Kevin Waldman

Back from the BBQs, Diving into CRE: Hope on the Horizon? Happy 4th of July hangover (or is it just the heat?) to my fellow CRE professionals! I'm sure, like me, many of you are just getting back into the swing of things after a well-deserved holiday break. But with the second half of the year upon us, it's time to refocus and strategize for what lies ahead. Speaking of strategy, I came across a fascinating article this morning that caught my eye (because let's be honest, who jumps right back into heavy reports after fireworks and cookouts?). It tackled the ongoing uncertainty in the commercial real estate market, particularly with the Fed staying tight-lipped about rate cuts. The article made a compelling point: maybe this uncertainty itself is a good sign. Here's why: while the market undeniably contracted, there are glimmers of hope that suggest a potential recovery, not just a never-ending downward spiral. For instance, a Goldman Sachs analyst believes office transactions might have hit rock bottom. That's music to my ears! Beyond that, there are other positive signs: Transaction volume is on an upward tick for three months straight. It might be a slow climb, but it shows renewed investor interest, which is always a good thing. The flood of new space is slowing down. This could help us chip away at the current oversupply and stabilize vacancy rates. Distressed property sales are on the decline. This suggests investors are finding opportunities in more stable properties, which is a healthy sign for the overall market. But let's not get ahead of ourselves. The recent price increase could just be a temporary blip, like a summer fling. Only time will tell if it's a true turning point or a short break before the rollercoaster continues. The bottom line? The CRE market is a mixed bag right now. The future is uncertain, but these developments offer a flicker of hope. Here's to a productive second half, filled with smart deals and strategic wins! #CRE #commercialrealestate #markettrends #investing #economy NAIOP Wisconsin NAIOP Marquette University Vieth Institute for Real Estate Leadership https://lnkd.in/gg56aEpR

5

1 Comment

A fabulous episode of the Weekly Take featuring Stephanie Dorsey CEO of Siemens Real Estate. She and Spencer Levy cover many ‘of the moment’ topics such as site selection evaluated via the 3T’s (talent, transportation and taxes), pressure being put on the power grid, sustainability, hiring in a tech focused future and the future allocations of Siemen’s real estate portfolio. A valuable listen whether you are an occupier of real estate, investor or considering career paths. Listen below! #CBRE #TheWeeklyTake #RTO #Tech #RealEstate #CommericalRealEstate

22

1 Comment

Another indication that the resiliency of the #consumer may be fading, posing a threat to sustained #industrial #realestate market expansion. https://lnkd.in/eC-JPK_e #consumerconfidence #industrialrealestate #interestrates #inflation

1

Urban Land Institute and PwC: Real Estate Industry Poised for a “Reset” Another interesting finding is that there’s a shift occurring in how CRE portfolios are structured. As one respondent quoted in the report notes: “One thing that has evolved during this last period is how we think about the composition of a core portfolio and the definition of core.” Part of that pivot has been a move away from traditionally strong asset classes (particularly in the mall and office sectors) and towards more niche subsectors. Assets like data centers and medical offices, for example, have become an increasingly popular pick, along with cold storage, self storage, and student housing. Growth in Sun Belt markets is also anticipated to continue in 2024, despite signs of slowing in specific sectors. ULI states that out of the top 20 markets showing strong “overall prospects,” 15 are located within the Sun Belt. Read the entire article - https://ow.ly/4qMH50RkKFm

1

An interesting listen on the latest episode of The Weekly Take podcast. Dive into the complexities and opportunities arising from the city's unique headwinds, which have deterred investors from seizing generational buying opportunities. They discuss the rising influx of venture capital firms, particularly those specializing in AI, and their increasing demand for office space. Understand how AI is revolutionizing San Francisco's real estate scene, from the type of office space needed to location preferences and shorter lease terms. Discover the city's tenants' growing inclination towards high-end, creative, sustainable office spaces and their fondness for adaptive reuse. #RealEstate #AI #FutureForecasting #TenantRep #OfficeLeasing #WeeklyTake

4

The ecosystem of opportunity. Where Darwinism and real estate intersect. If interest rates do not get cut soon, there will be more pain in the sector for those who were holding out for lower rates to start or refinance projects. The under-capitalized developers or sponsors who can't weather this financially will ultimately either need to sell to stronger sponsors or give keys back to the bank. It's sort of like a forest fire. It's very, very painful to watch, painful to live through, but it does regenerate the forest. So round and round we go. That starts the ecosystem of opportunity. This is where Darwinism and real estate sort of intersect...

5

Nearly 78.3% of all campsites in the US are RV sites. The remaining non-RV campsites include: Tents, cabins, yurts, and other lodging. At private campgrounds, over 92.1% of campsites are RV sites. In public campgrounds, only 43.6% of campsites are RV sites. Data is according to RVIA. Is the free market of private campgrounds showing us what campers want? (overwhelming majority RV sites) Or is there an opportunity here? For my analysis, check out my newsletter: ohweekly.substack.com

3

The latest NAIOP Office Space Demand Forecast projects that net demand for office space will shrink by 11.8 million square feet over the last three quarters of 2024 and will contract an additional 4.5 million square feet in 2025. Tenants have had several quarters to adapt to hybrid schedules and adjust their use of space accordingly. The forecast's authors expect that economic factors will increasingly drive leasing decisions going forward. However, persistent inflation, high interest rates and the continued possibility of a recession suggest the office market is not likely to rebound this year. #office #cre https://lnkd.in/eBzNVQHf

6

BAY AREA REAL ESTATE A pair of downtown S.F. towers are on the verge of selling for deep discounts By Laura Waxmann Two downtown San Francisco office towers located on opposite sides of Market Street are on the verge of selling to new owners lured by hefty discounts. San Francisco’s Rubicon Point Partners has been selected as the buyer of 33 New Montgomery St., a 20-story building that sits across from the luxurious Palace Hotel near Market Street, according to multiple real estate market participants. While the deal has yet to close, Rubicon is expected to purchase the property for roughly half of what it was worth pre-pandemic. Those individuals also confirmed that Southern California-based LBA Realty is closing in on a deal to purchase 255 California St., which rises 14 stories at the corner of Battery and California streets in the city’s Financial District. The building is expected to trade for one-third of what it was worth five years ago. https://lnkd.in/g77N7_QX

1

An interesting listen on the latest episode of The Weekly Take podcast. Dive into the complexities and opportunities arising from the city's unique headwinds, which have deterred investors from seizing generational buying opportunities. They discuss the rising influx of venture capital firms, particularly those specializing in AI, and their increasing demand for office space. Understand how AI is revolutionizing San Francisco's real estate scene, from the type of office space needed to location preferences and shorter lease terms. Discover the city's tenants' growing inclination towards high-end, creative, sustainable office spaces and their fondness for adaptive reuse. #RealEstate #AI #FutureForecasting #TenantRep #OfficeLeasing #WeeklyTake

5

📈 Apartment Market Insights: AvalonBay Communities is capitalizing on the work-from-home trend by integrating tailored spaces and services for remote workers into their properties. Key features include built-in desks, high-speed internet, and exclusive work-from-home areas to ensure productivity and comfort. This strategy not only enhances resident satisfaction but also positions AvalonBay as a top choice for remote workers looking for multifunctional living spaces. As the demand for home-office-friendly apartments rises, AvalonBay's focus on these amenities could significantly influence rental preferences and market trends. 🏢 Stay tuned for more updates on how multifamily communities are evolving! #Colliers #Pittsburgh #MoreIn24 #ThriveIn25 #ClosersCoffee #ColliersCapitalMarkets https://lnkd.in/eBhYJut9

6

"The end of the knowledge economy is giving way to a new paradigm where relationships hold the key to success." - Karin Kimbrough (LinkedIn's Chief Economist) Earlier this month, one of JLL's competitors released an article framing AI as (yet another) threat to the office market. For Class B & C assets, particularly those in undesirable locations, I could not agree more. Stephen Hawking famously said, "Showing up is half the battle." Since March 2020, some percentage of the U.S. population has deemed that "showing up" is not required. If your job can be automated, if you do not value showing up (i.e., building in-person relationships with your team), and/or if your job can be offshored for a fraction of your salary, your job is at risk. Right or wrong, public corporations prioritize shareholder value over allegiance to employees. Allegiances exist between mentors and mentees. On the flipside, many public and private corporations are investing more than ever before on front-of-house office facilities. For those expected to "show up", the office of today and tomorrow offers more than ever before. Park Avenue's vacancy has decreased by over 15% vs. 2022, which has been driven primarily by the leaders of financial services and professional services firms who expect that their employees will be visible stewards of their respective organizations. The change highlighted by Karin Kimbrough is both an opportunity and a threat, and the implications to the office market will continue to be equally polarizing.

14

4 Comments

Appraisers in the U.S. need better tools that allow them to use more judgement in valuing assets. My colleague Willem Vlaming has been developing work showing that in parts of the world with low market liquidity and few comparable sales, that appraisal teams have been better able to capture the decline in asset values. http://ms.spr.ly/6040Yw5ts MSCI Real Assets #CRE

61

Congratulations Siqi Zheng

11

What can Brown do for you? Sorry, I couldn’t resist, but if you are in retail or real estate, the answer is A LOT. I’m a 25+ year #cre #research #analyst and #commercialeealestate #economist that has specialized in #retailreakestate for the better part of my career. After a long journey in corporate real estate, I reunited with early friends and mentors at @gallellirealestate where I have been able to rediscover my entrepreneurial roots and launch the most comprehensive retail and reference guide to chains ever created. Something I have long dreamed of sharing with the market . That dream is #thebrownbook If there was ever anything that built my reputation in retail research it was knowing that knowledge of tenant plans and financials and their importance to gauging #shoppingcenter and retail health. As well as informing my team. Hockey great Wayne Gretzky once explained his success, “I go where the puck is going, not where it’s been.” That’s the basis of @TheBrownBook. A tool that helps you go where the puck is going to be and not where it was, in the fastest moving industry of all—retail. Now I am able to share with you all the culmination of my life’s work. All of my data gathering methods, connections, knowledge and endlessly hard work inform the data in #thebrownbook, the ultimate reference guide to retail tenants. An indispensable tool for #landlords, #developers, #investors, #tenants and #retailers (to know what their competition is up to), #facilitesmanagers, #appraisers, #media, anyone that needs solid #businessdevelopment tools that wants to know which #chains are growing, shrinking, new to market (you might not even know), or emerging. And who to call. Please check out samples of what The Brown Book contains. The Brown Book is not a book. It’s actionable knowledge for #businessdevelopment. https://lnkd.in/gTN-9qWT

4

1 Comment

Evolution of Community Engagement: New Approaches to Building Support for RE Developments. Evolve hosted a very informative and worthwhile event today. (Yep, they’re still carving a highly needed path in CRE.) Developers increasingly find themselves in choppy waters by not involving the people that live in proximity to a project early on. If they had enlisted a neighborhood outreach at the onset, the inclusion and communication could accelerate the timeline and calm the seas. Communities are willing to mobilize and collectively voice support for a desired concept, company, or a Culinary Dropout. And “interaction with the neighbors is as if not more important than the quality of your development” Brennan Ray, zoning attorney. Collaboration at the onset is key. But what do you do when the faceless adversary, aka social media, spreads misinformation that complicates the process with bad intel? Use social media to provide facts and bring transparency to dispel bad press. If possible, create a website that gives facts, data, summaries, traffic studies, site plans…most of which can be found via public websites anyway. Everyone’s voice is important. Grass roots community outreach is a collaboration worth the time and effort. #community #engagement #communityoutreach #development #cre #arizona Evolve Ventures, LLC Women in Commercial Real Estate - #womenincre Phoenix Business Journal GPS Commercial Advisors

16

5 Comments

AvalonBay Communities (AVB), along with the six other largest apartment REITs, reported robust rent growth for renewals. 📈 Many residents opted to stay in their homes amidst rising interest rates, which have driven up the cost of homeownership. 🏡 This trend underscores the continued appeal and stability of the rental market in uncertain economic times. #REITs #EconomicTrends #MarketInsights

4