Dear CCIM Members,

Our Chapter is off to a great start! With the newly installed 2021 Leadership, we are ready to begin the steady work ahead in delivering for you. Each and every month, we hope the e-newsletter is filled with timely and relevant articles to help in your CRE practice. In our Board meeting, our Treasurer Robin Humble CCIM of Nelson & Nielson presented the Chapter a healthy start with over $20,000 in the bank- the highest in last five years. We expect to have a greater social media presence with LinkedIn, Twitter, and Facebook this year with the help of Secretary Samuel Weiner of Langdon Title. We will continue to host the successful Virtual Dealshare with our main moderator, Ian Grusd CCIM of Ten-X. Chris Cervelli CCIM of Cervelli Real Estate will assist Ian, while he handles Candidate Development for our prospective CCIM candidates. Our newest Institutional Real Estate Committee will be co-chaired by newest board members, Scott Perkins CCIM of NAI James E. Hanson, Matt Annibale CCIM of First National Realty Partners, and Brian Whitmer CCIM of Cushman & Wakefield. And, we do plan on hosting online social networking events with the help of Tom Attivissimmo CCIM of Greiner Maltz and Lee Barnes CCIM of Woodman Group LLC. And returning board members, Al Holloman CCIM of RMFriedland and Camille Renshaw CCIM of B+E will provide steady guidance. So, please stay tuned! Our Chapter will continue to be responsive, as we address your important needs as CCIM, General, Affiliate, and Candidate members in the commercial real estate community. As a reminder: it’s not too late to pay your 2021 membership dues of $99 for the year and corporate sponsors, we have substantially reduced fee to $950, which includes newsletter/website banners, hosted events, and other announcements throughout the year, so please do share this with your organization or any allied professionals/firms you do business that would be benefit in being part of our high caliber CRE membership!

Best,

-J.R.

(646) 481-3801

We are facing global challenges such as health and well-being, climate change, urbanization and socioeconomic issues. People and customers expect smart and sustainable products/services and business models. New players are entering the market and growing vast market share. Many Green and digital new laws, regulations, and budgets are being adopted and prepared. And the current government and socio-economic system is creaking and squeaking on all sides. Times are tough for many, and in the midst of all the chaos of the pandemic, our talented and more nerdy entrepreneurs are hard at work, using their down time on innovating and coding new ways to get people connected and back into business. In the age of the pandemic the best way now of reaching people directly is by being digital and mobile.

Recent statistics showed that 5 billion people around the world currently have smartphones. People are using smart devices like micro-computers on the go. When it comes to accessing information, services and products online, people don’t hesitate to use their smartphone first. This means having A strong, welcoming Mobile experience is crucial for most businesses in today's environment:

And, as part of a mobile lifestyle, users expect their mobile and digital solutions to resolve their needs as easily as possible, without having any additional work on their end. People expect their digital apps and services to do most of the tedious backend work for them as seen below in the table:

With the rise of the affordable smartphone, reduced data prices and short replacement cycles, the smartphone industry has seen rapid adoption for the past few years. The graph above depicts how smartphone users have grown from 1.57B in 2014 to 2.53B in 2018 and it is expected that this data will cross the mark of 3 billion by the year 2021.

In 2021, companies will emerge that put their money where their mouth is and invest in a digital and sustainable future. They are not looking for 'marketing' as in the past 10 years. They will look for thought leadership, learning new skills, getting new insights, and ways to achieve their objectives and how to build a strategic agenda to build back better.

A New Start-Up is taking Real Estate Investing Mobile!

Fruitiion^TM has identified this major trend in the mobile market and understands what the next generation of Real estate investors expect from their technology. “If done right, The cohesion of today’s mobile technology capabilities and real estate investing can be a beautiful dance. We have the capability and technology to make real estate investing safer and more efficient than in the past. It’s just a matter of implementation and adoption” says Daren Kumar, Co-Founder & CEO of Fruitiion. “it wasn’t easy, But my team has made major strides in bringing the highly regulated and complex process of raising and managing investor capital to an easy-to-use, engaging user experience that walks everyone through the proper steps to raising capital for their real estate deals. The best part of the technology is that you can manage your deals and investor relationships easily all at your fingertips!”

In commercial real estate, for example, raising capital for deals can be a daunting task. Not only do you have to convince all your investors that you found a great opportunity, then you have to vet your investors and get each of them to call their bank to transfer their capital into your account within the close date. All this has to be done in accordance with SEC Regulation D (Reg D). These SEC regulations are necessary, but sponsors need to know how to navigate them to keep their team and investors safe. Knowing who to advertise too, which exemption to pick and documentation to use, while maintaining professional communication with multiple investors are all part of the tedious process of raising capital. This has led to the emergence of two new and fast-growing sectors:

1)     RegTech: Regulation technology

2)     FinTech: Financial technology

RegTech is an industry gaining lots of traction lately and the Fruitiion team is frontiering this new sector for real estate investors. The Fruitiion Development team has met with many sponsors, Certified Fund Managers and SEC attorneys to develop an intuitive workflow to keep your real estate deals within SEC Regulations. “With today’s advancement in mobile technology, we are able to keep all your deal data organized within regulation, so you and your team can focus on managing and growing your portfolio, rather than doing tedious and repeatable tasks that technology can handle for you.” Said Jorge Michael, Chief Compliance Officer on the Fruitiion Team.

FinTech is another hot topic right now, especially in the Mobile space. “Since the pandemic, we have seen a shift in many industries from banking and finance to marketplace and e-commerce, the ability to manage our finances from our personal mobile device is essential to the next generation of investors.” Said Kemble Chief Financial Officer at Fruitiion. “Not to mention, as the baby boomer generation retires we will see the largest wealth transfer in our lifetime, as the next generation of high tech and digital investors enter the market, it will be important to provide them with the tools and technology their generation understands and needs.” Kemble explained. This where innovation in FinTech gets exciting. Tech entrepreneurs are hacking together new ways for us to invest and transfer large sums of investment capital safely and securely through mobile apps. Matt Nafarrete, CTO at Fruitiion says “We have been successful in spearheading the challenge of securely transferring more than the $10k limit most banking apps currently have. We have currently partnered with Dwolla, a fintech API company to help us get across the finish line. With end-to-end encryption, we can now safely and securely transfer millions of investors dollars to real estate deals on our mobile platform.”

So, is this the App Revolution?

Our next generation of investors are growing up with mobile devices as the norm. Many are saying we are in the midst of the App Revolution. Some even say that the App Revolution started back in 2007 when Steve Jobs of Apple Computers unveiled a new mobile technology that changed the way companies interact with customers and handle business. And if you take a historical view at it, this is more of an Evolution in technology, than it is a Revolution. With new industries emerging, companies like Fruitiion will be essential in innovating and integrating these new mobile technologies into our everyday business lives.

Now is the phase of the CRE cycle when repositioning success stories are born. Imagine this column five to ten years from now: we’ll be reading about a property that was purchased for a song, underwent transformative repositioning, and achieved an impressive return upon sale. That deal, and others like it, are crossing someone’s desk right now. Unfortunately, these deals come with huge task lists to be worked through during the underwriting process. Rather than becoming overwhelmed, savvy CRE investors leverage due diligence advisors to bolster in-house acquisition teams and quickly put brackets around the “wild card” items that could sour projected returns.

Here’s a scenario: a property, possibly a hotel or retail building, was performing at one time but has recently suffered a sharp decline in cash flow. Maybe the cash flow is zero, and the building is sitting vacant. The broker has limited knowledge of the building systems and the building is to be sold “as is,” without any of the negotiations that are so familiar to other deals. But the location is great, the demographics are promising for a variety of future uses, and the asking price is well below replacement value. There is a at least one vision of what the repositioned property could be that would make the project a winner.

Assumptions for the big, important details—like asking rent, uses, occupancy, market absorption, finance carry costs (short and long term), post lease-up valuation, permanent financing, project horizon, exit, etc.—are right down the fairway for seasoned CRE finance teams. The deal “pencils.” It looks like there will be a healthy return. On the other hand, budgeting for renovation costs, understanding the outlook for building systems, and avoiding large scope deviations—those significant unknowns, the “wild cards” in a repositioning project, are best addressed by architects, engineers, and construction experts that are accustomed to functioning within the timelines of a Purchase and Sale Agreement.

Identifying and quantifying physical condition wild cards can be very helpful in a real estate model. Using a Property Condition Assessment (PCA) to determine which building systems you should expect to replace, repair, or reuse, and then compiling the preliminary costs for these systems can be critical to the go/no-go process. Tally all these items up and you have your preliminary project reposition budget. If all goes as planned, or at least close enough to plan, you’ll have a revenue-generating property again and the project will be deemed a success, right?

The problem is, you are still holding a wild card. A big wild card. The goal is to model the whole project–that includes the whole construction project–and the components need to work together. Complications across building systems and trades need to be accounted for; without them, the model is no good.

A detailed estimate for construction in an executable form, with a low probably of material change orders, is not feasible until plans, ideally bid plans, are prepared. It is extremely difficult to plug in a proposed reposition Capital Expenditure budget into a deal proforma or Discounted Cash Flow model when all you have is a vision. To reach the bid plan stage and come up with a “real” construction number, developers invest considerable time and budget in program development, conceptual planning, design development, permitting, and so on. When contemplating an acquisition, there is neither the time nor the budget to reach this point. So what can you do?

When examining detailed cost estimates based on approved bid plans, many experts recommend that you carry a 15% contingency. What contingency should be carried when you don’t have any plans? This is a hard question. In our experience, the answer lies in determining the largest budgetary line items first and working through your program assumptions, while keeping a mindful eye on the overall project. Ask your due diligence consultant for a PCA with a scope modification to incorporate a building repositioning. With this scope modification, you can get answers to questions like:

·        What are some options for reconfiguring the utility metering, so the tenants pay their own utilities?

·        Will this cooling system have enough capacity to serve the repositioned building?

·        What is a good system to improve the indoor air quality of this building?

·        How much should we carry to adjust the height of all the sprinkler heads?

·        Will the elevator hoistway be large enough to accommodate modern elevators?

·        What modifications will be needed to meet ADA accessibility standards?

·        Does this building require a structural seismic retrofit?

·        Does it make sense to add more insulation to the roof when we are replacing the membrane?

·        You can even pose open-ended questions, like this developer favorite: “Here’s what we’d like to do. Do you see any other issues we haven’t accounted for that will need to be addressed?”

This scope might include services like municipal research into the building’s history, 3D imagery that can be used later to generate accurate as-built plans, as well as insights from subject matter experts in fields such as Mechanical Electrical & Plumbing (MEP), Fire Life Safety (FLS), Industrial Hygiene (IH), Elevator, Façade, Roof, Structural, Site Civil, and Geotechnical engineering. An experienced due diligence advisor can do more than provide scope options; they can discuss your project with you and help craft a scope that maximizes the insight you gain in the limited amount of time available to advance your deal.

Architects and engineers that live in the world of evaluating buildings for future capital planning and overseeing active construction projects on behalf of those that provide construction financing are particularly well suited to this task. Given the time and budget constraints, this is one of the best sources of information for the developer evaluating a repositioning project. This upfront investment, often a negligible amount in the context of total project cost, can easily provide exponential returns upon project completion and help avoid unforeseen problems that hurt returns and frustrate investors.

Source: Globe St.

Amazon said Wednesday that it is launching a $2 billion housing equity fund to preserve and create over 20,000 affordable housing units in Washington state’s Puget Sound region; Arlington, Virginia; and Nashville—three areas where the company has or expects to have at least 5,000 employees each in the coming years.

The fund aims to preserve existing housing and create inclusive housing developments through below-market loans and grants to housing partners, traditional and non-traditional public agencies and minority-led organizations.

The housing effort reflects the online retailing giant’s commitment to affordable housing and seeks to ensure that moderate- to low-income families can afford housing in resource-rich communities with easy access to neighborhood services, amenities, and jobs.

The first investments include $381.9 million in below-market loans and grants to the Washington Housing Conservancy to preserve and create up to 1,300 affordable homes on the Crystal House property in Arlington and $185.5 million in below-market loans and grants to King County Housing Authority to preserve up to 1,000 affordable homes in Washington, with additional investments to come in all three regions.

Arlington County has lost about 14,400 privately owned affordably priced housing units since 2000. Between 2010 and 2018, the median home value climbed approximately 20% (after adjusting for inflation) and median rents climbed 11%, while median household incomes climbed only 7%.

“Amazon’s investment in affordable housing in Arlington is transformational—and couldn’t come at a better time,” said Matt de Ferranti, chairman of the Arlington County Board. “We are delighted to further strengthen our partnership with Amazon and to work together to serve our shared commitment to equity and economic opportunity for all of our residents.”

Amazon is providing below-market capital—in the form of loans, lines of credit and grants—to preserve and create 20,000 homes affordable for moderate- to low-income families in the Puget Sound region, Arlington and Nashville. In each of these areas, Amazon is targeting households making between 30% to 80% of the area’s median income.

In the Washington, D.C. metro area, this translates to a household of four earning less than $79,600 a year. In the Seattle-Tacoma-Bellevue metro area, this translates to a household of four earning less than $95,250 a year.

“Amazon has a long-standing commitment to helping people in need, including the Mary’s Place family shelter we built inside our Puget Sound headquarters,” said Jeff Bezos, Amazon founder and CEO. “The shelter now supports over 200 women and children experiencing homelessness every night. This new $2 billion housing equity fund will create or preserve 20,000 affordable homes in all three of our headquarters regions—Arlington, Puget Sound, and Nashville. It will also help local families achieve long-term stability while building strong, inclusive communities.”

Amazon’s housing equity fund will provide an additional $125 million in cash grants to businesses, nonprofits and minority-led organizations to help them build a more inclusive solution to the affordable housing crisis, which disproportionately affects communities of color.

The fund will also give grants to government partners not traditionally involved in affordable housing issues, such as transit agencies and school districts, to provide them with resources to advance and create equitable and affordable housing initiatives.

Sarah Rosen Wartell, president of the Urban Institute, praised Amazon’s housing commitment.

“In booming cities across the U.S., many apartment buildings affordable for teachers, healthcare providers, transit workers and others with modest incomes are increasingly being redeveloped into luxury apartments, causing displacement and reducing housing options for working families,” she said. “Investments like those announced today by Amazon that help preserve these existing buildings and maintain moderate rent levels are critical to local efforts that promote economic inclusion and support the stability and economic mobility of moderate- and low-income families.”

Source: CoStar

In the last few months, several major California technology companies have announced plans to move to Texas—an exodus that will further fuel the Lone Star state’s ongoing apartment construction boom. There are already currently 126,900 apartments under construction in Texas, making the state the national leader for new apartment construction, according to RENTCafe.

Nor is this influx likely to through the state’s supply-demand balance out of whack. “Texas holds the indisputable advantage of land use,” says Doug Ressler, manager of business intelligence at Yardi Matrix. “What’s great about it is that it enjoys an adequate availability to support population growth and migration, from dense cores to available exurban or suburban areas.”

Dallas is leading the state in new apartment construction with 49,000 new units under construction. In the last decade, more than 177,000 new units have been built in the market. Austin comes in second with 31,000 apartment units in the current construction pipeline and 22,600 of those units are located in Austin proper.

It isn’t surprising that these two markets, which account for more than half of the total apartment construction in the state, are also the primary locations for tech companies. Oracle and Tesla are both planning to move their California headquarters to Austin. Tesla alone says that it will create 5,000 new jobs and occupy 4 million to 5 million square feet of office space in the market. Oracle opened its Austin office campus in 2018, and the property supports 10,000 employees. Both companies have noted the business-friendly state and a large pool of tech workers as the reason for the move.

Hewlett Packard Enterprise Co. is also moving to the Lone Star state, but the firm is relocating to Houston, where it is building a new campus. Houston rivals Austin in terms of new apartment construction, with 28,600 new units in the pipeline, and more than 17,000 are landing in Houston proper. The city has been named the most popular market for corporate relocation and expansion.

San Antonio rounds out the list for apartment construction in the state with 10,900 new units in the pipeline.

Apartment construction has been robust in Texas for the last decade, with more than 500,000 new units in 2,000 new apartment buildings delivered in that time. Dallas has led the apartment construction activity with 177,400 new units added in the last 10 years, followed by Houston, which has seen 131,000 new apartment units come to market.

The apartment boom has also helped fuel growth in surrounding metros. Suburban Texas markets have grown in popularity among renters, many of which are offering many urban-style amenities found in the urban core, without the price tag and congestion. Texas has eight cities on RentCafe’s list of the top 20 suburbs in the US.

Source: Bisnow

The COVID-19 pandemic put a damper on office leasing activity last year, drastically shrinking the average deal size from the beginning of the year, according to CBRE’s new U.S. MarketFlash report on the Top 100 leases of 2020.

But one thing remained the same:

Technology companies led transactions.

Rather than move forward with relocations, expansions or other real estate-related decisions amid pandemic-induced uncertainties, office users took a wait-and-see approach in 2020, as evidenced by the numbers. The cumulative square footage of the Top 100 largest office leases of 2020 was 29 million square feet, marking a 32 percent year-over-year decline in the 100 largest transactions.

Additionally, the average size of the largest leases plummeted from 422,000 in 2019 to 290,000 square feet in 2020. Furthermore, with office users still skittish about making new commitments, renewals accounted for the bulk of activity, or 43 percent of the leases, marking a 10 percent year-over-year increase.

The tech sector provided a certain consistency in 2020, continuing an ongoing pattern of several years. “Tech companies accounted for 18 of the Top 100 leases and the most by square footage, 6.8 million square feet, largely in new leasing activity,” according to the report. The square footage marks 24 percent of the total square footage of the Top 100 leases.

“Nevertheless, leasing by tech companies was down by more than half year-over-year, demonstrating a slowdown by even one of the most resilient industries,” the report said. The government and nonprofit sector followed at a distant second with 4.7 million square feet and the legal industry took third place, claiming approximately 2.9 million square feet.

A whopping 38 percent of the square footage of the Top 100 leases in 2020 can be found in Manhattan and Washington, D.C., with Manhattan leading the way with 6 million square feet of the Top 100 leases and D.C. claiming 4.9 million square feet.

Top 10 Active Markets and New Lease Demand Drivers. Chart courtesy of CBRE

And while new leases were in the minority in 2020, 37 percent of new transactions took place at properties in Seattle, Boston, Houston and Atlanta—and 84 percent of the new transactions in those four markets involved tenants in the tech, life sciences and energy sectors.

Despite the hammering of sorts that office leasing took in 2020, CBRE anticipates that the pandemic’s effects will begin to dissipate later in 2021. “As positive sentiment returns to the market from lower COVID-19 transmission rates and wider administering of vaccines, occupiers will begin to form long-term portfolio strategies,” according to the report. “Improved office leasing activity in a more stable environment likely will begin in the second half of the year as workers return to the office and if economic growth continues.”

Source: Commercial Property Executive.

The short-squeeze frenzy on Wall Street could soon rock more real estate firms.

The share prices of some struggling brick-and-mortar retailers, including GameStop and AMC Entertainment, swung wildly this week as retail investors clashed with hedge funds over speculative trading known as short selling. And at least one major real estate company caught the eye of those same mom-and-pop traders.

The unprecedented trading activity saw GameStop briefly become nearly as valuable as Delta Airlines before plummeting 44 percent Thursday. (Melvin Capital, founded by Gabe Plotkin, reportedly needed an infusion of $2.75 billion after taking losses on its short positions.)

And AMC’s share price shot up 500 percent this week before falling by half Thursday, but has still tripled since Friday.

Wondering what the heck is going on?

Some institutional investors bet against pandemic-wracked firms by shorting their stocks. This involves selling shares to a third party and buying them back later, pocketing the difference if the price dropped.

But if the share price goes up, short sellers face unlimited losses. When this happens and they are forced to close out their positions while they can still afford to, the repurchasing drives share prices up, especially if there are not many shares available to buy. This is a short squeeze, and investors who anticipate it and buy the stock ahead of time can make a fortune.

But when stocks become wildly overpriced in a short squeeze, they can come crashing down just as fast.

In this week’s confounding case, day traders communicating on platforms such as Reddit’s WallStreetBets drove up the share price of those shorted stocks, causing hedge funds substantial losses and leading trading platform Robinhood to pause the exchange of volatile shares.

Here’s where real estate comes in.

Investors have taken short positions against mall landlords, such as Simon Property Group and Macerich, who rely on tenants like GameStop and Bed Bath and Beyond.

Macerich, in particular, has been pressured by short sellers. More than 85 percent of the firm’s tradable shares were held by short sellers as of Jan. 15, Morningstar reported. (That figure was 88 percent for GameStop.)

Whether it becomes the next target on Reddit is anyone’s guess. Last month the company was identified by WallStreetBets as an undervalued stock. Its share price rose 94 percent early this week before falling 25 percent from the week’s high.

Short sellers have targeted other real estate firms, though not to the same extent as Macerich. Almost 11 percent of outstanding shares in Zillow, once eyed by subprime mortgage short-seller Steve Eisman, were owned by short sellers on Jan. 15.

In Manhattan, where real estate prices fell more than anywhere else last year, office landlords are also under pressure. The number of tradable SL Green Realty shares owned by short sellers fell to 7 percent on Jan. 15 from nearly 20 percent on Dec. 31. Tradeable Vornado Realty Trust shares owned by short sellers rose 1 percent over the same period.

“Urban office[s] will likely experience substantial rent declines, lose occupancy, and assets values may fall as much as 40% over the next several years,” wrote real estate hedge fund Land & Buildings in a December report.

The company, led by Jonathan Litt, reportedly took short positions in May on Empire State Realty Trust, SL Green and Vornado.

While traders with big short positions remain vulnerable to coordinated buying sprees, companies and their lenders have so far benefited from surging share prices.

AMC took the opportunity to drum up cash, issuing $304 million of new equity, it announced Wednesday. Silver Lake, which financed debt to save the theater chain from bankruptcy, converted $600 million of that debt into 44.4 million shares at a price of $13.51. AMC shares closed at $8.63 Thursday.

Source: The Real Deal

The online brokerage, which has soared to a new level of notoriety this week for its role in the GameStop stock trading phenomenon gripping the nation, is looking for a roughly 60K SF office in New York City, The Real Deal reports.

Individual investors banded together via online forums to inflate stock prices on nostalgia-driven publicly traded companies, such as GameStop, AMC and BlackBerry, that had attracted hedge fund short-sellers, upending the market. The retail traders are largely using Robinhood to do so, placing it squarely in the center of the finance story of the year so far. Members of Congress called for a hearing on the incident, and Robinhood is facing intense pressure after halting stock purchases Thursday.

The company needed to raise cash in order to manage the onslaught of trades, drawing at least $500M from a line of credit and taking on $1B of new investment, The New York Times reports. The Silicon Valley-based company has office space in Menlo Park, Denver, London and Florida, according to TRD.

Robinhood's office search comes amid rising confidence in the New York City market after a disastrous year. The Real Estate Board of New York’s commercial broker confidence index rose 34% between the third and fourth quarters of last year, coming in at 2.89 out of 10 at the end of December.

“Broker confidence rebounding at the end of 2020 illustrates that the industry has an increasingly positive view that we can overcome the immediate challenges we face, including vaccinating all New Yorkers, getting New Yorkers back to work and boosting our economy,” REBNY President James Whelan said.

Three major office leases were signed around New York City over the past week, signaling that the worst of the leasing market might be in the past. In Midtown South, meal delivery service Freshly announced it will take up 92K SF for a headquarters at 63 Madison Ave., and Beam Suntory will take up 100K SF for a new global HQ at 11 Madison Ave. Apple, another tech firm, has signed a deal to take up 90K SF at Kaufman Astoria Studio in Queens for its AppleTV+ streaming service.

Source: Bisnow

In a survey of more than 2,000 apartment residents, Package Concierge has found half of renters have changed how they prioritize amenities during the pandemic.

Ninety-one percent of those who have actively been searching for a new apartment say that amenities will play a factor in their apartment search.

Among the top amenities listed by renters were package management systems, smart home devices (such as temperature control and digital locks), gym and recreation sport facilities, outdoor kitchen and dining areas and pet services.

“Last year, people spent more time in their homes than ever before, so finding a place to live that incorporates critical amenities is top of mind for everyone in 2021,” said Donna Logback, head of Marketing for Package Concierge in a statement.

Recognizing the demand, major players have gotten involved in apartment smart home technology. Last year, as one example, RealPage company STRATIS IoT, a technology platform that links apartment smart home systems to personal devices, partnered with Alexa for Residential through Amazon.

Managing the glut of online deliveries also appears to be a priority for residents, according to Package Concierge. One in five residents said package management systems were one of the most essential amenities, according to its survey.

The survey shows that one-third of renters live at a property that has changed or upgraded the way they handle packages since the start of the pandemic. Half say new technologies and systems were deployed, and 25% say more staff was hired.

One in five residents were not happy with the way their property handles package management. The top reasons include disorganization (23% of respondents), lost packages (19%), delay in retrieval of packages (18%), lack of social distancing and safety measures (16%) and lag time in delivery notifications (15%).

Amenity preferences aren’t the only thing changing during the pandemic.

Design is also evolving. Research from Newmark found that multifamily owners are increasing floor plans from a standard of 65 feet to 75 feet to create more flexible spaces, such as units that feature one-bedroom plus a den.

According to the survey, 14% of current apartment units are being reworked to better accommodate work-from-home needs, and developers are adding more outdoor space with balconies to meet the needs of workers that stay home.

Source: Globe St.

KEY POINTS

·        The typical delinquent renter now owes $5,600, being nearly four months behind on their monthly payment, according to a new analysis. This also includes utilities and late fees.

·        In total, an astounding $57.3 billion is owed by just more than 10 million renters.

·        “Eviction is a serious possibility,” wrote Mark Zandi and Jim Parrott.

About 18% renters in America, or around 10 million people, were behind in their rent payments as of the beginning of the month.

It is far more than the approximately 7 million homeowners who lost their properties to foreclosure during the subprime mortgage crisis and the ensuing Great Recession. And that happened over a five-year period.

In one of his first executive orders, President Joe Biden extended the Centers for Disease Control and Prevention’s current eviction moratorium through the end of March, but that is unlikely to be long enough.

A new analysis from Mark Zandi, chief economist at Moody’s Analytics, and Jim Parrott, a fellow at the Urban Institute, shows the typical delinquent renter now owes $5,600, being nearly four months behind on their monthly payment. This also includes utilities and late fees. In total, an astounding $57.3 billion is owed. This includes all delinquent renters, not just those suffering financially due to the Covid pandemic.

“Compared to renters that are making their rent payments on time, currently delinquent renters are more likely to be lower income, less educated, black and with children,” noted the authors of the analysis.

The $900 billion relief package passed in December provides $25 billion for both renters and landlords. It is being disbursed by the states and can be used for past and present rent, as well as fees and utilities. Renters must show that they suffered financial hardship due to the pandemic, have incomes below 80% of their area median income and are at risk of becoming homeless.

Zandi and Parrott’s analysis, however, shows that it is not even close to enough. If dispersed expeditiously, which is a big if, the $25 billion would bring the numbers down until April. By March about 6.3 million renters would be behind on payments, with total arrears of about $33 billion. Then the numbers would begin to creep up again.

“Eviction is a serious possibility. Lawmakers deserve credit for ensuring that these households did not lose their homes. But they need to do more. Soon,” Zandi and Parrott wrote.

The Biden administration has proposed $25 billion in additional rental relief in its $1.9 trillion stimulus package. It includes an extension of the eviction moratorium through the end of September 2021. That plan is already drawing criticism from Republicans and even some Democrats as being far too expensive. It remains to be seen if any cuts to that plan would come from the rental relief.

In addition, the CDC’s eviction moratorium is coming under fire from both tenant advocates as well as landlords.

“Extending the eviction moratorium is, on its own, insufficient,” wrote Diane Yentel, president and CEO of the National Low Income Housing Coalition. “The existing moratorium is flawed and some landlords exploit loopholes to evict tenants despite the protections. No federal agency is enforcing the order’s penalties for unlawful evictions.”

The NLIHC, along with about 2,000 national, state and local organizations, signed a letter sent to Biden, calling for additional relief and enforcement.

Meanwhile landlords, many of whom are now struggling to pay the mortgages on their properties, are concerned that an extension of the eviction moratorium through September would do more harm than good.

“Allocated rental assistance funds do not fully address the $70 billion in outstanding debt nor accruing debt moving forward. The industry simply cannot continue operation under these policies without disastrous harm to housing affordability,” according to a release from the National Multifamily Housing Council.

Source: CNBC

Simon Property Group has formed a special purpose acquisition company with a target value of $300M, according to a new filing with the Securities and Exchange Commission Friday. The filing stipulates that the new SPAC, called Simon Property Group Acquisition Holdings Inc., doesn't have a target company. The SPAC could raise up to $345M if its underwriter, Goldman Sachs, exercises an option to purchase an additional 4.5 million shares.

SPG Chairman and CEO David Simon will serve as chairman of the new company, and SPG Senior Vice President of Corporate Investments Eli Simon will serve as its CEO. The 33-year-old Eli Simon joined SPG in 2019 from his position as head of North American lodging for Och-Ziff Capital Management and Och-Ziff Real Estate.

In the filing, SPG stated that its SPAC "will seek to target an innovative business with the potential to disrupt various aspects of the retail industry and make a transformative impact on in-person and/or online experiences."

Among the categories of business SPG Acquisition Holdings said it could target are health and wellness, food and beverage retail, distribution, coworking, entertainment, sports, esports, hospitality, e-commerce or traditional retail brands. The blank check company expects to list on the New York Stock Exchange and trade under the name SPGS.U.

Simon is the latest real estate giant to launch its own blank check company, following CBRE and Tishman Speyer, which plans to use its SPAC to take proptech company Latch public at a $1.5B valuation.

Source: Bisnow

KEY POINTS

·        IHOP is adding six different types of burritos and bowls to its menu.

·        The Dine Brands chain is hoping to entice customers with the easy portability of the burritos and bowls, which will be available all day.

·        In recent years, IHOP has increasingly competed with fast-casual chains like Chipotle Mexican Grill for customer foot traffic.

IHOP is adding burritos and bowls to its menu as the pancake chain tries to entice customers back to its locations for breakfast, lunch and dinner.

Like many restaurants, the Dine Brands chain cut back its menu as the coronavirus pandemic weighed on its business last year. Facing supply chain challenges and hoping to simplify the jobs of its kitchens, IHOP’s menu went from 12 pages to just one page, double-sided. Chief Marketing Officer Brad Haley estimates that the chain cut more than a third of its menu items.

“We have the opportunity to do something more innovative now as, hopefully, we’re kind of moving into a new normal,” Haley said.

Starting Tuesday, the new items will be available nationwide all day, with prices starting at $5.99. Customers can choose bowls or burritos with six styles of toppings: the Classic, Country Breakfast, Spicy Poblano Fajita, Southwest Chicken, New Mexico Chicken or Spicy Shredded Beef.

About half the items include traditional breakfast items like eggs or sausage. Haley cited burritos’ position as the fastest-growing breakfast item in the U.S. as one reason why the chain decided to add it.

But the new options also play into IHOP’s multiyear push to appeal to lunch and dinner customers. The strategy kicked off in 2018 when the chain temporarily changed its name to IHOb to promote its new line of burgers. The stunt quadrupled IHOP’s burger sales. The following year, IHOP upgraded its chicken offerings. And in September, it started an “IHOPPY HOUR” value menu for customers who stop in between 2 p.m. and 10 p.m.

The additions come as fewer customers choose to dine at restaurants. Full-service restaurants like IHOP have been hit harder by government restrictions and consumer concerns about dining in-person during the pandemic. Unlike fast-food chains, they don’t have drive-thru lanes or a menu that’s formulated to travel well. Takeout and delivery orders are failing to make up for the lost sales, according to UBS Evidence Lab.

IHOP is hoping that the burritos and bowls will help bolster its to-go sales all day long. Breakfast has been the hardest hit meal by the pandemic, with many consumers reverting to eating cereal or brewing their own coffee while they work from home.

“Burritos and bowls are very, very portable, so it’s a great time to introduce them as well given the people’s desire to consume them where they want,” Haley said.

The menu strategy takes a page from the book of IHOP’s top competitors: fast-casual chains. For years, Chipotle Mexican Grill and Sweetgreen have used their own bowls to lure customers away from full-service chains with their convenience and high-quality food. Years before the pandemic, the full-service segment reported declining foot traffic as consumers stopped visiting.

On the heels of that trend, IHOP said it would launch a fast-casual spinoff called Flip’d by IHOP. It had planned to open the first location in Atlanta last April, selling menu items like pancake bowls. The plans were shelved as Covid spread across the U.S.

“We look forward to being able to open Flip’d actually some time in 2021,” Haley said. “We’re not at the point yet where we can talk publicly about what that looks like, but we’re still very interested in Flip’d and feel like we’ll get some opened this year.”

Shares of Dine have fallen 18% in the last year, giving it a market value of $1.16 billion. The company, which also owns Applebee’s, saw its net sales plunge 30% in the first nine months of 2020.

Source: CNBC

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