What I’m Reading
Mismatch: Most of the US is simultaneously experiencing a severe housing shortage and an office glut. Conventional wisdom suggests that vacant office buildings could be converted to residential uses. However, the bureaucratic processes are difficult, the conversions are typically too costly and office floorplates don’t translate well to residential use. Not to mention issues with building infrastructure like plumbing. As a result, many developers and property owners would rather wait out the pandemic than begin a yearslong process. NBC
Show Me the Money: Insane story from the Financial Times about how San Francisco’s strict rent control ordinance, coupled with the pandemic eviction moratorium resulted in a $475,000 tenant buyout signed in May, eclipsing the prior official record by $150,000. Financial Times
Much Ado About Nothing? The CDC eviction moratorium is scheduled to end (I’m highly skeptical that it actually will – especially with the Delta variant flaring up) on July 31st. The latest US Census Pulse Survey at the end of June showed that 7.4 million renters, about 15% of total renter households, are behind in their rental payments, raising concerns about an eviction crisis. However, this data is self reported and a combination of federal/state aid and landlord desire not to evict and deal with vacancy likely means that the scale of the problem is being dramatically overstated. Personally, I’ll take the under when it comes to evictions when the moratorium is lifted. Globe Street
Vertical Integration: Grocery deliver app Instacart will begin creating its own network of distribution centers over the next 12 months in a partnership with warehouse automation firm Fabric. The warehouses will store 10,000 to 50,000 items and use automation to sort orders, which would then be picked up by drivers for home delivery. Bisnow This move was inevitable and I first wrote about it on the old blog several years ago. The impact of the pandemic will absolutely accelerate the build out of distribution centers specifically for grocery delivery.
Now For Some Good News: Now that the economy is reopened, people are drinking more at restaurants and bars and less so at home. As a result, the price of wine has been falling somewhat. The Business of Business
And the Winner Is…. Industrial REIT Monmouth Real Estate is going with the $2.7 billion takeover bid from Sam Zell’s Equity Commonwealth over a $2.8 billion offer from Barry Sternlict’s Starwood. Monmouth’s management believes that Zell’s stock-based deal has greater upside for shareholders despite being lower than Starwood’s. The Real Deal
Chart of the Day
Source: Julian Klymochko
WTF
Happy Ending: A 51 year old Japanese man escaped death after nearly suffering a life threatening stroke while repeatedly masturbating, according to doctors. NY Post
Honest Mistake: South Korean broadcaster MBC has apologized for using photographs associating pizza with Italy, Chernobyl with Ukraine and Count Dracula with Romania in its coverage of the Olympic opening ceremony. (h/t Nicole Deermount) New York Times I want to go on record here and say that the broadcaster did nothing wrong.
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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