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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(Bloomberg)--By the end of the year, New York City will get three posh assisted-living towers offering seniors spa treatments, gourmet meals and chauffeured rides along with their daily care.
The projects were built on a bet that a surging population of wealthy elders would pay hefty sums -- starting around $13,000 a month in Manhattan -- to stay near their grown children, in a vibrant urban center, when they could no longer live alone.
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(Bloomberg Opinion) -- The Wall Street Journal’s editorial board published a column last week titled “The Fiscal Federal Reserve,” which admonished Chair Jerome Powell for imploring the U.S. Congress to do more to aid out-of-work Americans, struggling small businesses and strapped state and local governments. “Powell signs up to monetize trillions of dollars in more spending,” they wrote.
In many ways, Powell and his colleagues have actually been relatively restrained in their messaging. They could be much more forceful — the only question is whether they want to open that potential Pandora’s box.
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Anticipating a surge in online shopping during the holidays, e-commerce tenants are already prepared to handle the swell in orders, having locked in additional industrial space during the second and third quarters, according to Steve Schnur, executive vice president/COO at Indiana-based industrial REIT Duke Realty.
Online retail sales increased a whopping 30.1 percent during the first six months of the year, compared to the same period in 2019, from $266.84 billion to $347.84 billion, according to Digital Commerce 360 analysis by the U.S. Department of Commerce data.
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Technology companies across the country expect to need less office space in the coming years, a sign of falling demand in the commercial real estate market.
Tenant representation firm Savills released a survey Thursday of 250 technology companies that found 82% anticipate needing less office space over the next 12 to 18 months, and 55% plan to dispose of existing space over that time period.
This disposal of space is already happening in a big way, with a wave of sublease listings hitting the market, Savills Executive Managing Director Zev Holzman said.
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Amid the considerable carnage being inflicted on the U.S. commercial real estate sector by the COVID-19 pandemic, the most recent Commercial Property Price Indices from the industry’s major data firms show some good news.
Green Street Advisors, Real Capital Analytics (RCA) and the CoStar Group all reported their all-property indices have either stayed flat or rose slightly in recent months. Part of this dynamic likely has to do with far fewer sales being completed in the marketplace and investors’ focus on strong, well-located, leased-up assets when they do acquire properties. It also shows that so far, there have been few fire sales in the commercial space.
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