Editors’ Weekly News Roundup, Nov 28th – Dec 2nd
The best-read Connect CRE stories in the week following Thanksgiving each illustrate larger, ongoing trends. This past week’s top story, CREFC Sees Uptick in CMBS Delinquencies, Special Servicing, details the CRE Finance Council’s prediction that the environment for CMBS loans could become more volatile in the coming months.
Since the onset of the pandemic and the short but steep economic downturn it precipitated, the delinquency rate for CMBS loans has actually declined on a monthly basis for most of the past two-plus years, and the larger forecast of a new wave of distressed assets hasn’t panned out yet. That may be changing soon, CREFC warns, given the “challenging macro environment” for commercial real estate finance.
Even as the office sector has arguably become the most challenged of the major commercial property types, development continues, especially in Sun Belt markets. That’s even more true when you consider that New York City-based companies have been increasing their presence in warmer climes, as in this week’s second best-read story, Hunt Realty to Spend $500M on Goldman Sachs Dallas Offices. The new development, part of a mixed-use project in Dallas’ North End, will house about 5,000 Goldman employees.
Although California remains the nation’s most populous state and the world’s fifth largest economy, one reason frequently cited for corporations to relocate from the Golden State to the Sun Belt is the high cost of living. It’s a point made by California Claims 70% of the Priciest Zips in USA, this past week’s third most-read story.
In particular, 46 of those expensive zip codes are located in the Bay Area, although four of the nation’s five fastest-growing zip codes for home price appreciation are in Southern California, according to PropertyShark. Second-place New York State has to make do with just 17 entries in PropertyShark’s roster.
The affordability challenge for single-family homebuyers has helped propel the popularity of the single-family rental sector, bringing it into widespread favor among institutional investors. Two of these investors, the Carlyle Group and Banyan Residential, have teamed up for a build-to-rent acquisition in the hot market of Phoenix. Last week’s fourth best-read story, Phoenix BTR Community Fetches $511,000 Per Unit, has all the details.
On the subject of affordability, BMO Harris Bank has made financing of affordable housing a pillar of its massive pledge to invest in communities. The lead article on the Chicago page this past week and our fifth most-read story overall, BMO Commits $40 Billion to Community Investment, describes the bank’s plans to encourage the development of small businesses in low-to-moderate income communities as well as home ownership. More than a third of that commitment will go to California, where BMO Harris will have an expanded footprint after its acquisition of Bank of the West closes.