall with 21 per cent of mortgages being deferred. Many of those people deferred them because of loss of jobs,’ he said. ‘If they haven’t been able to find employment, and then they haven’t been able to sell their property, foreclosure may be the unfortunate circumstance for some people.’”
The Sydney Morning Herald in Australia. “The small red car was illegally parked. A handwritten note read, ‘No power when we got home. No parks outside. Call Adrian…’ That was from the night before, when it all began. Since early evening I’d had no hot water. Now, at 10am, I was locked out myself, barefoot, unwashed, on the street, in a thunderstorm, staring at the kerbside evidence of collective frustration.”
“Not because I’d forgotten my keys, but because I’d taken the recycling down without knowing that a power cut to the building’s common areas meant the lift would take you to ground, but not back up. I thought about getting the brolly from the car, but the basement was five floors of total darkness. As to getting back home, there was no other lift and the fire escape door, I’d learned during last week’s sofa failure, didn’t open from within. In a flash, I knew myself to be trapped in a ruthless system.”
“I suddenly recalled Philip Kerr’s 1995 novel, Gridiron, where an ultra-high-tech shopping mall goes mad and, by controlling light, air and access, tries to kill its human inhabitants. First it locks them in; no opening doors, carpark exit, escape stairs. Then it sets about making life uncomfortable, intolerable and, finally, impossible. I’d always thought it science fiction – until I moved into a typical example of Sydney Investor Grade Product. You think I exaggerate? Bear with.”
“I thought I was renting from a common-or-garden agent. In truth, the building is managed by a development company that flogs off-the-plan units, promising a negatively gearable net loss of $10,500 per annum for a unit worth $650,000. There are thousands of these across Sydney, tens of thousands. They promise the investor transparency, certainty and choice. But what the tenants receive is none of those.”
“And although there’s no reason for you to worry over my plight, multiply it by half a million and you’ll see we are attacking the very essence of Sydney, its sensual delight. Replace delight with slums and people will vote with their feet. Perhaps, indeed, it’s already begun.”