tag:blogger.com,1999:blog-87902860385071858412024-03-15T15:01:37.895-07:00Weitz Commercial Real Estate, Legal & Economics BlogMy Career and My passion: Economic, Financial & Legal insights. These are my opinions only and not meant to be relied upon. Respectful disagreement encouraged. Unknownnoreply@blogger.comBlogger176125tag:blogger.com,1999:blog-8790286038507185841.post-83067713886783037382024-03-15T14:56:00.000-07:002024-03-15T15:01:05.214-07:00Everett, WA Proposal for new multi-purpose stadium<p> <br /></p><div class="separator" style="clear: both; text-align: center;"><b>EVERETT NEW STADIUM</b></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"> A local story here for those in my community. The city of Everett is taking significant steps to determine a potential stadium in downtown Everett. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">See below article link as well as a copy of the potential sites found on the <a href="https://www.everettwa.gov/3163/City-of-Everett-Outdoor-Multipurpose-Fac" target="_blank">Everett City Website</a> below. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><br /></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZ5vvHAbF1m4D1Y95wH-Bz8JeS59IdHYr4S9nVGEz-CIb7__VrTwfYNbl2Oj2uNp-g2lBzvSRnw9egvlSrJ4v4vgWP1p08vb2ZOr4XHR610Qv-0bP_AZOKDM_cJhFxde9V5AolrzqzCOu57nl5YW3-4ZD556fnOJsH43qy41-BlJbRoFFFDWGa-jWpDT8/s828/Everett.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="526" data-original-width="828" height="406" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZ5vvHAbF1m4D1Y95wH-Bz8JeS59IdHYr4S9nVGEz-CIb7__VrTwfYNbl2Oj2uNp-g2lBzvSRnw9egvlSrJ4v4vgWP1p08vb2ZOr4XHR610Qv-0bP_AZOKDM_cJhFxde9V5AolrzqzCOu57nl5YW3-4ZD556fnOJsH43qy41-BlJbRoFFFDWGa-jWpDT8/w555-h406/Everett.jpg" width="555" /></a></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: #fff2cc;"><br /></span></div><div class="separator" style="clear: both; text-align: left;"><p class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="background-color: white;"><span style="font-family: georgia;"><span style="color: #292929; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 0pt; mso-ligatures: none;"><a href="https://www.heraldnet.com/news/everett-approves-new-committee-to-spearhead-aquasox-stadium-upgrade/" target="_blank">EVERETT</a> — The City
Council unanimously approved creating a new committee Wednesday to conduct
in-depth research and advise city leaders </span><b><span style="color: #333333; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 0pt; mso-ligatures: none;"><o:p></o:p></span></b></span></span></p>
<p class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="background-color: white; color: #292929; font-family: georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 0pt; mso-ligatures: none;">Three options are on the
table: <o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: normal; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-indent: -0.25in;"><span style="background-color: white;"><span style="font-family: georgia;"><!--[if !supportLists]--><span style="color: #292929; mso-bidi-font-family: Merriweather; mso-fareast-font-family: Merriweather; mso-font-kerning: 0pt; mso-ligatures: none;"><span style="mso-list: Ignore;">1)<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"> </span></span></span><span style="color: #292929; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 0pt; mso-ligatures: none;">upgrade the current Funko Field, <o:p></o:p></span></span></span></p>
<p class="MsoListParagraphCxSpMiddle" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: normal; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-indent: -0.25in;"><span style="background-color: white;"><span style="font-family: georgia;"><!--[if !supportLists]--><span style="color: #292929; mso-bidi-font-family: Merriweather; mso-fareast-font-family: Merriweather; mso-font-kerning: 0pt; mso-ligatures: none;"><span style="mso-list: Ignore;">2)<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"> </span></span></span><span style="color: #292929; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 0pt; mso-ligatures: none;">demolish and build a new stadium on the current property,
or <o:p></o:p></span></span></span></p>
<p class="MsoListParagraphCxSpLast" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: normal; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-indent: -0.25in;"><span style="background-color: white;"><span style="font-family: georgia;"><!--[if !supportLists]--><span style="color: #292929; mso-bidi-font-family: Merriweather; mso-fareast-font-family: Merriweather; mso-font-kerning: 0pt; mso-ligatures: none;"><span style="mso-list: Ignore;">3)<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-style: normal; font-variant: normal; font-variation-settings: normal; font-weight: normal; line-height: normal;"> </span></span></span><span style="color: #292929; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 0pt; mso-ligatures: none;">construct a new stadium downtown near the Angel of the
Winds Arena.<o:p></o:p></span></span></span></p>
<p class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="background-color: white; color: #292929; font-family: georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 0pt; mso-ligatures: none;">Everett needs
significant upgrades to meet the new MLB standards. The city would be at risk
of losing the minor league team if efforts to upgrade the stadium aren’t well
underway by 2025.<o:p></o:p></span></p>
<p class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="background-color: white; color: #292929; font-family: georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 0pt; mso-ligatures: none;">The project could cost
between $40 million and $80 million, according to figures presented by an
outside consultant hired to work on the project.<o:p></o:p></span></p><span style="background-color: white;"><span style="font-family: georgia;">For more information on Everett Commercial Real Estate, consider contacting an <a href="http://www.weitzcommercial.com">Everett Commercial Real Estate Broker</a>. </span></span></div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><br /></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-79177551886818333952024-03-15T13:09:00.000-07:002024-03-15T13:11:27.670-07:00NY Landlord Rudin sees positive for CRE<p></p><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/s3-jf6zHgtY" width="320" youtube-src-id="s3-jf6zHgtY"></iframe></div><br /> Bill Rudin sees positivity in the office market. He's mostly focused on NY city.<p>As we try to remain as neutral as possible despite our fairly negative / cautious outlook, it's important to look at the situation from all angles and make sure we look at all the 'pieces of the puzzle'. </p><p><i><b>Weitz: My thoughts on this interview is 1) he leans on a lot of anecdotal evidence which I can't stand. "18 new Broadway shows are coming"; "we signed a lease". One perception doesn't make a big picture reality. I don't think we are going to truly see the the office issue resolved for years until we settle into a new normal with the work from home vs. hybrid vs 5 days in the office. This will vary industry by industry and company by company, but overall, I have to think management teams generally will want to lower their office footprint while also creating a office culture.</b></i></p><p><br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-7408978512756238742024-03-13T10:46:00.000-07:002024-03-13T15:03:30.131-07:00Janet Yellan warns inflation decline may not be "smooth"<p></p><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><b><u>Treasury Secretary Janet Yellen Interview release today. </u></b></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/gl16aecTcG4" width="320" youtube-src-id="gl16aecTcG4"></iframe></div><br /> </div><br />"Once rents cycle through, inflation will come down more"... "it take awhile for that to filter into the Consumer Price Index ('CPI'). <p></p><p>Later in the interview, she said "I wouldn't expect this to be a smooth path month to month, but the trend is clearly favorable". </p><p><i><b>WEITZ: Let me interpret this... "(commercial) rents are falling, thus our current 'Consumer Price Index' / CPI numbers are crap. We are actually in more of a deflationary/ stagflation environment...but we are hiding the ball from the American public for whatever reason". </b></i></p><p><i><b>I hate to say this, but I have zero faith in our current leaders to navigate what I believe is coming our way. </b></i></p><p><i><b>In the later 2000s during the last major economic crisis, we had Ben Bernanke and Hank Paulson at the helm of Federal Reserve and Treasury respectively. Bernanke was a Princeton scholar on the Great Depression and Paulson was the former CEO of Goldman Sachs and carried a lot of weight on Wall Street. While I'd argue the bank bailouts benefitted the culpable parties and were thus were BS in some ways, that was the act of Congress and Obama at the time to not put guardrails on the use of the bailout funds.... Nevertheless, those two unequivocally saved us from a awful financial situation with collateral banking damage that likely would have mirrored a great depression like situation. I'm not so sure I have the same confidence in Mr. Powell or Ms. Yellen to navigate the ship if the 'waters get choppy'. </b></i></p><p><i><b>Lets be frank - we have a debt based monetary system that can't withstand interest rates this high so if we are monitoring it based on crap CPI numbers, their analysis is equally crap and they will keep rates too high for too long.</b></i></p><p><br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-51302233509926096742024-03-12T09:39:00.000-07:002024-03-12T09:39:41.126-07:00CNBC - Homebuyers need to earn 80% more than in 2020 to afford a house in this market. <p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6oHQ4BfELbrmdZllUe9pyGyh10xDA7yFAmj_2zkDDFIX4jsGyva-CXwUR6ER5aiLZQCUUxC_PKNuhhxtcl8apwxWDGZJsktQFqZP5BNxzjwxBTqluHhdXCiwEV10kI6Uv1jMD9ZSgo4T_2swXkUrDA2x09KJw-xmz_CYyW5F33_BJmjVgIIsSKx4ffM4/s2000/Home%20prices%20higher.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1125" data-original-width="2000" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6oHQ4BfELbrmdZllUe9pyGyh10xDA7yFAmj_2zkDDFIX4jsGyva-CXwUR6ER5aiLZQCUUxC_PKNuhhxtcl8apwxWDGZJsktQFqZP5BNxzjwxBTqluHhdXCiwEV10kI6Uv1jMD9ZSgo4T_2swXkUrDA2x09KJw-xmz_CYyW5F33_BJmjVgIIsSKx4ffM4/s320/Home%20prices%20higher.jpg" width="320" /></a></div>CNBC Article outlines the increased costs of housing in the past 4 years. <p></p><p>Some key takeaways: </p><p>Almost 4 years ago, household earning $59,000 annually could afford a new mortgage without spending more than 30% of their monthly income with a 10% down payment according to Zillow Group. </p><p>While the typical household in 2024 makes about $81,000 / year (up from $66k), wages have not kept up with housing costs. </p><p>Since January, 2020, the typical mortgage payment on the typical home has almost doubled, according a a senior economist at Zillow. </p><p>Nowadays, a potential home buyers to make $106,5000 to afford a typical home.</p><p>Tight supply is another reason behind the unaffordability. </p><p>The number of new housing units built throughout the years has been declining and law supply is rooted in restrictive land use and zoning regulations. </p><p><i><b>WEITZ: Nothing new here necessarily. Yes, affordability is a problem. Yes, low inventory is a key component of that. I continue to believe you will see an inventory increase as people 1) sell 2nd or 3rd homes; 2) we see distressed listings either in the form of defaults (job losses appear to be mounting); 3) divorce, 4) elderly people moving out of their homes or passing them to the next generation; or 5) people just wanting to move to a new area. </b></i></p><p><i><b>I have a hard time seeing this entire pricing situation as sustainable. Fed Chairman Powell all but admitted he's <a href="https://www.businessinsider.com/housing-market-recession-dragging-home-prices-lower-federal-reserve-powell-2022-9" target="_blank">trying to lower prices</a> when the rate increases were established by the Fed. I personally think he's surprised by the resiliency to this point (as am I), but I don't know if he fully thought of the collateral damage that no one would sell their home with a 2.5-3% rate to buy something at 7% and thus we have created the most stagnant market of my lifetime. The next 12-24 months will be a tug of war between inventory vs. rates. If rates fall and inventory stays the same, we will see continued growth. If inventory grows and rates stay somewhat in line, I think we see some weakness in pricing in many parts of the country. If I had to bet, I'm betting on the latter of those two. I simply don't think these prices are sustainable for the average American (certainly not young american who doesn't have equity in a current home) although I certainly feel like the black sheep with that opinion these days. </b></i></p><p>...<b><i>. Time will tell. </i></b></p><p><br /></p><br /><p><br /></p><p><br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-26221902002615041132024-03-08T10:26:00.000-08:002024-03-08T10:26:18.096-08:00Biden Announces Plan to Lower Housing Costs for Working Families<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOCZ6GUm4MPUDlVG_siXLDXqh8BCShhHniFVFSCDiZrxor5e6gjM-HTmfFYbuH-qFegMyKjUF5-XL8PmuNRUTlKTOfmY6Cdtq0cGBvVrC8XUkDwBNxlVP7b0AAIy6Ux-FpKZKFR28rZwNDX-_jgTLSX_ogxdI-LFH5RxiiKqQq00MSKb6alNfL0EjIpx0/s800/white%20house.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="498" data-original-width="800" height="199" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOCZ6GUm4MPUDlVG_siXLDXqh8BCShhHniFVFSCDiZrxor5e6gjM-HTmfFYbuH-qFegMyKjUF5-XL8PmuNRUTlKTOfmY6Cdtq0cGBvVrC8XUkDwBNxlVP7b0AAIy6Ux-FpKZKFR28rZwNDX-_jgTLSX_ogxdI-LFH5RxiiKqQq00MSKb6alNfL0EjIpx0/s320/white%20house.jpg" width="320" /></a></div><br />I<span style="font-family: georgia;">n conjunction with his State of the Union address, President Biden & the White House announced <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/07/fact-sheet-president-biden-announces-plan-to-lower-housing-costs-for-working-families/" target="_blank">A PLAN</a> to lower housing cost for working families. </span><p></p><p><span style="font-family: georgia;">Below are some of they points and any insights I can provide on the matter. I do my very best to keep politics out of any commentary so I'll make best efforts to be as neutral as possible in my comments. </span></p><p><span style="line-height: 115%;"><span style="font-family: georgia;">1. President Biden believes
housing costs are too high, and significant investments are needed to address
the large shortage of affordable homes inherited from his predecessor and that
has been growing for more than a decade. </span></span></p><p><span style="line-height: 115%;"><i><b><span style="font-family: georgia;">Weitz- I'd agree that costs are too high for the average American. </span></b></i></span></p><p><span style="font-family: georgia;">2. President Biden will call
on Congressional Republicans to end years of inaction and pass legislation to
lower costs by providing a <u>$10,000 tax credit for first-time homebuyers</u> and
people who sell their starter homes; build and renovate more than 2 million
homes; and lower rental costs. </span></p><p><span style="font-family: georgia;"><b><i>Weitz- Is a $10,000 tax credit going to do much if you can't afford the home in the first place? </i></b></span></p><p><span style="font-family: georgia;">3. Mortgage Relief
Credit. President Biden is calling on Congress to pass a mortgage relief
credit that would provide middle-class first-time homebuyers with an annual tax
credit of $5,000 a year for two years. This is the equivalent of reducing the
mortgage rate by more than 1.5 percentage points for two years on the median
home, and will help more than 3.5 million middle-class families purchase their
first home over the next two years. </span></p><p><b><i><span style="font-family: georgia;">Weitz- This math doesn't work in Seattle area, but I like the concept. </span></i></b></p><p><span style="font-family: georgia;">4. The President’s plan also
calls for a new credit to unlock inventory of affordable starter homes, while
helping middle-class families move up the housing ladder and empty nesters
right size. Many homeowners have lower rates on their mortgages than current
rates.</span></p><p><span style="font-family: georgia;"><b><i>Weitz- How? See below.</i></b> </span></p><p><span style="line-height: 115%;"><span style="font-family: georgia;">5. The President is calling on
Congress to provide a one-year tax credit of up to $10,000 to middle-class
families who sell their starter home, defined as homes below the area median
home price in the county, to another owner-occupant.</span></span></p><p><i><b><span style="font-family: georgia;">Weitz - so I go from a 2.5% mortgage at $700k so I can buy a 7%+ mortgage at $700k. That's a horrible move if the credit only lasts a year. On a $700k home loan, that's $32,000 increase annually, but thanks for the $10,000 tax credit!</span></b></i></p><p><span style="font-family: georgia;">6. <span style="background-color: white;">Lowering Closing Costs for Home Mortgages. The Consumer
Financial Protection Bureau will pursue rulemaking and guidance to address
anticompetitive closing costs imposed by lenders on homebuyers and
homeowners. These charges—which benefit the lender but not the
borrower—can add thousands to the upfront costs of a mortgage. Those
upfront costs cut into the amount of homebuyers’ down payments and reduce
homeowners’ available equity.</span></span></p><p><span style="font-family: georgia;">7. Tax Credits to Build More
Housing. President Biden is calling for an expansion of the Low-Income
Housing Tax Credit to build or preserve 1.2 million more affordable rental
units. Renters living in these properties save hundreds of dollars each month
on their rent compared with renters with similar incomes who rent in the
unsubsidized market.</span></p><p><span style="line-height: 115%;"><span style="font-family: georgia;">8. Innovation Fund for Housing
Expansion. The<b><u> President is unveiling a new $20 billion competitive grant
fund as part of his Budget to support communities across the country to build
more housing and lower rents and homebuying costs. </u></b>This fund would support the
construction of affordable multifamily rental units; incentivize local actions
to remove unnecessary barriers to housing development; pilot innovative models
to increase the production of affordable and workforce rental housing; and spur
the construction of new starter homes for middle-class families. </span></span></p><p><span style="line-height: 115%;"><b><i><span style="font-family: georgia;">Weitz - intrigued by this as would be my developer contacts. I have to say its a bit concerning that this is 1/3 of what many want to send to Ukraine.</span></i></b></span></p><p><span style="line-height: 115%;"><span style="font-family: georgia;">9. Fighting Rent Gouging by
Corporate Landlords. The Biden-Harris Administration is taking action to combat
egregious rent increases and other unfair practices that are driving up rents. </span></span></p><p><b><i><span style="font-family: georgia;">I've keep an eye on this. I'll never be made a tax credits, but this doesn't seem to solve the issue although the grant program seems very intriguing. </span></i></b></p><p><br /></p><p><br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-46924702900886010022024-03-07T09:21:00.000-08:002024-03-07T09:21:54.079-08:00Fed Chairman Powell speaks at Senate Committee Hearing<p></p><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/K5NMgHPDIZo" width="320" youtube-src-id="K5NMgHPDIZo"></iframe></div><br /> <p></p><p><span style="font-family: georgia;">While I'd expect exactly zero people to watch this 2.5 hour video, Chairman Powell sat for his "Semiannual Monetary Report to Congress".</span></p><p><u><span style="font-family: georgia;">Below are the highlights: </span></u></p><div class="e141zjhk1 css-xm7a9b-ParagraphContainer" style="background-color: white; box-sizing: border-box; margin-block-end: 16px; width: 620px;"><p class="e141zjhk0 css-1r85sm1-FormattedText" style="--summary-bullet-small-font-color: #222222; --summary-font-color: #4D5B5C; box-sizing: border-box; font-stretch: normal; line-height: 24px; margin-block: 4px; margin: 0px; padding: 0.5px 0px;"><span style="font-family: georgia;">The hearing comes after he told lawmakers on Wednesday that the central bank’s policy-setting committee still isn’t convinced that continued progress toward their 2% inflation objective is “assured,” and that it won’t make sense to cut interest rates until it is confident.</span></p></div><div class="e141zjhk1 css-xm7a9b-ParagraphContainer" style="background-color: white; box-sizing: border-box; margin-block-end: 16px; width: 620px;"><p class="e141zjhk0 css-1r85sm1-FormattedText" style="--summary-bullet-small-font-color: #222222; --summary-font-color: #4D5B5C; box-sizing: border-box; font-stretch: normal; line-height: 24px; margin-block: 4px; margin: 0px; padding: 0.5px 0px;"><span style="font-family: georgia;">Powell told the House Financial Services Committee that <u>he still expects cuts to come this year.</u></span></p></div><div class="e141zjhk1 css-xm7a9b-ParagraphContainer" style="background-color: white; box-sizing: border-box; margin-block-end: 16px; width: 620px;"><p class="e141zjhk0 css-1r85sm1-FormattedText" style="--summary-bullet-small-font-color: #222222; --summary-font-color: #4D5B5C; box-sizing: border-box; font-stretch: normal; line-height: 24px; margin-block: 4px; margin: 0px; padding: 0.5px 0px;"><span style="font-family: georgia;">Powell noted that the inflation situation has “eased notably” over the past year, without any significant spikes in unemployment. The labor market remains “relatively tight” even as surging immigration has made more workers available.</span></p></div><div class="e141zjhk1 css-121lfs3-ParagraphContainer" style="background-color: white; box-sizing: border-box; margin-block-end: 0px; width: 620px;"><p class="e141zjhk0 css-1r85sm1-FormattedText" style="--summary-bullet-small-font-color: #222222; --summary-font-color: #4D5B5C; box-sizing: border-box; font-stretch: normal; line-height: 24px; margin-block: 4px; margin: 0px; padding: 0.5px 0px;"><span style="font-family: georgia;">The central bank head's testimony hit the same notes the public has heard from officials in recent weeks following the Federal Open Market Committee’s January meeting.</span></p><p class="e141zjhk0 css-1r85sm1-FormattedText" style="--summary-bullet-small-font-color: #222222; --summary-font-color: #4D5B5C; box-sizing: border-box; font-stretch: normal; line-height: 24px; margin-block: 4px; margin: 0px; padding: 0.5px 0px;"><span style="font-family: georgia;"><i><b><br /></b></i></span></p><p class="e141zjhk0 css-1r85sm1-FormattedText" style="--summary-bullet-small-font-color: #222222; --summary-font-color: #4D5B5C; box-sizing: border-box; font-stretch: normal; line-height: 24px; margin-block: 4px; margin: 0px; padding: 0.5px 0px;"><span style="font-family: georgia;"><i><b>WEITZ - Simply put, I have zero faith the Fed will get this right. They were wrong about inflation being "transitory" and they will be wrong about sticking a soft landing. Time will tell, but I expect housing to start seeing trouble in '24 and the following years to be tough sledding....and that doesn't take into account the $1 Trillion in CRE loans that need to dealt with this year. </b></i></span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 17.25pt; margin: 0.25in 0in 7.5pt;"><span style="font-family: Georgia, serif; font-size: 13.5pt;">For more
information on Snohomish County Commercial Real Estate, consider contacting a
<a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate broker</a>. </span><span style="font-family: "Georgia",serif; font-size: 13.5pt;"><o:p></o:p></span></p><p class="e141zjhk0 css-1r85sm1-FormattedText" style="--summary-bullet-small-font-color: #222222; --summary-font-color: #4D5B5C; box-sizing: border-box; font-stretch: normal; line-height: 24px; margin-block: 4px; margin: 0px; padding: 0.5px 0px;"></p><p style="background: white; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="color: black; font-family: "Georgia",serif; font-size: 13.5pt; mso-color-alt: windowtext;"><br /></span></p><p style="background: white; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="color: black; font-family: "Georgia",serif; font-size: 13.5pt; mso-color-alt: windowtext;">Our Firm</span><span style="font-family: "Georgia",serif; font-size: 13.5pt;"><o:p></o:p></span></p>
<p style="background: white; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="color: black; font-family: "Georgia",serif; font-size: 13.5pt; mso-color-alt: windowtext;">Weitz Commercial</span><span style="font-family: "Georgia",serif; font-size: 13.5pt;"><o:p></o:p></span></p>
<p style="background: white; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="color: black; font-family: "Georgia",serif; font-size: 13.5pt; mso-color-alt: windowtext;"><a href="mailto:Scott@weitzcommercial.com">Scott@weitzcommercial.com</a></span><span style="font-family: "Georgia",serif; font-size: 13.5pt;"><o:p></o:p></span></p>
<p style="background: white; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="color: black; font-family: "Georgia",serif; font-size: 13.5pt; mso-color-alt: windowtext;">T: 206.306.4034</span><span style="font-family: "Georgia",serif; font-size: 13.5pt;"><o:p></o:p></span></p><span style="font-family: georgia;"></span><p></p></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-23498068089930826882024-03-06T11:45:00.000-08:002024-03-06T17:09:09.134-08:00RXR CEO Scott Rechler Commercial Real Estate Update<p></p><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/OhaIusKCLDs" width="320" youtube-src-id="OhaIusKCLDs"></iframe></div><br /><br /><div>Interview with RXR CEO Scott Rechler. He points out many of the issues I've discussed in the past few months. A detailed overview as well as my commentary can be found below.<p></p><p>"A trillion dollars of commercial loans are coming due this year". </p><p>"The slow motion train wreck hasn't 'left the station". </p><p>"The challenges haven't been dealt with".</p><p>Occupancy rates down 20% on office space. </p><p>"There has to be acknowledgement of prices. The values being used by banks are in flux. </p><p>The smaller and regional banks are facing the biggest hurdle. </p><p>Banks referenced include KeyCorp (KEY), ZIONS Bancorp (ZION), M&T Bank (MTB), PNC Financial (PNC). </p><p><b><i>WEITZ: Mr. Rechler always brings a great, well thought out honest take. There is nothing here that I would disagree with. Its going to take awhile for all of this to play out.</i></b></p><p>For more information on investing in <a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Real Estate</a>, consider contacting a <a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate Broker</a>. </p><p>Our Firm: </p><div style="text-align: left;">Weitz Commercial<br />Scott Weitz<br />T: 206.306.4034</div><p><br /></p></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-69949357514267240712024-02-29T11:00:00.000-08:002024-02-29T11:01:52.804-08:00Macy's to close 150 stores - CRE effects<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVprfdBpjy3djA5fZl41y44DLdrFXMi9WcTEmdbWA7DmIywgMq08xI2FFue5Og9rKoOfJySPNKMvj3rfJ2Qbr1sHT8hkGBFb6e32WFGfdpiCB3kQ5yCpcOPKZURvPeJV-tJkmfzrc7OJlUGK1SCUdDP_EbLmWzoxPj0wy7eSf0az3H7-P2s1RA94cqyUs/s1065/macys.webp" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="799" data-original-width="1065" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVprfdBpjy3djA5fZl41y44DLdrFXMi9WcTEmdbWA7DmIywgMq08xI2FFue5Og9rKoOfJySPNKMvj3rfJ2Qbr1sHT8hkGBFb6e32WFGfdpiCB3kQ5yCpcOPKZURvPeJV-tJkmfzrc7OJlUGK1SCUdDP_EbLmWzoxPj0wy7eSf0az3H7-P2s1RA94cqyUs/s320/macys.webp" width="320" /></a></div><span style="font-size: medium;"><a href="https://www.bisnow.com/national/news/retail/suffering-weakened-sales-macys-to-shutter-150-stores-over-next-3-years-123080">Bisnow.com</a>: Macy's released a statement that they will be closing 150 stores nationwide over the next 3 years.</span><p></p><p><span style="font-size: medium;">My immediate reaction was "there are 150 Macy's stores in the US?!</span></p><p><span style="font-size: medium;">Indeed - as of Jan, 2024, there were <u>507 stores in the US</u>. To close 150 is a pretty bold move, and one would imagine that is just the stores where leases are expiring. </span></p><p><span style="font-size: medium;">It also poses a significant question on large retail shopping centers. I'm the last to be considered a shopping expert, but all the Macy's stores I'm aware of are THE or one of the flagships of every mall/ shopping center they are in. That's certainly the case locally in Seattle and Bellevue. Whose big enough in the retail world to fill these spaces? What can the landlord do to somehow utilize all this lost space. I imagine it will take a tremendous amount for alterations to get these spaces functional again. </span></p><p><b><u><span style="font-size: medium;">Below are the key points and my comments. </span></u></b></p><p></p><p style="background: white; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in;"><span style="font-size: medium;"><span style="color: #333333; font-family: Georgia, serif;"><u><b>Macy's will close 150 stores
nationwide over the next three years </b></u>as part of a plan meant to right the ship
</span><span style="font-family: Georgia, serif;">for the storied retailer, which has struggled in recent years, particularly
since the pandemic.<o:p></o:p></span></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: Georgia, serif;"><span style="font-size: medium;">The first 50 stores are scheduled to close by the end of the
fiscal year, Macy's said, with the rest of the closures occurring by the end
of 2026. The statement also mentioned the monetization of $600M to $750M of
assets by the end of 2026, indicating the potential sale of properties.<o:p></o:p></span></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: Georgia, serif;"><span style="font-size: medium;"><br />The impacted stores account for 25% of the company's
square footage but just 10% of sales.<o:p></o:p></span></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: Georgia, serif;"><span style="font-size: medium;">When the closures are complete, Macy's will be left with about
350 stores, just over half its pre-pandemic store count. The company announced a similar in February 2020, closing 125 stores in the three
years that followed.<o:p></o:p></span></span></p><p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: Georgia, serif;"><b><i><span style="font-size: medium;">Weitz- franky, this feels like it may be a slow play to avoid BK and allow time for shareholders to get out/ retain value before closing shop for good. Perhaps that's just the skeptic in me. </span></i></b></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: Georgia, serif;"><span style="font-size: medium;">The company also announced a pivot toward its luxury brands,
Bloomingdale’s and Bluemercury. The renewed focus on these brands is expected
to result in 15 new Bloomingdale's locations and 30 Bluemercury stores in the
next three years. Another 30 existing Bluemercury stores are slated for
remodeling. <o:p></o:p></span></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-size: medium;"><span style="font-family: Georgia, serif;">The move comes amid slumping sales for the legacy department
store chain, as well as a looming proxy fight</span><span style="font-family: Georgia, serif;"> for Macy's with Arkhouse Management, which nominated a
slate of nine directors for Macy's 14-person board not long after the retailer
rejected a bid by Arkhouse and Brigade Capital Management to go private.</span></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: Georgia, serif;"><span style="font-size: medium;">The real prize in taking the company private would likely
be its real estate. Macy's is worth billions more than the $5.8B Arkhouse
and its partner put forward, mainly because of its prime real estate.<o:p></o:p></span></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-size: medium;"><span style="font-family: Georgia, serif;">Last year, Macy's net sales dropped 5.5%
compared to 2022, and 2</span><span style="font-family: Georgia, serif;">comparable store sales were down 6% year-over-year. The chain experienced a loss of $71M in 2023, down from a net income of $105M in</span><span style="font-family: Georgia, serif;">022. For the fourth quarter of 2023, net sales
were off 1.7% compared with a year earlier, and comparable store sales dropped
4.2%.</span></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: Georgia, serif;"><span style="font-size: medium;">Macy's faces the same headwinds as the entire <o:p></o:p></span></span><span style="font-family: Georgia, serif; font-size: large;">department store
sector, which has been slowly contracting for years. In January, department
stores suffered a 6.7% drop in sales compared to a year earlier according to the Census Bureau. </span></p><p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 0in; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-size: medium;"><b><i><span style="font-family: Georgia, serif;">Weitz- I have a feeling this won't be the last story like this. We will follow what we think will be a wild ride in the coming years as best we can for our readers with no political agenda. </span><span style="font-family: Georgia, serif;"> </span></i></b></span></p>
<p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 7.5pt;"><span style="font-family: Georgia, serif;"><span style="font-size: medium;">For more
information on <a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate investing</a>, consider contacting a
<a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate broker</a>.</span></span></p><p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; margin: 0.25in 0in 7.5pt;"><span style="font-family: Georgia, serif;"><span style="font-size: medium;">My contact: </span></span></p><div style="background: white; line-height: 17.25pt; margin: 0.25in 0in 7.5pt; text-align: left;"><span style="font-size: medium;"><span style="font-family: Georgia, serif;">Scott@WeitzCommercial.com <br /></span><span style="font-family: Georgia, serif;">D: 206.306.4034</span></span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-87292815187614595522024-02-20T09:10:00.000-08:002024-02-20T09:10:17.432-08:00Office Market Optimism?<p></p><p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8DDug28tv3Hy3Wo7lqD7Gobr1hU7xexs57C_V3j8mY3AV_XdjEGm29gPRL4B-7hm1lHApmWub36ifJT9h5wziN7B6JVoQUeqwjud9z6Hy8Cyr470sHSBXThFGt3PxyZpmVr-8yeWEIhZwwrCMA89RgW9MxC85w943H77v8DG7aB-zU_YJaftopxI5alM/s474/A1.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="201" data-original-width="474" height="136" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8DDug28tv3Hy3Wo7lqD7Gobr1hU7xexs57C_V3j8mY3AV_XdjEGm29gPRL4B-7hm1lHApmWub36ifJT9h5wziN7B6JVoQUeqwjud9z6Hy8Cyr470sHSBXThFGt3PxyZpmVr-8yeWEIhZwwrCMA89RgW9MxC85w943H77v8DG7aB-zU_YJaftopxI5alM/s320/A1.jpg" width="320" /></a></div><span style="color: #333333;"><span style="font-family: georgia;">Bisnow.com article on “Optimism for
office market”. Despite my typical negative commentary on the intermediate
future for CRE and the economy, I also do my best to remain as neutral as I can
be. As such, here’s an article on optimism for the office market from
Bisnow.com. <o:p></o:p></span></span><p></p>
<p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in;"><span style="color: #333333;"><span style="font-family: georgia;">AP- Though sentiment around the
office market has sunk drastically, <u>some economists believe that the fears
of an urban 'doom loop' might be too extreme.<o:p></o:p></u></span></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: #333333;">Although the office market has faced record-high vacancies and
falling values, experts </span><span style="color: black;">on a panel at
the National Association for Business Economics conference in
Washington, D.C., this week said there are <u>several signs that major
cities can avoid financial crisis</u>, <a href="https://www.marketwatch.com/story/economists-doubt-that-a-doom-loop-will-hit-office-real-estate-cdcd950f" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Market Watch reported</span></a>.</span><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">“Intellectually, based on the data, we’ve
concluded no doom loop fears here. The industry can make its way through,” <a data-tag-id="131363" href="https://www.bisnow.com/tags/moody%E2%80%99s-analytics" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Moody’s Analytics</span></a> Deputy Chief Economist Cristian
deRitis said at the event, according to Market Watch. “<u>There is
quite a bit of capital in the system. The distribution of CRE loans is not just
concentrated in banks</u>."</span><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">Erin Patterson, global co-head of
research and strategy for real estate at <a data-tag-id="163016" href="https://www.bisnow.com/tags/manulife-investment-management" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Manulife Investment Management</span></a>,
said there are <u>other financing options out there that are helping
and banks have been open to working with borrowers to create value for office
buildings.</u></span><u><o:p></o:p></u></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">“That’s an escape hatch from this doom
loop,” Patterson said at the event, according to Market Watch. </span><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">The term "<a href="https://www.techtarget.com/whatis/feature/Urban-doom-loop-explained-What-it-means-for-businesses" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">doom loop</span></a>" comes from the vicious cycle that occurs when
people begin to leave cities, which leads businesses to close and cities to
lose tax revenue. This, in turn, leads these cities to cut services and raise
taxes further driving people out. </span><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">Other economists think this
possibility should be taken more seriously, as it could lead to devastating
impacts on major metro economies. </span><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">As the remote work trend continues,
people aren't coming into downtown offices at the same levels as they did
pre-pandemic, which has caused office values to drop and led to economic
pain in many major cities. </span><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><u><span style="color: black;">"These commercial property tax
revenues are an important component of the budget of local governments, which
means less money for police departments, trash collection and some people are
going to decide that the quality of life has deteriorated too much and they
want out,"</span></u><span style="color: black;"> <a data-tag-id="47223" href="https://www.bisnow.com/tags/columbia-business-school" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Columbia Business School</span></a> professor Stijn Van
Nieuwerburgh <a href="https://www.cbsnews.com/news/empty-office-buildings-doom-loop-cities-60-minutes/" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">said last month</span></a> on 60 Minutes.</span><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">Van Nieuwerburgh added that the top 10
U.S. cities have lost over 2 million residents in the last three years,
taking with them the tax revenue that these cities rely on.</span><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">Boston is projected to face a $1.5B
revenue shortfall in the next five years due to declining office values, <a href="https://www.bisnow.com/boston/news/office/boston-to-face-1b-tax-shortfall-from-struggling-office-market-122894" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">a new report found</span></a> this week, while D.C. <a href="https://www.bisnow.com/washington-dc/news/office/dc-office-market-faces-its-darkest-hour-122551" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">has seen a 'shocking' plunge</span></a> in office values and is <a href="https://www.bisnow.com/washington-dc/news/economic-development/assessments-of-dcs-commercial-property-fall-again-but-this-is-certainly-not-the-bottom-122717" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">expected to lose</span></a> hundreds of millions in tax
revenues. </span><o:p></o:p></span></p>
<p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in;"><i><b><span style="font-family: georgia;"><span style="color: black;">Weitz Take:
This article is pretty funny. The title and start give an ‘opinion’ that things
may turn out fine, and then goes on to cite data that would objectively lead to
a very different conclusion. In an effort to be positive, I’ll say that the
next few years will vary market to market so to paint a broad stroke of doom
and gloom would be irrational. I think there are some smaller submarkets that
could perform well that have untapped potential as of now. </span><o:p></o:p></span></b></i></p>
<p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in;"><span style="font-family: georgia;"><span style="color: black;"><i><b>For instance,
my area of Snohomish County, WA, while I don’t believe it will be immune from
all negativity has considerable room to grow given current zoning opportunities
as well as companies looking for more affordable space than what they could
find in areas of Seattle, Bellevue, Etc. </b></i></span><o:p></o:p></span></p>
<p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in;"><span style="font-family: georgia;"><span style="color: black;">For more
information on <a href="http://wwww.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate</a>, consider contacting a
<a href="http://www.weitzcommercial.com">Snohomish County Commercial Real Estate broker</a>. </span><o:p></o:p></span></p><span style="font-family: georgia;">Contact us Today</span><p></p><div style="text-align: left;"><span style="font-family: georgia;">Weitz Commercial<br />Scott@WeitzCommercial.com<br />t: (206) 306-4034</span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-5129629694392359992024-02-19T14:19:00.000-08:002024-02-19T14:19:25.874-08:00Bank Term Funding Program (BTFP) Basics<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhI0Ni6AKI72-6rv_jIHjA0oXQB5QLmesQJMCMgGnE2hag8SiLESeE4JTzht5eRSzjbjkSkV_5bkIYvnRTWgvr0afwwwqEn5gJyQfarTnNzaPqzSZvZn_AkalWC1ZWpK79i-1OUL38Xu0a7B0lnSKfNiJA1Um2f6LHLW58sleAPMgsNwFhOpc91cS6Ttj8/s392/BTFP.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="220" data-original-width="392" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhI0Ni6AKI72-6rv_jIHjA0oXQB5QLmesQJMCMgGnE2hag8SiLESeE4JTzht5eRSzjbjkSkV_5bkIYvnRTWgvr0afwwwqEn5gJyQfarTnNzaPqzSZvZn_AkalWC1ZWpK79i-1OUL38Xu0a7B0lnSKfNiJA1Um2f6LHLW58sleAPMgsNwFhOpc91cS6Ttj8/s320/BTFP.jpg" width="320" /></a></div><span style="font-family: Garamond, serif;">Remember those bank failures nearly a year ago that had the banks being turned on their heads? Signature Bank, Silicon Valley Bank, etc. What happened to that concern. Things don't seem to have improved much, but the banks all seem fine. What happened. Well, I'll be honest - I wasn't blogging about economics back then and this even went past my radar ..... BUT ..... this is pretty incredible.... here's a direct overview from the Federal Reserve</span><span style="font-family: Garamond, serif;"> website. The Fed funneled</span><span style="font-family: Garamond, serif;"> an extraordinary amount of loans to banks in the form of the Bank Term Funding Program (BTFP). </span><p></p><p class="MsoNormal"><span style="font-family: "Garamond",serif;">On March 12,
2023, the Board of Governors of the Federal Reserve System (Board), by the
unanimous vote of its six members and with the approval of the Secretary of the
Treasury (Secretary), authorized each of the 12 Federal Reserve Banks (Reserve
Banks) to establish and operate the Bank Term Funding Program (BTFP) under
section 13(3) of the Federal Reserve Act (12 U.S.C. § 343(3)). The BTFP makes
funding available to eligible depository institutions to help assure banks have
the ability to meet the needs of all their depositors.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: Garamond, serif;">Here's the data they are required to post: </span></p>
<p class="MsoNormal"><span style="font-family: "Garamond",serif;"><span style="mso-spacerun: yes;"> </span>As of March 15, 2023: The total outstanding
amount of all advances under the BTFP was <b><u>$11,942,528,000</u></b>. <span style="mso-spacerun: yes;"> </span>The total value of the collateral pledged to
secure outstanding advances was <b><u>$15,885,798,000</u></b>. The amount of
interest, fees, and other revenue or items of value received under the
facility, reported on an accrual basis, was $662,000.<o:p></o:p></span></p><p class="MsoNormal"><a href="https://www.federalreserve.gov/publications/files/13-3-report-btfp-20230316.pdf" target="_blank">March 2024 Data</a></p><p class="MsoNormal"><span style="font-family: "Garamond",serif;">As of January 31,
2024: The total outstanding amount of all advances under the BTFP was <b><u>$165,237,527,000</u></b>.
<o:p></o:p></span></p><p class="MsoNormal"><span style="font-family: "Garamond",serif;"><a href="https://www.federalreserve.gov/publications/files/13-3-report-btfp-20240213.pdf" target="_blank">February 2024 Data</a></span></p>
<p class="MsoNormal"><span style="font-family: "Garamond",serif;">The total value
of the collateral pledged to secure outstanding advances was <b><u>$204,762,040,000</u></b>.
In addition, the Department of the Treasury is providing $25 billion as credit
protection to the Reserve Banks.<o:p></o:p></span></p><p class="MsoNormal">So let me get this straight, in less than 12 months, they have issued $165,237,527 to the banks with unclarified payoff periods (as far as I can tell). </p><p class="MsoNormal">Call it what you want, but this is nothing short of a bailout. This program ends soon and frankly, the economic situation is the same (if not worse) in terms of items banks have loans out like Commercial Real Estate. </p><p class="MsoNormal">It will be interesting to see how the banks progress when this program ends. I have to think we will see another round of failures and/or bailouts. </p><p class="MsoNormal">For more information on <a href="http://www.weitzcommercial.com">Snohomish County Real Estate</a>, consider contacting a <a href="http://www.weitzcommercial.com">Commercial Real Estate broker</a>. </p><p class="MsoNormal"><br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-67248858444573213862024-02-16T08:53:00.000-08:002024-02-16T08:53:03.895-08:00Foreclosure Filings on the Rise Nationwide<p><span style="font-family: georgia;"></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: georgia;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-GFq76azPMgSyMrYRnUlfYf6CJnVVZCnM5SVQHeTQU424FSrmQZOif-GBP13QTvkTTh74uMPxTncRwtNFr25yPJjmIH_YqWk51RzjtcgXnFdipa2Xczg2LYm1k2h0Bi6ZoZYkX_NwqVeUCybh0RQ2HWWHzi0Qb_uP8LH3vinCR9ZFqiHMcPSe1qilorQ/s273/Foreclosure.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="185" data-original-width="273" height="185" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-GFq76azPMgSyMrYRnUlfYf6CJnVVZCnM5SVQHeTQU424FSrmQZOif-GBP13QTvkTTh74uMPxTncRwtNFr25yPJjmIH_YqWk51RzjtcgXnFdipa2Xczg2LYm1k2h0Bi6ZoZYkX_NwqVeUCybh0RQ2HWWHzi0Qb_uP8LH3vinCR9ZFqiHMcPSe1qilorQ/s1600/Foreclosure.jpg" width="273" /></a></span></div><span style="font-family: georgia;"><br />AP - <a href="https://www.msn.com/en-us/money/realestate/foreclosure-filings-rise-homeowners-caught-in-storm-of-financial-uncertainty/ar-BB1ikNIn?ocid=msedgntp&pc=LCTS&cvid=fde8fab3eb694231943821a50612b3a2&ei=37#comments" target="_blank">Article on Nationwide increase in foreclosure filings</a>. Key points and comment below. </span><p></p><p></p><p style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="font-family: georgia;"><span style="color: black;">Foreclosure filings have seen an uptick,
signaling potential distress for homeowners amid ongoing financial volatility.</span><o:p></o:p></span></p>
<p data-t="{"n":"blueLinks"}" style="-webkit-text-stroke-width: 0px; background: white; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">The <u>number of properties with foreclosure filings
in January is up 5%</u> compared to a year ago and 10% from December, according
to real estate data provider ATTOM's <a data-t="{"n":"destination","t":13,"b":1,"c.t":7}" href="https://www.attomdata.com/news/foreclosure-trends/u-s-foreclosure-activity-sees-notable-increase-in-january-2024/" style="color: var(--accent-foreground-rest);" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">January 2024
U.S. Foreclosure Market Report</span></a>. The report shows there were <u>a
total of 33,270 foreclosure filings</u> — default notices, scheduled auctions
or bank repossessions.</span><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: georgia;"><span style="background: white; color: black; line-height: 115%;">"We
observed a slight uptick in foreclosure filings, which may be partially
attributed to the typical post-holiday progression of filings through the legal
system," ATTOM CEO Rob Barber said. "However, other external factors
may be at play such as escalating interest rates, inflation, employment shifts
and other market dynamics. We remain vigilant in monitoring these trends to
understand their full impact on foreclosure activity."</span><span style="background: white; line-height: 115%;"><o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="font-family: georgia;"><u><span style="background: white; color: black; line-height: 115%;">Foreclosure completions surged in 19 states.</span></u><span style="background: white; color: black; line-height: 115%;"> In January, lenders
repossessed 3,954 properties through completed foreclosures, marking a 1%
increase from the previous year and a 13% rise from December. It's the first
month-over-month increase in completed foreclosures (REOs) since July.</span><span style="background: white; line-height: 115%;"><o:p></o:p></span></span></p>
<p style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="font-family: georgia;"><span style="color: black;">Among the 224 regions with a population
of at least 200,000, cities with the highest numbers of REOs included Detroit
with 609, followed by Chicago with 194, New York City with 163, Philadelphia
with 107 and San Francisco with 107.</span><o:p></o:p></span></p>
<p data-t="{"n":"blueLinks"}" style="-webkit-text-stroke-width: 0px; background: white; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">Foreclosure rates across the United States remained
concerning, with one in every 4,236 housing units experiencing a filing
nationwide. Leading the pack in foreclosure rates were Delaware, where one in
every 2,269 housing units faced a foreclosure filing, followed by Nevada with
one in every 2,272 and Indiana with one in every 2,499.</span><o:p></o:p></span></p>
<p data-t="{"n":"blueLinks"}" style="-webkit-text-stroke-width: 0px; background: white; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">Foreclosure initiations surged monthly and yearly as
lenders started proceedings on 21,770 properties in January — a 6% increase
from the previous month and a 5% rise compared to the same period a year ago.</span><o:p></o:p></span></p>
<p style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="font-family: georgia;"><span style="color: black;">Leading the tally of states with the
highest number of foreclosure starts in January are California, which saw
2,719, followed by Texas with 2,613, Florida with 2,330, New York with 1,341
and Illinois with 763.</span><o:p></o:p></span></p>
<p data-t="{"n":"blueLinks"}" style="-webkit-text-stroke-width: 0px; background: white; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: black;"><span style="font-family: georgia;">In major metropolitan statistical areas with
populations of at least 200,000, New York led with 1,470 foreclosure
initiations, trailed by Houston with 1,015, Los Angeles with 817, Miami with
804 and Chicago with 763.</span></span><span style="font-family: "Segoe UI",sans-serif; font-size: 13.0pt;"><o:p></o:p></span></p><b><u>Weitz Take: If you read this blog, you know I've been predicting this since rates increased dramtically and job loses (that the media hardly covers) started in the last 12-18 months. I think we are just at the tip of the ice berg on this. Buckle up. </u></b><p></p><p>For help with foreclosure defense, consider contacting a <a href="http://www.weitzlawfirm.com">Snohomish County Foreclosure attorney</a>. </p><p><br /></p><p><br /></p><p><br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-2643928735087485482024-02-15T08:58:00.000-08:002024-02-15T15:03:39.814-08:001/5 of all Commercial Loans set to mature this year. <p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhn9Lz6W61BIWS31PUwU4NyHABdDPV_oqJIritQuUYl6zcB9XPxjXsxd24ohen2xLWiDJU4CFe1MZO5sDmpmwLpjPmKXhCm-B-V3q0Xsm2FI-tMm-HrC_nJOUm0Fpy7YVwNcWZYHtxa0YilCzEtj47zCtPWUCZt_cdyU59DvsbhAg9BDVBObJrKPl-yEq8/s640/Commercial%20Loan%20maturity.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="214" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhn9Lz6W61BIWS31PUwU4NyHABdDPV_oqJIritQuUYl6zcB9XPxjXsxd24ohen2xLWiDJU4CFe1MZO5sDmpmwLpjPmKXhCm-B-V3q0Xsm2FI-tMm-HrC_nJOUm0Fpy7YVwNcWZYHtxa0YilCzEtj47zCtPWUCZt_cdyU59DvsbhAg9BDVBObJrKPl-yEq8/s320/Commercial%20Loan%20maturity.jpg" width="320" /></a></div><br /><a href="https://www.bisnow.com/national/news/commercial-real-estate/929b-in-commercial-property-loans-set-to-mature-in-2024-122842">Article from Bisnow.com on Commercial Real Estate Loans coming due in 2024</a>. Highlights and overview below. <p></p><p class="MsoNormal"><span style="background: white; color: black; font-family: "Garamond",serif; mso-color-alt: windowtext;"><i><b>Almost one-fifth of outstanding
commercial real estate debt is due to mature this year, a total of $929B in
debt obligations</b></i> that will require borrowers to refinance or sell
properties, according to new figures from the </span><span style="font-family: "Garamond",serif;"><a data-tag-id="38533" href="https://www.bisnow.com/tags/mortgage-bankers-association" style="-webkit-text-stroke-width: 0px; box-sizing: border-box; cursor: pointer; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-align: start; transition: all 0.25s ease 0s; widows: 2; word-spacing: 0px;" target="_blank"><span style="background: white; color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Mortgage Bankers Association</span></a><span style="background: white; color: black; mso-color-alt: windowtext;"><span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;">.</span></span><span style="background: white;"><o:p></o:p></span></span></p>
<p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in;"><span style="color: black; font-family: "Garamond",serif; mso-color-alt: windowtext;">The value of loans set to come due is up
40% from an earlier $659B estimate by the MBA, <a href="https://www.bloomberg.com/news/articles/2024-02-12/commercial-property-loans-coming-due-in-us-jump-to-929-billion?embedded-checkout=true" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Bloomberg reports</span></a>. The outlet attributes the sizable
increase to an uptick in loan extensions and similar delays rather than an
onslaught of new deals.</span><span style="font-family: "Garamond",serif;"><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: black; font-family: "Garamond",serif; mso-color-alt: windowtext;">U.S. commercial real estate backs about $4.7T in
debt, and investors, lenders and regulators have grown antsy as building
values slide and loans mature, Bloomberg reported. <b><u>Prices on commercial
properties have fallen 21% from an early 2022 peak. Office prices have
dropped most precipitously, sinking 35%.</u></b></span><span style="font-family: "Garamond",serif;"><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: black; font-family: "Garamond",serif; mso-color-alt: windowtext;">Particularly in the office market, borrowers have
largely been playing a game of loan extensions when possible, pushing harder
decision points down the road. <u><b>About 25% of office loans are coming due in
2024, according to the MBA.</b></u></span><span style="font-family: "Garamond",serif;"><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: black; font-family: "Garamond",serif; mso-color-alt: windowtext;">While uncertainty around interest rates, unclear
property values and questions about real estate fundamentals have
suppressed transactions of late, it's more likely deals get done this
year, <a data-tag-id="44622" href="https://www.bisnow.com/tags/jamie-woodwell" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Jamie Woodwell</span></a>, head of commercial real estate research
at the Mortgage Bankers Association, told Bloomberg. </span><span style="font-family: "Garamond",serif;"><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: black; font-family: "Garamond",serif; mso-color-alt: windowtext;">“This year’s maturities, coupled with greater clarity
in those and other areas, should begin to break the logjam in the
markets," Woodwell said in a statement.</span><span style="font-family: "Garamond",serif;"><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: black; font-family: "Garamond",serif; mso-color-alt: windowtext;">This year could also bring more refinanced loans and
fewer modifications on better-performing properties, <a data-tag-id="1630" href="https://www.bisnow.com/tags/trepp" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Trepp</span></a> Research Director Stephen Buschbom <a href="https://www.bisnow.com/chicago/news/commercial-real-estate/a-game-of-extensions-chicagos-top-five-maturing-cmbs-loans-in-2024-122333" style="box-sizing: border-box; cursor: pointer; transition: all 0.25s ease 0s;" target="_blank"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">told <em style="box-sizing: border-box;"><span style="font-family: "Garamond",serif;">Bisnow</span></em> earlier this year</span></a>. Still,
if loan modifications continue, it is a signal that the market’s health has yet
to improve, he said. </span><span style="font-family: "Garamond",serif;"><o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: black; font-family: "Garamond",serif; mso-color-alt: windowtext;">“If we do start to see some refinances happen at
maturity, that would be a really nice, positive sign to see,” Buschbom said.
“But at this point, I don't think anybody's baseline scenario would be that
they're expecting to see more refinances for office buildings than they did
last year.”.</span><span style="font-family: "Garamond",serif;"><o:p></o:p></span></p><p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><b>Weitz Commercial Notes: This is absolutely staggering. I imagine banks will keep 'punting' by doing loan extensions so they don't have to take the loses on their books as well. The entire situation seems to be just kicking the can down the road. As some point, the music has to stop and reality has to sink in, but it's hard to say when that will play out. The middle to end of this year seems like a good guess. </b></p><p style="background: white; box-sizing: border-box; line-height: 17.25pt; margin: 0.25in 0in 7.5pt; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2;"><o:p><span style="font-family: Garamond, serif;">For more information on <a href="http://www.weitzcommercial.com">Snohomish County Commercial Real Estate</a>, consider contacting a <a href="http://www.weitzcommercial.com">Snohomish County Commercial Real Estate Broker.</a> If you need to restructure debt, or seek a loan extension, consider contacting a <a href="http://www.weitzlawfirm.com">Snohomish County Real Estate Debt restructure attorney</a>. </span></o:p></p><p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: Garamond, serif;">Our Firm: </span></p><div style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin: 0.25in 0in 7.5pt; orphans: 2; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;">Weitz Commercial<br />108 Union Street<br />Snohomish, WA <br />t: 206.306.4034</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-20171762597347676482024-02-14T10:30:00.000-08:002024-02-14T10:30:03.533-08:00CNBC - Commercial Real Estate will be a 'dull pain'. <p></p><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;">Interesting interviewing with Mega Commercial Owner Richard LeFrak discussing commercial real estate issue and further prognosis. I'll highlight the key items below. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/In1FhHDJpE4" width="320" youtube-src-id="In1FhHDJpE4"></iframe></div><br /><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">* Apartment rents are starting to firm up again as "everyone is working";</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">* "We are in an unvirtuous cycle as no-one knows what anything is worth, and thus its hard to get financing. Commercial Real Estate lives on debt so if debt is unavailable, its a complete guess what anything is worth".</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">* Big vague bunch of facts; there is no money available; there will be severe loses by equity owners and some financial institutions. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">* Why have we avoided real trouble in commercial real estate? "The reality of the problem is going to be more obvious". </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">* "We are going to see more and more problems in the next 12-24 months. I don't think there is a 'magic bullet'. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">*Even the distress funds have not been that active yet. It will be a dull pain that won't change for awhile "unless rates go to 3-5% and everyone goes back to work. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">Weitz Take: finally a rationale and realistic mind in the media - we wholeheartedly agree that this is situation will last awhile and may be worse than many predict. Time will tell, we believe people with extensive real estate portfolios should consider diversifying into other assets. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">For more information on <a href="http://www.weitzcommercial.com" target="_blank">Snohomish Commercial Real Estate</a>, consider contacting <a href="http://www.weitzcommercial.com" target="_blank">Snohomish Commercial Real Estate broker</a>. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">Our Firm</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">Weitz Commercial</div><div class="separator" style="clear: both; text-align: left;">Scott@Weitzcommercial.com</div><div class="separator" style="clear: both; text-align: left;">t: 206.306.4034</div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"> </div><br /> <p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-56577122219396451032024-02-13T09:25:00.000-08:002024-02-13T09:25:05.085-08:00Jan '24 CPI data hotter than expected.<p><span style="font-family: georgia;"></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: georgia;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdtQh2V8yL6m6dH8ZaQ0jnk3PHgbzzoxaLCzeCgIcOELzfGDXGJiwn9tFQErwz29DeChA3A93T7SKky03lVvXMDDm3YiBFgv7TilXEx-J16L0jeAjc5qlBJMAa07UjfBoeqmOggAa206pHcf8xwwTyXwy4r9_rDMaisrl501Zlm-YKZe8T0fYPkg5R6Rg/s474/Core%20CPI.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="266" data-original-width="474" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdtQh2V8yL6m6dH8ZaQ0jnk3PHgbzzoxaLCzeCgIcOELzfGDXGJiwn9tFQErwz29DeChA3A93T7SKky03lVvXMDDm3YiBFgv7TilXEx-J16L0jeAjc5qlBJMAa07UjfBoeqmOggAa206pHcf8xwwTyXwy4r9_rDMaisrl501Zlm-YKZe8T0fYPkg5R6Rg/s320/Core%20CPI.jpg" width="320" /></a></span></div><span style="font-family: georgia;"><br />AP- <a href="https://www.cnbc.com/2024/02/13/cpi-inflation-january-2024-consumer-prices-rose-0point3percent-in-january-more-than-expected-as-the-annual-rate-moved-to-3point1percent.html" target="_blank">Inflation Data</a> out for January; it was higher than expected which increases the likelihood that the Fed will keep rates high for awhile. </span><p></p><p><span style="font-family: georgia;"><u><b>Details and commentary below: </b></u></span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">Inflation rose more than expected in January as stubbornly high shelter prices weighed on consumers, the Labor Department reported Tuesday.</span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">The consumer price index, a broad-based measure of the prices shoppers face for goods and services across the economy, increased 0.3% for the month, the Bureau of Labor Statistics reported. On a 12-month basis, that came out to 3.1%, down from 3.4% in December.</span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;"><i><b>Economists surveyed by Dow Jones had been looking for a monthly increase of 0.2% and an annual gain of 2.9%.</b></i></span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">Excluding volatile food and energy prices, the so-called <u><b>core CPI</b></u> accelerated 0.4% in January and <b>was up 3.9% from a year ago</b>, unchanged from December. The forecast had been for 0.3% and 3.7%, respectively.</span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">Shelter prices, which comprise about one-third of the CPI weighting, accounted for much of the rise. The index for that category climbed 0.6% on the month, contributing more than two-thirds of the headline increase, the BLS said. <b><u>On a 12-month basis, shelter rose 6%</u></b>.</span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">Food prices moved higher as well, up 0.4% on the month. Energy helped offset some of the increase, down 0.9% due largely to a 3.3% slide in gasoline prices.</span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"></p><div class="separator" style="clear: both; text-align: center;"><br /></div><span style="font-family: georgia;">Fed officials expect inflation to recede back to their 2% annual target in large part because they<u><b> think shelter prices will decelerate through the year</b></u>. January’s increase could be problematic for a central bank looking to take its foot off the brake for monetary policy at its tightest in more than two decades.</span><p></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><b><u>Weitz- note that the Fed is openly saying they think rents/ real estate will lower this year. I suppose that's saying the 'quiet part out loud'. </u></b></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">“The much-anticipated CPI report is a disappointment for those who expected inflation to edge lower allowing the Fed to begin easing rates sooner rather than later,” said Quincy Krosby, chief global strategist at LPL Financial. “Across the board numbers were hotter than expected making certain that the Fed will need more data before initiating a rate cutting cycle.”</span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">In recent days, policymakers including Chair Jerome Powell have said the broader strength of the U.S. economy gives the Fed more time to process data as it doesn’t have to worry about high rates crushing growth.</span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">Weitz- time will tell on this. I think these rates have already started to hurt the economy but the "data" simply is reactionary. </span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">Market pricing before the CPI release indicated a tilt toward the first rate cut coming in May, with a likely total of five quarter-percentage point moves lower before the end of 2024, according to CME Group data. However, <b><u>several Fed officials have said they think two or three cuts are more likely.</u></b></span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">Outside of the jump in shelter costs, the rest of the inflation picture was a mixed bag.</span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;"><span class="transition-fade-appear-done transition-fade-enter-done" style="box-sizing: border-box;"></span></span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><span style="font-family: georgia;">Used vehicle prices declined 3.4%, apparel costs fell 0.7% and medical commodities declined 0.6%. Electricity costs rose 1.2% and airline fares increased 1.4%. At the grocery store, ham prices fell 3.1% and eggs jumped 3.4%.<br /></span></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><b>Weitz - The market is reacting negative to this news as they perceive that rates will stay higher for longer. I personally this think is just the beginning of a long, negative stretch for the general economy. At some point, the inflationary data will turn flat to negative, but we will be in a 'deflation' or 'stagflation' scenario. At that point, the Fed will start to lower rates, but the damage will be done and its hard to turn around a deflationary spiral. Time will tell I suppose. </b></p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"> For more information on interest rates, consider contacting a <a href="https://movement.com/lo/carrie-haines">Lake Stevens Mortgage Broker</a>. </p><p style="box-sizing: border-box; padding-right: 20px; position: relative;"><br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-61075151818715921102024-02-12T16:42:00.000-08:002024-02-12T16:45:00.444-08:002024 Job Losses - Jan 1 to current according to WSJ<p>Below is an email from a mortgage industry insider discussing trends they believe will lead to lower interest rates by the Fed. I'm focused on the job loses, and these don't take into account 1099 Contractor positions lost. These numbers are fairly staggering. Bottom line is the reality of market doesn't match up with the government data currently where they like to say we are at "record low unemployment" - I fully expect the Fed to lower rates as well, but also predict they will be 'late to party' per usual. This is what happens when you base all your decisions on reactionary bureaucratic data rather than proactive, critical thinking. </p><p style="text-align: center;">___________________________________________________________________</p><p><span face="Calibri, Helvetica, sans-serif" style="background-color: white;">Hi All,</span></p><div dir="ltr" style="background-color: white; color: #222222; font-family: Arial, Helvetica, sans-serif;"><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><br /></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;">Thought you might like to see what's happening in the labor market and what that may mean to rates, inflation and the economy. The Wall Street Journal posted a list of announced corporate layoffs since January 2024 to today. This info supports the deflationary trend we're heading into and how fast it may go. With luck the Fed Reserve will see this scheduled decline in labor and start openly planning for lower rates.</span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><br /></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;">The typical economic experience starts with job losses </span><span face="Calibri, Helvetica, sans-serif" style="color: black;">and then lower spending due to lack of income which inevitably</span><span face="Calibri, Helvetica, sans-serif" style="color: black;"> leads to lower production and manufacturing. The cycle continues until the economy is headed for, or is in, a recession or depression. During this time and at some point, the Fed Reserve will acknowledge what's happening and then actively buy up mortgage bonds to lower mortgage interest rates and also lower the fed funds rate to "inspire" spending among companies and the public. </span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><br /></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;">The typical timeline for lower rates could be seen as: </span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b><br /></b></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b>Economic Slowdown (indicated by layoffs and lower production) leads to </b></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b> </b></span><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b>→</b></span><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b> Central Bank Lowers Interest Rates (Monetary Policy) </b></span><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b>leads to </b></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b> </b></span><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b>→</b></span><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b> Lower Borrowing Costs (for businesses and consumers) </b></span><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b>leads to </b></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b> → Lower Mortgage and Interest Rates </b></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><br /></span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;">And then the vicious and chaotic cycle begins again. Only we hope the Fed will not let rates drop below 5% as 5.0% to 5.5% is a stable range and average rate seen over various timelines. </span></div><div style="margin: 0px;"><span face="Calibri, Helvetica, sans-serif" style="color: black;"><br /></span></div><p style="margin-bottom: 0px; margin-top: 0px;"><span face="Calibri, sans-serif" style="color: black; line-height: 25.68px;"><b>This layoff list for February 2024 and January 2024 means the economy is still going to record significant job losses in 2024. The impact can take a few months to hit economic reports.</b> </span></p><p style="margin-bottom: 0px; margin-top: 0px;"><span face="Calibri, sans-serif" style="color: black; line-height: 25.68px;"><br /></span></p><p style="margin-bottom: 0px; margin-top: 0px;"><span face="Calibri, sans-serif" style="color: black; line-height: 22.8267px;">These are just the big corporations reporting in. Small businesses and those that provide services and products to these companies will be in the same downsizing mode.</span></p><p style="margin-bottom: 0px; margin-top: 0px;"><span face="Calibri, sans-serif" style="color: black; line-height: 25.68px;"><b><br /></b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black; line-height: 19.9733px;"><b><u>February 2024</u></b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>DocuSign</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The e-signature company said it would lay off about <b>6% of its workforce</b>, mostly from its sales and marketing teams.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Estée Lauder</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The cosmetics company said it would cut up to </span><span face="Calibri, Helvetica, sans-serif" style="color: black;"><b>3,100 positions</b></span><span face="Calibri, sans-serif" style="color: black;">, or about 5% of its workers, following several weak quarters. </span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Okta</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The identification-software company is laying off <b>400 employees, or about 7% of its workforce</b>, in its latest round of job cuts. </span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Snap</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">In the Snapchat parent’s latest round of job cuts, the social-media company is <b>reducing its workforce by about 10%</b> to trim costs amid a soft advertising market.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Warner Music</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">Warner Music Group said it would cut 600 employees, or around 10% of its workforce. Chief Executive Robert Kyncl said in a note to employees that the changes would result in $200 million in annual cost savings, which would mostly be used to support the company’s core business. </span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Zoom</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The videoconferencing company said it would cut about <b>2% of its workforce</b>. The layoffs come about a year after the company reduced its staff by 15%.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><br /></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black; line-height: 19.9733px;"><b><u>January 2024</u></b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Alphabet</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">Google laid off <b>hundreds of employees in January</b> in divisions including hardware and internal software tools, as the search giant continues to reverse its pandemic hiring spree. The company later in January said there <b>were more layoffs to come but didn’t specify how many</b> employees would be cut or which teams would be affected.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Amazon</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The e-commerce giant is <b>eliminating hundreds of jobs across its film and television studio</b> and Twitch streaming platform in an effort to rein in costs.<b> </b>Its audiobook platform Audible and its Buy With Prime division for third-party merchants are also each <b>cutting about 5% of their staff</b>.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>BlackRock</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The world’s largest asset manager said it would layoff<b> 600 employees, or around 3% of its total workforce</b>. The company laid off about 3% in January 2023 as well. </span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Citigroup</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The bank said it would eliminate <b>20,000 jobs by the end of 2026</b> as part of a multiyear restructuring plan.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Discord</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The free messaging platform popular with videogamers said it is cutting <b>17% of its staff.</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Duolingo</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"> The language-learning software company <b>cut 10% of its contractors </b>and said it would use artificial intelligence to handle some content creation. </span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>EBay</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The online marketplace said it would <b>lay off about 1,000 employees, or 9% of its full-time workforce</b>, as part of efforts to boost performance at a time of what it called rising competition and softer consumer spending.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>iRobot</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The smart vacuum company said it would cut <b>350 jobs, or 31% of its workforce</b>, following the termination of its merger agreement with Amazon.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Macy’s</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The retailer said it is eliminating 2,350 store and corporate positions, or 3.5% of its overall workforce excluding seasonal hires, to trim costs.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Microsoft</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The tech company is <b>cutting 1,900 employees, or about 8% of its videogame staff</b>, after last year’s acquisition of Activision Blizzard. The layoffs affect less than 1% of total workforce.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>PayPal</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The digital payments company plans to trim 9% of its workforce this year. Last year, it said it would <b>lay off 2,000 employees, or a 7% cut</b>.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Rent the Runway </b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The fashion subscription company said it is <b>cutting 37 roles, or about 10% of its staff</b>.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Salesforce</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The cloud-based software company is <b>laying off around 700 employees, or 1% of its workforce</b>, according to a person familiar with the matter.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Sports Illustrated</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The legacy sports publication <b>announced major layoffs, according to its union</b>, sparking turmoil at the magazine. The announcement came after Sports Illustrated’s publisher said it failed to make a payment to its licensor and lost its license to publish the magazine. </span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>United Parcel Service</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The package-delivery giant plans to <b>cut about 12,000 jobs this year </b>amid a slowdown in its delivery business. The cuts will result in $1 billion in savings, UPS said.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Unity Software</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The videogame company said it would lay off 1,800 employees, or about 25% of its workforce, following cuts by other game companies over the past year. </span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Universal Music Group</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The music company plans to <b>lay off around 100 to 300 employees globally this year</b>, according to a person familiar with the matter.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Wayfair</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The online retailer is <b>laying off about 1,650 employees, or 13% of its workforce</b>, weeks after its chief executive sent a memo asking them to work harder has done several rounds of layoffs in recent years as pandemic furniture buying has cooled.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><b>Xerox</b></span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;">The printer maker said it would <b>trim its workforce by 15% had 20,500 employees at the end of 2024</b>, according to regulatory filings.</span></p><p style="margin: 0in 0in 8pt;"><span face="Calibri, sans-serif" style="color: black;"><i>Source WSJ - By Joseph De AvilaFollow</i></span></p><p style="margin: 0in 0in 8pt;">For more information on <a href="https://movement.com/lo/carrie-haines">Lake Stevens Mortgage Needs</a>, consider contacting a professional loan officer. </p><p style="margin: 0in 0in 8pt;"><br /></p><p style="margin: 0in 0in 8pt;"><br /></p><p style="margin: 0in 0in 8pt;"><br /></p></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-39210963983308323972024-02-12T11:18:00.000-08:002024-02-12T11:18:19.784-08:00WSJ- Economy is starting to look normal - Housing Isn't<p><span style="font-family: georgia;"></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: georgia;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdkhoVlqenVrxYiNhbUCIGvGfKD08pnRZ51XVsX7Hiw7UsJSfR5VOFT24u9zNgIAIgcsb-utYQtcrauIdhS1CMskOw1Ef81BmtYKVbp-QaDqAQAaeEZGfADDaxBCxf_RbV-hRX4VH9KIm4oeraq3wGQhR-pBWeuYnYBrXM4Ib47APSRyDdZvA4ij73tvI/s275/Interest%20rates.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="183" data-original-width="275" height="183" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdkhoVlqenVrxYiNhbUCIGvGfKD08pnRZ51XVsX7Hiw7UsJSfR5VOFT24u9zNgIAIgcsb-utYQtcrauIdhS1CMskOw1Ef81BmtYKVbp-QaDqAQAaeEZGfADDaxBCxf_RbV-hRX4VH9KIm4oeraq3wGQhR-pBWeuYnYBrXM4Ib47APSRyDdZvA4ij73tvI/s1600/Interest%20rates.jpg" width="275" /></a></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;">WSJ- A <a href="https://www.wsj.com/economy/housing/the-economy-is-starting-to-look-normalhousing-isnt-66266f5d?mod=housing_news_article_pos5" target="_blank">recent article in the WSJ</a> on the State of Housing. Some good points and we will dig into the details and where we think they nailed it or aren't digging deep enough. </span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><br /><b><u>The Basics:</u></b> <br /><span style="color: black;"><br /></span></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">If you haven’t tried to buy a home lately, the U.S. economy is
starting to look kind of, sort of normal. But the housing market is still a
mess, and it looks as if it will be that way for a long time.</span></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;"><br /></span><span style="color: black;">Finally,
the labor market has been moderating. Both job gains and wage growth,<a data-type="link" href="https://www.wsj.com/economy/jobs/jobs-report-december-today-unemployment-economy-58801a70" style="box-sizing: border-box; color: var(--interactive-text-color);"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;"> while still looking robust</span></a>, have slowed. The
unemployment rate, at 3.7%, is right at its 2019 average.</span></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;">A lot of the distortions that came in the
wake of the pandemic—a massive reshuffling of the job market, hefty government
relief, huge savings stockpiles, soaring demand for goods, supply-chain
distortions and skyrocketing inflation—look to have been largely wrung out.</span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">Except for the housing market. Even with the retreat from the
24-year high set in late October, <b><u>the average rate on 30-year mortgage,
at 6.6% in the latest week according to Freddie Mac, is about 3 percentage
points higher than before the pandemic.</u></b> Prices are much higher too,
with the National Association of Realtors on Friday reporting that the median
existing, or previously owned, <b><u>single-family home sold in December
fetched $387,000, versus $277,000 in December 2019</u></b>. Put the two
together and affordability is far worse than before.</span><br /><b><i><br /></i></b></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><b><i>Weitz - I'm not sure many realize the drastic difference just 3% points can make when applying for a mortgage. For instance, lets talk a $600k loan which sadly isn't getting you a great home these days in the Seattle area. At a 3.6% interest rate, that loan over 30 years will cost the borrower approximately $2,727/ month (not including taxes, insurance, etc) according to mortgagecalculator.org. That same loan at 6.6% will cost $3,832. As you can see, the purchase power of the average income will get you far less home that it would have 3 years ago, yet prices have sky rocketed due to lower inventory as discussed in more detail below. </i></b><br /><span style="color: black;"><br /></span></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">A lot
of the problem comes down to supply. With so many homeowners locking in low
rates before and during the early part of the pandemic, they are loath to move
and sell. <u>Friday’s report showed <a data-type="link" href="https://www.wsj.com/economy/housing/home-sales-likely-fell-to-15-year-low-in-2023-3da220e1?mod=article_inline" style="box-sizing: border-box; color: var(--interactive-text-color);" target="_blank"><span style="color: black; mso-color-alt: windowtext;">the fewest existing homes were
sold last year since 1995</span></a>.</u></span><br /><b><i><br /></i></b></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><b><i>Weitz - This shows the issue. We have very low supply, and the lowest number of sales in 30 years. Sellers can't sell as they know they can't buy a new home at 6.5%+ and give up what is likely a low interest rate on their current home. Simply put, the market is in a stalemate. </i></b><br /><br /></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;">There is no quick solution here. Even if mortgage rates decline
over the next year, they are unlikely to drop so much that they completely
reverse the lock-in effect. Home builders are constructing more small homes at
lower prices to serve entry-level buyers, and additionally large builders are
offering “buydowns” that lower buyers’ mortgage rates. But building more homes
isn’t as simple as throwing a switch.<br /><span style="color: black;">Wednesday,
the National Association of Home Builders said that its measure of builders’
single-family home sales expectations over the next six months rose to its
highest level in January since July. <b>The Commerce Department on Thursday
reported that construction was started on a seasonally adjusted 1.09 million
homes in the fourth quarter—the most since the second quarter of 2022.</b></span><br /><i><b>Weitz- I love to see the inventory of homes coming on the market. That said, it could be a double sided sword. The more inventory that comes on the market, the more the market will be tested at exactly what the market will dictate for pricing with rates at current levels. </b></i><br /><span style="color: black;"><br /></span></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;">Just
because housing could add to GDP doesn’t mean what is happening with it is
good. People unable to move for fear of losing their low rate payments,
would-be buyers unable to find a home they can afford—these are problems. Even
if the rest of the economy ends up looking healthy this year, housing won’t.</span><br /><span style="color: black;"><i><b><br /></b></i></span></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;"><span style="color: black;"><i><b>Weitz - overall, a solid article getting to the heart of the matter by the WSJ. It will be an interesting year to see how it all shakes out. I predict the areas where sellers can afford to liquidate / sell like 2nd home markets will be the ones where inventory increases, and we start to see where the supply/ demand truly is. Almost everyone I talk to says that we are going to explode higher if/ when rates fall. I think the unintended consequences of that will be increased inventory and we may actually have the opposite effect. </b></i></span><br /><br /></span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;">For more information on mortgages rates and purchasing power, consider contacting a <a href="https://movement.com/lo/carrie-haines" target="_blank">Lake Stevens Mortgage Broker</a>. </span></div><p></p><p>
</p><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: var(--primary-text-color); font-family: georgia;">My Info:</span></div><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;">Scott Weitz<br />Designated Broker; <a href="www.weitzcommercial.com ">Snohomish Commercial Broker<br /></a></span><div style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); -webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; color: var(--primary-text-color); font-variant-caps: normal; font-variant-ligatures: normal; line-height: calc(1.58824); margin: 0in 0in 12pt; orphans: 2; overflow-wrap: break-word; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="font-family: georgia;">Weitz Commercial<br /></span><span style="font-family: georgia;"><i>t: 206.306.4034<br /></i></span><span style="font-family: georgia;"><span style="color: black;"><i>e: Scott@weitzcommercial.com </i></span></span></div></div>
<p class="css-k3zb6l-paragraph" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><o:p><span style="font-family: georgia;"><i><b> </b></i></span></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p><br /><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-26498405930023624162024-02-08T09:43:00.000-08:002024-02-08T09:43:10.564-08:00Wall Street Journal Retail CRE Update & Analysis<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirFUDuy1CuPaBt9_oEzYNZpS0vpPh9nWc2WwjevAm59ucVKD1rB6m0446sxpfsicQrWP8qddnv8ognBruO7r-GZ52mipWuCRHxm5PLCIkeRWzyBMgIE-uHGuDH84RmEt58BTZ7J8rjFwy3P1xOr6c-6gUlRnrrOSKceuM6wCQCUijb5vf2xQvIwlFgWuc/s2000/Retail-web.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1332" data-original-width="2000" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirFUDuy1CuPaBt9_oEzYNZpS0vpPh9nWc2WwjevAm59ucVKD1rB6m0446sxpfsicQrWP8qddnv8ognBruO7r-GZ52mipWuCRHxm5PLCIkeRWzyBMgIE-uHGuDH84RmEt58BTZ7J8rjFwy3P1xOr6c-6gUlRnrrOSKceuM6wCQCUijb5vf2xQvIwlFgWuc/s320/Retail-web.jpg" width="320" /></a></div><b> WSJ - Some bright news for Retail CRE according to the WSJ</b><p></p><p><a href="https://www.wsj.com/real-estate/commercial/retail-landlords-rent-discounts-ending-b07723ec">For Retailers, Business Is Back and Landlords Say No More Rent Discounts - WSJ</a></p><p><u>Some key points below. </u></p><p></p><p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><span style="color: black; font-family: "var(--article-font-family)", serif;">1) Retail
property owners are shedding the discounts and other concessions they offered
struggling tenants during the depths of the pandemic, the latest sign that
competition for <a href="https://www.wsj.com/real-estate/commercial/investor-appetite-for-retail-real-estate-is-heating-up-again-f293601f"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">retail real estate</span></a> is intensifying.</span><span style="font-family: "var(--article-font-family)", serif;"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><span style="color: black; font-family: "var(--article-font-family)", serif;">2) Now,
landlords are having a much easier time filling <a href="https://www.wsj.com/articles/the-hottest-real-estate-play-is-in-your-neighborhood-7e8ff991"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">prime retail space</span></a> and are far less likely to agree to
these concessions, said Ed Coury, senior managing director at
retail-brokerage firm RCS Real Estate Advisors.</span><span style="font-family: Helvetica, sans-serif;"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><span style="color: black; font-family: "var(--article-font-family)", serif;">3) Landlords’
increasing leverage is another sign of retail real estate’s recent
strength. <u><a href="https://www.wsj.com/real-estate/commercial/a-bright-spot-in-commercial-real-estate-retail-shops-a3ef009e"><span style="color: black; mso-color-alt: windowtext;">Store openings outpaced closures</span></a> for
the second straight year in 2023 after years of net closures, according to
research firm Coresight Research.</u></span><u><span style="font-family: "var(--article-font-family)", serif;"><o:p></o:p></span></u></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><span style="color: black; font-family: "var(--article-font-family)", serif;">4) Consumer
spending remained resilient last year despite high inflation and recession
concerns, and Americans’ <a href="https://www.wsj.com/economy/consumers/americans-are-finally-feeling-better-about-the-economy-e964804f"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">views on the economy are improving</span></a> at the start of 2024.
This, coupled with scant new construction of retail real estate, leaves
landlords optimistic that retailers will be vying for limited available space
for the foreseeable future. </span><span style="font-family: "var(--article-font-family)", serif;"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><u><span style="color: black; font-family: "var(--article-font-family)", serif;">5) Vacancies
at U.S. shopping centers fell to 5.3%</span></u><span style="color: black; font-family: "var(--article-font-family)", serif;"> in the fourth quarter, the lowest
level since real-estate firm </span><span style="color: black; font-family: Helvetica, sans-serif;"><a href="https://www.wsj.com/market-data/quotes/CWK"><span style="color: black; mso-color-alt: windowtext; text-decoration: none; text-underline: none;">Cushman
& Wakefield</span></a> began tracking the metric in 2007. Average
asking rents rose to $23.70 a square foot and are now nearly 17% above 2019
levels.</span><span style="font-family: Helvetica, sans-serif;"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><span style="font-family: "var(--article-font-family)", serif;">6) Retail’s
strong position stands in contrast to </span><a href="https://www.wsj.com/real-estate/commercial/offices-around-america-hit-a-new-vacancy-record-166d98a5" style="font-family: "var(--article-font-family)", serif;"><span style="color: black; text-decoration-line: none;">the office sector</span></a><span style="font-family: "var(--article-font-family)", serif;">, where owners are grappling with oversupply
and a drop in demand because of remote work.</span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><span style="color: black; font-family: "var(--article-font-family)", serif;">7) Percentage-of-sales
agreements proliferated in 2020 as landlords sought to keep restaurants and
other retailers from going out of business. </span><span style="font-family: "var(--article-font-family)", serif;"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><span style="color: black; font-family: "var(--article-font-family)", serif;">8) Retail
landlords’ negotiating power isn’t absolute. Older, tired properties still have
to offer concessions and accept lower rents to attract tenants, Coury said.
Most landlords are still spending to renovate or build-out retail spaces for
new tenants, and these costs have escalated along with construction
prices. </span><span style="font-family: "var(--article-font-family)", serif;"><o:p></o:p></span></p><p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><i><b>Weitz Commercial take: I'm not sure I'm totally buying this; it feels like they interviewed a lot of retail owners and it may be more of a 'puff piece'. A 5.3% vacancy rate isn't exactly ideal. For now, I'll say this is good news for the industry, but will refrain from getting the 'pom-poms' out until and if it continues further into 2024. I believe the consumer is stretched pretty thin given inflation, and that layoffs are a bigger issue than the published figures would lead you to believe at that moment. That said, Kimco Realty just posted a positive Q4 as well and they focus on Retail so perhaps there is some light at the end of the tunnel. Certainly, existing complexes will / may have an advantage as building is a challenge with construction costs and borrowing costs at the moment. </b></i></p><p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;">For more information on <a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate</a>, consider contacting a <a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate Broker</a>. </p><div style="background: white; line-height: normal; margin-bottom: 12pt; text-align: left;">Our Firm<br />Weitz Commercial<br />E: Scott@WeitzCommercial.com</div><p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 12.0pt;"><br /></p><br /><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-72283396410502059162024-02-06T11:17:00.000-08:002024-02-06T11:17:48.218-08:00<p><span style="font-family: Garamond, serif; font-size: 11pt;"></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: Garamond, serif; font-size: 11pt;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBLBNAEMX1F-T27ZI6pKb8IBCJ4TfT43Qbvds_qjbvLSA8N6shCx6E-rpqQCedCfWM-jJDTUdXPkCKz1tzvWxR8DplM_ghhcOEZL3-JFc_2XkntYQiWeMigCkPe2-WLl_sHLbGBzuyW_08jZeM_ubEFmzEjkNJtnRBjH5cg7ImvIgw-XzqK6QbmvV249U/s1278/Bill%20Coming%20due.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1278" data-original-width="1278" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBLBNAEMX1F-T27ZI6pKb8IBCJ4TfT43Qbvds_qjbvLSA8N6shCx6E-rpqQCedCfWM-jJDTUdXPkCKz1tzvWxR8DplM_ghhcOEZL3-JFc_2XkntYQiWeMigCkPe2-WLl_sHLbGBzuyW_08jZeM_ubEFmzEjkNJtnRBjH5cg7ImvIgw-XzqK6QbmvV249U/w320-h320/Bill%20Coming%20due.jpg" width="320" /></a></span></div><span style="font-family: Garamond, serif; font-size: 11pt;"><b><i><br />AP: Recent excerpts from a Wall Street Journal article on
distressed commercial real estate and some of our comments.</i></b></span><p></p>
<p class="css-k3zb6l-paragraph" style="margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin: 0in 0in 12pt;"><span style="font-family: "Garamond",serif; font-size: 11pt;">The troubled commercial real estate market is bracing for a
record amount of maturing loans, boosting the prospect of a surge in defaults
as property owners are forced to refinance at higher rates. <o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); font-size: calc((17 / var(--article-base-font-size)) * var(--article-text-size-scale) * 1rem); font-weight: var(--article-font-weight); line-height: calc(1.58824); margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: "Garamond",serif; font-size: 11pt;">In
2023, $541 billion in debt backed by office buildings, hotels, apartments and
other types of commercial real estate came due, the highest amount ever for a
single year, according to the data firm Trepp. Commercial-debt maturities are
expected to continue rising, with more than <u>$2.2 trillion coming due between
now and the end of 2027</u>, Trepp said.<o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">Most of these loans have
so far been repaid or extended. In 2022 and 2023, <u>many owners were able to
exercise one- or two-year extensions built into their original loans.</u></span><u><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></u></p>
<p class="css-k3zb6l-paragraph" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin: 0in 0in 12pt;"><b><i><span style="font-family: Garamond, serif; font-size: 11pt;">Weitz Commercial Note: The questions becomes: do banks/ lenders keep
extending or do they force foreclosure/ re-finance? My guess is many will kick
the can down the road to save their own books and not be forced to take the loss, but all this will do is delay a reckoning at some point most likely. </span></i></b></p>
<p class="css-k3zb6l-paragraph" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin: 0in 0in 12pt;"><span style="font-family: Garamond, serif; font-size: 11pt;"></span></p><figure class="css-wgssxl-Figure e1bulelc3" style="box-sizing: border-box; margin: 0px;">Now,
those extensions are burning off. That is compelling many borrowers to confront
the higher rate environment—along with higher vacancies and weakening cash
flows—which is depressing property values. Some owners and creditors are also
grappling with the expirations of deals they made early on during the pandemic
to delay payments until the worst of the health crisis passed.<span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span><p></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">“Borrowers have simply
been unwilling to accept reality,” said Gwen Roush, senior vice president
at DBRS Morningstar. “But reality has to come due at some point.” </span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">Unlike home mortgages,
whose principal is paid off over time, most commercial mortgages are interest
only. That means that when the debt matures, the borrower has to refinance or
pay off the principal. </span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin: 0in 0in 12pt;"><b><i><span style="font-family: Garamond, serif; font-size: 11pt;">Weitz Commercial Note: This isn’t necessarily true. Most have balloon
payments that are of a shorter duration than the typical residential loan. </span></i></b><b><i><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></i></b></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">While office-building
owners have been especially hard-hit from remote and hybrid work, the damage to
the commercial real estate sector is widespread. <u>Vacancy rates are
increasing in some <a data-type="link" href="https://www.wsj.com/real-estate/apartment-rent-relief-is-expected-to-continue-in-2024-9acf43d1" style="box-sizing: border-box;"><span style="color: black; mso-color-alt: windowtext;">multifamily markets</span></a>,
making it harder for many of those landlords to raise rents or make payments on
floating-rate debt</u>. <a data-type="link" href="https://www.wsj.com/real-estate/commercial/the-great-american-warehouse-building-boom-is-over-eff6d7e4" style="box-sizing: border-box;"><span style="color: black; text-decoration-line: none;">Industrial space</span></a>, long the darling of Wall Street for its use
as e-commerce hubs, is also showing signs of weakness.</span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin: 0in 0in 12pt;"><span style="font-family: Garamond, serif; font-size: 11pt;">Lender
losses on commercial-property loans have started to increase and look poised to
rise farther. <u>Fitch Ratings projects the delinquency rate of commercial
mortgage loans that have been converted into securities will increase to 4.5%
in 2024 and to 4.9% in 2025</u>—more than doubling the 2.25% rate in 2023 as of
November. Retail, hotel and office delinquencies are all expected to rise,
Fitch said.</span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">The <a data-type="link" href="https://www.wsj.com/economy/central-banking/fed-holds-rates-steady-and-sees-cuts-next-year-4d554e9f" style="box-sizing: border-box;"><span style="color: black; text-decoration-line: none;">decline in inflation and interest rates</span></a> in recent months
has eased the pain. But <u>most borrowers still have to refinance at much
higher rates than those of their maturing loans</u>. </span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">“For commercial real
estate, rate cuts can’t come fast enough,” said Matthew Anderson, managing
director at Trepp.</span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">Financial regulators are
concerned that commercial-property losses could spill over into the broader
financial system. “<u>Sales of financially distressed properties can…lead to a
broader downward valuation spiral and even reduce municipalities’ property tax
revenues</u>,” according to the Financial Stability Oversight Council, a
federal government organization created after the 2008-09 financial crisis to
monitor risks to the financial system. </span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">In its 2023 annual
report, the council warned that financial institutions need to “better
understand” their exposure to commercial real estate. And that isn’t only from
their own property-loan portfolios. They should examine loans they made to
other real-estate creditors, the report said. </span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">More than $50 billion of
the loans maturing this year were made by nonbank lenders such as funds
operated by private-equity firms and mortgage real estate investment trusts,
according to Trepp.</span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">When loans mature,
refinancing by far is the preferred route, but that can be tricky when credit
markets are coping with the Federal Reserve’s fastest hike in interest rates
since the 1980s. </span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">“You need someone to
hand the baton to,” said Jade Rahmani, an analyst at Keefe, Bruyette &
Woods. “When you have these interest-rate shocks, there can be no one there.”</span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">The upshot: <u>Many
commercial-property borrowers will have to work out deals with existing
creditors when loans mature.</u> Thaddeus Wilson, a partner at the law
firm King & Spalding, said he has been involved in about 50 such workout
negotiations in the past year, compared with just a few a year in normal times.</span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in; margin: 0in 0in 12pt;"><span style="font-family: Garamond, serif; font-size: 11pt;">“We’ve
seen deals in every market in multiple asset classes,” Wilson said.</span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">The weak property sales
market has complicated workout negotiations, making it harder for borrowers and
lenders to agree on what properties are worth. Borrowers tend to have a more
optimistic view on values than lenders, who are often looking at worst-case
scenarios, said Wilson of King & Spalding.</span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="css-k3zb6l-paragraph" data-type="paragraph" style="--summary-bullet-small-font-color: var(--primary-text-color); --summary-font-color: var(--secondary-text-color); background: white; box-sizing: border-box; color: var(--primary-text-color); direction: var(--article-direction); line-height: calc(1.58824); margin: 0in 0in 12pt; overflow-wrap: break-word;"><span style="font-family: Garamond, serif; font-size: 11pt;">“At some point borrowers
are going to have to come to grips that their lenders might be right about the
values and look at it from the worst-case scenario,” he said. </span><span style="font-family: "Garamond",serif; font-size: 11pt;"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Garamond",serif;"><i><b>Weitz Commercial:
I’ve been writing about this stuff for months/ years on Facebook (Forllow @WeitzCommercial) but will
start to focus more on the blog writing of this situation. Frankly, one can
expect it to get better before it gets worse. We see the next few years as a
struggle at best and a paradigm shift of many sectors/ industries and even
capital markets in general at worse. </b></i><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Garamond",serif;">For more help
with lending advice, consider contacting a <a href="https://movement.com/lo/carrie-haines" target="_blank">Lake Stevens mortgage lender</a>, or with
commercial real estate sales or work outs, consider contacting a <a href="http://www.weitzcommercial.com" target="_blank">Lake StevensCommercial Real Estate Broker</a>. <o:p></o:p></span></p>
<div style="margin-bottom: 0in; text-align: left;"><span style="font-family: "Garamond",serif;">Our Firm<br /></span><span style="font-family: "Garamond",serif;"><a href="http://www.weitzcommerial.com">WeitzCommercial</a><br /></span><span style="font-family: "Garamond",serif;">My
direct email: <a href="mailto:Scott@WeitzCommercial.com">Scott@WeitzCommercial.com<br /></a></span><span style="font-family: "Garamond",serif;">T:
206.306.4034. </span></div>
</figure>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-83786739658492163162024-02-06T09:49:00.000-08:002024-02-06T09:49:10.461-08:00Nationwide Industrial Trend - Vacancy increases among new projects <p> </p><p style="background: white; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in;"><span style="color: #333333; font-family: Georgia, serif;"></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTE0yyTv_QxDZXabxTwkkkA6mABfWOmTutFHZ6OJbvENUxBPrzyOYqM4fMo2dv3gngEVt3Elf8_p-Py9GAdhIkWF9x5i6nzfIkZdmeTCupDNDkV3sZuKk2gQGzg7YnjHdjmQ0d1XEhY-SVUmLMzeETNeMFR7fDUHrvUsPhCNlaI7ellbxXBbQtkg3SAkI/s2047/Industrial%20Vacancy.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1070" data-original-width="2047" height="167" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTE0yyTv_QxDZXabxTwkkkA6mABfWOmTutFHZ6OJbvENUxBPrzyOYqM4fMo2dv3gngEVt3Elf8_p-Py9GAdhIkWF9x5i6nzfIkZdmeTCupDNDkV3sZuKk2gQGzg7YnjHdjmQ0d1XEhY-SVUmLMzeETNeMFR7fDUHrvUsPhCNlaI7ellbxXBbQtkg3SAkI/s320/Industrial%20Vacancy.jpg" width="320" /></a></div>After years of rapid growth,
the industrial market became imbalanced last year, with new development far
outpacing occupancy gains according to a recent report from Colliers, an overview can be found below and article attached <a href="https://www.bisnow.com/national/news/industrial/colliers-new-industrial-supply-nearly-triples-demand-122692">here</a>. We will provide the basics and our insights on the issue as well. <p></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: #333333; font-family: Georgia, serif;">A record <u>607M SF of new industrial projects delivered
across the country last yea</u>r, while the U.S. saw 231M SF of positive net
absorption, according to Colliers Q4 2023 Industrial report. <u>Nationwide
vacancy rose by 194 basis points to 5.5%</u>, the highest rate since 2016.<o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: #333333; font-family: Georgia, serif;">"New supply nearly tripled demand, as measured by net
absorption during 2023, pushing vacancy higher in every region of the country
and across nearly all industrial markets". <o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: #333333; font-family: Georgia, serif;">The five largest industrial markets all saw spikes in
vacancy: Greater Los Angeles' vacancy rate rose 256 basis points to 3.4%,
Chicago's rose 75 basis points to 5.3%, Dallas-Forth Worth's rose 335 basis
points to 8.5%, New York City's rose 183 basis points to 4.7% and Atlanta's
rose 290 basis points to 6.6%. <o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: #333333; font-family: Georgia, serif;">Though Dallas-Fort Worth saw some of the biggest vacancy
rate increases, it also had the most positive net absorption with 28M SF
and the most product under construction in Q4 with 40M SF. <o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: #333333; font-family: Georgia, serif;">The fastest-growing markets in the country included Savannah,
which saw 17% supply growth last year, followed by Charleston at 14.7% and
Austin at 13%.<o:p></o:p></span></p>
<p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;"><span style="color: #333333; font-family: Georgia, serif;">However, slowing construction starts should help bring supply
and demand back into balance, Colliers' report said: 80M SF of new projects
started during the second half of 2023, down 76% from the same period
in 2022.<o:p></o:p></span></p><p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;">Weitz Commercial: This will be an interesting trend to keep an eye on. The industrial sector has been considered one of the safest sectors of the market for years thus a vacancy increase like this is a nothing to take lightly. That said, the modest amount of new products this year will hopefully offset the current vacancy rate, but alternatively provides a perhaps scary precursor for what we perceive is and will be a fairly dramatic slowdown in CRE building across many of the sectors. <br /></p><p style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin-bottom: 7.5pt; margin-left: 0in; margin-right: 0in; margin-top: .25in; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;">For more information on <a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate</a>, consider contacting a <a href="http://www.weitzcommercial.com" target="_blank">Snohomish County Commercial Real Estate Broker</a>. </p><div style="-webkit-text-stroke-width: 0px; background: white; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; line-height: 17.25pt; margin: 0.25in 0in 7.5pt; orphans: 2; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; widows: 2; word-spacing: 0px;">Our Firm: <br />Weitz Commercial<br />Scott@WeitzCommercial.com<br />t: 206.306.4034<br /><o:p> </o:p></div>
Unknownnoreply@blogger.com0Snohomish County, WA, USA48.0329979 -121.833947219.722764063821153 -156.9901972 76.343231736178836 -86.6776972tag:blogger.com,1999:blog-8790286038507185841.post-376865827112869822024-02-05T15:20:00.000-08:002024-02-05T15:20:16.116-08:00Are Modular homes a viable option in Snohomish County Multi-family? <p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtPT80nSql7OOvFgApbQovheKM1ITR1jQhYkRu2Uuz75kY-xd7289_NYXErAPoXSzv7xaShqrOVk8sW9v88d919_JioiXpAB8lzB7B7OoLO1586IrJsEBdsM6D9_A01uJtEFk3c49RD2-RF2DKUOwrGu9ZvvG8UTAdvqPGr9_N49b3VVdpZUzIDEZrf4k/s275/modular.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="183" data-original-width="275" height="279" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtPT80nSql7OOvFgApbQovheKM1ITR1jQhYkRu2Uuz75kY-xd7289_NYXErAPoXSzv7xaShqrOVk8sW9v88d919_JioiXpAB8lzB7B7OoLO1586IrJsEBdsM6D9_A01uJtEFk3c49RD2-RF2DKUOwrGu9ZvvG8UTAdvqPGr9_N49b3VVdpZUzIDEZrf4k/w330-h279/modular.jpg" width="330" /></a></div><br />One of themes we constantly discuss with clients is the potential to use modular home in their development processes. As such, we thought it would be fun to do an up-to-date overview of some of the pros and cons of multi-family modular construction as referenced by a popular site we follow. <p></p><p><a href="https://www.multihousingnews.com/is-modular-the-best-solution-to-multifamilys-big-supply-problem/">Is Modular the Best Solution to Multifamily's Big Supply Problem? - Multi-Housing News (multihousingnews.com)</a></p><p class="MsoNormal"><span style="font-family: "Garamond",serif; font-size: 12.0pt; line-height: 107%;">KEY FACTS<o:p></o:p></span></p><p class="MsoNormal"><span style="background: white; font-family: Garamond, serif; font-size: 12pt; line-height: 107%;">Modular
homes account for the biggest share of the prefab segment, but not all prefab
homes are modular. For the purposes of this discussion, modular housing refers
to a volumetric modular building which is built in an off-site factory,
transported to the site and often craned into position.</span><o:p></o:p></p><p class="MsoNormal"><span style="background: white; font-family: Garamond, serif; font-size: 12pt; line-height: 107%;">Modular
is definitely a lot better product because it is a lot more customizable. And
while modular homes can cost around 15 percent to 20 percent more than a purely
manufactured home, the opportunity for customization is a key selling point for
residents.</span><o:p></o:p></p><p class="MsoNormal"><span style="background: white; font-family: Garamond, serif; font-size: 12pt; line-height: 107%;">PITFALLS<o:p></o:p></span></p><p class="MsoNormal"><span style="background: white; font-family: Garamond, serif; font-size: 12pt; line-height: 107%;">1) Coordination
with job site: is not infrequent that the modular units do not fit perfectly
with the completed preparatory work on the property.</span><o:p></o:p></p><p class="MsoNormal"><span style="background: white; font-family: Garamond, serif; font-size: 12pt; line-height: 107%;">2) Additional
costs: Yet because apartment unit dimensions usually extend beyond 12 feet,
that poses logistical issues. Trucking costs—fuel, weatherproofing material,
insurance among them—are often enough to price builders out of modular entirely</span>.
<o:p></o:p></p><p class="MsoNormal"><span style="background: white; font-family: Garamond, serif; font-size: 12pt; line-height: 107%;">3) Financing:
a general lack of understanding from banks who tend to be a bit leery about
financing</span>.<o:p></o:p></p><p>
</p><p class="MsoNormal"><span style="background: white; font-family: Garamond, serif; font-size: 12pt; line-height: 107%;">Overview:
Modular housing offers a step in the right direction toward increasing housing
availability and promoting housing affordability. Still, it appears to have a
long way to go before it reaches its full potential, and opinions vary widely
as to whether modular is the ideal form of prefabrication and to date, the savings in offsite construction don't overcome the potential pitfalls. Hopefully, this will change in the coming years. Perhaps government subsidies / tax incentives could make up for the pitfalls, but that remains to be seen. </span></p><p class="MsoNormal">For more information on <a href="http://www.weitzcommercial.com" target="_blank">Snohomish Commercial Real Estate</a>, consider contacting a <a href="http://www.weitzcommercial.com" target="_blank">Snohomish Commercial Real Estate broker</a>. </p><p class="MsoNormal">Our Firm</p><p class="MsoNormal">Weitz Commercial</p><p class="MsoNormal">Scott Weitz</p><p class="MsoNormal">Scott@Weitzcommercial.com</p><p class="MsoNormal">t: 206.306.4034</p><p><br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-62680501717791836962024-02-05T13:44:00.000-08:002024-02-05T13:44:43.936-08:00<p><br /></p><p>This past week, the Fed Chairman Jerome Powell was interviewed by 60 Minutes. See link below. </p><p> <a href="https://www.cbsnews.com/news/fed-chair-jerome-powell-interest-rates-60-minutes-transcript/">Fed Chair Jerome Powell shares why Fed hasn't yet cut interest rates | 60 Minutes - CBS News</a></p><p><b><u>The details:</u></b></p><p></p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">Powell committed to not decreasing rates until the rate of inflation
lowered to around 2%. <o:p></o:p></p>
<p class="MsoNormal">He says price stability is the main focus of Fed. <o:p></o:p></p>
<p class="MsoNormal">He acknowledges the Fed was too slow to raise rates and his
previous calls that inflation was ‘transitory’ were not accurate. <o:p></o:p></p>
<p class="MsoNormal">“Not likely” rates will be lowered in Fed Committee Meeting
in March. <o:p></o:p></p>
<p class="MsoNormal">“Prices will not decline” (referring to basic essentials, ie food etc). <o:p></o:p></p>
<p class="MsoNormal">US Debt / fiscal situation is ‘unsustainable’. <o:p></o:p></p>
<p class="MsoNormal">He suggests the first interest rate cut will come around the
middle of the year. <o:p></o:p></p>
<p class="MsoNormal"><b><u>Our take:</u></b> I’ll refrain from any truly harsh opinion on this
interview. It does feel like a bit of a puff piece, and I remain skeptical as to
how long the economy can sustain these interest rate levels without feeling
considerable pain. As is, the real estate market feels stagnant which helps
prices, but puts pressure on all the businesses in those particular industries.
Just as he admits he was ‘too late’ to quell inflation, I believe they will be
equally as late to lower rates. <o:p></o:p></p><p class="MsoNormal">As it relates specifically to commercial estate, I simply don't see how pricing won't be effected negatively and the potential for bank defaults as loan maturities come due. </p><p class="MsoNormal">We plan on following this closely in the coming year(s) and will blog as appropriate. </p><p class="MsoNormal">For more information on <a href="http://www.weitzcommercial.com">Everett Commercial Real Estate</a>, consider contacting an <a href="http://www.weitzcommercial.com">Everett Commercial Real Estate broker</a>. </p><p class="MsoNormal">Our Firm: </p><p class="MsoNormal">Weitz Commercial</p><p class="MsoNormal">108 Union Ave</p><p class="MsoNormal">Snohomish, WA 98290</p><p class="MsoNormal">Scott@weitzcommercial.com</p><p class="MsoNormal"><br /></p><br /><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-37217732194219654932024-02-01T14:44:00.000-08:002024-02-01T14:44:25.051-08:00Building Commercial Real Estate Process in Snhomish County and beyond. <p>So you what to build Commercial Real Estate, but not sure where to start? ..... with the right team, anyone with the funds can build a property that can be utilized by a community and provide a stream of income indefinitely. </p><p>Below is a overview of the basic process and some of the parties that would be needed. It's not as daunting as one may think with the right team in place. </p><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Site Selection and Evaluation</u></span></h3><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">Using multiple sources of information, commercial real estate developers look at all available properties within a designated trade area that meet basic site requirements. Some of the most important factors that go into determining the right site are:</p><ul style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; margin: 0px 0px 11px;"><li style="box-sizing: border-box;">Property size</li><li style="box-sizing: border-box;">Visibility</li><li style="box-sizing: border-box;">Traffic flow</li><li style="box-sizing: border-box;">Demographics</li><li style="box-sizing: border-box;">Zoning Restrictions</li><li style="box-sizing: border-box;">Surrounding Infrastructure</li><li style="box-sizing: border-box;">Potential Access Points</li><li style="box-sizing: border-box;">Competitors (and their performance)</li><li style="box-sizing: border-box;">Nearby tenants (and their sales data)<span style="background-color: transparent; box-sizing: border-box;"> </span></li></ul><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">And there are a whole host of additional factors that play into finding the right property to fit the client’s needs.<span style="background-color: transparent; box-sizing: border-box;"> </span></p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">And another one of those important factors is the cost basis. Which site provides the developer, and/or the client potentially lower construction costs and a greater investment opportunity?</p><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Due Diligence/Research</u></span></h3><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">In this phase process, steps are taken in order to satisfy legal requirements and ascertain the risks and advantages of the transaction. As a prospective buyer, developers must thoroughly examine issue like local zoning restrictions, potentials liens, and possible encroachments on the property.</p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">You have to find out what kind of requirements are needed in order to develop the property? You’ll also want to determine what kind of offsite work you may be dealing with. Is the zoning in the area you’re looking at going to be an allowed use? If the property needs to be rezoned or requires a variance, what’s that process? </p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">Obtaining this information generally involves reaching out to municipal planning departments. </p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">Once your site has been preliminary reviewed and selected, you’ll move forward with creating a <u>site plan</u>. Doing this allows you to visually address if this project can actually work. Can you meet setbacks? Can you meet parking requirements? These are just a couple of the questions you’ll be able to address once the site plan has been created.</p><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Site Investigation Reports (SIR) / Feasibility Study</u></span></h3><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">Site Investigation Reports are a collection of data/questions assessing the potential issues with the site, or what needs to be done in order to meet all requirements. These include requirements for:</p><ul style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; margin: 0px 0px 11px;"><li style="box-sizing: border-box;">Parcel Land Use and Zoning</li><li style="box-sizing: border-box;">Engineering</li><li style="box-sizing: border-box;">Building Permits</li><li style="box-sizing: border-box;">Fire Department Requirements</li><li style="box-sizing: border-box;">Building Setbacks</li><li style="box-sizing: border-box;">Parking Setbacks and Requirements</li><li style="box-sizing: border-box;">Landscape Setbacks</li><li style="box-sizing: border-box;">Lighting Ordinance</li><li style="box-sizing: border-box;">Signage Requirements</li><li style="box-sizing: border-box;">Access and DOT requirements</li><li style="box-sizing: border-box;">Off-site/Public Improvements</li><li style="box-sizing: border-box;">Utilities</li></ul><ul style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; list-style-type: circle; margin: 0px 0px 11px; padding-left: 60px;"><li style="box-sizing: border-box;">Water</li><li style="box-sizing: border-box;">Sewer</li><li style="box-sizing: border-box;">Storm Drainage</li><li style="box-sizing: border-box;">Power</li><li style="box-sizing: border-box;">Gas</li><li style="box-sizing: border-box;">Phone/Cable</li></ul><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">The goal of this data is to place emphasis on potential problems that could occur if a project is pursued.</p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">A thorough examination will provide the developer with some confidence that the project is feasible and has the potential to be profitable. Essentially the study asks, do the anticipated future benefits exceed the expected future costs of the proposed commercial real estate development.</p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">Some of the major financial factors to look at include:</p><ul style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; margin: 0px 0px 11px;"><li style="box-sizing: border-box;">Land Purchase & Acquisition Costs</li><li style="box-sizing: border-box;">Finance Costs</li><li style="box-sizing: border-box;">Professional Fees</li><li style="box-sizing: border-box;">Utility Connection Fees</li><li style="box-sizing: border-box;">Impact Fees</li><li style="box-sizing: border-box;">Permit and Review Fees</li><li style="box-sizing: border-box;">Construction Costs</li><li style="box-sizing: border-box;">Insurances</li><li style="box-sizing: border-box;">Closing Costs</li><li style="box-sizing: border-box;">Income & Profit</li></ul><div><span style="color: #555555; font-family: akkuratregular;"><b><u><br /></u></b></span></div><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Municipality and Lender Required Reports</u></span></h3><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">Site evaluation will also involve obtaining official reports denoting some of the physical and environmental aspects and potential hazards on or associated with the site. </p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><strong style="box-sizing: border-box;">Phase 1 (Environmental Study)<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">The Environmental Site Assessment Phase 1 (ESA Phase 1) is an environmental due diligence report prepared for real estate transactions such as land purchases and building purchases.</span></p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;">The main purpose of this report is to ensure there is no soil or groundwater contamination from previous use or neighboring sites. Any contamination in these reports may impact the property’s value or limit its use.</p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><strong style="box-sizing: border-box;">Geotechnical Study (Soil Study)<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">The goal of this study is to obtain information about the soil consistency and the geological structure of the property. It may uncover certain characteristics of that site that would add costs to the project, and the report will provide certain recommendations for the development project <span style="box-sizing: border-box;">site.</span></span></p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;">In the case of a geotechnical study for a development project, the following are important areas of examination:</p><ul style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; margin: 0px 0px 11px; padding-left: 80px; padding-right: 115px;"><li style="box-sizing: border-box;">Footprint of the building</li><li style="box-sizing: border-box;">Land area on which the building will be located</li><li style="box-sizing: border-box;">Land slope</li><li style="box-sizing: border-box;">Land closeness to water (lake, stream, river)</li><li style="box-sizing: border-box;">Geographical location where the building will be located</li></ul><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><strong style="box-sizing: border-box;">Survey<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">A property survey is a legal document that shows the location of all improvements relative to a commercial property's boundaries. It depicts the boundaries and descriptions of the property easements, rights-of-way, and encroachments found on the site.</span></p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;">This report generally contains an illustration of the physical features of the property and a written report detailing the surveyor's opinions and concerns.</p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;">FINALIZE THE PSA</p><h1 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="box-sizing: border-box; color: #555555; font-family: pf_din_text_cond_prolight;"><span style="font-size: small;"><u><br /></u></span></span></h1><h1 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="box-sizing: border-box; color: #555555; font-family: pf_din_text_cond_prolight;"><span style="font-size: small;"><u>Development and Entitlement</u></span></span></h1><h6 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="color: #0b0d0e; font-family: pf_din_text_cond_promedium;"><span style="font-size: small;"><i>Hiring Architects, Engineers, and Consultants</i></span></span></p></h6><h6 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Getting a commercial development off the ground often starts with bringing in a number of consultants including architects and civil engineers. Their role is to ensure the most viable development plans and processes are going to be put into place, resulting in a successful and under budget development project.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Architects<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">The goal of the architect is to draw up an initial concept scheme, and a good architect will ultimately add considerable value to your project by designing a project that is functional for the tenant and appealing to the marketplace and neighborhood it’s located in.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Landscape Architect<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">The landscape architect’s job is to design municipality required landscaping around the site plan. This typically means natural plants and trees to offer shade and a natural aesthetic appeal.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Mechanical, Plumbing, Electrical Engineer<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">These engineers ensure the HVAC is designed adequately for conditions, plumbing is meeting the correct connections and draining properly, and electrical wiring is properly placed in needed areas to meet building codes.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Structural Engineer<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Structural engineers work with architects to factor in the weight and loads of construction materials on the ground they sit on. This is to ensure the building will support itself and not sink into the ground. Their main goal is to develop a structural design that is both functional and cost effective.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Civil Engineer<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">A civil engineer is used to identify many of the technical issues relating to the civil design of project elements. Storm drainage, parking lot and sidewalk design, driveway connections, and conforming to grade requirements are managed by civil engineers. Factors such as topography, environmental issues, or utilities play major roles in how sites are laid out and designed. The engineer's explanation of these issues may result in a different development strategy for the property — one that provides a better project at a lower cost.</span></span></p></h6><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><b> <u style="color: #0b0d0e; font-family: pf_din_text_cond_promedium;">Municipality Submittal and Review</u></b></p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;">In order for projects to become realities, they must first get the approval of the appropriate municipal and government entities. Submittal and review often entails the following:</p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><strong style="box-sizing: border-box;">Zoning Review<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Zoning review is meant to ensure the compliance with standards and provisions set by each municipality, while encouraging quality development. It’s intended to encourage the most appropriate use of the land, enhance aesthetic value, and facilitate adequate provision of transportation, schools, parks, and other public requirements.</span></p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><strong style="box-sizing: border-box;">Site Plan Review<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">A detailed site plan is submitted, along with associated documents to particular government departments, agencies, utility companies, etc. for review and initial comments. The purpose of the review is to address how the particular development is designed and to address any issues related to public safety, water supply, sewage disposal, utilities, traffic, emergency access, public obstructions, and a variety of other elements. </span></p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><strong style="box-sizing: border-box;">Design Review<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Provide architectural building elevations, landscape plans, and drawings related to design principles and meeting the aesthetic requirements.</span></p><p style="background-color: white; box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;">Once the site plan and design are approved during design review process, you are generally allowed to submit construction drawings for review by the building department.</p><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>City Entitlement Process</u></span></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Before a project can commence, you must be granted permission from local regulatory agencies and the community. It is crucial to be prepared for this stage of the development process, as you may be asked many questions from city planners, local residents, and government leaders.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><strong style="box-sizing: border-box;"><span style="font-size: small;">Examples of Entitlement can be:</span></strong></p><ul style="box-sizing: border-box; color: #555555; font-family: akkuratregular; margin: 0px 0px 11px; padding-left: 60px;"><li style="box-sizing: border-box;"><span style="font-size: small;">Rezoning</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Zoning Variances</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Use permits</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Utility approvals</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Road approvals</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Landscaping</span></li></ul><span style="font-size: small;"><br style="box-sizing: border-box; color: #555555; font-family: akkuratregular;" /></span><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">City Council or City Planning Commission Approval<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Oftentimes, new commercial development must first receive approval from city council, city planning commission, or some municipal body. Working with, and gaining approval from the city’s planning department generally allows for a planning commission or city council to approve the project at a formal public hearing. However, not all projects need the official approval of a city council or planning commission.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Public Hearing<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">A public hearing will take place for local property owners and residents, in order to hear feedback on the proposed commercial development. Any individual or community group including a neighborhood council has the right to speak on the proposed project.</span></span></p></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Building Permits Approval/Issuance</u></span></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><span style="background-color: transparent; box-sizing: border-box;"></span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Once plans have been reviewed during the usual rounds of the review process, and determined to be in compliance with the city/municipality codes, building permits are then issued. These permits give the developer authority to start construction work and allows for appropriate inspections to be performed.</span></p></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Close of Escrow</u></span></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">This is essentially the final step in the execution of the initial real estate purchase transaction. A title company or other trusted party will transfer funds and the deed of trust to the involved parties.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">For some commercial real estate developers, this step in the process may come at a different stage. Some developers may prefer to close on a property once all of the permits and approvals are in place, while others may actually close before the final permitting process.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Getting a property fully approved, entitled, and closing on the land requires time, experience, relationships, and persistence. But once the project has been given approval and is entitled, it’s ready for contractors and builders to bring the commercial development to life.</span></p></h3><h1 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="box-sizing: border-box; color: #555555; font-family: pf_din_text_cond_prolight;"><span style="font-size: small;">Construction and Tenant Turnover</span></span></h1><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Now that your development plans have been submitted and approved, your permits issued, and you’ve closed on the property, it’s time to start building. This is where the contractors and builders will bring the commercial development to life.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;"> </span></p></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Overall Construction Coordination</u></span></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">As a commercial real estate developer, the construction aspect of the project revolves around managing and coordinating the construction stage, as opposed to actually constructing the building. Working with general contractors and subcontractors, the overall construction coordination often consists of:</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Weekly Construction Calls and Reports<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">As a way to stay in direct contact with general contractors, a developer’s construction department will generally take part in weekly update calls. These status updates focus on the overall progress of the development, while going over upcoming schedules and time frames. Additionally, the calls will address any major issues that may hinder the timely completion of the project.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;">In addition to the weekly construction calls, written progress reports are submitted by the general contractors to the developer in order to address the project status, schedules, etc.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Handling RFIs from Contractors and Architects<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">During the construction phase, commercial developers are also responsible for managing Requests for Information (RFIs). These requests often come in because not all construction documents may address every single matter of the construction process.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;"><a data-hs-anchor="true" id="ConstructionCoordination" style="box-sizing: border-box; color: #05c8e0; display: inline-block; margin-top: -150px; padding-top: 150px; visibility: hidden;"></a></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;">These requests are issued in order to help contractors get clarification on project details or ask for a decision to be made on particular elements.</span></p></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Building Construction</u></span></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span color="#00c1d5" style="box-sizing: border-box;"><span style="font-size: small;">The building construction is when the property you envision begins to take form as you add structure to your property. Frames, walls, roofs, and all of the major components of building the “bones’ of a commercial real estate development. Some of the major work involves:</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Site Utilities<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Site utility work includes preparing the property to connect to public utilities. These including water, sewer, electric, and gas.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Framing<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Framing consists of creating the broad pieces that will give support and shape to the building. This may involve either a wood frame, structural steel, or concrete.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Roofing<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Depending on the type of roof, this may involve elements such as building out the rafters, ceiling joists, trusses, insulation, structural deck, and the appropriate roof covering.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">HVAC<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Involves preparing the installation site by setting either setting a pad or installing a rooftop support structure. The ductwork and electrical is also prepared for interior connection.</span></span></p></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>On-site Work</u></span></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Beside the construction of the building itself, work must be done on the surrounding property in order to make for a complete, well-rounded commercial development. Some of that on-site work includes:</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Site Grading<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">This is the process of distributing dirt in a strategic way to ensure the proper water runoff and to prepare the site for additional work, such as paving and landscaping.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Paving and Striping Parking<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">Once the site is properly graded, you can move forward with paving the parking area. The parking area should be smooth, contain a level, compacted base, and have proper drainage. Then, upon proper paving, the lot can be striped.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><span style="background-color: transparent; box-sizing: border-box;"></span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Landscaping<br style="box-sizing: border-box;" /></strong><span style="background-color: transparent; box-sizing: border-box;">This involves installing irrigation, planting decorative or shade trees, bushes, flowers, gravel, or any other elements that add to the visual appeal of the property.</span></span></p></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Inspections</u></span></h3><h3 style="background-color: white; box-sizing: border-box; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Upon completion of each project, inspections must take place to ensure that the major elements meet all municipal codes and ordinances. While periodic inspections take place during the construction phase, final inspections must be performed to assure that the buildings are safe for occupancy. Elements inspected include:</span></p><ul style="box-sizing: border-box; color: #555555; font-family: akkuratregular; margin: 0px 0px 11px;"><li style="box-sizing: border-box;"><span style="font-size: small;">Structural and Building envelope</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Roof surface</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Plumbing</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Electrical</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">HVAC</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Fire/Safety</span></li><li style="box-sizing: border-box;"><span style="font-size: small;">Interior Elements</span></li></ul></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Construction Close-out</u></span></h3><h3 style="background-color: white; box-sizing: border-box; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">The close-out of a project typically involves developing a detailed schedule of duties including punch lists, equipment testing, start up procedures, and occupancy. Close-out may also involve gathering and retaining critical records and documentation for the project, in case there are any questions or issues to be addressed after project completion.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">The close-out process addresses everything from the work performed by contractors to returning of rented equipment. It’s to ensure that your new development is more than prepared to be turned over to the tenant.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;"><strong style="box-sizing: border-box;">Punchlist<br style="box-sizing: border-box;" /></strong>The construction punchlist is used to address any unresolved tasks or issues before final occupancy. It’s used as a control measure to ensure the quality standards of the developer and future tenant are met.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px; padding-left: 30px;"><span style="font-size: small;">The punchlist usually includes a plan for completion of items including any minor repairs to finishes, cleanup, or any outstanding installations.</span></p></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Certificate of Occupancy</u></span></h3><h3 style="background-color: white; box-sizing: border-box; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Once the project meets all of the final inspections, codes, and ordinances, the appropriate municipal agency will issue a Certificate of Occupancy for the property.</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Issuance certifies that the property is suitable for occupancy by the proposed user, or type of user, and that the building complies with the plans and specifications that were initially submitted and approved.</span></p></h3><h3 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; line-height: 1; margin: 0px 0px 15px;"><span style="font-size: small;"><u>Tenant Move-in</u></span></h3><h6 style="background-color: white; box-sizing: border-box; color: #0b0d0e; font-family: pf_din_text_cond_promedium; font-weight: normal; line-height: 1; margin: 0px 0px 15px;"><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span color="#00c1d5" style="box-sizing: border-box;"><span style="font-size: small;">The “final step” in the commercial real estate development process: tenant move-in. As it implies, this means the property is prepared for the tenant to set up shop and eventually open for business. The project has officially gone from conceptualization to construction to handing over the keys.</span></span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">For more information on purchasing or developing commercial real estate in Snohomish County or beyond, consider contacting a <a href="http://www.weitzcommercial.com">Snohomish County Commercial Real Estate Broker</a> or an <a href="http://www.weitzcommercial.com">Everett Commercial Real Estate Broker</a>. </span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">My information: </span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Scott Weitz</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Designated Broker/ Attorney</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">T: 206.306.4034</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><span style="font-size: small;">Scott@WeitzCommercial.com</span></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><br /></p><p style="box-sizing: border-box; color: #555555; font-family: akkuratregular; line-height: 1.6; margin: 0px 0px 10px;"><br /></p></h6>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-69037023617008350112022-06-30T15:31:00.003-07:002024-02-05T14:57:27.054-08:00Stagflation and a Macro Economic update/ prediction<p> </p><div class="separator" style="clear: both; text-align: justify;"><span style="background-color: white; font-family: "Times New Roman", serif; font-size: 12pt; text-align: left;">It is my personal belief that we are entering some
unprecedented economic times in this country. I’ve been saying from the better
part of year that while others continually discuss ‘Inflation”, I believe we
are entering into a Stagflation period or perhaps even a deflationary period.
Below is an article from an economic idol of mine Ray Dalio who started and
still manages the largest hedge in the world ‘Bridgewater’ out of Westport, CT.
I have omitted some of the article and reorganized in an effort to make it more
readable and succinct, but also made additional comments at the conclusion of article. </span></div><p></p><p></p><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen="" class="BLOG_video_class" height="266" src="https://www.youtube.com/embed/hPpwEHmi1po" width="320" youtube-src-id="hPpwEHmi1po"></iframe></div><br /><p></p><p></p><p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">For me, hearing supposed “experts” talk about what’s
now happening in the markets and economy is like listening to nails scratch
against a chalkboard because they are typically saying incorrect things in a more complex way than commonsense would dicatate. Markets and economic movements are driven
by much simpler and more commonsense linkages than most people care to articulate. </span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">More specifically, I now hear it commonly said that
inflation is the big problem so the Fed needs to tighten to fight inflation,
which will make things good again once it gets inflation under control. </span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">I believe this is both naïve and inconsistent with
how the economic machine works. That’s because that view only focuses on
inflation as the problem and it sees Fed tightening as a low-cost action that
will make things better when inflation goes away, but it’s not like that. </span></p><p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;">The facts are that:</span></b></p><p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: Times New Roman, serif;"><span style="font-size: 12pt;"><b>1. prices rise when the </b></span><b>amount</b><span style="font-size: 12pt;"><b> of spending increases by more than the quantities of goods and series sold increase; </b></span></span></p><p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: Times New Roman, serif;"><span style="font-size: 12pt;"><b>2. the way central banks fight inflation is by taking money and credit away </b></span><b>from</b><span style="font-size: 12pt;"><b> people and companies to reduce their spending; </b></span></span></p><p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="font-family: Times New Roman, serif;"><span style="font-size: 12pt;"><b>3. They also take buying power away by raising interest rates which increases the </b></span><b>amount</b><span style="font-size: 12pt;"><b> of that has to go toward paying interest and decreases the amount of money that goes toward spending; </b></span></span></p><p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;">4. raising rates lowers spending. </span></b></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">My main point is that while tightening
reduces inflation because it results in people spending less, it doesn’t make
things better because it takes buying power away. It just shifts some of the
squeezing of people via inflation to squeezing them via giving them less buying
power. </span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">The only way to raise living standards
over the long term is to raise productivity and central banks don’t do
that. </span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">So, what do central banks do?</span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">Central banks move demand around by
providing and withdrawing spending power by influencing the creation and
amounts of debt assets and debt liabilities.</span></b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";"> They do that in a way that
naturally produces cycles in markets (bull and bear markets) and economies
(expansions and recessions). More specifically, <u>central banks inject doses
of stimulation into the system via injecting credit and money into the system</u>,
which produces increases in demand for goods, services, and investment assets
that are followed by periods of paying back and withdrawals of the
stimulations, which produce lows in demand that are depressing. Whenever these
depressing periods of paying back become too depressing, central banks
typically provide another and even bigger dose of stimulation. <b>They
produce the short-term debt cycles (also known as the business cycle), which
typically last for about seven years give or take a few.</b></span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><b><u><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">These short-term debt cycles add up to
the long-term debt cycles that typically last about 75 years</span></u></b><b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">, give or take about
25.</span></b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";"> That’s
because most everyone wants the ups and not the downs, so the stimulations and
debts that central banks produce typically add up over time to produce more ups
than downs until the debt assets and liabilities get unsustainably large, at
which point they have to go down via some mix of inflation (due to money
printing to reduce the debt burdens by monetizing them, which is inflationary),
debt restructuring, and paying the debt service in non-depreciated money (which
is depressing). </span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">That is what we have been experiencing. It’s why <u>debts
have been increasing relative to incomes at the same time as each cyclical rise
and each cyclical decline in interest rates since 1980 </u>has been lower than
the one before it until interest rates hit 0%, and since then each central bank
printing and buying of debt has been greater than the one before it up until
now.</span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">So, what should central banks do to do their job
well? </span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">Central banks should:</span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<ol start="1" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">Use their powers to drive the markets and
economy like a good driver drives a car—with <u>gentle applications
of the gas and brakes</u> to produce steadiness rather than by
hitting the gas hard and then hitting the brakes hard, leading to lurches
forward and backward.</span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><b><u><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">Keep debt assets and liabilities relatively stable</span></u></b><b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"> and, most importantly, not allow them to get too large
to manage well.</span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></li>
</ol>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">To do this they should not allow interest rates and
availabilities of money to be either too good or too bad for the debtors or the
creditors. </span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">By these measures central banks policies
have not been good.</span></b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";"> More
specifically,</span><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<ol start="1" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">The <u>Fed is moving from printing and buying debt at
an annual rate of around $1.5 trillion to selling it at an annual rate of
$1.1 trillion</u>, and <u>from sharply lowering interest rates to sharply
raising them</u>. For that reason, we experienced the big lurch
forward and are now experiencing the big lurch backward.</span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">Because debt assets and liabilities are now very high
and because government deficits will remain high, it is virtually
impossible for the Fed to push interest rates to levels that are high
enough to adequately compensate holders of debt assets for inflation
without them being too high to support strong debtors, strong markets, and
a strong economy.</span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"> If
the holders of debt don’t get adequate returns they will sell them,
which worsens the free market debt supply/demand picture, which either
leads to a dramatic cutback in private credit (which is depressing) or the
central bank creating more money and buying more debt to fill in the
funding hole (which is inflationary). <o:p></o:p></span></li>
</ol>
<p class="MsoNormal" style="background: white; line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"><b><span style="color: black; font-family: "Times New Roman",serif; font-size: 12pt; mso-color-alt: windowtext; mso-fareast-font-family: "Times New Roman";">In summary my main points are that
1) there isn’t anything that the Fed can do to fight inflation without creating
economic weakness, 2) with debt assets and liabilities as high as they are and
projected to increase due to the government deficit, and the Fed also selling
government debt, it <u>is likely that private credit growth will have to
contract</u>, weakening the economy, and 3) over the long run the Fed will most
likely chart a middle course that will take the form of stagflation. </span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Weitz take: As I typically do, I agree with Ray whole
heartedly in this assessment. Namely the buying debt to selling debt coupled with the dramatic increase in the Fed Funds rate is a double edge sword that is fairly insurmountable. I said to a colleague in late 2021 that if the Fed did increase rates as much as they intended to, it would be an intentional collapse. For
better or worse, the inflation rates spooked the fed into slamming on the economic brakes, but that will not come without negative economic performance until we
get to a new equilibrium. How far we must go to get there is uncertain, but the
chance of severe headwinds is almost a certainty in my eyes. I'm always open to good faith dialogue so if you disagree, feel free to make a comment below. <o:p></o:p></span></p><p class="MsoNormal">My Info for comments/ feedback: </p><p class="MsoNormal">Scott Weitz</p><p class="MsoNormal">Scott@WeitzCommercial.com</p><p class="MsoNormal">105 Lake Street S; Ste 205</p><p class="MsoNormal">Kirkland, WA 98033</p><p class="MsoNormal">Cell: 206.306.4034</p><p class="MsoNormal"><br /></p><p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><br /></span></p><br /><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-21524190125280290762022-06-07T14:56:00.003-07:002022-06-07T14:56:23.282-07:00WSJ - Commercial Real Estate shows signs of slowing down<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIV3gDLLMzLpuChNlrF7ADHNELrXA4RKSrKFxP8p30gByTET_f23INW2aur2yj-imDfbCu4Q5TQ34KJTxzxJyj9cU5pJ1W7iTZteejnKXY_pztHJ9bJTwvD3pMSCdeOS2SbMik2qL6DQA3cEOQqUkJJUigfbK9fjLEfE6LmQz5hlyIhjmZBcGxMhgy/s1280/WSJ%20Logo.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1280" data-original-width="1280" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIV3gDLLMzLpuChNlrF7ADHNELrXA4RKSrKFxP8p30gByTET_f23INW2aur2yj-imDfbCu4Q5TQ34KJTxzxJyj9cU5pJ1W7iTZteejnKXY_pztHJ9bJTwvD3pMSCdeOS2SbMik2qL6DQA3cEOQqUkJJUigfbK9fjLEfE6LmQz5hlyIhjmZBcGxMhgy/s320/WSJ%20Logo.jpg" width="320" /></a></div><br />AP- The Wall Street Journal recently published an article on the slowing down of the commercial real estate market. For those that follow us on this blog and social media, this comes as no surprise. <p></p><p>Here, we will provide excerpts from the article, highlight the important data and provide our own opinion feedback where appropriate. </p><p></p><p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 0in; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">Commercial
real estate is showing the first signs of cooling in more than a year, <a href="https://www.wsj.com/articles/rising-interest-rates-concern-apartment-building-owners-renters-11653393600?mod=article_inline" target="_blank"><span style="color: windowtext; text-decoration: none; text-underline: none;">disrupted by rising interest rates</span></a> that are already
causing some deals to collapse. Property sales were $39.4 billion in April,
which was <b><u>down 16% compared with the same month a year ago</u></b>,
according to MSCI Real Assets. (The decline followed 13 consecutive months of
increases).</span><span style="font-family: "var(--font-serif)", serif;"> </span></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">Property
sales tanked sharply during the early months of the pandemic…A rebound began in
late 2020 as investors took advantage of low interest rates and started to buy
in anticipation of an eventual rebound. Demand for multifamily and industrial
properties in particular <a href="https://www.wsj.com/articles/big-tech-companies-amass-property-holdings-during-covid-19-pandemic-11632821401?mod=article_inline" target="_blank"><span style="color: windowtext; text-decoration: none; text-underline: none;">helped fuel commercial sales</span></a> through 2021 and into this
year. The success of those sectors outweighed the drag on property markets
caused by underperforming office buildings which continue to be hurt by remote
work.<o:p></o:p></span></p>
<p></p><blockquote style="border: none; margin: 0 0 0 40px; padding: 0px;"><p></p><p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; text-align: left; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;"><b><i><u>Weitz
Commercial:</u></i></b> as we have referenced in our facebook posts, we think they office
market will continue to face uphill battles as the desire to reduce office footprint
will assuredly be a common theme in lease renewals. We predict the large companies
will have more offices with smaller footprints to accommodate the hybrid work
model and employees that may live a distance from city centers.</span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p><p></p></blockquote><p>
</p><p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 0in; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">Analysts
are starting to ask whether the rally is running out of steam. <b><i>Hotels,
office buildings, senior housing and industrial properties recorded big drops
in sales last month.</i></b> Sales of <u>retail properties were up in April</u>,
the fourth consecutive month that <a href="https://www.wsj.com/articles/consumer-spending-personal-income-april-2022-11653597309?mod=article_inline" target="_blank"><span style="color: windowtext; text-decoration: none; text-underline: none;">U.S. households boosted spending</span></a>, while <u>apartment building
sales continued to rise due to strong tenant demand and landlords’ ability to
raise rents</u>. But analysts and brokers said activity in even these sectors
may be slowing as rising interest rates <a href="https://www.wsj.com/articles/commercial-real-estate-is-seen-as-an-inflation-hedge-but-that-isnt-always-the-case-11645534801?mod=article_inline" target="_blank"><span style="color: windowtext; text-decoration: none; text-underline: none;">keep some investors from making competitive offers</span></a>.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><b><i><span style="font-family: "var(--font-serif)", serif;">April’s
16% decline in sales marked an abrupt turn from March, when total commercial
property sales rose 57% from the same month a year before.<o:p></o:p></span></i></b></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">But with
interest rates considerably higher—the yield on 10-year Treasury notes, a
common benchmark for commercial mortgages, has nearly doubled this
year—property investors that relied on large amounts of cheap debt to purchase
buildings have been some of the first ones to fall out of the market, brokers
and investors said.</span></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">“Suddenly,
you’re just not competitive,” said John Carrafiell, co-chief executive of
property investment firm Bentall GreenOak, describing buyers who use debt to
finance 60% or more of a property’s sale price.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">Surging
interest rates in recent weeks have left many investors with a choice between
losing their deposit or paying much more than expected for their mortgage, said
Jay Neveloff, a partner at law firm Kramer Levin Naftalis & Frankel LLP.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">Most have
been moving ahead with planned purchases, he said, but other investors are more
cautious now about signing new contracts. That will inevitably drive down
prices. “The pricing can’t be blind to changes in capital markets,” Mr.
Neveloff said.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">But lower
prices also offer an opportunity for bargain hunters, especially for
real-estate investment funds that are sitting on big cash reserves. “I have
heard people say, ‘this is when I’m making deals, this is when I’m finding
properties. ” Mr. Neveloff said.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 0in; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">The
investment firm <a href="https://www.wsj.com/market-data/quotes/APO"><span style="color: windowtext; text-decoration: none; text-underline: none;">Apollo Global
Management</span></a><span style="border: none windowtext 1.0pt; mso-border-alt: none windowtext 0in; padding: 0in;"> Inc.</span> and hospitality
investor Newbond Holdings recently <a href="https://www.wsj.com/articles/hilton-hotel-to-reopen-after-sale-accelerating-times-square-comeback-11654516801?mod=article_inline" target="_blank"><span style="color: windowtext; text-decoration: none; text-underline: none;">agreed to buy the Hilton Times Square</span></a> for about $85
million, according to people familiar with the matter, a significant discount
to the hotel’s 2006 sale price of $242.5 million.</span><span style="font-family: "var(--font-serif)", serif;"> </span></p>
<p></p><blockquote style="border: none; margin: 0 0 0 40px; padding: 0px;"><p></p><p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 0in; text-align: left; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;"><b><i><u>Weitz
Commercial:</u></i></b> this drop in price for the Hilton Times Square is fairly
staggering. Its hard to say whether this is COVID driven, general malaise of
the property, or a sign of the times in Manhattan these days. Whatever the
reasoning, it’s a significant drop for a trophy property like this one. </span></p><p></p></blockquote><p>
</p><p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 0in; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">As the
buyer pool narrows and interest rates rise, sellers are becoming more likely to
make concessions to close deals, said Henry Stimler, an executive in the
multifamily capital-markets division at the <a href="https://www.wsj.com/market-data/quotes/NMRK"><span style="color: windowtext; text-decoration: none; text-underline: none;">Newmark</span></a> real-estate
firm.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;">His firm
recently brokered the sale and financing of a $457.5 million multifamily
portfolio concentrated in the Carolinas, where rent growth has been strong over
the past year. </span><span style="color: #333333; font-family: Georgia, serif;">“It’s now turning into a buyer’s market,” Mr. Stimler said.</span><o:p></o:p></p>
<p></p><blockquote style="border: none; margin: 0 0 0 40px; padding: 0px;"><p></p><p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; text-align: left; vertical-align: baseline;"><span style="color: #333333; font-family: Georgia, serif;"><span style="font-size: x-small;"><b><i><u>Weitz
Commercial:</u></i></b> For those in our investor database, we have been very clear that we
think the market will fall, now is a good time to diversify into other assets/ cash
and prepare for a changing market. That plan hasn’t changed one bit. In fact,
articles like this are turning what was once a contrarian view to perhaps more of
a mainstream analysis. Just how much the market turns will vary market to market,
and we continue to like essential (multi-family/ industrial) properties in
mid-markets, but generally speaking, we think tremendous opportunities lie ahead
for a patient purchaser.</span></span></p><p></p></blockquote><p>For more information on <a href="http://www.weitzcommercial.com">Puget Sound Commercial Real Estate News</a>, consider contacting a Snohomish County or <a href="http://www.weitzcommercial.com">King County Commercial Real Estate Broker</a>. </p><p><u><b>Our Firm: </b></u></p><p>Weitz Commercial</p><p>108 Union Street</p><p>Snohomish, WA</p><p>Scott@WeitzCommercial.com</p><p>
</p><p class="MsoNormal" style="line-height: 20.25pt; margin-bottom: 12.75pt; vertical-align: baseline;"><span style="font-family: "var(--font-serif)", serif;"><o:p><span style="font-size: x-small;"> </span></o:p></span></p><br /><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8790286038507185841.post-28745001537550849122022-05-29T16:05:00.002-07:002022-05-29T16:05:12.498-07:00 The U.S. Economy Shrinks in the First Quarter of 2022 and our prediction(s)<p> <span style="color: red; font-family: Arial; font-size: 17pt; font-weight: 700; text-align: center; white-space: pre-wrap;">The U.S. Economy Shrinks in the First Quarter of 2022</span></p><span id="docs-internal-guid-19382fec-7fff-b201-656d-1d49454cddc8"><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt; text-align: center;"><span style="border: none; clear: right; display: inline-block; float: right; height: 241px; margin-bottom: 1em; margin-left: 1em; overflow: hidden; width: 331px;"><img height="241" src="https://lh4.googleusercontent.com/7PJDjF38mhCKBYMy3f2Ms2OWhs6nVbZtSk0DgdeTIhcvIOjukl3JWKjCMHPimlxK0A-MN6_xwl6jNezO_XNm5i70C0DTJK1k42ejtEtduvdFjQjCUzl9IRrdpiIREK2giroNl_K4Axc5MBOCsw" style="margin-left: 0px; margin-top: 0px;" width="331" /></span><span style="font-family: Arial; font-size: 17pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;"></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 15pt; font-weight: 700; white-space: pre-wrap;">The Basics of GDP</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">GDP stands for Gross Domestic Product. GDP</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">measures the output of goods and services</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">produced by labor and property located within</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">the U.S. during a given time period. It was</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">developed in the 1930s as a way for</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">policymakers to gauge the recovery from the</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Great Depression. GDP is essential as it</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">measures the total monetary value of all goods</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">and services which is important for seeing the </span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">economic growth or decline in the U.S.</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 15pt; font-variant-east-asian: normal; font-variant-numeric: normal; font-weight: 700; vertical-align: baseline; white-space: pre-wrap;">The Shrinkage</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">The U.S. economy shrank in the first quarter of 2022, with <b><i>GDP falling 1.4%</i></b> in the first</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">three months of the year, the U.S. Commerce Department reported late last week.</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Economists with CBRE Group Inc. (NYSE: CBRE) wrote last week the U.S. economy 1.4% shrinkage in Q1 was attributed to a decline in trade and inventory investment, which reflects the strength of domestic demand relative to a weaker global economy.</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 15pt; font-variant-east-asian: normal; font-variant-numeric: normal; font-weight: 700; vertical-align: baseline; white-space: pre-wrap;">What does this mean for investors?</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">So far, the U.S. investment sales market for commercial real estate has been robust in 2022. Aggregate pricing was up 7.8% year-over-year in Q1 while investment volume reached $96.7 billion, according to Colliers International Group Inc. (NASDAQ: CIGI).</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">“The commercial real estate sector is in a pretty resilient position, as it was in 2019 and 2020 as we went into the covid crisis,” he continued “I haven't turned pessimistic just yet, especially for commercial real estate, but I would say buckle your seat belts to investors. Drive with caution”</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">“It might actually benefit certain property types and geographies,” said Victor Calanog, head of commercial real estate economics at New York-based Moody’s Corp. “capital is always looking to be deployed and for yield. In an environment of rising interest rates and potential uncertainty, U.S. commercial real estate is still an amazing promise of real yield</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 15pt; font-variant-east-asian: normal; font-variant-numeric: normal; font-weight: 700; vertical-align: baseline; white-space: pre-wrap;">The Future</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Consequently, we do not expect the Q1 drop in GDP will alter the Fed’s plans to continue hiking interest rates the year,” the economists wrote. “CBRE forecasts GDP growth of close to 3% for the year, which will underpin improving real estate fundamentals.”</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Risks for the U.S. economy are more likely in 2023, as inflation falls and the lagged effects of tighter monetary policy take hold according to CBRE.</span></p><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial; font-size: 11pt; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Calanog said most forecasters, including at Moody’s, are expecting capitalization rates to rise in accordance with the Federal Reserve’s moves. Calanog and others continue to expect the Fed to hike interest rates a half-percentage point this month, but economists have begun pointing to early signs of inflation potentially easing off.</span></p><br /><br /><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;"><u><b>Weitz Commercial Take:</b></u></span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;"><br /></span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;">While the above is from an AP article, we see a decrease in GDP as a major warning sign for the economy. While most don't believe it will have much effect on Real Estate prices, we think the negative effects (lease delinquencies and reduced SF usage in many classes (namely retail and office)) have not be recognized. While we remain confident in many mid-markets like Snohomish County, we think we are going to experience significant compression of lease rates and thus market values in 1) major cities; and 2) depressed areas. Bottom line: investors need to hedge as best they can, be very specific to growth areas, and reduce debt loads as best they can as change is coming. </span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;"><br /></span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;">For information on <a href="http://www.weitzcommercial.com">Snohomish County Commercial Real Estate</a> consider contacting a Commercial Broker. </span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;"><br /></span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;">Our info: </span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;"><br /></span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;">Weitz Commercial</span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;">108 Union Ave</span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;">Snohomish, WA</span></span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><span style="font-family: Arial;"><span style="white-space: pre-wrap;">Scott@WeitzCommercial.com. </span></span></p><br /></span>Unknownnoreply@blogger.com0