Summit Commercial Brokers’ Post

What an insightful day at the Boulder Valley Real Estate Conference, presented by BizWest! 🌟 It was a fantastic opportunity to connect with industry leaders and colleagues, dive deep into current market trends, and prepare for the future of real estate in the Boulder Valley and Northern Colorado markets. With many panels featuring experts both active in the local and national markets, the conference offered invaluable information! Thank you to the event organizers, speakers, and sponsors for such a well-rounded and informative day. Looking forward to applying these insights to drive success in our local market! Key highlights included: - Residential Forecast: Higher mortgage rates paired with historically high home appreciation created a challenging Residential Real Estate Market, but it looks like 2024 has fared better than 2023 - Commercial Outlook: The office market remains challenged by lingering remote and hybrid work trends, with high vacancies (30-50% in some areas with older buildings and larger floor plates). Multi-family and industrial markets have remained solid, driven by strong demand and affordability challenges in homeownership, and retail vacancies remain low with lease rates trending upward! - Investor Analysis: The Office market is presenting opportunity for Counter-cyclical investors as they look to acquire Class A Office Buildings. Banks are still weary of investing in this product, so savvy investors are leveraging relationships with Regional Banks, Life Insurance Companies, and Seller Financing to seize this opportunity. High-powered buildings are also presenting an interesting opportunity as Life Sciences and Quantum Industries evolve. - Keynote by Dr. Lawrence Yun, chief economist at National Association of Realtors: The housing market faces challenges from high interest rates and low inventory, but home equity remains at a historic high, and foreclosure rates are at record lows. Wealth inequality between homeowners and renters continues to widen, with homeowners holding an average of $415K in wealth compared to $10K for renters. Despite oversupply in multifamily rentals and higher mortgage rates (~6-7%), housing demand persists, with first-time buyers averaging 38 years old in 2024. Infrastructure spending lags behind job growth, and capital gains exemptions are outdated, prompting calls for adjustment. Real estate remains a reliable asset amidst inflation and economic uncertainty. Check out my notes below for a more in-depth look at these topics and the rest of the panels at the Conference! #RealEstate #BoulderValley #CommercialRealEstate #ResidentialMarket #InvestorInsights #CRE #Boulder #BizWest #Networking

🏢💼📈 The U.S. real estate market is a complex and dynamic environment that is continuously shaped by various economic and social factors. As we navigate through these unprecedented times, it is crucial for real estate professionals to stay informed and adapt to the changing landscape. Here are some key insights to consider: - The current low mortgage rates are driving demand for housing, leading to a competitive market with limited inventory. - Urban to suburban migration trends are reshaping housing preferences, emphasizing the need for adaptable real estate strategies. - Commercial real estate is experiencing significant shifts as remote work becomes more prevalent, impacting office and retail spaces. In this ever-evolving market, it is essential to stay agile and embrace innovative approaches to meet the evolving needs of clients. Understanding the intricacies of local markets, staying updated on industry trends, and fostering strong relationships will be key to navigating the complexities of the U.S. real estate landscape. Let's continue to elevate our industry with a forward-thinking mindset and a commitment to excellence. Together, we can drive positive change and shape the future of real estate in the United States. 🌟🏠💡 #RealEstate #USMarket #Innovation #Adaptability

Navigating the Midpoint of 2024: Key Insights for Commercial Real Estate Professionals As we reach the midpoint of 2024, the initial goal of surviving until 2025 has been met with mixed outcomes. Despite hopes for improved conditions, the year's unpredictability, driven by high interest rates and economic uncertainties, continues to impact the industry. Office Valuations: A New Reality The national office market faces significant challenges. Declining property valuations have become a central theme, with trophy office towers in cities like Los Angeles, Chicago, New York, and Philadelphia selling for a fraction of their previous prices. Office sales have dropped more than 55% over the past year to $35 billion, a nearly 15-year low, due to high vacancy rates and declining rents. Despite these challenges, Kevin Shannon of Newmark notes a growing sense of stability and more investors willing to take advantage of significant discounts. Housing Market: Signs of Improvement The housing market, particularly for existing single-family homes, condos, and co-ops, has struggled with a chronic inventory shortage due to the "lock-in effect" of historically low mortgage rates. However, there are glimmers of hope. In May, the supply of existing homes for sale reached its highest level in four years, with some areas returning to pre-pandemic supply levels. Increased inventory is a promising sign for consumers, as noted by Lawrence Yun of the National Association of Realtors. Retail Market: The Investor's Darling While the office market stumbles and the housing market shows tentative recovery, the retail market has emerged as a bright spot for investors. Historic low vacancy rates and a stagnant construction pipeline have created fierce competition for retail space. Retailers are bullish on expanding their portfolios, often opting for available locations to meet growth targets. Looking Ahead: Uncertain Yet Hopeful The first half of 2024 has taught us valuable lessons about market volatility and adaptability. High interest rates remain a persistent challenge, but as the Federal Reserve considers future cuts, we remain cautiously optimistic about the second half of the year. Let's continue to navigate these uncertain times with resilience and adaptability. #CommercialRealEstate #RealEstateMarket #2024Trends #OfficeMarket #HousingMarket #RetailMarket #MarketInsights

🏢 Navigating the Real Estate Landscape: Opportunity in a Time of Uncertainty 🏢 Detailed in a new Fortune article: In a landscape marked by uncertainty, industry leaders like KDM Financial CEO Holly MacDonald-Korth and DWS Group's Paul Kelly offer valuable perspectives on the future of commercial real estate (CRE) and where opportunities lie. Key Takeaways: •Contrary to prevailing sentiments, MacDonald-Korth remains bullish on office spaces, launching a $350 million fund with a significant allocation to nonresidential commercial properties, believing in their enduring value in the long term. •Kelly, while cautious about traditional office real estate, sees promise in alternative sectors such as industrial, residential, and retail, citing stronger fundamentals and growth potential. •Despite challenges like record-high vacancy rates and losses in property values, signs of optimism emerge, fueled in part by expectations of a potential drop in interest rates, which could alleviate financial strains and stimulate market activity. •While office properties face hurdles, the broader commercial real estate sector stands to benefit from solid fundamentals, a favorable interest rate environment, and increased private capital infusion. •Regional disparities are expected, with growth areas emerging in the South, Sunbelt, and Midwest, where return-to-work dynamics vary. •Echoing sentiments of confidence, Kelly draws inspiration from JPMorgan Chase CEO Jamie Dimon's reassuring outlook, suggesting a resilient market navigating through challenges. As the real estate market undergoes a transformation, driven by shifting dynamics and evolving demands, astute investors and industry players recognize the importance of adaptation and strategic positioning. By embracing innovation, identifying emerging trends, and leveraging regional insights, stakeholders can navigate uncertainties and capitalize on opportunities for growth and resilience in the dynamic CRE landscape. To read the full article visit: https://lnkd.in/gGGtt3Va #CommercialRealEstate #IndustryInsights #MarketOutlook #Adaptability #StrategicPositioning

#FEDEMACWeeklyNews (08.08.2024) - Anywhere Real Estate Inc. Impacted by Relo Market In a challenging quarter, Anywhere Real Estate Inc., the umbrella company for Cartus, reported stable revenues of $1.7 billion. Despite a sluggish relocation market impacting results, the company saw a 3% rise in home sale volumes due to increasing property values. This quarter's earnings were bolstered by $30 million in cost savings, reflecting effective management strategies during tough times. CFO Charlotte (Brosh) Simonelli noted a gradual stabilization in the relocation sector, hinting at potential recovery. "It was definitely a drag on the quarter, but we're starting to see signs of stability," she commented. For an in-depth look at how Anywhere Real Estate Inc. is managing these market dynamics and learn other news of this week, visit our link: https://lnkd.in/dRpaRB9B Stay updated with the latest in real estate and relocation with #FEDEMACWeeklyNews. #BusinessInsights #RelocationIndustry #RealEstate

Redfin CEO Warns of Housing Armageddon - But There's a Contrarian Play The "rock bottom" housing market shows no signs of recovery. But smart real estate investors should seriously consider the contrarian play institutional capital is overlooking. With mortgage rates holding stubbornly above 7% through early 2024, homebuying power remains obliterated. This is where the opportunity lies - smart investors can scoop up battered office buildings trading at cap rates as low as 6% in some markets, as WFH impacts persist. The goal? Convert these offices into coveted multifamily rental units - an asset class with insatiable demand from those priced out of homeownership. High borrowing costs cut both ways - clobbering office valuations due to WFH, yet supercharging rental demand. According to RealPage data, U.S. apartment rents rose 3.9% year-over-year through February 2024, over double the rate of overall inflation. We're at the cusp of an epic "buy low, sell high" arbitrage. Nimble players conquering this dislocation can master complex office-to-rental conversions. Unleashing trapped value from distressed office properties in secondary markets into booming housing-starved rental hotspots like Orlando, Vegas, Atlanta. More than profits, these conversions can reshape urban/suburban real estate. Transforming obsolete office buildings into vibrant live/work/play communities. Investors become pioneers of the next era in mixed-use, while institutional capital remains stuck in 20th century thinking. https://lnkd.in/gQ-U8BkV #RealEstate #Investment #Contrarian #OfficeConversions #Multifamily #Rentals  #Arbitrage #CapRates #HousingMarket #ResidentialConversions  #MixedUse #SmartMoney #RealEstateStrategy #SecondaryMarkets #SunBeltRental #LiveWorkPlay #PropertyValues #ValueAdd #Distressed #Opportunistic #MarketDislocation #InstitutionalCapital

Retention rates have significantly improved year-over-year, leading to reduced turnover for operators. Over 53% of renter households renewed their leases in Q2 2024, contributing to stabilized occupancy numbers. Our lease-up trends indicate that the market is effectively absorbing new supply. However, there are potential headwinds. Regionally, we're seeing varied performance across different markets. The Midwest and Northeast metros, with their low supply, are leading the way with rent growth between 2% to 3%. On the other hand, the Sun Belt is grappling with a peak in new supply over two generations. Despite strong demand, there's still work to be done to achieve supply and demand equilibrium. Join my colleague Carl Whitaker and me at 1 PM CT today for the U.S. Summer Apartment Outlook. This is a webcast you won't want to miss! https://lnkd.in/eVtXRzHz #multifamily #multifamilyrealestate

In new CoStar Group reporting, #RealEstate professionals recount the lessons learned so far in 2024, while preparing themselves for the remainder of the year. Overall, #CapitalMarkets have settled. Not to say that much of the situation has improved, but with settlement, there is a level of stability (certainty) which has not been present over the last couple of years. With stability comes more plan making, which eventually leads to deal making. #OfficeRealEstate is close to the bottom, if not already bottomed out. However, these assets carry a high level of stigma and recovery will be long. How long? Your guess is as good as any, but 'long' is the prediction. With that, sales transaction volume has slowed and prices have fallen and will be there for a 'long' while. #ResidentialRealEstate, specifically single-family #Housing, is experiencing inventory gains. While not yet at pre-pandemic levels, this trend is indicating that people are starting to experience life conditions which out-weigh the 'benefits' of a low-interest-rate mortgage. #RetailRealEstate, with historically low vacancy rates, are providing landlords with stable returns while forcing #Retail operators to make difficult concessions, such as offering high #rental rates, long terms and compromising on location to open the next operation. #IndustrialRealEstate is all about #DataCenters right now. Where #Industrial is experiencing an average softening, data centers are attracting a TON of attention and #Capital. #HospitalityRealEstate continues to rebound from the pandemic, but with softening consumer activity, low and mid-level hotels are at higher risk than top-end hotels, however all are experiencing uncertainty due to uncertain travel and tourism trends. All in all, #CommercialRealEstate is working through a significant correction which has not yet stepped on significant landmines, looking at you #CRE debt maturations. Hope remains that we are able to negotiate through these risky times, but prudent hedging is advised. How are your portfolio strategies shifting and changing mid-2024?

Understanding the Recession’s Impact on Commercial Real Estate Recessions, though unwelcome, are part of the commercial real estate landscape. With over a 50% chance of a recession in 2023, according to JPMorgan Chase’s Al Brooks, and 89% of respondents in a recent Morrison Foerster poll believing we’re either in or heading into one, preparation is key. The effects vary: office buildings may see more vacancies due to remote work, retail spaces might face shifting consumer habits, while industrial and warehouse properties are bolstered by e-commerce. Multifamily and affordable housing often provide a safe haven. Navigating these challenges effectively is essential. Financial Management Strategies In a recession, cash flow is crucial. Scrutinize expenses, negotiate better supplier terms, and cut unnecessary costs. Consider refinancing to take advantage of dropping interest rates and preserve capital. Diversifying your portfolio can also help mitigate risk. The goal is to not just survive the downturn but to position yourself for success when conditions improve. Asset Management and Property Operations Efficiency is key during tough times. Cut costs without compromising quality—consider energy-efficient upgrades and renegotiate service contracts. Maintain properties well to attract tenants and command higher rents. Embrace technology for better management and operational efficiency, including property management software to track expenses and manage leases effectively. Tenant Relations and Leasing Strategies Strong tenant relationships are vital. Retaining good tenants is more cost-effective than finding new ones, so address their needs proactively. Be firm but fair in rent collection, and offer short-term concessions if needed. Flexibility in lease terms can help attract new tenants. As consumer spending shifts towards community-oriented experiences and e-commerce grows, adapting retail spaces could be advantageous. Market Analysis and Positioning Stay informed with thorough market research to understand local and national trends. Look for value-added opportunities, such as repurposing underperforming spaces or converting malls into mixed-use developments. Be ready to pivot with property repositioning, and use competitive analysis to differentiate yourself in the market. Investment and Acquisition Strategies Recessions can offer unique investment opportunities. Keep an eye on distressed assets that may be undervalued. Conduct diligent research and explore alternative financing options as traditional lenders may be more conservative. Position your investments for long-term growth, turning current challenges into future success. #MarketResearch, #PropertyRepositioning, #CompetitiveAnalysis, #RealEstateTrends, #MarketOpportunities, #CommercialRealEstate Read more about this topic at https://lnkd.in/ghVWDEar

Navigating the Shifts in the U.S. Home Flipping Market: Insights from Q2 2024 The latest U.S. Home Flipping Report for Q2 2024 reveals some intriguing developments in the real estate investment landscape. 🏡🔄 Here’s a snapshot: 1. **Decrease in Home Flipping Rates**: There’s been a noticeable reduction in the home flipping rate, now at 5.5%, compared to 6.1% in the prior quarter and 6.4% the year before. 2. **Shrinking Profit Margins**: Profit margins for flippers have tightened to 24.5%, down from previous quarters. This drop is reflected in the average profit per flip, which has decreased to $63,400. 3. **Regional Variations**: Flipping activity continues to be robust in certain locales, particularly in Memphis, TN, and Birmingham, AL, showcasing the highest rates of home flips. 4. **Top ROI Markets**: If you're looking into flipping, cities like Pittsburgh, PA, and Cleveland, OH, offer the most promising returns, with ROIs reaching upwards of 44%. Reflecting on these trends, it’s evident that while the overall flipping landscape may be cooling down, opportunities still abound, especially in specific markets. 📉➡️📈 My own experiences mirror these findings. Recently, I explored potential flips in Pittsburgh and can attest to the favorable conditions despite broader market cooling. 🤔 What’s your read on these shifting dynamics? Are you adapting your strategies to changing market conditions or seeing similar trends in your regions? For anyone engaging in or considering real estate investments, staying attuned to such detailed reports is crucial for informed decision-making. Feel free to share your insights or get in touch if you’re curious about which markets might suit your investment strategies best! #RealBrokerLLC #TheAceTeam #RealBrokerage #RealEstateInvestment #HomeFlipping #MarketTrends #InvestmentStrategy