For Rent: CRE Opportunities Abound as the U.S. Turns to Landlords
The U.S. is increasingly a country of renters — and landlords.
Last year, 37 percent of homes sold were acquired by buyers who didn’t live in them, according to tax-assessment data compiled in a new report published by Attom Data Solutions and ClearCapital.com Inc.
“In the search for alpha, you need to think outside the box and understand the fundamentals that drive lifestyle, especially in today’s competitive-yield world. Several years ago, a few large investment players saw the need for rental units as a reality, had the money to sink into distressed single-family residential properties, fix them up and then create a rental portfolio,” says Situs RERC President Ken Riggs. “That’s what Invitation Homes did and their recent IPO became the largest U.S. IPO in over a year. This is a good example of real estate investors having the foresight to realize that, in time, demand for this asset class would exist and they would be there to meet that need.”
Bloomberg reports, in the years following the foreclosure crisis, Wall Street drove a rise in the share of homes purchased by landlords, as private equity firms bought thousands of cheap homes. In 2012, institutional investors accounted for 7.8 percent of home sales.
On the other hand, Rick Sharga, Executive Vice President of Ten-X quips, “This story makes for a great headline, but landlords are hardly ‘taking over the U.S. housing market.’ What we’re more likely seeing is a return to normal levels of second home and vacation home purchases, which fell off dramatically after the housing bubble burst, along with modest growth of single family homes purchased as rental units. The number of single family rental homes has increased from about 11 million in 2009 to over 15 million today, as many potential homebuyers – especially Generation X families who suffered from the foreclosure crisis and the Great Recession – have opted to rent rather than purchase a home. But the bottom line is that the homeownership rate, even at its current low level, still represents about two-thirds of all housing units. We’re not exactly the United States of Renters just yet.”
Rising home prices led big investors to curtail their purchases, and the share of homes acquired by institutional investors fell to 2.9 percent last year. But as Wall Street backed off, smaller investors picked up the slack, aided by tools developed to help big investors find, finance, and manage rental properties.
In Seattle, where the median home price was $414,000 at the end of last year, the annual share of sales to non-occupiers peaked in 2013, at 23 percent. But in cheaper Dallas, where the median home price was $201,000, the share of homes sold to people who don’t live in them nearly doubled over the last 12 years.
CJC Technologies, a Situs Afilliated Business, has announced their Closer Xchange initiative. Closer Xchange will facilitate greater CRE data sharing across the entire life cycle of the loan. Click here to read more about it.
Mall Landlords’ Next Act: Apartments and Concerts
Westfield Corp. recognized more than a decade ago that the long-term outlook for shopping centers was rough. So it changed course.
Since 2004 the Australia-based landlord has slashed its portfolio of shopping centers in half, to 33 from 66, including most of its malls in the Midwestern U.S. where sales growth has disappointed. Instead, it has focused on flagship assets such as the gleaming white mall it operates at New York’s World Trade Center.
The culling also freed up Westfield to make strategic shifts. It is dipping its toes into apartment buildings, organizing concerts and other events, and developing mobile apps to engage with consumers.
“In the past, mall landlords could rely on their tenants to drive traffic to their centers,” said Romney Jacob, president at consulting company Threadsight. Now, landlords have to provide more than just bland boxes containing stores and restaurants, she said.
Westfield declined to comment for this article because it is in a quiet period ahead of its Feb. 23 earnings report. But Co-Chief Executive Steven Lowy told investors in October that “We are evolving and are continuing to evolve from a company that was really in the business of building buildings and leasing shops to retailers, to creating a much broader strategy.”
Westfield plans to build its first residential building in the U.S. in San Diego in the near future, and has developed Westfield Labs, a platform that tests new technologies including those including those that allow customer to shop online. Last August, the firm hired Scott Sanders, a Broadway producer, to oversee its global entertainment offerings, which recently included a holiday concert by the a cappella group Pentatonix.
read more: Wall St Journal
Facebook Likes Dublin
Facebook is close to a deal to lease an office building near Dublin’s International Financial Services Centre, according to three people with knowledge of the matter.
The world’s largest social network plans to lease about 110,000 square feet (10,220 square meters) of space, the equivalent of about two American football fields, the people said, asking not to be identified because the information is private. Facebook, which has its European headquarters in the Irish capital, is seeking a building that can hold as many as 1,000 workers, The Sunday Business Post reported in December.Facebook is looking for additional office space in Dublin to expand its operations and has yet to commit to a location, a spokesman for the firm said. The Comer Group, the landlord of the property, did not reply to requests for comment.
Monthly active users of Facebook’s main social network increased 17 percent from a year earlier to 1.86 billion people, the Menlo Park, California-based company said earlier this month. The firm decided against using an option to lease more than 55,700 square feet of office space on Oxford Street in London, landlord Great Portland Estates Plc said in January.
The office building targeted by Facebook is between East Point Business Park, where Google and Cisco Systems Inc. lease offices, and The Point Village, where Yahoo! Inc. occupies space. It already rents space in the district known as Silicon Docks.
Prime office rents in Dublin are expected to peak this year at about 683 euros a square meter, according to CBRE Group Inc. Most of the demand will come from financial services, the life-sciences industry and technology companies, the broker says.
read more: Bloomberg
Rapper and mogul Jay-Z is launching a venture capital firm, according to multiple sources.
One of his partners will be Jay Brown, a longtime business partner and president of Roc Nation. The pair also is scouring the venture market for a full-time investment partner. The “Jays” also are partnering with Sherpa Capital, although this won’t be a Sherpa-branded effort, and existing Sherpa staff won’t be leading investments.
Expect the focus to be on seed-stage tech opportunities, with this really being the institutionalization of Jay-Z and Jay Brown’s previous angel investing activities. For example, they both were in Uber’s Series B, at a $300m pre-money. No word yet on fund size target, nor any comment from anyone directly involved (due to regulatory restrictions).
read more: Axios
Australia Beats U.S. as Top Spot for Migrating Millionaires
Australia, the U.S. and Canada are now the favorite countries for millionaires to move to, according to a new study.
An estimated 11,000 millionaires moved to Australia last year, according to New World Wealth, making it the number one country for millionaire migrants. The U.S. ranked second with 10,000, followed by Canada with 8,000.
The overall number of millionaire migrants is rising. Last year, 82,000 millionaires migrated worldwide, up from 64,000 in 2015.
Andrew Amoils of New World Wealth, said that when it comes to deciding whether to move and where to live, millionaires are looking mainly for a good education for their kids and personal safety.
“They want the best schools for their children and to feel safe,” he said. “Climate, health care and cleanliness all follow those top two.”
When it comes to where millionaires are moving from, New World said, France tops the list. Fully 12,000 millionaires left France last year. China ranked second in millionaire flight, with 9,000 leaving, followed by Brazil with 8,000.
read more: CNBC
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