What I’m Reading
Deteriorating: Moody’s Analytics REIS is out with a somewhat devastating report for the office sector, predicting that vacancies will likely show their largest increase this year. The report predicts that the occupancy continue to deteriorate until at least 2023 with employers still pushing off physical space decisions as the debate over the permanence of work from home rages on. REIS also predicts asking and effective rents will decline by 4.9% and 7.4% this year, respectively. If these projections hold up, it seems likely that the number of distressed transactions in the office sector will increase materially in the intermediate term. Moody’s Analytics REIS
Cornering the Market: Microsoft, Amazon and Google now account for over half of today’s 600 hyperscale data centers – meaning a data center owned an operated by the company that it supports. This is sign of just how concentrated control over cloud computing has become amongst a few mega companies. Synergy Research Group
Trend Follower: Simon Property Group has formed a SPAC with a target value of $300MM and says that it “will seek to target an innovative business with the potential to disrupt various aspects of the retail industry and make a transformative impact on in-person and/or online experiences.” Bisnow
Driving Change: Drive through properties are in high demand in the pandemic era and even fast casual chains like Sweetgreen and Shake Shack that previously offered counter service only are getting on board. Los Angeles Times
Out of the Rough: From the move to the suburbs to eCommerce adoption, a lot of the stories that have garnered press during COVID are accelerations of trends that were already in place. Golf is an exception. The sport had been in a slow decline for years as boomers aged and younger generations played less and courses and master planned communities designed around golf courses suffered. However, its socially-distanced nature has led to a renaissance of sorts and rounds played were up massively in 2020, even with the spring shutdowns. Wall Street Journal
Chart of the Day
Economy hotels are performing a lot better than their luxury brethren.
Source: Real Capital Analytics
WTF
sOcIaL dIsTaNcInG: Police broke up an orgy involving 100 people in a warehouse for breaking COVID rules because France. Gotta be honest here, COVID is probably the least dangerous disease a participant in a 100 person orgy could catch. Daily Mail
Honest Mistake: A wife reportedly stabbed her husband multiple times after finding pics on his phone of him having sex with “younger woman” – without realizing it was actually her. (h/t Scott Andrews) The Sun
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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