CRE X-Factor - Renters May Gain Some Temporary Leverage as Flood of New Apartment Supply Comes to Market
By
Xander Snyder on April 15, 2024
Similar to the for-sale housing market, apartment leasing trends are seasonal. Typically, both renters and home buyers are more likely to move in the spring than in the winter. After all, while people in warm-weather climates might have an easier time moving year-round, for many it’s hard to move when there’s snow on the ground or other inclement ...
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CRE X-Factor - The Link Between CRE Mortgage Maturities and Transactions
By
Xander Snyder on March 29, 2024
Over the last two years, commercial real estate (CRE) transaction volume has declined precipitously as interest rates soared. Currently, the market is at a multi-year trough in transaction activity, and many are wondering when it may pick back up. Though it’s hard to say with certainty, one factor that will invariably play a role in the recovery ...
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Measuring the Foreclosure Risk in Commercial Real Estate Assets
By
Xander Snyder on March 18, 2024
While there is a substantial quantity of commercial real estate (CRE) debt maturing this year, there’s nothing inherently dangerous about a mortgage coming due. Challenges arise when maturities occur simultaneously with one of two other challenges. The first is when a building is not generating sufficient income to cover its expenses, which is ...
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What’s Behind the Surge in Industrial Cap Rates?
By
Xander Snyder on February 23, 2024
Though the industrial market is softening compared to the pandemic days of double-digit rent growth and record-low vacancy, it is far from weak. Despite slowing rent growth and modestly rising vacancies, demand to lease industrial space remains strong, driven by long-term trends such as rising eCommerce sales, retailers’ need for modern logistics ...
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Commercial Real Estate industrial real estate Potential Cap Rate Model
CRE X-Factor - Will the Post-Valentine’s Day Retail Sales Report Come up Roses?
By
Xander Snyder on February 14, 2024
This Valentine’s Day, while couples nationwide enjoy romantic dinners, exchange chocolates and flowers, or cozy up at home with a nicer-than-average bottle of wine, economists will instead be focusing on something slightly less romantic: how much money people are spending on retail goods and services. While the retail sales report that comes out ...
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Why Apartment Rents are Poised to Decline in Former Pandemic Hot Spots
By
Xander Snyder on January 29, 2024
Nationally, a substantial amount of new apartment supply will be delivered in 2024. Increased supply empowers renters with more choices, prompting landlords to compete through pricing. Some cities have a lot more supply coming to market than others, and each market’s ability to absorb new units, as well as how many vacant units are left over after ...
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CRE X-Factor - Great Rate Expectations for 2024
By
Xander Snyder on January 22, 2024
In a recent article, we juxtaposed the Federal Reserve’s projections with the “wisdom of the crowd” to consider possible interest rate outcomes in 2024. In this X-Factor, we explore the uncertainty surrounding interest rate expectations more broadly. For example, if there is a soft landing, there’s still a chance, according to the Fed’s own ...
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2024 Will be a Year of Transition in Commercial Real Estate
By
Xander Snyder on December 15, 2023
A new, albeit not particularly comforting refrain has become popular in the commercial real estate (CRE) world -- stay alive until 2025. Many are hoping that by 2025 inflation will be demonstrably tamed and the Federal Reserve will have lowered interest rates. But getting to 2025, as the catchphrase suggests, means that 2024 will be a year of ...
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CRE X-Factor – Lower Prospective CRE Returns Contribute to Depressed Transaction Volume
By
Xander Snyder on November 13, 2023
The recent rise in long-term interest rates suppresses commercial real estate (CRE) transaction volume in two primary ways. First, higher long-term interest rates typically lead to higher CRE mortgage rates, which make CRE deals less profitable. Lower prospective returns on CRE deals incentivize buyers to wait on the sidelines until prices fall ...
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Debt Maturities Driving Involuntary Sales Will Set the Pace of Price Discovery
By
Xander Snyder on November 7, 2023
The primary driver of suppressed transaction volume in today’s commercial real estate (CRE) market is the gap in price expectations between prospective buyers and sellers. Falling prices and rising cap rates make buyers hesitant to jump into the market, since a better deal might be waiting in the near future. On the other side of the table, owners ...
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