Investors are targeting multifamily

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The salary needed to buy a home in America’s 5 most expensive cities link

• In Atherton, CA, a median-priced home costs $8.9 million, requiring an annual income of $1.85 million under the 30% rule. Many buyers in these high-priced areas avoid mortgages or make substantial down payments exceeding the typical 10%-20%.

• Malibu's median home price is $5.92 million, translating to a $367,758 annual mortgage payment. Iconic residents include Beyoncé and JAY Z, who bought a record-breaking $190 million mansion in the area.

• Los Altos Hills, CA, homes average $5.79 million, requiring a $1.2 million recommended income. The community has strict residential zoning, attracting Silicon Valley elites like Sergey Brin.

• click on the link to see the rest of the list.

Investors target multifamily despite oversupply concerns link

• Multifamily developers delivered 500,000 apartments in 2024, but fears of oversupply are easing as vacancy rates are projected to fall to 4.5% by the end of 2025. Investors like Portman Holdings and Waterton see opportunities in undervalued properties with strong long-term fundamentals.

• Blackstone acquired Apartment Income REIT for $10 billion, focusing on upscale rental housing in cities like Miami, Los Angeles, and Boston. They plan to invest $400 million in property improvements, signaling confidence in the market's recovery.

• Office-to-residential conversions are gaining momentum, with Dune Real Estate Partners and TF Cornerstone launching a $1 billion fund targeting transit-oriented neighborhoods in cities such as New York, Washington, and Dallas. Portman is also exploring this avenue alongside value-add multifamily acquisitions.

Retail and office spaces are increasingly being converted into healthcare facilities link

• Retail and office spaces are increasingly being converted into healthcare facilities due to their prime locations, established infrastructure, and accessibility. Examples include Hartford Healthcare repurposing sites like a former Blockbuster and Bed Bath & Beyond.

• The shift from hospital-centric care to outpatient models drives demand for flexible spaces, making retrofitting existing properties more cost-efficient and faster to operationalize. This also ensures long-term lease stability for property owners.

• Challenges include rezoning, infrastructure upgrades, and compliance with healthcare building codes such as HVAC standards and patient safety. Community concerns over traffic and noise add complexity to conversions.

Industrial vacancy will fall in 2025, Colliers says link

• Industrial vacancy rates are expected to peak by mid-2025 as new supply and tenant demand reach equilibrium. Rent growth will stabilize, with rents rising 3%-6% annually after a 9% increase in 2024.

• Construction activity is slowing, with total space under construction dropping 53% to 331 million square feet. This is projected to fall further below 300 million square feet by early 2025, aligning with pre-pandemic levels.

• Automation and last-mile delivery solutions are critical for maintaining resilience amid high costs and disruptions. Companies are increasingly adopting AI and data analytics to enhance warehouse efficiency and streamline deliveries.

Moody’s traffic light analysis shows retail on top, CBD office on bottom link

• Retail performed strongest with a Green 86 score, driven by steady vacancy rates and balanced supply-demand metrics. Supply growth was minimal at 0.3%, while demand slightly outpaced it at 0.5%.

• Multifamily rose to Green 80 due to declining vacancy rates from 5.5% to 5.3% and strong demand offsetting high production concerns. Year-over-year, vacancy rates improved in 25 markets but worsened in 39.

• CBD offices remained under pressure with a Yellow 45 score, though there were minor improvements in demand and supply metrics. Vacancy rates held at 19.6%, reflecting persistent challenges in this sector.

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Developers are turning to modular construction link

• Modular construction reduces carbon emissions and waste while cutting build times by up to 50%. This makes it an effective alternative to traditional methods that rely heavily on materials like concrete and steel, which contribute over 15% of global CO2 emissions combined.

• Developers can lower costs by up to 20% and avoid delays using factory-built methods, which also enable energy-efficient, climate-resilient buildings. These structures meet Zero Energy Ready Homes standards, offering long-term sustainability.

• Modular methods attract "green" financing options like green bonds, helping developers secure funding amid high costs and tighter lending. This financial resilience is critical for innovation and the shift towards a circular economy.

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I’d move to Vermont for this!

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Vidit

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