RENTAL INCOME JUMPS 19 % FROM OLD TO NEW TENANTS |
PLAN FLOATED TO BOOST OFF-HOURS ACTIVITY IN DOWNTOWN SAN FRAN |
SURVEY : INDUSTRIAL MOST LIKELY ‘ CRE DARLING ’ TO FACE DIFFICULTIES |
BOOMING DEMAND FOR DATA CENTERS FACES LOGISTIC , COST PRESSURES |
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This page , left to right : Artur Debat , Zeyu Wang , Buzbuzzer , ArtPartner-images |
Considering increasing interest rates and the tight supply of housing , demand for multifamily looks to be solid for the near future . For landlords and owners , the numbers support such optimism . According to recent data by RealPage Market Analytics , new renters are paying 19 percent more than the previous inhabitants of the same spaces . While rental rates jump with new leases , the same report noted lease tradeout slowed in June compared to recent months , meaning the overall volume of new renters could decrease despite continued demand .
Looking at specific markets , three areas in Florida performed the best . Miami reported new leases paying 32.6 percent more than previous renters , followed by Fort Lauderdale , Fla ., at 27.6 percent , and Orlando , clocking in at 26.4 percent . New York , meanwhile , reported a strong recovery with growth in new rents reaching 30.5 percent in June , compared to a COVID-19 low of -21.5 percent in November 2020 .
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One of the most picturesque and beautiful cities in the world , San Francisco is hoping to amp up interest in the central business district outside of normal working hours . Downtown SF Partnership has announced a Public Realm Action Plan to attract foot traffic and businesses to the downtown area outside of the usually 9-to-5 .
Citing COVID-19 as a force that revealed the CBD as a one-use district , Downtown SF Partnership Executive Director Robbie Silver outlined the plan to include improved pedestrian traffic flows , more green space and public open spaces , and reduced retail and restaurant vacancies in the downtown area .
“ Downtown , and primarily the Financial District , was really exposed as a one-use district after COVID ,” Silver tells Bisnow . “ We definitely had some business closures on the ground floor as a result . Many are definitely struggling with operations , because if people are coming back to work , they are coming back Tuesdays , Wednesdays , and Thursdays .”
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They say all good things come to an end — and while there ’ s not an immediate end in sight for industrial ’ s years-long robustness , difficulties could be ahead . In Trepp ’ s 2022 CRE Sentiment Survey , respondents chose industrial as the most likely “ darling ” sector to see cracks in its fundamentals by the end of the year . More than 35 percent tabbed industrial as the most likely to face challenges , ahead of multifamily ( 26 percent ) and self-storage ( 12 percent ).
According to the survey results , CRE professionals have a pessimistic view for the near future :
• 59 percent said CRE fundamentals will somewhat or significantly worsen by the end of 2022 , compared to just 14 percent who expected improvement .
• Inflation ( 70.8 percent ), interest rates ( 59.7 percent ), and supply chain constraints ( 36 percent ) are top concerns .
• 83 percent of respondents expect CMBS delinquencies to worsen by early 2023 .
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To say demand is “ red hot ” often includes a bit of exaggeration , but it ’ s certainly appropriate for the data center market in North America , with demand tripling year over year in H12022 . With development hustling to keep up with a seemingly insatiable appetite for investors , nearly 75 percent of the 1,457 megawatts of under-construction capacity in 1H2022 is preleased , according to CBRE research .
While the amount of supply under construction has also tripled YOY , some developments are seeing delays in delivery due to continued logistical problems related to the supply chain and increasing costs for building materials . CBRE pointed to essential equipment like network switches that can take more than a year for delivery . Northern Virginia , the world ’ s largest data center market , absorbed 270 MW in 1H2022 with another 837 MW under construction . Dallas had the second highest amount under construction with 240 MW .
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