Top real estate news for Wednesday 17 November 2021: new heights in industrial real estate
Net absorption and record rents in industrial real estate, while apartments in the Sun Belt helped overall apartment sales to dominate CRE’s volume. Housing starts are dropping, but high prices are pushing new expected limits for secured loans to nearly $ 1 million.
The industrial real estate market sets new heights
The bull market for industrial real estate continues. A report released today by Transwestern indicates that the industry has set new records on several key performance indicators (KPIs). This includes 540 million square feet of net absorption year-over-year, the first time the KPI has increased by more than 500 million square feet in a year. (Net absorption is the difference between square feet that became physically occupied and square feet that became physically vacant during a specific time period.)
Asking rents also rose to $ 7.11 per square foot, Transwestern said in its 3Q21 report, the first time KPI broke the $ 7 mark in property management, management and capital markets files. Houston-based counsel. These figures explain why retail and institutional investors are investing money in this sector.
Apartment buildings sell fastest of all
Transactions totaled $ 241.9 billion in the 12 months to September 2021, up 27% from the same period in 2019, according to RealPage analysis of data from Real Capital Analytics dating back to 2001. Apartments accounted for 44% of all transactions, the most for any type of commercial property. Industry came second, while struggling hospitality, retail and office sectors lagged behind.
A RealPage economist said Bloomberg in an article published today, these apartments have been historically undervalued, particularly in the Sun Belt. The pace and price of sales in these markets means that reality may change.
Housing starts drop, but building permits rise in monthly census / HUD report
Homebuilders across the country launched 0.7% fewer projects in October than in September, mainly due to shortages of materials, labor and land. This is from the monthly housing starts report released today by the US Census Bureau and the Department of Housing and Urban Development.
The same closely watched report noted that the rate of new housing starts was still 0.4% above October 2020. And the sellers of those 1.52 million units that were started can expect to find ready buyers, as supply still lags demand in the residential housing market. This confidence is reflected in the Census / HUD report which showed that housing permits authorized in October were up 4% from the previous month.
Fannie and Freddie back up nearly $ 1 million home loans
Due to the rapid rise in house prices, the government-sponsored companies (GSEs) backing these loans are set to raise the bar for jumbo lending when they announce the new limits on November 30. The Wall Street Journal reports this week that the limit of Fannie Mae– and Freddie mac– back-to-back loans of just under $ 1 million in high-cost markets.
The Federal Housing Finance Agency places around 100 counties across the country in this category. The current limit is $ 548,250 everywhere else and $ 822,375 in these markets. Raising these limits will allow more people to qualify for loans in the face of rising house prices, but could also raise questions about the role of government. After all, Fannie and Freddie were forced into guardianship during the 2008 housing crisis and now have access to more than $ 250 billion in support from the Treasury Department, as the WSJ Remarks.
Realty Income hunts elephants
Real Estate Investment Trust (REIT) Real estate income (NYSE: O) recently consumed the massive approximately $ 11 billion acquisition of its counterpart VEREIT. There are a number of advantages to top-up acquisition, but one that investors should pay special attention to is scale.
Motley Fool contributor Reuben Gregg Brewer discusses how being bigger than your peers means Realty Income can do things others can’t, and how it might do more in the future. Realty Income is one of the best-known REITs, a company that has paid no-fault monthly dividends for decades and still deserves to be watched.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.