A report from Realtor.com on Florida. “After three years of twists, turns, and foreclosure proceedings, Birdman’s mansion was finally sold for $10.85 million. The Cash Money Records co-founder purchased the Miami Beach, Florida, mansion back in 2012 for $14.5 million. Three years ago we reported the music mogul, aka Bryan Williams, had listed the swanky spot for $20 million. He quickly slashed the price to $16.9 million, followed by subsequent discounts over the years. The price was just under $13 million in June of this year.”
“The reason for the rush to sell at a discount: the reported $12 million foreclosure proceedings on this luxury home and a Miami office building that housed his recording studios. According to reports, in 2015, the hip-hop entrepreneur’s holding companies took out a $12 million mortgage on both buildings. In 2017, the mortgage holder filed a complaint, alleging Williams had defaulted on the mortgage and owed $12 million in principal, plus interest. Amid the claims and counterclaims, one thing is certain: After Birdman bought the mansion, he poured millions into customizing the place.”
From Bisnow on Florida. “The Shops at Sunset Place in South Miami will not be redeveloped as planned, its lead developer said in Securities and Exchange Commission filings and on a conference call last week. The long-struggling mall had been slated for a partial teardown and the addition of three new 17-story towers that would house apartments and hotel rooms.”
“‘It is unlikely we will move forward with the planned redevelopment or repay the mortgage loan at the current balance, and thus, do not expect we will be long-term holders of this asset,’ Federal Realty wrote in a quarterly SEC filing Nov. 5. ‘While we continue to engage in negotiations with the lender, we expect our exit from the property would either be achieved through a short term extension of the loan and an orderly sales process commencing in 2021, or potentially, the lender taking control of the asset.’”
From Seattle PI in Washington. “Seattle’s condo market proved to be a resilient in October. Downtown, on the other hand, continued to struggle with median sale prices dropping 14.7% compared to the same period a year ago. The number of available Seattle condos for sale remained plentiful with 953 listed for sale in October. That’s 49.6% more than we had a year ago. The condo dense neighborhoods in the city core (downtown, Queen Anne, Capitol Hill) as well as West Seattle reflected the greatest increase in active listings, all exhibited more than 60% more inventory than last October.”
“In the downtown area, the NWMLS noted 331 active units listed for sale in October. However, that figure does not contemplate the hundreds more available for purchase in recently completed and soon-to-be completed condo buildings. Only a tiny fraction of those units are listed in the NWMLS database, thus the actual number of listings is greater.”
From Forbes. “Following the COVID-19 pandemic and ensuing economic downturn, rental markets across the country experienced an uncharacteristic decline in rent prices. ‘Early on, when the guidance was to shelter in place and all the news attention and people’s mindset shifted toward the pandemic, we saw a huge reduction in the quantity of people who were moving, driving down prices universally, across the board. The entire market slowed down,’ says Rob Warnock, research associate at Apartment List.”
“In Boston, rents in the city are down 7.8% since January. New York rents have dropped 13%, and, above all, San Francisco rents have taken an 18% tumble. The biggest gap has opened in Seattle, where suburban rents have increased a little, 1%, while urban rents have decreased by a lot, 7%. Only San Jose, just south of San Francisco in Silicon Valley, posted a bigger decline in suburban rents: -11%, than city rents, -6%.”
From Socket Site in California. “For the first time since 2011, the average asking rent for a studio apartment in San Francisco has slipped below $2,000 a month, which is down nearly 25 percent since the end of February and over 30 percent below the market’s peak in 2015, driven by a sharp increase in vacancy rates (which continue to climb)…with over 3 times as many apartments currently listed for rent in San Francisco than at the same time last year despite the precipitous drop in rents (and pro forma cash flows).”
From Westword in Colorado. “A new study suggests that a growing number of renters are moving from Denver to surrounding suburbs, even though prices in the Mile High City have actually been falling during the COVID-19 pandemic. In previous years, Apartment List research associate Rob Warnock continues, ‘cities like Denver brought in a huge annual influx of out-of-towners looking to take advantage of the strong job market. Now those same movers can access jobs without living as close to the city center. So it’s not just a story of people leaving Denver. It’s also a story of people not coming to Denver.’”
From CNBC on New York. “A big drop in rental prices appears to be luring new, younger renters back to the city, even as office workers and wealthy New Yorkers remain in the suburbs and more rural resort towns. The typical rent paid for apartments including discounts, or the median net effective rent, fell 19% from a year ago to $2,868 — a record decline. Smaller apartments, which cater to younger renters, fell the most. The price of studio apartments was down 21%, and one-bedroom apartment prices dropped 19%.”
“Manhattan real estate still faces major challenges. There were 16,145 unrented apartments in October — an all-time high. The vacancy rate, which typically hovers around 2%, is now over 6%. All those empty apartments mean landlords will have to continue to lower rents and offer incentives to lure people back to the city. On average, landlords are offering more than two months of free rent, and over 60% of new leases in October had some form of incentive or discount, according to the report.”
From Bisnow on New York. “Gotham Organization has been sued for hundreds of thousands of dollars in rent that has gone unpaid. An affiliate of Samco Properties, which owns 432 Park Ave. South, where Gotham has leased office space since 2015, filed a lawsuit in New York State Supreme Court claiming Gotham owes it $200K in total unpaid rent, and $41K since the coronavirus pandemic took hold in New York in April, Crain’s New York Business reports. Gotham isn’t the only real estate company that has been sued for unpaid office rent in Manhattan this year. Paramount Group sued tenant Douglas Elliman for $273K in back rent at 712 Fifth Ave. in June.”
The Wall Street Journal. “More companies are looking to dump excess office space by renting it out to new tenants, flooding the market with additional supply that could depress U.S. office rents. Most of those companies are locked into long leases of as long as 20 years and have little opportunity to get out of these agreements. That is leading companies from Airbnb Inc. and Twitter Inc. in San Francisco to Expedia Group in Austin, Texas, to try to unload their overflow by subletting unwanted office space.”
“Corporate tenants put a record 42 million square feet of space on the office market in the second and third quarters, according to data firm CoStar Group Inc. That increased the total sublease space in the U.S. to roughly 157 million square feet, or 1.7% of the total office inventory. It is the highest rate since CoStar began measuring it in 2005. The additional sublease supply is expected to pressure office rents, property analysts say.”
“It is made worse because corporate tenants are often more willing to offer their space at lower rents just to get some cash for it, said Jonathan Adelsberg, a partner and chair of the leasing department at law firm Herrick Feinstein LLP. ‘There will be cases where tenants and landlords are going to be competing for the same business,’ Mr. Adelsberg said.”
The Globe and Mail in Canada. “The condo market in downtown Toronto continues to struggle, Robert Hogue, senior economist with Royal Bank of Canada points out. In the 416 area code, sales in the condo segment fell 8.5 per cent last month compared with October, 2019. Active listings have soared 173 per cent in the same period. Prices of condo units have plateaued since spring in the GTA, with signs of decline emerging in downtown locations in October. Prices in the 416 slipped from the September level, Mr. Hogue says.”
“Many owners are selling in order to move to a single-family house, investors are taking money off the table, and a large number of tenants have given up their leases. Patrick Rocca, a broker with Bosley Real Estate Ltd., says some landlords are still unrealistic about the falling rent prices in the core. He has turned down rental listings if the owners are not willing to set a fair rental price. ‘Why would I take it and waste my time? They’re not with the program,’ he says. ‘I don’t want to compete with 6,500 other rentals downtown.’”
“Mr. Rocca is just as blunt with sellers: He warns that the price they are refusing to accept today could be lower in February. ‘You’ve got to be really aggressive in your pricing,’ he says. ‘More so than ever before.’”
The Irish Independent. “‘In most parts of the country, the stock of homes available to rent continues to fall and is at all-time or close to all-time lows, in a series stretching back to January 2006,’ said Ronan Lyons, assistant professor in economics in Trinity College, and author of the Daft.ie report. ‘In Dublin, however, availability has doubled in the last year – and with it, rental inflation has come to an end,’ he added. ‘The respite in Dublin’s rental sector is down to Covid-19, which has brought about a once-off redistribution of a couple of thousand properties from the short-term lettings segment to the long-term rental segment,’ Mr Lyons noted.”
The Deccan Herald in India. “Residential tenants were in a bind largely because they could not relocate – but that has since changed as WFH becomes the new normal, Real Estate demand has plummeted (except for some pockets in Bangalore and Hyderabad). Tenants now are negotiating their rentals from an average of 10% to 30% across major cities according to The Real Deal. The landlord must keep in mind the probability of the premises being vacant and drop or increase rents opportunistically. The math is straight forward – at any price point, one month’s lost rent is a drop of 8.3% of the yield.”
The Daily Mail. “Rents have crashed in Australia’s urban centres as international students are locked out of the country – good news for those wanting to move closer to major cities. Just 80 foreigners arrived in Australia to study during September because of the coronavirus border closure. This represented a 99.8 per cent plunge from the 45,220 international students who arrived during the same month in 2019, the Australian Bureau of Statistics revealed on Thursday.”
“Georg Chmiel, the executive chairman of Chinese real estate sales site Juwai IQI, said the virtual end of international student arrivals, for now, was bad news for property investors. ‘It will be pain before gain,’ he said. ‘Student numbers are likely to keep falling and vacancies to keep rising until mid-2021.’”
“Melbourne’s Docklands area near the city saw its rental vacancy rate surge to 17.4 per cent in September – a fivefold increase on the 3.2 per cent level of a year earlier, Juwai figures showed. In neighbouring Southbank, rental vacancies have quadrupled to 16.8 per cent from 4.1 per cent. Sydney’s central business district experienced a similar problem with vacancy rates almost tripling to 12.8 per cent, up from 4.3 per cent, in Haymarket.”
“‘Chinese buyer enquiries are down to just half the level of a year ago,’ he said. Mr Chmiel urged prospective investors in China to consider buying a distressed rental property from a struggling landlord. ‘If you’re looking to take advantage of this dip in the market, then the best opportunity is most likely to purchase in the hardest-hit suburbs from an owner who can no longer afford to carry the property with the lower prevailing rents,’ Mr Chmiel said.”