Editors’ Weekly News Roundup, Jan 16th – 20th
The federal government and the potential impact of its actions took center stage this past week as far as Connect CRE readers were concerned. Taking the lead among most-read stories was Walker Webcast: Peter Linneman Thinks the Fed Has It Wrong. It covered the real estate economist’s views on the macroeconomy, the outlook for each of the major commercial property sectors and why we’ll still manage to squeeze out 3% GDP growth this year, despite what he sees as the Federal Reserve’s misguided attempts to tame inflation.
Linneman has been a quarterly guest on the weekly Walker Webcast series since 2020, with most of his appearances coinciding with the release of his quarterly Linneman Letter. As Walker & Dunlop CEO and webcast moderator Willy Walker has observed, Linneman’s prognostications during that time have been remarkably prescient.
Among the commercial real estate topics Linneman discussed was the return to offices, which he believes will happen eventually. In the case of federal office-using employees, the Real Estate Roundtable would like to see them back because their agencies have mandated their attendance. The Roundtable said new Congressional legislation, titled the Stopping Home Office Work’s Unproductive Problems (SHOW UP) Act, reflects the group’s views in a recent letter to President Joe Biden. That legislation was the focus of this past week’s second best-read story, House Bill Would Require All Federal Employees to Return to the Office.
The legislation would also require the Biden administration to provide Congress with a plan to mitigate the negative impacts of remote work and report on agencies’ plans for federal property leases. As with office attendance, that has implications for office landlords and local economies far beyond Washington, DC and its suburbs, where the lion’s share of agency headquarters are located. The Roundtable recently pointed out that the federal government has offices in more than 2,000 communities nationwide.
Leasing is one of the pillars of commercial real estate. Another is investment sales, and it’s always big news when a heavy hitter in commercial brokerage moves over to another company. On that count, Marcus & Millichap’s Institutional Property Advisors division just brought in a powerhouse team. Gary Mozer is joining IPA after 38 years with George Smith Partners, as is his three-member team.
As detailed in George Smith’s Gary Mozer & Team Jump to IPA, the third best read story of the past week, Mozer will serve as executive managing director, reporting to IPA’s Evan Denner. The change of employers by Mozer and his colleagues is only the latest in a series of high-profile recruitments Connect CRE has reported over the past year, including IPA’s hiring of Brian Eisendrath and Greg Willett a year ago.
It bears repeating that real estate remains a local business, but for some players it’s also a global one. One such organization is Hines, which began the new year by releasing an outlook report titled “2023: Navigating the Labyrinth.” On a sector-by-sector basis, Hines sees varying opportunities across the Americas, Asia and Europe, as well as differences in terms of market cycle among these regions. The report and its guidance served as the basis for the past week’s fourth best-read story, a Weekender article titled Hines Sees Opportunities Aplenty in 2023, If You Know Where to Look.
Although the opportunities may vary by region, one theme remains constant in Hines’ assessment. That’s the need to bring a discerning eye to any and all transactions in the coming year.
Moody’s Analytics reported last week that construction volume is down nationwide but that in many cases the lower output is due to projects stalling rather than never getting off the ground to begin with. One stalled project in Las Vegas is now on track for completion later this year, thanks to a joint venture’s success in lining up construction financing.
JV Secures $2.2B to Finish Las Vegas Hotel and Casino recounts the success of a partnership of Fountainebleau Development and Koch Real Estate Investments in lining up financing to bring a long-gestating, nine-million-square-foot development along the Strip to fruition. Originally begun in 2007, the project has gone through numerous changes of ownership since then before being reacquired by one of the original developers. Connect CRE readers made the latest iteration of this development saga the week’s fifth most-read story.
Just outside the top five was a story on another sector that, like hospitality, was hit hard by the pandemic and wasn’t expected to recover. But retail did, and a story based on a Cushman & Wakefield report, Shopping Center Vacancy Reaches Historic Lows, describes how fundamentals have held steady even amid the current economic uncertainty.
That doesn’t mean that all of the tenants are enjoying robust good health. Ahead of a bankruptcy filing that’s widely expected any day now, there were regional stories of Bed Bath & Beyond closures in California and Arizona. And another retailer with hundreds of stores—coincidentally also headquartered in New Jersey, as is Bed Bath—has gone the Chapter 11 route. Late last week, we reported that Party City was in federal bankruptcy court.