Whopping $265 Billion Frozen Food Market

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Overall Real Estate Market

Freddie Mac House Price Index Increased in June to New High; Up 1.7% Year-over-year link

• The National FMHPI saw a year-over-year increase of 1.7% in June, a rise from 0.8% YoY in May.

• In June, 15 states and D.C. experienced declines from their previous peaks, with Idaho leading the pack at -7.7%.

• The FMHPI and the NAR median prices are leading indicators for Case-Shiller, suggesting a likely increase in the YoY change in the Case-Shiller index soon.

Banks report tighter lending standards, weaker demand for mortgages and HELOCs link

• U.S. banks have increased their lending standards for residential real estate loans and home equity lines of credit in Q2 due to the collapse of regional banks and rising interest rates.

• These changes are a response to the Federal Reserve's efforts to control inflation.

• Banks are expected to continue tightening their lending standards for the rest of the year, as per the Fed’s quarterly senior loan officer opinion survey.

Housing July 31st Weekly Update: Inventory increased 1.1% Week-over-week; Down 10.1% Year-over-year link

• Active single-family inventory rose by 1.1% week-over-week, indicating a slight increase in available housing.

• Despite the weekly increase, the year-to-date inventory is down by 1.3%, reflecting a tighter housing market compared to the start of the year.

• Compared to the same week in 2022, inventory is down by 10.1%, highlighting a significant year-over-year decrease in housing availability.

New Data Reveals Top Challenges and Opportunities in Affordable Housing - link

• Operational efficiency is the top challenge for affordable housing property management companies, with 75% of the surveyed operators ranking it as their number one issue. They spend a significant 39% of a typical 40-hour week on busywork.

• HR, staffing, and recruitment is another major challenge, with 47% of managers reporting this among their top 3 challenges. Only 52% of affordable housing property management team members are satisfied with their salary.

• Risk, compliance, and regulations was a top 5 challenge, with 58% of respondents finding general compliance the most challenging activity within this category. The increasing costs and burdens of regulations also contribute to this challenge.

Opportunities

Record Number Of Apartment-Generating Conversions In Works link

• Adaptive reuse projects are on the rise, with 122,000 rental apartment conversions in the pipeline, 45,000 of which are from office repurposing.

• Hotel-to-apartment conversions have spiked to a five-year peak, accounting for 29% of all adaptive reuse projects.

• Los Angeles leads the cities with the most conversions, housing 1,292 converted apartments, twice as many as the runner-up, Kissimmee, Florida.

Capitalizing on the $265 Billion Frozen Food Market: Cold Storage's Crucial Role link

• The frozen food market is booming, with a global value of $265 billion and U.S. sales surpassing $72 billion. This growth is attracting major industry players like Cargill, Conagra, Nestle, General Mills, and Unilever.

• Cold storage facilities play a vital role in meeting the rising demand for frozen food products and ensuring the resilience of the food supply chain. Opportunities for modernization and innovation are emerging, such as upgrading facilities with advanced refrigeration systems.

• The shift in consumer behavior towards online grocery shopping and the rising demand for frozen food products present significant opportunities for the cold storage industry. Retailers are investing in customer fulfillment centers with extensive cold storage capabilities to capitalize on this trend.

Industrial's Low Vacancy Rate Best Among Asset Classes link

• Industrial sector investing is gaining momentum, outperforming other commercial real estate asset classes in the first half of 2023.

• The industrial sector boasted a low vacancy rate of 4% in March, at least 30 basis points below all other major commercial real estate segments.

• Transaction velocity in the industrial sector has been notably high, indicating robust activity and demand.

Risks

Rents Slip By Double Digits for Self-Storage link

• Despite peak leasing season, move-in rents for self-storage units continue to decline, with the trend expected to persist throughout 2023.

• Nominal rents have seen an improvement since January 2023, allowing REITs to enhance their pricing power, albeit less than usual.

• Revenue growth is influenced by changes in occupancy (currently down from all-time highs) and rent charged to existing customers (above historical norms at around 15% per year).

U.S. CMBS Delinquency Rate Rises Sharply in July link

• The delinquency rate among KBRA-rated U.S. CMBS rose to 3.93% in July, marking a significant 34-basis point increase.

• CMBS loans totaling $2.6 billion were either transferred to special servicing or became newly delinquent in July, with office properties accounting for the highest exposure at 34.7%.

• Mixed-use properties had the highest delinquency rate in July at 6.71%, followed by retail at 5.48% and office at 3.79%.