Editors’ Weekly News Roundup, Jan 23rd – 27th
2023 forecasts and one company dominated the roster of five most-read stories this past week. Leading the roster was Berkadia, Knight Frank Forge Global Alliance. The partnership will offer clients of both firms access to domestic and internationally based capital. Between them, London-based Knight Frank and New York-based Berkadia offer a combined global network comprising more than 22,750 people across 558 offices in 57 territories.
Among the products Berkadia offers in multifamily lending are those from Fannie Mae, and the GSE’s latest outlook commentary was the basis for the week’s second most-read story. Although 2022 ended on stronger-than-anticipated footing—with GDP growth of 2.9% in the fourth quarter—the economy is still expected to slip into a modest recession beginning in the first half of 2023, according to Fannie Mae’s Economic and Strategic Research Group.
As detailed in Fannie Mae Still Sees Recession Looming; Soft Landing a Possibility, the group predicts GDP growth of negative 0.6% in the year ahead. The group also says the Federal Reserve is likely approaching its target for raising the federal funds rate but notes that upside risk remains for tighter-for-longer monetary policy.
Our recent reporting on the student housing sector indicated that universities with instant name recognition are faring best when it comes to attracting students. They may also be in the best position to expand, as readers saw in the past week’s third best-read story, UCLA Completes $80M Purchase of MCU Campus.
The acquisition of Marymount California University’s campus in Rancho Palos Verdes and The Villas student townhouse complex in San Pedro will give UCLA room to expand its enrollment. Berkadia and Cushman & Wakefield represented MCU and UCLA, respectively.
The new year has begun with widespread uncertainty and a host of questions that need to be answered. A new report by Cushman & Wakefield’s Jennifer Edwards frames 10 of those questions; they include “will the central bank be able to tame inflation without causing a recession?” and “are occupiers really fleeing to higher-quality office space?”
We based a Weekender story around those queries, and our readers made 10 Commercial Real Estate Questions That Need Answers in 2023 the fourth best-read story of the past week. Edwards made it clear that the answers may not be apparent for some time, “but no doubt they will shape the economy and the real estate industry over the next several quarters.”
Rounding out the top five was another forward-looking story, this one focused on the outlook for multifamily. A Q&A with Berkadia’s Hilary Provinse, 2023 Forecast: Berkadia Analyzes the Multifamily Market for the Year Ahead, considers matters ranging from new supply to financing.
Investor activity—or more to the point, hesitancy—is also a focal point. “While we are beginning to see cap rates expand given what’s happening in the debt markets, we believe there needs to be more pricing transparency before more investors move off the sidelines,” says Provinse.
A story out of California, Regal Closing Seven More Theaters in California, wasn’t among the top five overall but does illustrate a national issue. With the bankruptcy of its parent company, Cineworld, last year, Regal Cinemas has been rejecting leases for locations it considers unviable for the long term. The latest round of closings could reach 39 locations nationwide, and reports indicate that there could be dozens more to come.
What happens to these locations—whether they remain open after all, go dark but are soon backfilled by other theater operators or pose sizable vacancies for months or years—is a concern for individual landlords. The larger question is the long-term stability of an experiential retail category that in former years was considered a traffic builder for shopping centers and mixed-use developments. That changed with the pandemic, and it remains to be seen whether movie theaters can regain their consumer appeal, as fitness clubs managed to do.