Investors bought more apartment properties than anyone expected in the third quarter of 2020, despite the ongoing chaos stemming from the pandemic.
First, apartment investors found ways to complete deals planned before the coronavirus spread. Additionally, investors began to make new deals to buy apartment properties, especially in strong suburban markets.
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The notion of artificial intelligence making hiring decisions may seem like a high-tech HR parody of Black Mirror. But as more and more companies contemplate a future when the coronavirus pandemic extends deep into the future, and the adaptations it brings to work become more crystallized, human resources departments have begun to consider more significant changes.
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A rise in cap rates will cause commercial real estate values to drop from 7 to 9 percent in the multifamily and industrial sectors and by 20 percent or more for office, retail and hospitality asset types, a new white paper from Moody’s Analytics REIS predicts.
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Fitch Ratings has downgraded coworking giant WeWork's rating regarding its ability to pay long-term debt, giving as reasons Fitch's misgivings about whether an anemic demand for WeWork's products will recover.
"While WeWork has made material progress to reduce its cash burn rate, in a scenario where demand is structurally lower, Fitch sees WeWork as potentially requiring additional liquidity sources inclusive of and beyond the full $3.3B SoftBank financing commitment," Fitch said in its statement.
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The pandemic has boosted business at many law firms. But it also initiated a long-overdue correction to law firm operations, forcing a focus on efficiencies and the ongoing success of the firms, according to Sherry Cushman, vice chair of the legal sector advisory group with real estate services firm Cushman & Wakefield. That might spell trouble for office landlords.
In 2019, law firms accounted for 5.9 percent of all office leases signed in the U.S., according to real estate services firm CBRE. In markets like Manhattan, they ranked fifth from the top for the largest office leases signed that year, with 819,735 sq. ft. of space.
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The COVID-19 recession has had a complicated impact on data center real estate, and firms are adapting quickly to respond.
Unlike past downturns, the current recession comes with an ongoing health crisis and a sudden shift to remote work, in addition to swift changes to U.S. fiscal policy as the country pushes to recover. For the data center industry as a whole, the sharp rise in remote work and schooling has accelerated already-strong demand for data storage and processing.
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After a pause earlier in the year, the CRE CLO market is beginning to show signs of life, with new deals happening in recent months. But recovery in the segment is still expected to be slower than for traditional CMBS loans.
Part of the issue is that unlike CMBS loans, which are backed largely by stabilized properties, CLOs focus on assets that are in some sort of transition, involving renovation or redevelopment. As a result, little income is often expected from these assets during the transition period. For this reason, one of the questions facing participants in the CLO market is whether projects can be completed on budget and on time, particularly challenging amid the COVID-19 pandemic. Another question is whether these properties will be able to meet their initial leasing expectations post-transition as many real estate sectors continue to struggle.
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With the rate of new cases of the coronavirus growing in the U.S. once again and no vaccine immediately on the horizon, businesses are beginning to give up on bringing employees back to the office this winter.
Major employers such as Microsoft, Target, Ford Motor Co. and The New York Times have announced in the past week that they wouldn't be requiring employees to return to their offices until at least July, the Times reports. Google, Uber, Slack, Airbnb and DocuSign have all pushed anticipated return-to-work dates until summer in the past few weeks.
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CRE owners need to consider collectability of rent payments and lease concessions in their financial reporting.
As the third quarter comes to a close, the impact of COVID-19 on the U.S. economy continues to be felt. In fact, according to Reuters, the U.S economy suffered its biggest blow since the Great Depression in the second quarter of 2020. In addition, many feel a resurgence of the coronavirus is just ahead of us.
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In a banner year for data center expansion, several markets in the West are seeing heightened construction and leasing activity as demand for data storage and processing continues to climb.
A combination of remote work, cheap power and government incentives is driving up demand in markets like Utah, Colorado and Arizona, which enjoy proximity to Silicon Valley and a number of other appealing traits for data center firms. Industry experts say it is still early innings for data centers, with Western cities capturing much of the growth among secondary markets.
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