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Coronavirus' Effects on Local and National Real Estate Markets – D Magazine

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After financial markets declined last week and as companies continue to encourage — or in many cases, mandate — that employees work from home, local proceedings across industries are far from business as usual. Employees proceed with concern and uncertainty over how the spread of the virus, and the measures being taken to slow it, will impact, or already have impacted their sector.

A recent report by California-based real estate firm Marcus & Millichap, which also has a Dallas-Fort Worth office, suggests that the window for commercial real estate investor action could change rapidly. Here is what they had to say:

Uncertainty surrounding the expanse and impact of the coronavirus spawned investor uncertainty that sparked the flight to safety. Investor fears, fueled by the limited insights available from leading health organizations as the new virus spread, continue to weigh on the market. As clarity emerges and actions are taken to mitigate the risks from the virus, financial markets will likely begin to stabilize. Past pandemic events such as the swine flu, the bird flu, and SARS also generated short- term market volatility that stabilized within 90-180 days on average. While the trajectory of the coronavirus could certainly be different from past pandemics, pharmaceutical firms have engaged in collaborative efforts to move a vaccine to trials as soon as April, offering the prospect of a resolution.

Though the short term may be challenging to predict, both the report and co-founder of Dallas commercial real estate firm Whitebox Real Estate, Grant Pruitt, suggest optimism is warranted for the long term.

Grant Pruitt, Whitebox Real Estate

Pruitt predicts continued opportunity in local industrial and office spaces. “I think we are underserved for the [industrial] growth that we’re experiencing and going to experience,” he says.

Despite nationwide moves toward work-from-home business models, demand for office space, Pruitt feels, will continue as humans crave socialization and collaboration opportunities. “People want to have a place to go. They want to have a place to interact with people,” he says.

Pruitt and Whitebox, like many companies, understand, however, that for many clients, immediate concerns for health and safety are more pressing: Whitebox is the first real estate firm locally to offer no-contact real estate services. “We are small enough to be nimble and adapt and react to what our clients are looking for,” Pruitt says.

Using video conferencing platforms such as Zoom and other digital tools, Whitebox will offer clients the option to elect to conduct business digitally no matter where they are at in the leasing process. Digital tours will help clients to view prospective spaces.

For now, Whitebox still has employees working in local offices to conduct in-person business with clients who are willing. Even, Pruitt encourages his clients to opt for no-contact real estate if they feel ill or the digital process would make them feel safer.

He also frequently monitors debt markets. “Loan maturities are a big thing that we are talking about because there are considerable opportunities coming,” Pruitt says. “There’s a lot of untapped value that people can use to their advantage at lease negotiation, knowing how that debt stack works, regardless of where they are in the building lease process.”

Marcus & Millichap’s recent report puts debt as “in the 3 percent range depending on the borrower’s credit, asset quality, location, etc.” — a reassuring number for prospective buyers locally and across the country.

“It’s one of the few times where it’s not a zero-sum game as far as capital markets are concerned,” Pruitt says. “It could be a good time to sell. It could be a good time to buy.”

If the bird and swine flu outbreaks are any indications, we should see the financial market steady within three to six months, according to predictions in the report. Any impact, to the contrary, would likely be caused by public policies inciting travel bans or public event cancellations researchers suggest.

Though some companies may delay large industrial projects or transactions, overall, demand for commercial real estate should stabilize and remain mostly unaffected nationwide if Marcus & Millichap researchers are to be proven correct.

Pruitt hopes the same for the local scene. “[The impact of the past few days on the local commercial real estate sector] remains to be seen,” says Pruitt. “But one thing that I do know is that the DFW fundamentals are very, very, very good. We have a pro-business environment. We have a low tax environment. We’re in the center of the country, and people want to be here.”

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BC real estate company accused of price gouging during pandemic | Urbanized – Daily Hive

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A real estate company based out of Surrey, BC, is facing accusations of price gouging after a lease agreement for the Surrey location of Bad Axe Throwing Inc was released to news outlets.

Business owner Mario Zelaya has 40 locations of Bad Axe across North America and the United Kingdom, with nine locations in Canada.

The Surrey location was undergoing a renewal of its lease agreement with the rental company, Richwood Enterprises LTD, a subsidiary of the Redstone Group real estate company.

Zelaya said he was surprised to find some unusual amendments to the new lease agreement.

The amendments included a lease extension for two years and six months, mandatory payment on property taxes (to which the company is allegedly applicable for relief or deferral), an interest rate of 6.0% (the current Bank of Canada prime interest rate is 2.45%), and the tying of personal assets to the lease.

The final nails in the coffin for Zelaya were two clauses mandating that the tenant would not talk to other tenants of the building regarding the agreement, and that no one involved with the lease would speak to press, members of the public, or anyone else about the contents of the agreement.

“When the landlord is telling me that other tenants have signed it and it’s not a big deal, that’s suspect,” said Zelaya in a phone interview with Daily Hive.

“The average tenant doesn’t understand the legalese and can’t afford to hire a lawyer to go through the agreement. We have the luxury of not having to sign the proposal. I can afford that. Most small businesses can’t.”

Zelaya stated that other landlords across the company’s 40 locations have been very gracious in their deferral of rent for the axe-throwing company. The Surrey location is the only location to have received a document like the one sent out by the Redstone Group.

“I think that the message I want to get out and include is that the province needs to step in. The greater problem is for those who don’t have the luxury to not sign the agreement,” said Zelaya.

“I’ve gotten in touch with the premier of BC about what I feel is essentially price gouging in a crisis. There needs to be protection for this […] This is something that needs investigating and needs to be stopped.”

Daily Hive has reached out to the Redstone Group for comment but did not hear back by time of publication.

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Despite one billion-dollar deal, commercial real estate sales drop sharply in Metro Vancouver in 2019 – Straight.com

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Last year was not the best of times for commercial real estate brokers in the Lower Mainland working north of the Fraser River.

That’s because the number of sales plummeted 32.8 percent from 2018, according to figures released today.

The Real Estate Board of Greater Vancouver noted that the 2019 commercial sales figure was also 41.5 percent behind the torrid pace set in 2017.

The drop in dollar value was even greater—the $6.86 billion in sales in 2019 was 56.7 percent below the $15.83 billion recorded in the previous year.

“Activity in the commercial market slowed in 2019 due in large part to reduced economic activity across our provincial economy last year,” REBGV president Ashley Smith said in a news release. “We experienced a pickup in home buyer activity in the residential real estate market to start this year, but we’ll have to wait and see how demand for commercial real estate will be impacted by the economic difficulties that the COVID-19 pandemic is causing.”

That’s not to say there weren’t any gigantic commissions, though.

The biggest-ticket sale came when Hudson Pacific Properties and Blackstone Partners bought the Bentall Centre in Vancouver’s financial district for $1.05 billion.

Another significant sale involved 1075 West Georgia Street, a 26-storey office tower that went for $275 million. Airport Executive Park in Richmond traded hands for $208 million.

It’s just that there weren’t as many of these as in previous years.

Real Estate Board of Greater Vancouver president Ashley Smith attributes the slow commercial market to reduced economic activity in B.C.

The best-performing sector last year was industrial land, with 463 sales. That was down just 6.1 percent from 2018, with the value dropping by 6.9 percent.

Ecommerce has driven the industrial land market in recent years, with Amazon securing several large sites.

Office and retail transactions declined by 24 percent in 2019. But what’s worse from the standpoint of commissions is that the dollar volume in this area plunged by 65.8 percent.

Commercial land sales were also slow, with a 54.1 percent drop in transactions and a 61.5 decrease in dollar volume in 2019.

Multifamily land sales fell by 50.5 percent, with the dollar volume diminishing by 48.9 percent.

The Real Estate Board of Vancouver’s territory does not include White Rock, North Delta, Surrey, and Langley.

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Toronto real estate firm supports residents and businesses during COVID-19 pandemic – National Post

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A Toronto real estate firm is offering residents of its properties $100 in UberEats gift cards or grocery gift cards to help support them and local businesses during the COVID-19 pandemic.

In a letter to residents dated March 30, Shiplake Properties Ltd., which operates five rental apartment towers in Toronto, with currently 1,200 units, said it wants to support residents and local communities during the pandemic.

“Offering our assistance to both our residents and our local community will help ensure that the most vulnerable among us are supported during the crisis,” the letter says.

The real estate group, a third-generation business owned by the Latner family in the city, also offered credits toward rent increases from the past year to tenants, in addition to the $250,000 in gift cards.

We will continue to work tirelessly to ensure that our community is safe and secure

Stephen Bloom, the company’s CEO, said they have “deep roots” in Toronto, dating back to the 1940s, and that residents “find themselves facing the same challenges as the rest of society.”

“Many residents in our communities were going to have challenges paying their rent,” Bloom said in an interview. “We felt it was our obligation … something we absolutely wanted to do.”

In addition to the credits and gift cards, Shiplake has also established a dedicated email for residents so they can reach out if they’re facing additional difficulties and where issues will be addressed on a case-by-case basis, Bloom said.

“We wanted to both help our tenants and some of the local businesses that have been so badly impacted.”

The logical option, Bloom explained, was to help support local restaurants, which he said are struggling for survival, through their takeout services. Local business, such as restaurants, are important to a community because they bring much character to Toronto’s neighbourhoods, he said. The gift cards, hopefully, will give the local restauranteurs some business, he added.

Shiplake and the Latner Family Foundation have several other initiatives: they are spending $250,000 in April to make sure University Health Network emergency staff are able to pay for accommodations — they’re putting their own lives on the line, Bloom said, and some are staying in hotels so they can be closer to work. More details are still to come, he explained, but there will be support for food essentials at the Sinai and Sunnybrook Hospitals and support for The Daily Bread Foodbank.

As well, they have partnered with the National Gallery of Canada for a virtual tour on April 4 to provide entertainment at home, the letter said. It’ll happen on Instagram Live. Bloom said it’s something for people to do while they’re stuck at home isolating.

“We will continue to work tirelessly to ensure that our community is safe and secure,” said the letter.

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