Real Estate Roundup:
- BlackRock CEO Larry Fink said the work-from-home revolution will have lasting effects, including pushing down demand for commercial real estate. Fink predicts that after businesses were forced to run from mostly remote setups during the coronavirus crisis, many companies will choose not to bring all their workers back to the office even when it is safe to do so. (Bloomberg)
- The Federal Housing Finance Agency said that mortgage firms can sell loans in forbearance to Fannie Mae and Freddie Mac, the government-controlled companies that buy mortgages and package them into securities. Industry officials praised the regulator’s move but suggested that fees Fannie and Freddie will charge for the purchases—from 5% to 7% of a loan’s value—were high and should be subject to negotiation. (WSJ)
- Some casual-dining chains have built up carryout and delivery operations to make up for lost traffic in their restaurants. The growing takeaway business won’t cover the sales that chains are losing in their dining rooms: “You can’t do 40% of your previous revenue and survive, because your cost structure isn’t set up to support that.” (WSJ)
- The Death of the Department Store: ‘Very Few Are Likely to Survive’ (NYTimes)
- Compass slashes salaries by 10 to 50 percent. The pay cuts follow a round of layoffs last month, and take place as the company continues to rely on its strategy of recruiting agents during the pandemic. (TRD)
- RXR has filed plans for a 200-unit residential project at 2413 Third Avenue in Mott Haven. The project will span around 224,000 SF, and include a mixture of affordable and market-rate units. (TRD)
Deals put into contract before COVID-19
- Lam Generation has acquired 55-59 Chrystie Street from Gary Tse’s CTW Realty for $28.6 million. The buyer secured a $14 million loan from East West Bank to close the deal last week. The six-story vacant office building spans 42,492 SF. (CO)
- Starbucks has signed a 230,000-square-foot lease for a ground-floor location at the Empire State Building. The space could potentially be a high-concept store similar to the Starbucks Reserve Roastery and Tasting Room in Seattle. Visitors to the observation deck, which Empire State Realty Trust spent $150 million redeveloping, will descend to an exit near the Starbucks, facilitating a flow of tourists into the coffee shop. Chipotle also renewed its lease and will move to the Starbucks existing space on the west end of the building. (TRD)
- Flexible legal office space provider FirmVO has signed an 11,000 SF lease for a full floor at Reade Broadway and Associates’ 305 Broadway in Tribeca. (CO)
Despite the challenges, Edmonton area real estate values 'have held up extraordinarily well' – Edmonton Journal
I have to say the Edmonton area real estate market has surprised me.
When you consider the onslaught we have had in the past five years — oil price crash, more than 100,000 job losses, fires, floods, domestic and international trade disputes and then COVID-19, I would say the Edmonton and area real estate values have held up extraordinarily well.
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Since 2014, we’ve only seen modest declines in prices, with single family homes declining the least. Edmonton remains Canada’s most affordable major city with one of the highest average incomes.
Other Canadian cities have seen significant price gains in the same time period creating a bigger difference in real estate values between regions. We have had clients who can work anywhere and chose Edmonton as they can afford much nicer living quarters here for the same money.
Given the lower prices and interest rates combined with rising rental demand, it is easier for investors to get positive cash flows. We are seeing investors looking at condos for their positive cash flow. This fact will help to support our real estate values.
Toronto and Vancouver Real Estate Inventory May Get A Boost From AirBNB Slowdown – Better Dwelling
Canadian real estate markets may be getting another inventory headwind soon. National Bank of Canada (NBC) research estimates AirBNB hosts may contribute to oversupply later this year. As the slowdown impacts hosts, many may be incentivized to sell. By their estimates, just a quarter of hosts selling would cause inventory in cities like Toronto and Vancouver to swell.
AirBNB and Housing Inventory
AirBNB helps homeowners take existing housing stock and convert it to short-term rentals. Rather than staying in hotels, travelers can now stay in existing non-hotel stock. At first, it wasn’t a big issue when just a few people were doing it. As the platform expanded, people began buying additional housing just to operate short-term rentals. By repurposing housing that would otherwise be long-term units, cities now need additional housing. Basically, short-term rentals lead to an inventory squeeze, pushing rents and prices higher. Temporarily at least, for as long as the squeeze persists. That squeeze could end as quickly as travel did.
The Travel Industry Expects A Big Slowdown
The travel industry doesn’t expect travel to recover quickly from the pandemic. The US has approved some routes cutting plane traffic up to 90% until September. The IATA, the trade association for international airlines, also doesn’t see traffic returning to 2019 levels until at least 2023 – at the earliest. What does this mean? Fewer users of short-term rentals, and more competition from hotels for those travelers. All of this can have a big impact on real estate inventory, according to NBC numbers.
Canada’s Biggest Real Estate Markets May See Inventory Spike
If just a quarter of AirBNB inventory is sold off, NBC sees a lot more real estate listings on the market. In Vancouver, the bank estimates real estate listings would rise 12%. Montreal would see an increase of 27% in resale listings. Toronto is another story though, with inventory forecasted to rise a whopping 34%. That’s with just 25% of AirBNB exiting as hosts.
AirBNB Boost To Canadian Real Estate Inventory
The potential increase in real estate listings if 25% of AirBNB properties were listed for sale.
Source: National Bank of Canada, Better Dwelling.
The boost is another headwind for inventory rising later in the year. Inventory was already expected to rise in the coming few months. NBC economists believe this would be “exacerbating oversupply in the coming months.”
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How Is The Real Estate Market In Muskoka Post COVID19 – Hunters Bay Radio
In a brand new video podcast series, Gerry Lantaigne with Sutton Group – Muskoka Realty discuses the world of real estate in Muskoka during the Coronavirus pandemic.
Join Gerry every month as he updates you on The State of Real Estate
Watch the inaugural episode here:
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