What I’m Reading
Permanent Decline? Green Street is predicting that office occupancy may never return to pre-pandemic heights and that office NOI will likely not outpace inflation over the next five years. Green Street is predicting a 15% reduction in office space demand in the US, a figure the firm says represents “the midpoint of a potentially wide range of outcomes that were set in motion well before the global pandemic accelerated WFH in early 2020.” Obviously this would have massive ramifications for the sector which is a large part of the reason that investors have largely taken a wait and see approach despite little signs of distress as of yet. Globe Street
Inertia: With the latest wave of return-to-office delays from the delta variant it is looking increasingly likely that some companies could have their offices closed for nearly two years. The longer that Covid-19 keeps people home, the harder it may be to get them back to offices. Wall Street Journal
Another Hurdle: The well documented construction labor shortage may be about to get worse. Construction workers have vaccination rates substantially below workers in most other industries. As governments increasingly impost vaccination and testing mandates, the industry will likely lose even more of an already dwindling workforce. Yardi Matrix
Shrug it Off: Real estate capital markets have fully recovered back to pre-COVID levels. However, the underlying composition among asset classes has shifted substantially with industrial and multi-family taking share. Bisnow
Perfect Storm: The conditions for rent growth are showing no signs of abating. As a result, some of the most affordable places in the country – think the Southwest and Sunbelt – could become some of the most expensive in the near future. CNBC
Chart of the Day
The median age of US homebuyers has increased dramatically since the 1980s and the trajectory has accelerated since the Great Recession.
Source: Deutsche Bank Research
To put things in context, the US population is aging but at nowhere near the rate in the chart above.
Source: Statista
WTF
Thrill Seekers: A couple was spotted having sex on a cliff near a busy beach in Sydney, Australia during the COVID lockdown. NY Post
Putting on a Show: A woman was arrested after masturbating and exposing her breasts to an inmate during a visitation because Florida. Tampa Free Press
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
Visit us at RanchHarbor.com