Ten-X CRE Pulse – June 27, 2019

  • June 27, 2019

Ten-X CRE Pulse highlights key trends and developments in the week that are changing the real estate market landscape.

New Releases

The Ten-X Strategic Insights team released the June CRE Nowcast this week.  The Nowcast shows that commercial real estate pricing remains moribund as the fundamentals outlook remains tepid. For further details please see the full report.

Trade Talks

China and the United States are set to resume trade negotiations at the G-20 summit in Osaka, though optimism for a long-term deal is muted. Any escalation of tariffs on either side has the potential to further handicap west coast, port-oriented markets, warehousing/distribution real estate markets, and certain manufacturing activity.

Bloomberg Economics also estimates that an escalation of the ongoing US-China trade dispute could cost the rest of the world up to $1.2 trillion in lost global GDP.

On the Home Front

Despite a drop in mortgage rates, new home sales declined 7.8% in May from April, as home-buying demand continues to soften in the first half of 2019. Housing affordability is a growing concern after a rapid multi-year run-up in home prices, and a new survey from Freddie Mac revealed few renters believe homeownership is in their future. Only 24% of respondents thought it ‘extremely likely’ they would ever own a home.

Some investors, including Toll Brothers, are betting on build-to-rent housing as an alternative income stream. This is in contrast to some other investment firms, like Fortress, who are seeking to divest of their residential real estate business. The rationale for Toll Brothers and Tampa-based builder ERC Homebuilders lies in a large millennial population that is aging into marriage and parenthood, not all of who want nor can afford to buy a home.

For Your Health

Amazon and Rite Aid have struck a new deal that will add Rite Aid locations to the e-commerce giant’s package delivery network. Customers will be able to pick up packages from Rite Aid locations, with the drugstore chain hoping to generate increased foot traffic.

Competitor Walgreens is seeing profits squeezed by weaker generic drug sales, and the CEO is calling for a new strategy of turning retail locations into more service-oriented medical centers.

Apple is making forays in the health care space as well, with select Apple Stores now selling a blood glucose monitor that integrates with other Apple products. The tech giant is in the midst of a national expansion effort, and announced 2,000 new jobs in Seattle will be added over the next five years.

The CRE Pulse is taking a week off for July 4th next week, but stay tuned for our next edition on July 11th for more information on housing, CRE, and economic trends!

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