Amazon’s impact on CRE

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Amazon’s return-to-office mandate: turning point for the office CRE market? link

• Amazon’s shift to a five-day in-office requirement starting January 2025 could revive commercial real estate in cities like Seattle, San Francisco, and New York. With Amazon's $4.5 billion tied to office properties, the move signals renewed demand for office spaces in these tech hubs.

  

• Office vacancy rates have been climbing, hitting a near 9-year high with a delinquency rate increase of over 200 basis points since 2023. Amazon’s mandate could stabilize values in the office sector by increasing office usage, countering recent declines.

• Although some employees are dissatisfied with the policy, Amazon's move may prompt competitors like Meta, Microsoft, and Salesforce to reconsider their hybrid models. If more companies follow, office demand could surge, helping reduce the current pressures in commercial real estate.

More homeowners disaster-proofing homes, Freddie Mac finds link

• In 2023, 23.3% of U.S. households made disaster-proofing home improvements, up from 17.6% in 2022. However, only 5% of homeowners increased their insurance coverage.

• Households with lower incomes or those in high-risk areas, like the West, are more likely to consider relocating due to natural disaster concerns. Roughly 16% of people aged 18-44 explored relocation.

• Hispanic and Black households were among those making more property upgrades. Nearly 30% of these groups took steps to mitigate disaster risks.

Operating fundamentals improving in the industrial sector link

• Industrial vacancies average around 6% across the U.S. as new supply dampens short-term demand. High-growth markets are seeing larger industrial spaces, with some exceeding a million square feet.

• E-commerce growth and a rebound in manufacturing will drive long-term demand for industrial assets. The sector is expected to benefit from reduced oversupply over time.

• Investors should focus on traditional property appreciation metrics rather than expecting cap rate compression seen during the 2018-2022 period. The market is more balanced now, with higher yield expectations.

Home prices continued to hit new all-time highs in July link

• Home prices rose by 5% year-over-year in July, though this was slower than the 5.5% rise seen in June. Despite this, prices reached new highs for the 14th consecutive month.

• New York led with 8.8% annual growth, driven by a 10.8% increase in homes priced under $533,000. Other cities like Las Vegas and Los Angeles saw sharp gains, while Portland had the slowest growth at just 0.8%.

• Mortgage rates fell to 6.09% from their 7.2% peak in May, boosting buyer purchasing power. However, the rise in housing supply (up 22.7% annually) could hold price growth in check.

Zumper partners with Airbnb to market Airbnb-friendly apartments link

• Zumper’s new partnership with Airbnb allows renters to earn extra income by hosting part-time stays in Airbnb-friendly apartments. Renters can easily find these properties on Zumper’s platform, marked with a special badge.

• 57% of leads for Airbnb-friendly apartments request a tour, highlighting strong renter interest in the program. 85% of multifamily property partners report improved resident satisfaction with the Airbnb tools in place.

• Property owners can share revenue from short-term stays while maintaining control over hosting rules, such as occupancy limits and hosting nights per year. Both renters and owners are covered by Airbnb's AirCover protection program.

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Vidit

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