Residential investment is not the macroeconomic force it used to be. As the share of residential investment in GDP has fallen, its contribution to recession-inducing economic weakness has also declined: from 32% before the downturn in 1980, to 21% ahead of that in 1991, to only 12% by the eve of that in 2001.
26.4% of households reported they missed last month’s rent or mortgage payment (or had little confidence in making this month’s payment). This has increased from a low of 22.1% in the survey of June 4th - June 9th.
The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 38 basis points from 8.18% of servicers’ portfolio volume in the prior week to 7.80% as of July 12, 2020. According to MBA’s estimate, 3.9 million homeowners are in forbearance plans. To put these numbers in perspective, the MBA notes “For the week of March 2, only 0.25% of all loans were in forbearance.”
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels). 2020 was off to a solid start, however, COVID-19 crushed hotel occupancy. Notes: Y-axis doesn’t start at zero to better show the seasonal change.
The occupancy rate for the last four weeks was 43.9%, 46.2%, 45.6% and 45.9%. Flattening out well below the typical median for this last week–75%. Usually hotel occupancy starts to pick up seasonally in early June. So some of the recent pickup might be seasonal (summer travel). Note that summer occupancy usually peaks at the end of July or in early August.
As demand from restaurants and retailers plummets, recovery for these uses remains uncertain. While developers remain uncertain and have varying perspectives, design experts say the product is not dead–and could be in greater demand than before–so long as developers can pivot to meet the market’s changing needs.
According to the National Association of Realtors, existing-home sales rebounded at a record pace in June 2020, showing strong signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic.
In Sacramento’s Newton Booth neighborhood, R Street is lined by a sea of single-family bungalows on one side, and light industrial buildings on the other. Block 27, a 4,505-square-foot, four-unit apartment complex, makes use of an infill lot right along that border, targeting a neglected segment of the market in one of California’s most populous cities.
Ascena Retail Group, the parent company of Ann Taylor and Lane Bryant, has filed for bankruptcy, the latest apparel seller unable to ride out the economic damage caused by coronavirus restrictions. Ascena’s various brands operated 2,800 retail locations, many of them inside shopping malls. Most of the company’s stores have reopened, but it still expects sales to fall by 36% for the year due in part to its stores being closed for two months. The company has targeted roughly 1,100 for its initial round of store closures.
Electric automaker Tesla (NASDAQ: TSLA) has selected a 2,000-acre site near Austin for the development of its latest $1 billion ‘Gigafactory.’The plant will build Tesla’s new Cybertruck pick-up truck and will be the second U.S. manufacturing site for the Model 3 and Model Y automobiles, distributing largely to the eastern half of North America.
The location is in southeast Travis County, five minutes from the Austin International Airport and 15 minutes from Downtown Austin, according to Tesla CEO Elon Musk. The project is set to receive $60 million in tax breaks from the county and a local school district over the next decade, according to reports by the Associated Press.
The dozen states of America’s Midwest have a population of 68m, equal to Britain’s. They share an economy worth some $4trn, equivalent to the gdp of Germany, the world’s fourth-biggest. And the region’s swing voters weigh heavily in politics. Donald Trump won the presidency four years ago thanks to narrow victories in Michigan, Pennsylvania and Wisconsin. This year’s contest may yet be decided there, too. At the same time the Midwest’s troubles, after decades of industrial decline, are also outsized. Detroit, despite its recent improvements, is sadly still emblematic of how hard it is for cities to recover. It has shrunk to just one-third of its peak population of 1.8m in the 1950s. What can the region do to prosper again, and what can the rest of the world learn from its experience?
Mike joined the global real estate industry in 1987 and has extensive experience both as an investor in and manager of real estate vehicles. Before joining CBRE Global Investors he was Senior Managing Director and Head of European Real Estate for Mesirow Financial. At Mesirow he was co-portfolio manager of a global fund of funds program with specific responsibility for sourcing, undertaking due diligence, executing and managing value add and opportunistic strategies in Asia and Europe. Prior to this, he spent 18 years at Schroders where he grew assets under management from £160 million to over £8 billion through the development of a multi-product real estate strategy.