CNBC - Commercial Real Estate will be a 'dull pain'.

Interesting interviewing with Mega Commercial Owner Richard LeFrak discussing commercial real estate issue and further prognosis. I'll highlight the key items below. 

* Apartment rents are starting to firm up again as "everyone is working";

*  "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".

* Big vague bunch of facts; there is no money available; there will be severe loses by equity owners and some financial institutions. 

* Why have we avoided real trouble in commercial real estate? "The reality of the problem is going to be more obvious". 

* "We are going to see more and more problems in the next 12-24 months. I don't think there is a 'magic bullet'. 

*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. 

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. 

For more information on Snohomish Commercial Real Estate, consider contacting Snohomish Commercial Real Estate broker. 

Our Firm

Weitz Commercial

Scott@Weitzcommercial.com

t: 206.306.4034

 

 

Nationwide Industrial Trend - Vacancy increases among new projects

 

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 here. We will provide the basics and our insights on the issue as well. 

A record 607M SF of new industrial projects delivered across the country last year, while the U.S. saw 231M SF of positive net absorption, according to Colliers Q4 2023 Industrial report. Nationwide vacancy rose by 194 basis points to 5.5%, the highest rate since 2016.

"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".  

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%. 

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. 

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%.

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.

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. 

For more information on Snohomish County Commercial Real Estate, consider contacting a Snohomish County Commercial Real Estate Broker. 

Our Firm: 
Weitz Commercial
Scott@WeitzCommercial.com
t: 206.306.4034