RENTAL DEBT KEEPS ACCUMULATING DURING RECOVERY |
SMALLER METROPOLITAN AREAS EYE MIXED-USE REVITALIZATION |
DALLAS LEADS NATIONWIDE CONSTRUCTION BOOM |
SELF-STORAGE ’ S OUTLOOK VARIES ACROSS THE U . S . |
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This page , left to right : Gerber86 , Tashka , Bill Dickenson , Douglas Sacha |
Eviction moratoriums spread across the U . S . as the country dealt with the first wave of the coronavirus pandemic . Rental forbearance has been another avenue to alleviate the pressures faced by those negatively impacted by COVID-19 . But now a year from the initial tumult , as the economy looks to get back on track , accumulated debt in rental properties is a significant concern for tenants and owners .
A recent study by the Federal Reserve Bank of Philadelphia estimates that tenants who lost employment due to COVID-19 have amassed more than $ 11 billion in arrears . A broader examination of the rental market by Moody ’ s Analytics estimates that more than $ 53 billion in back rent , utilities , and fees have accumulated by January 2021 .
COVID relief passed in December 2020 included $ 25 billion in federal rental aid , but the multifamily sector faces difficulties in recapturing delayed rental income .
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With many people considering all the implications of working , living , and even visiting large coastal cities during the COVID-19 pandemic , some inland locations see opportunity in attracting new residents or keeping others from leaving with mixed-use developments projects .
Pittsburgh has been a model of reinvention , with the metropolitan area attracting new industries , including robotics , to replace manufacturing that had left western Pennsylvania . But smaller , suburban locations are investing in mixed-use developments to help revitalize residential , commercial , and retail interest in downtown areas .
Hamilton , Ohio , outside of Cincinnati , for instance , is transforming a downtown paper mill into a $ 144 million mixed-use project that will include a sports complex , hotel , convention center , and restaurants . Also , Green Bay , Wis .; Akron , Ohio ; and Canton , Ohio , all have relatively impressive nine-figure plans to attract interest in the Rust Belt .
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Unlike many other sectors of commercial real estate , industrial saw record levels of development in 2H2020 . By the end of 3Q2020 , more than 328 million sf of industrial space was under construction across the U . S . Dallas-Fort Worth topped all metro areas with 28 million sf , with both Chicago and Atlanta topping 20 million sf in construction projects .
While Dallas boasted the most activity , the Texas hub actually had more space under construction in 2019 . Denver had the largest yearover-year increase in developments , more than doubling its pipeline to 7.4 million sf . That increase includes the largest speculative facility under construction — a 594,000-sf warehouse in Aurora , Colo .
In terms of vacancy , Baltimore , Houston , and Phoenix all topped 8 percent , followed by Charlotte , N . C ., and Dallas-Fort Worth above 7 percent . Los Angeles , Detroit , and New York had the lowest vacancy rates , all below 4 percent .
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Entering 2020 , some analysts feared the self-storage sector was becoming oversaturated with new inventory . Some municipalities were even putting a freeze on new facilities . While COVID-19 may have put the brakes on some construction , street rates for self-storage units ticked upward in 2020 . According to a February report from Yardi Matrix , prices for standard non-climate-controlled units increased by 3.5 percent in January 2020 compared to the previous year , while prices for climatecontrolled spaces increased 2.3 percent .
Of 32 metro areas examined by Yardi , California boasted the three top-performing locations , with Inland Empire , San Jose , and San Francisco seeing the biggest increases in rental rates . Conversely , Boston saw modest increases in rates , but developers abandoned 15 projects during 2020 , more than any other market .
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