10-must-reads-for-real-estate-investors-to-end-the-week-(sept.-29,-2023)

10 Must Reads For Real Estate Investors To End The Week (Sept. 29, 2023)

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Preferred equity providers are increasingly looking to close financing gaps in the multifamily sector, according to Multi-Housing News. CoStar News looks into how the proliferation of AI is driving data center growth beyond their usual markets. These are among today’s must reads from around the commercial real estate industry.

  1. ‘Record Collapse:’ New Report Shows Extent of Regional Bank Pullback in CRE Lending “In the months after three shocking bank failures, regional banks began a lending pullback of historic proportions — one that promises to continue. In the second quarter, regional banks accounted for 25% of all new commercial real estate loans worth at least $2.5 million, a 900-basis-point drop from the first quarter, according to data published Wednesday by capital markets research firm MSCI.” (Bisnow)
  2. Preferred Equity Is Pouring into Multifamily “As traditional lenders hold back on funds and leverage due to rising interest rates, regulatory pressures, and a higher perception of risk, multifamily sponsors are facing significant ‘gaps’ in financing, noted Jacob Feingold, a managing director at Canyon Partners Real Estate. That creates vast opportunities for investors to assist with construction loans, bridge loans, permanent financings and refinancings.” (Multi-Housing News)
  3. Las Vegas and its Big, Big Ambitions “Round-the-clock construction makes every excursion a dice roll with traffic, and these days everyone seems a loser. I turn right on Sands Avenue, just before the golden tower of the Wynn Las Vegas, and am so stunned by what I see that I join three dozen other cars illegally parked next to the crowded sidewalk. Some people are sitting on the concrete divider to gawk, camera phones pointed toward an otherworldly spectacle: a colossal eye seemingly the size of the Death Star staring down the street at us. The eye is so large and glaring that the neon-lit hotels and casinos are mere shadows.” (The New York Times)
  4. Six Questions on the $33B Signature Loan Portfolio “Tom Galli, a partner at Duane Morris, represented more bidders on loan portfolios sold by the FDIC than perhaps any other lawyer in this country.  He talked with GlobeSt.com about loan portfolio sales, including the $33 billion Signature real estate loan portfolio being marketed by the FDIC. Why should real estate industry participants pay attention to the Signature Bank loan portfolio transactions and other FDIC structured transactions if they otherwise have no interest in investing in them?” (GlobeSt.com)
  5. ‘Wanting to See the Change:’ New Organization AEC Unites to Launch in Support of Black Talent in CRE “AEC Unites seeks to build more opportunities for Black talent and Black-owned businesses within these fields. Set to officially launch on Oct. 3 at an event in Washington, D.C., the organization will include 12 founding firms, including Gensler, Turner Construction Co. and McKissack & McKissack. ‘I think the good news is that we do have, especially in our industry, CEOs who do want to see this change,’ said AEC Unites Board Chair and President Deryl McKissack, president and CEO of DC-based AEC firm McKissack & McKissack.” (Bisnow)
  6. AI Drives Growth in Data Centers Beyond Usual Markets “Record demand for data center space is expected through the second half of this year and into 2024, according to a recent report from real estate firm JLL. But the trend, driven by the rapid adoption of artificial intelligence, is affecting local markets differently. Phoenix and Salt Lake City outpaced the largest data center market, Northern Virginia, as the leaders in demand for the first six months of 2023, JLL said. Data center property trends are assessed not by square footage but by megawatts, the standard unit for measuring their power handling capabilities. One megawatt is equivalent to 1 million watts, or the power output of about 10 car engines.” (CoStar News)
  7. Trump Real Estate Ruling Puts Scrutiny on the Subjectivity of Commercial Property Valuations “First off, there is no such thing as objective value; it would make a great book title. The Trump organization stands by its assessment of value because, well, who knows how much the Trump brand is worth (or at least was worth back then). They then defend what they are using to come to these valuations, the fixed assets approach. This is a valuation technique typically used for businesses, not real estate, and therefore explains how they got their numbers that were at times 700 percent more than the real estate appraisers estimated. All of these defenses might be valid, but I can certainly see it being hard to convince a judge or a jury.” (Propmodo)
  8. This California City Has More Warehouses Than People. Here’s How It’s Trying to Change. “In one of California’s smallest cities, heavy trucks rumble past the low-slung industrial buildings along Santa Fe Avenue, a major thoroughfare in the heart of Vernon. Instead of homes, shops and parks, gray warehouse structures with loading docks and parking lots dominate nearly every block in this city, four miles southeast of downtown Los Angeles. Industrial buildings outnumber full-time residents nearly four to one, according to CoStar data. But city officials hope to modify that industrial dominance, looking to quintuple the population and bring in millions of new investment dollars.” (CoStar News)
  9. Great Recession Was Turning Point for Region’s Housing Shortage, Report Says “The 2007-2008 mortgage crisis and subsequent recession marked a “clear demarcation” point for the tristate area’s severe housing shortage, according to a new report from the Regional Plan Association.” (Crain’s New York Business)
  10. Decades Later, Closed Military Bases Remain a Toxic Menace “At more than 1,000 sites within the closed bases, the land is so badly contaminated that no one will ever be allowed to live on it. Sites that were supposed to be clean were later found full of asbestos, radioactivity and other health threats. In most cases, fixing up the bases is costing far more than expected and taking longer, federal reports show. The Government Accountability Office found last year that the projected costs for closing the bases had escalated to $65 billion from $43 billion.” (The New York Times)

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