Distressed Properties Have Reached $63.7B, Urgent Care Demand Accelerating and more

Distressed Properties Have Reached $63.7B link

• Pandemic Impact: The distress in the property market, which was expected during the pandemic, has been realized with values, prices, and rent growth experiencing historically high paces.

• Surprising Surge: By the end of Q1 2023, distressed property grew to a whopping $63.7 billion, with 10% of that added in Q1 alone.

• Troubled Assets: The inflow of newly troubled assets exceeded workouts by more than $5.7 billion, indicating a significant increase in distressed properties.

Apartment sales continue their descent link

• Plummeting Performance: Multifamily transactions fell a staggering 79% year over year to $7.7 billion in May, with prices sliding 12.5%.

• Single Deal Savior: The portfolio activity, which came in at $2.5 billion, was largely driven by a single purchase by Chicago-based Nuveen, acquiring over 12,000 units in New York City.

• Rate Hike Repercussions: The Federal Reserve's interest rate hikes have been cooling the market for about seven months now, with apartment sales volume falling at a year-over-year rate of about 60%.

Industrial Subleasing Is on the Rise But Shouldn't Affect Absorption link

• Surge in Subleasing: Industrial sublease space is increasing as more tenants and landlords see it as a viable way to earn revenue and enjoy potentially shorter lease terms.

• Doubling Down: Despite the rise, subleasing has more than doubled compared to a year ago, yet it still represents less than 1 percent of the nation’s total industrial inventory.

• Absorption Unaffected: The rise in industrial subleasing is not expected to significantly impact absorption rates, maintaining market stability.

Demand for Urgent Care Facilities is Accelerating link

• Surge in Demand: Since 2019, patient volume at urgent care centers has spiked by a whopping 60%.

• Promising Growth: The sector is predicted to grow at a compound annual growth rate of 5.35% between 2022 and 2029, according to Data Bridge Market Research.

• Shift in Healthcare Delivery: The rising demand underscores a change in healthcare delivery models, with patients preferring ease of access for non-life-threatening conditions.

Why Home Prices in San Francisco will keep Crashing (-30%) link

• Astronomical Collapse: San Francisco's real estate market has seen a 13% drop from its 2022 peak, with the typical home price still standing at a whopping $1.3 million. The high prices, coupled with a 7% mortgage rate, have led to a significant decrease in homebuyer demand.

• Epicenter of Decline: The most severe price drops have been observed in San Francisco County, with a 13% decline in the last year. The downtown area, particularly Pacific Heights, has seen values drop from $1.8 million to $1.4 million.

• Mortgage Mayhem: The Federal Reserve's rate hike has led to a near 7% mortgage rate, severely affecting affordability in San Francisco. This has resulted in a monthly expenditure of nearly $10,000 for homeowners, translating to an annual payment of $120,000. This means potential buyers need to earn over $300,000 per year to qualify for a mortgage.

Investors of All Stripes Continue to Bet on Build-to-Rent Projects link

• Record-Breaking Deliveries: Last year saw the delivery of 14,541 new build-to-rent (BTR) homes, marking the highest annual total to date and a 47% increase from 2021. BTRs accounted for 6.9% of all single-family construction starts in 2022, a new record for the product.

• Surging Construction: As of March 2023, nearly 44,700 new BTR units were under construction, triple the number completed in 2022. Despite this surge, with an occupancy rate of 97%, the outlook for the BTR sector remains bright.

• Investor Interest: Both institutional and high-net-worth investors are increasingly attracted to BTR projects. For instance, Blue Vista Capital Partners has consistently deployed capital in the BTR sector, focusing on developing new BTR communities in growth markets across the Southwest's and Southeast's primary and secondary markets.

Prologis Agrees To Year’s Largest Industrial Property Deal link

• Mega Deal: Prologis, the world's largest developer for warehouse and distribution-related real estate, agrees to buy 14 million square feet of U.S. logistics properties for $3.1 billion from Blackstone Group, marking the largest industrial-only portfolio acquisition of the year.

• Strategic Acquisition: The deal involves commercial real estate in major markets and is a long-term bet on growth. The properties are concentrated in large U.S. cities with 60% well positioned for direct-to-consumer delivery, expanding Prologis' presence in markets like Atlanta, Southern California, Dallas, and more.

• Market Trends: Despite a slowdown in industrial property value growth from 5.4% quarterly in Q2 2021 to 0.5% this quarter, Prologis reported a 98% occupancy in the first three months of the year, indicating a robust demand driven by e-commerce spending.

Fannie Mae lowers 2023 single-family originations forecast to $1.59 trillion link

• Inventory Drought: The current housing market is heavily influenced by the scarcity of existing homes for sale, a situation that didn't improve during the spring homebuying season.

• Downward Revision: Fannie Mae has adjusted its 2023 single-family originations forecast to $1.59 trillion, a drop from the previous $1.65 trillion.

• Price Surge and Construction Boost: The lack of inventory has triggered a resurgence in home price growth and has stimulated new home construction.