What I’m Reading
Turning Point: Amazon has dominated the industrial leasing market, sending prices soaring. However, the ecommerce giant is now beginning to pivot away from leasing towards buying and developing its own facilities. Bisnow Will be interesting to watch how this plays out as a competitor with zero capital cost and a long horizon begins bidding against developers who need to turn a profit – and were often reliant on Amazon to do so. To be clear, I’m a bit skeptical that this will cause any sort of supply shock in the market. Amazon is not reducing their footprint – instead, they will continue to increase it and will likely be willing to pay more than others (see previous comment about cost of capital). This likely results in more scarcity for other tenants in need of warehouse space. No doubt that this could be painful for individual developers riding the Amazon gravy train the past few years though.
In Demand: Life company lenders love institutional quality industrial properties and are quoting aggressive spreads, helping to keep downward pressure on cap rates even as interest rates rise. Commercial Property Executive
No Surprise Here: Southern California’s Los Angeles and Long Beach ports handle the most ocean cargo of any ports in the United States, but are some of the least efficient in the world, according to a ranking by the World Bank and IHS Markit. Reuters
Endless Loop: Retailers are responding to supply chain pressures by overordering to stock up on inventory. This, in turn is making the supply chain crisis even worse with no end currently in sight. CNBC IMO, we are starting to run the risk of a classic inventory cycle recession – which had been supposedly “eradicated” thanks to a just-in-time supply chain – when things finally cool off.
Dispersion: Remote work is starting to chip away at the dominance of superstar cities as tech talent is drawn to high quality of life smaller metropolises. Wall Street Journal
Chart of the Day
Reminder: US housing markets may seem insane but are a far cry from what is going on elsewhere in the world, including out neighbor to the north.
Source: Visual Capitalist
WTF
Not Illegal But Frowned Upon: A man was arrested for stripping naked and masturbating in the back of an ambulance in the presence of first responders because Florida. The Smoking Gun
Streaker: A Missouri woman was arrested for allegedly streaking naked across a field full of eighth-graders at a football practice. Shockingly (perhaps less so if you see the mug shot), she claimed it was because of meth. NY Post
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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