A report from Boston.com in Massachusetts. “International buyers, a key ingredient in new downtown condo projects, have pulled back in the past few years. The pullback is a departure from real estate anecdotes in recent years across the country of international buyers gobbling up condos well ahead of a project’s completion. The average condo sales price during the second quarter of 2020 in the Seaport was a hefty $1.8 million — which was actually down more than 31 percent from the same time in 2019, according to Warren Residential.”
“‘At some point, the investment doesn’t make sense on a return [to an international buyer],’ said Sue Hawkes, managing director at the Collaborative Cos.
From DS News. “A group of landlords in Massachusetts is fighting at both the state and federal level to have an eviction and foreclosure ban lifted. Richard Vetstein, an attorney, represents one property owner and landlord who also is a nurse. Her tenants, as she launched the lawsuit, owed her some $20,000 in back rent, Vetstein told the Boston Herald. ‘She’s a blue-collar nurse, and is in serious financial difficulty because of this,’ Vetstein said. ‘When a tenant can’t pay, that burden flows down to the landlords.’”
From CNBC. “Nearly a third of renters who live in single-family or small multifamily properties owned by individual landlords were unable to pay their August rent, according to a survey by Avail. ‘Our data show that 42% of renters and 35% of landlords are digging into their emergency funds and savings to cover everyday expenses,’ said Ryan Coon, CEO of Avail. He noted that close to half of small landlords said they have offered to defer or forgive rent entirely.”
From Seattle PI in Washington. “Let’s talk about the elephant in the room in Seattle real estate. The market in general is on fire, but the condo market is lagging. Condos in Downtown Seattle have more than doubled in just 4 months. Indicating a flight to the suburbs and less absorption of units in the Downtown Seattle core. Sales have slowed and the impact of people fleeing Downtown should continue. The pending and closed sales are not exceeding the number of new listings. This isn’t terrible, but it indicates a buyers market. It also doesn’t look too bad when you compare it to New York.”
From Mansion Global on New York. “Donna Olshan, president of Olshan Realty and author of the report, points out that since the beginning of March contracts included in her weekly report averaged a 14% price reduction from their original asking price to their final listing price, and spent on average 633 days on the market. The second-most expensive home to find a buyer last week was a five-bedroom condominium in Tribeca, which was last asking for $12.4 million, a significant reduction from its original asking price in 2015, when it was listed off floor plans with an $18.9 million price tag. Jason Walker, a Douglas Elliman agent who represented the buyer, said his client did not pay the asking price, but got ‘a fair deal.’”
From Curbed on New York. “The wealthiest neighborhoods in Manhattan are emptying out. While median rents in Manhattan dropped 7.6 percent, and median rents in Queens — home to a large population of the city’s lower-income residents — dropped a whopping 14.2 percent. There are hints that Brooklyn is starting to soften. Rents in the borough have started to trend downward across the board, with some neighborhoods — like Sunset Park and Red Hook — seeing July median rents drop by 20 percent or more year-over-year.”
“There’s also a glut of available rentals in Brooklyn. According to the appraisal firm Miller Samuel, listing inventory in July was up a whopping 84.2 percent year-over-year, while the number of new leases was down 24.2 percent. This clearly shows that demand is not keeping up with supply.”
From Multi-Housing News on Florida. “Miami’s condo market is taking a beating from a glut of inventory and a struggling South Florida economy, but one pair of developers are finding success with a new luxury residential tower in the Coconut Grove neighborhood. Terra and The Related Group say they have sold more than $245 million worth of condos at the 66-unit waterfront property, One Park Grove, with more than 80 percent of contracts having already closed in the last 60 days. Year-over-year in July, inventory jumped 6.8 percent to 14.2 months, indicating a buyer’s market.”
The Aspen Times in Colorado. “A nonprofit organization is trying to establish a special fund to prevent an anticipated surge in evictions of renters from Aspen to Parachute this fall. The unemployment rate was 16% in Pitkin County in June compared with only 3.2% in June 2019. The Colorado Workforce Center has estimated that ’42 percent of lost jobs in Pitkin County are not coming back.’”
The Aspen Daily News in Colorado. “The city of Aspen is allowing more flexible lease terms for its Marolt Ranch housing complex this winter. Just one week out from the September move-in date, City Manager Sara Ott said occupancy at Marolt Ranch is just above 30%. Councilmember Ward Hauenstein echoed his colleagues, saying it would be a shame for the apartments to sit empty this winter. ‘(With) the high demand for housing in the upper end of the valley we really need to make every effort we can to make those occupied,’ Hauenstein said. ‘It would really be a loss to have those sit vacant.’”
From CBS Bay Area in California. “On the steps of San Francisco City Hall, small business owners, particularly those who run gyms and hair salons came out to protest the current COVID-19 restrictions, saying they need to open up now to have a chance at survival. ‘We haven’t had any business, we’ve had about a 80 percent loss,’ said Michael Jigalin owner of Jigalin Fitness.”
“Around the city, it’s hard to miss the ‘For Lease’ signs and plywood on windows. According to the San Francisco Chamber of Commerce, 1300 small businesses are not in operation right now. ‘Before the pandemic, we were really about a 7 percent commercial vacancy rate, a 7 percent storefront vacancy rate in San Francisco – that 7 percent has skyrocketed to over 50 percent,’ says Jay Cheng, public policy director for the Chamber.”
From Bisnow on California. “A polarized San Jose City Council last Tuesday voted 7-4 to eliminate affordable-housing fees for downtown residential high-rises. Developers like KT Urban say the city’s fees paired with Bay Area construction costs have made many high-rises close to impossible to pencil. ‘San Jose’s rents never generated the returns necessary to attract the institutional capital that is crucial to build at scale,’ KT Urban partner Shawn Milligan said.”
From Yield Pro on California. “The apartment vacancy rate in San Francisco rose to 6.2 percent in May, according to RealPage. That’s up from 3.9 percent only three months ago. San Francisco’s median rent in May for a one-bedroom apartment was also down 9.2 percent compared with a year ago at $3,360 a month, according to Zumper. Several large, high-paying companies, including Yelp Inc., and Lyft Inc., have begun laying off workers in the city.”
“LendingClub reported to the California Employment Development Department earlier this month that it was permanently laying off 306 San Francisco employees. San Francisco-based startup Stitch Fix Inc., meanwhile, is looking to save costs by hiring or relocating staff to cheaper cities outside of California like Pittsburgh and Cleveland.”
From Socket Site in California. “The former San Francisco home and studio space of the late Howard Hack has sat (mostly) vacant for over a decade. The sale of the deteriorating Laurel Height building at 54-56 Cook Street closed escrow with a contract price of $1.455 million in August of 2016. And this past Friday, 54-56 Cook Street returned to the market without any approved plans or permits to commence said work, and a list price of $1.399 million.”
From KDHL Radio in Minnesota. “It looks like that’s a wrap, folks. St. Cloud’s famous Poseidon House finally has an accepted offer and is listed under ‘pending’ on Zillow. The home is notable for having a giant Poseidon statue in the front yard. We’ve been following this home sale closely as it’s been on the market since 2017. The house, located at 32208 County Road 1, was originally listed for $1.2 million. Since then, we’ve seen several price drops, including the most recent decrease on June 20 to $539,900. If you’re bad at math, that’s a nearly a 55% price drop. What a deal, right?!”
The Wall Street Journal on New Jersey. “This summer’s markets rally hasn’t helped banks and investors who lent about $2.7 billion to build the country’s second-largest mall, near the Meadowlands Sports Complex in New Jersey. The American Dream Mall has been shut since March, and mutual funds that bought municipal bonds backing its construction have since taken hundreds of millions of dollars in paper losses. ‘I think the situation for payment on the bonds has gotten more tenuous,’ said Lisa Washburn, managing director at bond research firm Municipal Market Analytics.”
From Bloomberg. “Some of the largest real estate investors are walking away from debt on bad property deals, even as they raise billions of dollars for new opportunities borne of the pandemic. The willingness of Brookfield Property Partners LP, Starwood Capital Group, Colony Capital Inc. and Blackstone Group Inc. to skip payments on commercial mortgage-backed securities backed by hotels and malls illustrates how the economic fallout from the coronavirus has devalued some real estate while also creating new targets for these cash-loaded investors.”
“The mass exodus of Americans from public spaces has hammered already-weak retailers and their landlords, crippled business travel, crushed restaurants unable to fill all of their tables, and sown chaos for office towers whose tenants may never need as much space again.”
“Missing payments on CMBS debt is relatively painless, because it’s typically non-recourse, meaning borrowers can hand over the keys to a property and lenders won’t be able to come after other assets. Property owners are more likely to walk away when their equity has been wiped out by lower values.”
“‘They know that if they borrow from most lenders, they win if they win and they win if they lose,’ said Ethan Penner, an investor who pioneered CMBS deals in the 1990s at Nomura Securities.”
The Wall Street Journal. “Retail landlords are including pandemic language in new leases, a previously rare feature as tenants seek protection after the first government-mandated coronavirus shutdowns in March complicated their negotiations for rent relief. Because many insurance policies didn’t cover pandemic-related losses, landlords have offered various concessions to attract and retain tenants, including allowing them to defer part of their rent if another shutdown is ordered. Both sides get breathing room: Tenants are able to lower expenses while landlords are still able to collect some money for overhead and their mortgage.”
“Real-estate brokers said landlords have to contend with a glut of stores and social-distancing measures that have forced many retailers to shrink the number of stores. ‘We are seeing rents 25% cheaper than pre-Covid 19,’ said Corey Bialow, chief executive at Bialow Real Estate LLC, a firm that represents retail tenants. ‘Some landlords may not make a profit for six to seven years.’”