Mom & Pop Investors Are Shaping the Housing Market

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Open-air shopping centers driving ‘retail renaissance’ link

• Open-air shopping centers have a record-low vacancy rate of 6.2%, the lowest since 2006. Limited new supply and strong demand are driving rent growth across the sector.

• The $127M sale of the Bridgepointe Shopping Center in San Mateo reflects investor confidence, with the price surpassing its 2017 value by $2M. The high-income suburban setting and limited retail space contribute to its appeal.

• Cohen & Steers projects long-term rental growth and earnings acceleration in the open-air retail market. They highlight resilient retail models thriving post-pandemic and capital values below replacement costs as key growth drivers.

CoreLogic: Mom & Pop Investors Are Quietly Shaping the Housing Market link

• Mom-and-pop investors, owning 3 to 10 properties, now dominate the housing market, surpassing institutional buyers. They represent the majority of real estate investors, playing a larger role than commonly perceived.

• Smaller-scale investors are stabilizing home prices even as overall demand softens. Their consistent activity helps maintain market balance in a period of uncertainty.

• Institutional buyers account for only a small fraction of total investor activity, despite dominating media narratives. This highlights a shift toward more localized and diversified ownership.

Single-Tenant Net Lease Sector Cap Rates Rise for 11th Quarter link

• Cap rates for single tenant net lease properties rose in Q4 2024, with retail at 6.52% (+2 bps), office at 7.78% (+3 bps), and industrial at 7.23% (+8 bps). The overall cap rate average climbed to 6.76%, influenced by high interest rates and minimal rate cuts from the Federal Reserve.

• Drug stores saw the highest upward pressure, with cap rates increasing by 23 basis points and supply growing by 8.5%. National asking cap rates for Walgreens and CVS rose 25 and 15 basis points, respectively.

• Investor activity picked up in Q4, narrowing the bid-ask spread and signaling better alignment between buyers and sellers. Industrial assets available for sale increased 7.6%, while retail and office supply declined.

Impact of maturity of $1 trillion in commercial real estate loans link

• More than $1 trillion in commercial real estate loans are set to mature between 2024 and 2025, with an even larger wave expected between 2026 and 2028. These maturities could boost multifamily sales activity as investors take advantage of favorable capital market conditions.

• The National Multifamily Housing Council's equity financing index rose to 63 in Q3, marking the first increase in available equity financing since January 2022. Debt financing conditions also improved, with the NMHC Debt Financing Index hitting 77, above the breakeven level of 50.

• Special servicing rates have climbed to 7.37%, the highest since 2015, signaling challenges for borrowers with maturing loans. The Federal Reserve's continued elevated interest rate forecasts may increase pressure on borrowers to sell or restructure.

A look at real estate in New York city in 2024 link

• In-unit laundry was the top-searched amenity among New Yorkers, beating out parking and central air, with pet-friendly homes also seeing a 200% increase in search volume. The pandemic-driven rise in pet ownership likely influenced this trend.

• Manhattan dominated the lists of most popular neighborhoods, with Midtown East topping renters' searches and the Upper East Side leading for buyers. Brooklyn neighborhoods like Williamsburg, Park Slope, and Brooklyn Heights also remained popular for family-friendly options.

• TriBeCa had the highest median asking rent in NYC at $8,295 per month, followed by SoHo at $6,100, reflecting a 14% increase from 2023. On the sales side, SoHo and TriBeCa led with average asking prices of $4.2M and $3.995M, respectively, while Carroll Gardens in Brooklyn followed at $2.65M.

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Vidit

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