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Palm Beach Can Learn Something From Aspen's Real Estate Boom – BNN

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(Bloomberg) — Compared to last year, Aspen’s luxury real estate market had a spectacular September.

New signed contracts for homes from $10 million to $19.99 million were up 800% (nine were signed compared to last September’s one), while new listings in the same price range were up 600% year-over-year, according to a new report by Douglas Elliman.

These numbers come hot on the heels of a booming August (75% year-over-year increase for that price range) and a truly unprecedented July in which a staggering 23 new contracts were signed in that range—a 1,050% year-over-year increase.

“This summer was—the word’s been overused now, but it was unprecedented,” says Andrew Ernemann, a broker at Aspen Snowmass Sotheby’s International Realty. “We went from no activity in April and the early part of May—when I think, at one point, we had a total of 12 contracts in all of Aspen. And then we went to setting records, with over 120 properties under contract.”

But in the midst of this euphoria, there are signs the momentum is fading. Aspen’s September numbers are down 40% from August to September, and the number of new listings also slid 72%, from 39 to 11, which could impact sales volumes in the coming months.

That’s not necessarily bad news.

“I don’t really look at the sharp drop as a negative” says Jonathan Miller, the president and chief executive officer of appraiser Miller Samuel Inc., which  prepared the Elliman report. “It’s self-correcting. You have the pent-up demand aspect, which has been satiated, and now the question mark is how elevated sales will remain going forward, given this new, post-Covid world.”

Considering that Aspen’s real estate market opened in May, nearly a month ahead of comparable real estate markets (in-person showings in New York’s Hamptons were permitted only in mid-June), its slow-but-better-than-average performance could be seen as a bellwether for high net worth markets, including the Hamptons, Palm Beach, Fla., and Greenwich, Conn., all of which had bonanza summers.

“I look at these multiple boutique—or very small luxury—submarkets as [ones that] enjoyed a rapid, sharp burst as they became ‘co-primary’ markets,” Miller says, meaning that houses in vacation destinations are becoming year-round domiciles. “That is what is keeping them substantially above levels from a year ago. Now they’re all plateauing, not unlike most markets, because the demand from the lockdown has been fulfilled.”

“Let’s Go for It”

It’s hard to overstate how quickly Aspen’s market exploded.

“There were two things driving the market this summer,” says Jennifer Banner, a broker with Christie’s International Real Estate Aspen. “One, because of Covid and some of the other things happening around the country, people were looking to get out of the cities and come to a small town where they felt a bit safer.”

“And two, I think we had a large contingent of buyers who’d been sitting on the sidelines, waiting to see if there was a dip in the market,” she explains.

When they saw there wouldn’t be one, Banner continues, “they said: ‘Let’s go for it and make the purchase—maybe I’ll pay more than I hoped, but I’ll be in Aspen.’”

Other brokers agree that’s how it played out. “We weren’t allowed to show property between the first week of March and May 9,” says Galen Bright, of the Aspen real estate broker Setterfield & Bright. “And on May 9, I was surprised with buyers called me, telling me that they wanted to see properties ‘right now.’”

By mid-June, he continues, “It was clear that it was going to be a very busy summer. That was when buyers realized that prices weren’t going to drop.”

A One-Bedroom for $5 Million

The frenzy of home buying extended beyond the traditional Aspen borders, brokers say. “For years, it was all about the core and the West End and then Red Mountain,” says Banner, describing areas that were walkable—or, at the very least, a short drive to downtown Aspen.

“Now we’ve  seen a definite increase in demand in properties that are more out[side]” of town,” Banner says. “McClain Flats, Woody Creek—people looking for more elbow room within striking distance of town. Those numbers are [way] up.”

Unsurprisingly given the pandemic-inspired boost, buyers want houses they can move into immediately.

“Most buyers want turnkey,” says Ernemann. “They’re ready to go and ready to move in. It’s less common for someone to take on a remodel project that can take two-plus years.” 

“We’re seeing it across the board,” says Michael Latousek, a broker with Douglas Elliman. “I sold a $5 million one-bedroom condo before it came to market.”

No More Listings

Now, brokers say, two factors could dent the market: sellers with wild expectations and a lack of new, move-in-ready homes.

“If anything is going to slow the train down, other than seasonality, it’s that the newer inventory is at premium prices,” says Ernemann.

“New listings are definitely now aspirational pricing,” says Latousek. “I’m hearing from sellers they want to put their houses on the market—but they want crazy prices, and I’ve turned down a few listings by saying, ‘This is just too much,’” he continues. “But for me personally, I’m just about out of listings.”

That, Bright says, is his problem, too: “Except for two listings, I think I’ve sold all of mine.”

“I’ve been in contact with a lot of my clients to see if they’d be willing to sell,” he continues. “These people have built incredible homes worth $20 million or $30 million, and buyers are looking for those homes, but people just aren’t interested in selling.”

©2020 Bloomberg L.P.

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Real Estate Roundup 10.21.20 – Real Estate Daily Beat

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Real Estate Roundup:

National Acquisitions Roundup 

  • Blackstone has agreed to purchase an office complex in Silicon Valley that’s leased to Roku for $275 million. The two buildings are part of a project called Coleman Highline, a new development that’s walking distance to a Caltrain station and the stadium where Major League Soccer’s San Jose Earthquakes play. The purchase price translates to roughly $770 per SF. (Bloomberg)
  • The Stro Cos. has purchased a fully occupied, 78,000-square-foot industrial property in Fairfield for an undisclosed price. The property, located at 140 Clinton Road, is home to two tenants and sits directly along Route 46, offering quick access to interstates 80, 280 and 287, among other highways. (RENJ)
  • Realterm US Inc. has acquired a property under renovation for use by Amazon from Bridge Development Partners for $81 million. The Torrance, CA property is located at 2751 Skypark Drive, and consists of 118,000 of warehouse space, with 12,500 SF will be set aside as an office and reception area. (LABJ)

National Financing Roundup

  • AvalonBay has secured a $167 million construction loan from a syndicate led by Bank of America for its 475-unit multifamily project in Downtown L.A.’s Arts District. The development sits on a 3.75-acre site at 668 S. Alameda Street, and will also have roughly 60,000 SF of commercial space. (LABJ)

Retail 

  • Starwood Retail Partners is giving up on the nearly 1 million-square-foot Louis Joliet Mall in Chicago, handing over the keys to its lender after first defaulting on a loan payment in the spring. The move comes two months after parent company Starwood Capital Group lost control of a seven-property regional mall portfolio. The landlord is reportedly in negotiations for a deed in lieu of foreclosure or a foreclosure sale. (TRD)
  • In a regulatory filing made public Tuesday, AMC said it will be selling 15 million Class A shares in an offering valued at approximately $45 million. The firm estimates that on September 30 it had $417.9 million in cash and cash equivalents—an amount that “would be largely depleted” by the end of 2020 or early 2021 without any additional sources of liquidity. Last Tuesday, AMC disclosed in a regulatory filing that it resumed operations at 494 of its 598 U.S. theaters with limited seating capacities of between 20% and 40%. (Forbes)
  • With outdoor space at a premium, shopping malls and garages are opening their parking lots to tenants and other vendors for open-air stores and other events. At a time when most brick-and-mortar retail is suffering, landlords are grateful for anything that brings in any additional revenue or foot traffic. Some use lots for public-service functions like job fairs, voting stations and drive-through Covid-19 testing. Others have become gathering spots for trivia or bingo games where participants play from their cars. (WSJ)

Lawsuits 

  • JEMB Realty has filed a lawsuit that claims that Greenwich Insurance Company should have covered their losses at 1293 Broadway because the pandemic is defined as a pollutant. The insurance policy defined pollutants as “any solid, liquid, gaseous or thermal pollutant, irritant or contaminant.” The coronavirus qualifies, given that it spreads through the air or via surfaces, JEMB claims. The firm is seeking $3 million in remediation. (TRD)

New to the market 

  • Brookfield Asset Management is exploring a sale of its life-sciences real estate portfolio, and seeking about $3 billion. The firm is working with advisers to sell roughly 2.3 million square feet of life-sciences real estate it acquired as part of its 2018 purchase of Forest City Realty Trust. (Bloomberg)

Other news

  • Nontraded real-estate investment trusts are again bringing in money after a pandemic slowdown… The funds typically take investments of as little as $2,500 and have been paying dividends above 5% without the volatility of the stock market. In the third quarter, the funds raised $1.37 billion. That was $450 million more than they raised in the previous quarter. In the first quarter, a record number investors tried to get their money back and some weren’t able to redeem shares. In the second quarter, redemption requests eased to $515.8 million from $724.1 million in the first quarter. (WSJ)
  • With New Yorkers rushing to the suburbs, Fairfield County, Connecticut — the home of tony Greenwich — suddenly has the fastest-rising real estate prices in the U.S. The median home price climbed 33% in September from a year earlier to $499,000, while sales jumped 80%. By both measures, the county was the hottest U.S. housing market, based on an analysis of the largest metropolitan areas in the U.S. (Bloomberg)

This section was part of our premium newsletter only available to subscribers. Email theteam@theredaily.com to learn more. Enjoy the preview!

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Hudson Bay aims to 'unleash' real estate values – Western Investor

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A plan by Hudson Bay Company (HBC) to unlock the real estate values of its vast property holdings could run into dramatic price differences among its holdings in Western Canada.

On October 19, the venerable retailer, founded in Canada in 1670, announced it had formed HBC Properties and Investments (HBCPI), a dedicated real estate and investments business to “manage, maximize and enhance” the 40 million square feet of gross leasable space that HBC owns across North America.

Richard Baker, HBC’s executive chairman and CEO said, “This is an exciting phase of our company’s transformation and provides us with a significant opportunity to unleash the full potential of our real estate and investments business. Under this new organization, we will build upon our strong foundation of valuable real estate assets in key demographic areas. We will also continue our strong track record of maximizing our portfolio and generating value from these assets, as we did through the sales of the Lord + Taylor flagship building and our interest in European real estate assets,” He added, “HBCPI is well-equipped to further elevate and increase the value of our portfolio.”

HBCPI sold HBC’s Lord + Taylor building in New York City last year for $1.1 billion. It unloaded the company’s share of European assets for a reported $1.5 billion.

The plan to monetize real estate could include downtown locations in Vancouver, Edmonton and Winnipeg.

The 168,000-square-foot Edmonton store is slated to close this fall. The Winnipeg downtown store, once the HBC flagship outlet in Canada, is scheduled to close February 2021 after more than 125 years in business.

In Vancouver, HBC had a conditional agreement in 2018 to sell its downtown store at 674 Granville Street to RioCan Real Estate Investment Trust for $675 million, but the transaction failed to go through.

The site, which includes 767,000 square feet of land at the corner of West Georgia Street, is currently assessed at $251.6 million by BC Assessment.

As a comparison, the 650,000-square-foot Winnipeg downtown building was valued at zero in a January 2020 appraisal done by Cushman & Wakefield.

According to the appraisal, the building is worthless, but the site would likely be developed with retail and other commercial uses, such as offices or multi-residential development.

This would likely be the fate of other HBC downtown locations in Canada.

HBCPI now owns New York-based Streetworks Development, a large-scale property development division that specializes in mixed-use redevelopments.

“This new division focuses on creating multi-use spaces that feature a variety of services and experiences across the workplace, retail, residential and entertainment categories,” according to a HBCPI statement October 19.

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New Brunswick Real Estate: Hot Markets, Province-wide – RE/MAX News

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The COVID-19 public health crisis has altered consumer trends and home-buying patterns. From social distancing to Zoom teleconferencing, more people are working from home and performing their daily duties from the comfort of their kitchen or dining room. This has allowed a lot of homebuyers to vacate the big cities and re-plant their roots within rural and suburban communities. Based on the numbers, it looks like many of these home seekers are looking to the Prince Edward Island, Nova Scotia and New Brunswick real estate markets.

Despite the economic challenges in the wake of the coronavirus pandemic, many major urban centres are witnessing record-breaking growth, whether it is in sales activity or prices. If too many Canadians were priced out of these cities before the outbreak, their dreams of living in the downtown core of Toronto and Vancouver are becoming even harder to realize. These trends have facilitated tremendous growth in Atlantic Canada real estate.

Atlantic Canada housing markets have witnesses record-breaking activity since the height of the pandemic. Below, we take a closer look at just how well New Brunswick’s hottest housing markets have fared over the course of this unprecedented public health crisis.

New Brunswick Real Estate: Hot Markets, Province-wide

Fredericton

Fredericton was one of the many Atlantic Canada markets to endure the “pandemic pause,” but the city has since recuperated and now it is on track to close out 2020 with strong numbers that are projected to boost the local market into next year.

According to the Real Estate Board of the Fredericton Area, residential sales surged a record high 34.4 per cent in September 2020 compared to the same time last year. The average price of homes sold in September climbed an impressive 22.6 per cent year-over-year, to $210,015.

Although 312 new residential listings were added to the housing market in September, overall inventory continues to decline to its lowest level in 17 years. Active residential listings were down more than 40 per cent compared to the end of September 2019.

The RE/MAX Fall Market Outlook Report forecasts that Fredericton home prices will maintain their current values, rising 2.5 per cent to finish 2020. However, as a direct result of dwindling supply and pent-up demand, Fredericton is witnessing a new trend that has largely been confined to Canada’s largest real estate markets, such as Toronto and Vancouver: bidding wars.

Saint John

Like Fredericton, Saint John is another city in the New Brunswick real estate market to enjoy record-setting activity, particularly in the second half of 2020.

According to the Saint John Real Estate Board, residential sales advanced by 27.1 per cent year-over-year, setting a new sales record for the month of September. The average price of homes sold in September increased by 14 per cent from a year ago to a record-breaking $205,247.

Despite 320 new residential listings, active listings fell 38.1 per cent at the end of September 2020. Overall supply levels are trending downward, standing at 12-year lows.

“Our local real estate market has continued to outperform expectations in September,” said Corey Breau, President of the Saint John Real Estate Board and broker at RE/MAX Professionals Saint John. “New listings also posted strong gains this past month but are struggling to stay ahead of the brisk pace of sales. Much like other parts of New Brunswick, Saint John’s usually busy fall market is experiencing significantly increased demand. When you combine that with the lowest inventory numbers that we have seen in over a decade, it creates sustained upward pressure on prices.”

While Saint John was not immune to the coronavirus-induced drop in housing activity earlier this year, the market has recovered. The RE/MAX Fall Market Outlook Report suggests that sales and prices will continue to be strong in the final quarter of 2020. Due to a lack of inventory, the high cost of building materials, and pent-up demand, Saint John prices are expected to surge seven per cent through the remainder of 2020.

The Broader New Brunswick Real Estate Market

CBC News recently reported that many New Brunswick households are better off financially than before the pandemic. Why? Federal COVID-19 relief spending in New Brunswick increased household incomes in the province to all-time highs, despite the economy slumping and thousands of people losing their jobs. When more consumers have money, a renewed confidence trickles down through the entire market, including real estate.

With demand outpacing supply in markets across the province, the competition for New Brunswick homes is ballooning, particularly with more real estate agents enabling the facilitation of online transactions. Remote markets are more accessible than ever before, and accordingly, people are snatching up New Brunswick real estate from across the country. In many cases, purchases are being made without the buyers even seeing the house in person.

The New Brunswick economy is on the rebound, thanks to successful containment of the coronavirus and interest rates at historical lows. For now, the province is enjoying stable growth, and the strong activity within its largest real estate markets will not only contribute to New Brunswick’s economic rebound, but also a possible population spike!

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