A report from Bisnow New York. “The coronavirus pandemic brought New York City’s office market to a screeching halt. Adding to landlord concerns is the seemingly constant new supply of space. ‘If they [refinanced] recently, this is the problem,’ added Helen Hwang, senior executive managing director at Meridian Investment Sales.”
“New York still lags behind the average occupancy of the top 10 metro areas, at 35% last week — only San Francisco and San Jose are seeing fewer office workers in their buildings. ‘B-minus, maybe C-plus [buildings], mid-block, Garment Center, frankly, I don’t see any life for those. I don’t see any use for those,’ said Savanna founder Chris Schlank.”
From WCPO on Ohio. “Blue Tide Partners, a residential real estate company partly owned by former Cincinnati Bengals placekicker Doug Pelfrey, is drowning in red ink after losing a $39.9 million foreclosure judgment in Hamilton County Common Pleas Court earlier this month. The ruling puts more than 500 apartment units in Hamilton County under duress and makes it harder for Pelfrey to achieve the real estate goals he articulated in 2019. ‘I’m not in this to be a landlord,’ Pelfrey said at the time. ‘I’m in this to change people’s lives.’”
The Business Observer on Florida. “A Texas private equity firm has bought two local assisted living facilities in deals totaling more than $50 million. According to property records, Dallas-based Lone Star Funds bought Discovery Commons Cypress Point in Fort Myers for $32.3 million and Discovery Commons South Biscayne in North Port for $19.2 million.”
“Lone Star bought Discovery Commons South Biscayne after the property was foreclosed on and sold back to its debtor, Preston Holloway Capital, Jan. 14. According to Sarasota County court documents, $27.8 million was owed at the time of the sale. As for Discovery Commons Cypress Point, Lee County records show that Preston Holloway Capital bought the property Dec. 2. According to court records, $29.3 million was owed at the time.”
The Associated Press on Vermont. “After attempts to sell the Jay Peak ski area were halted at the start of the pandemic, sale discussions have been taking place with several parties this year, according to a update from the receiver appointed after the former owner was accused of fraud in 2016. Former Jay Peak owner Ariel Quiros of Miami, and former president William Stenger were accused by the Securities and Exchange Commission of misusing more than $200 million of about $400 million raised from foreign investors for area developments in ‘Ponzi-like fashion.’”
“Quiros and Stenger settled with the SEC, with Quiros surrendering more than $80 million in assets, including Jay Peak and Burke ski resorts. They were indicted criminally in 2019 along with two others over a failed plan to build a biotechnology plant using millions raised through the EB-5 visa program. The program encourages foreigners to invest in U.S. projects that create jobs in exchange for a chance to earn permanent U.S. residency.”
From Bisnow Washington DC. “The D.C. office market continues to lose occupancy and hit new vacancy records. Over the past 12 months, the Class-A segment in D.C. experienced negative absorption of 460K SF, while the Class-B segment experienced 1.5M SF of negative absorption, according to Newmark. Class-B vacancy now represents more than one-third of the District’s total vacant space, according to Newmark, compared to less than a quarter of the city’s vacancy in 2016.”
“‘I don’t know how C buildings are surviving, and B is kind of pushing it,’ said Lucia Hedke, a tenant representative. ‘Tenants are willing to pay for a great quality, safe environment. The reality is they don’t need as much space, so their annual costs are going to maintain, but they’re getting much higher quality. For B and C, it’s almost insulting that the product is there, and that someone is pushing it on someone like me, because I feel obligated to steer my clients away from a product that is not of a certain quality.’”
The San Francisco Chronicle in California. “The San Francisco Board of Supervisors on Tuesday unanimously rejected a group home development that would have added 316 micro-units in the heart of the Tenderloin. The project at 450 O’Farrell St. would have allowed property owner Fifth Church of Christ, Scientist to knock down an existing structure and replace it with a 13-story group housing complex. Supervisor Aaron Peskin said the project would have added to ‘a glut of group housing in the Tenderloin and Mid-Market areas, including those with a very high rate of turnover.’”
From Bisnow Los Angeles in California. “There is still a lot of uncertainty in the market for established and in-progress projects, whether from shortages of materials or workers, or the stretched timeline for needed approvals and permits due to city workers being remote, or the still unanswered question of whether workers will return to Downtown, executives speaking said.”
“‘We’re very fortunate that we’re a family business and we don’t have a lot of outside money that wants quarterly returns,’ Karney Properties CEO Aliza Karney Guren said. ‘But if you do want quarterly returns, God help you.’”
A press release on Canada. “Despite strengthening condominium sales, an oversupply of inventory relative to demand kept prices in check; in August, Calgary saw 332 condominium sales and 1,786 units of inventory – equating to roughly five months’ worth –and the healthiest amount of inventory across all housing types in the market.”
From Yahoo Finance. “Australian home buyers and investors have been warned to avoid certain suburbs in Australia, particularly in Sydney and Melbourne, which are at high risk of being oversupplied with thousands of new units flooding the market in those areas. Some locations are facing a major glut of newly developed units in the pipeline over the next 24 months – yet will likely remain vacant for a long while amid closed borders which have drastically reduced demand, according to data from Buyers Buyers.”
“‘Unit supply is a factor landlords need to be wary of,’ said Buyers Buyers CEO Doron Peleg. ‘Investors should be cautious about the risk of rental vacancies and capital loss, particularly investors who consider new or off-the-plan purchases.’”
“The number of units in NSW’s Schofields will more than double in two years’ time, with more than 3,000 units in development over the next 24 months. Rouse Hill in Sydney’s north-west is due for an 88 per cent increase in the volume of units in the area, with 1,274 units being developed. Meanwhile, the number of units in Western Australia’s Subiaco will increase by nearly half (46.4 per cent).”
From ABC News. “Evergrande’s meltdown is partly due to a cooling off in demand for new projects in smaller cities. There are 90 million apartments across China sitting vacant, according to Rhodium Group. Whether that number is accurate, there has been an extraordinary amount of construction, even for a country of China’s scale. On fast train journeys across the countryside, it’s common to see agricultural fields suddenly give way to 10 new apartment blocks, seemingly in the middle of nowhere.”
“The average price for a one-bedroom apartment in Shanghai is nudging towards $1 million. And the job magnet metropolis of Shenzhen is no bargain either, at about $700,000 for a flat.”
From Business Insider. “Once, Hu Haoqi’s dreamed about moving out of the two-bedroom apartment he shares with two of his friends and into an apartment of his own. He doesn’t want that anymore.Ever since news of Evergrande defaulting on its debts broke last month, Hu, 32, who works in Guangzhou, has spent a lot of free time ‘doom scrolling’ through housing-related threads.”
“‘It is extremely scary to read stories of people my age who put down deposits for Evergrande apartments, thinking they’d be able to move into a home of their own in five or six years,’ Hu told Insider. What scares Hu most are videos that feature abandoned ‘ghost cities’ and unfinished buildings. ‘I’ve seen accounts of people who dumped their savings over the last decade and a half into those deposits, and now they don’t know if the apartment building’s ever going to be fully built,’ Hu said. ‘I don’t want that to happen to me, so for now, I’m just going to keep renting and saving up.’”
“Zhuang Jingrui, 33, who works in a fashion company in Beijing, told Insider that she was planning to buy into a high-risk, high-return wealth management product from one of her college classmates. But she was ‘put off’ and got nervous about investing in anything at all after seeing videos of desperate Evergrande Wealth investors being left high and dry. ‘My college roommate was telling me that I could earn enough from my investments to buy a car in just two years if I just invested the savings I earned within the last year. Now, I’m starting to think that this all seems like a scam,’ Zhuang told Insider.”