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Eight Must Reads for CRE Investors Today (March 3, 2023)

Multifamily Dive checks in on capital markets conditions in the build-to-rent sector. Movie theaters aren’t dying, but adjusting to a new environment, according to CNBC. These are among today’s must reads from around the commercial real estate industry.

  1. Are the BTR Capital Markets Coming Back? “Fueled by strong institutional investor interest, the purpose-built single-family rental sector, also known as build-to-rent, has established itself as one of the hottest segments in commercial real estate over the last five years. But the past year’s interest rate hike changed things, according to Adam Wolfson, CEO of Las Vegas-based Wolfson Development Co., which built one single-family rental development in Florida and is currently constructing a second one in the state.” (Multifamily Dive)
  2. Dollar Tree Ramping Up Store Growth as Momentum Continues “The extreme-discount retailer entered its new fiscal year under the leadership of a new CEO: Executive chairman Rick Dreiling expanded his role to take over as CEO, effective January 29. In a presentation in conjunction with the earnings release, Dollar Tree's fiscal 2023 outlook called for new store growth of 600 to 650 stores, with 43% of the growth occurring in the first half of the year.” (Chain Store Age)
  3. It's Do or Die for Opendoor: Can It Survive a Real Estate Slump? “Opendoor is in the iBuying business -- using pricing algorithms to buy houses from customers at a discount to fair value. Opendoor's cash offers and quick closing process are a tremendous value proposition for sellers who avoid realtors, open houses, and home staging. However, overly optimistic pricing models, mounting debt loads, and stale inventory exposed significant flaws in the iBuying model. The writing is on the wall, with peers like Zillow and Redfin closing their iBuying divisions following substantial losses.” (Nasdaq)
  4. Office Mandates. Pickleball. Beer. What Will Make Hybrid Work Stick? “The freight elevator doors opened onto 50,000 square feet of office real estate. Right now, it is empty, but Seth Besmertnik, chief executive of the software company Conductor, gestured at the beams and concrete floor with pride. He has plans for his company’s new office — conference rooms, a pickleball court and, of course, all of his 200 employees in the New York City area. Mr. Besmertnik conceded that it was scary to persuade his board to sign a lease doubling his office real estate in 2021. But to Mr. Besmertnik, leasing a larger office was a symbol of his belief in physical, in-person collaboration.” (The New York Times)
  5. How the Prices Go for Flex Space “Flex space, with its multi-decade history, started garnering greater attention more recently — first with the flash, and ultimate troubles, of WeWork, and then with the pandemic and hybrid and work-from-home models. But while industry attention has largely been on the strategic, whether funding for flex space sales and marketing services, flex marketplaces, or concerns over the impact of tech layoffs, there’s been little coverage on and discussion about some basics. Like how much do the variations of flex space charge, the amount they might make, and where they’ve been popping up.” (GlobeSt.com)
  6. Movie Theaters Aren’t Dying—They Are Evolving “Since 2019, the number of total screens in the U.S. have decreased by around 3,000 to just under 40,000. This consolidation was a direct result of the Covid pandemic, which shut down theaters for a time and triggered a surge in streaming subscriptions. A number of regional chains have shuttered for good, while others were left to reevaluate their financial footing. For many, that meant closing locations or selling off leases.” (CNBC)
  7. Macy’s, Best Buy Sales Declines Reflect Shopper Pullback on Discretionary Goods “Consumers pulled back on purchases of apparel and electronics in recent months while continuing to spend on groceries and other necessities, according to some of the largest U.S. retailers. Department-store chain Macy’s Inc. M 9.57%increase; green up pointing triangle on Thursday said sales were down 4.6% in the fourth quarter, as people spent less online and in stores. Macy’s has said that the days around Christmas were a bright spot in an otherwise underwhelming holiday season as it burned off inventory.” (The Wall Street Journal)
  8. The Hotel Pennsylvania’s Great Disappearing Act “Bit by bit, floor by floor, the building that once rose 22 stories over Penn Station is shrinking before the city’s very eyes. The black netting draped over its ever-diminishing brick is like a magician’s handkerchief; once removed, it will reveal — nothing. Behold: The Great Disappearing Act of the Hotel Pennsylvania. This isn’t — or wasn’t — just any building. This was once the largest hotel on earth, with 2,200 rooms, shops, restaurants, its own newspaper, and a telephone number immortalized by the bandleader Glenn Miller with a 1940 song ‘Pennsylvania 6-5000.’” (The New York Times)
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