What I’m Reading
On Demand: Pop-up distribution centers are becoming a thing as the pandemic forced retailers and e-commerce platforms to quickly and cost-effectively respond to localized demand surges in their supply chains. Chain Store Age
Cream Rises to the Top: For years, international investors favored office buildings when it came to their US CRE investment. However, multifamily has overtaken office as the favored product type for foreign capital as the outlook for office remains uncertain while multifamily fundamentals continue to strengthen. (h/t Steve Sims) WealthManagement.com
I have a theory as to why office has been so popular with foreign investors despite it being a mostly mediocre long-term CRE asset: apartment buildings (and warehouses, shopping centers, etc) are not iconic in the same way that office buildings are. For example, there is a certain cache to owning the Empire State Building, Transamerica building, Freedom Tower etc that is probably attractive to foreign investors, despite these almost certainly being subpar investments. There is really no equivalent to this in the rest of the CRE world except for perhaps some 5-star hotels. However, multifamily’s continued outperformance seems to finally be changing the dynamic.
Exhaustion: The ongoing inflation surge appears to be peaking, backing up the Fed’s transitory assumption. The Capital Spectator
Tailwind: According to the US Census, the most common ages in the US in June 2021 all range between 26-36. This is prime household formation territory and helps explain the housing shortage. United States Census Bureau
Context: It’s impossible to get a complete view of today’s housing shortage without recognizing how few homes were built over the past decade compared to historical norms. Wall Street Journal
Chart of the Day
The home price / income ratio is approaching 2006 levels. However, the mortgage payment / income ratio is at 2003 levels. Things are expensive, but perhaps not quite as expensive as they appear.
Source: John Burns
WTF – Tennessee Edition
Bender: A naked Tennessee woman was arrested for vandalizing a Walmart with an ax, throwing items at employees and defecating on herself. (h/t Adam Siegel) Yahoo News
Extra Baggage: A Tennessee man is facing murder charges after allegedly attempting to sell his girlfriend’s car with her corpse in the backseat. (h/t Jeff Gordon) People
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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