The Chinese proverb—“may you live in interesting times” —seems to ring true in today’s financial market. Just ask real estate investors faced with the uncertainty of future Fed monetary policy, the path of inflation, the tough year for equities, and sagging retirement portfolios. The Business Roundtable just reported CEO sentiment is deteriorating, with falling earnings estimates, a shaky housing market, and remaining supply chain issues.
Meanwhile, consumer spending is up, savings are down, and borrowing is growing—even as interest rates are rising.
In a lunchtime capital markets panel at the 2022 ULI Florida Meeting in Miami, top real estate investment leaders shared insights on investing in today’s uncertain environment and more specifically, in Florida. The prevailing takeaway seemed to boil down to an investor’s risk tolerance in uncertain times.
“There are things that we know we don’t know. We know activity has started to slow. The economy has started to slow. But what we don’t know is exactly how all these dynamics will play out,” said Darin Mellott, director of research & analysis for CBRE. “We know the inflation story is global, it’s persistent, and it’s high. There are some glimmers of hope here. It appears to be peaking. The central bank has been hiking at a record pace, not just here in the U.S., but across the globe, and this presents particular challenges for capital intensive industries such as ours.”
In the face of these unknowns, what are investors expecting? Recession or not, we’re in much choppier economic waters today. Real estate can be complicated but at its core, it’s supply and demand, said Jonathan Pollack, Sr., managing director, Blackstone. Even with a focus on migration, job growth and asset classes, the unpredictability of interest rate cycles adds to market nuance.
“If you ask 20 different experts on Wall Street that are in research roles and you get 20 different answers,” he said. “It’s very hard to predict so that means you stay close to home and do things that seem safer and more obvious in a world that could be headed into a recession or more challenging environment.”
Warren de Haan, managing partner and Co-CEO with ACORE Capital, compared this moment to the opening weeks and months of the pandemic. People thought “return to work” and normalcy was around the corner. “We all need hope,” he said.
“I’m not a rocket scientist, but CEOs are going to reduce their consumption. Put those factors together, along with everything else that’s going on, and that leads me to believe I need to be on defense, not offense right now for my portfolio,” he said. “That will play out for us at Acorn in two ways…. getting ahead of the issues, great communication with our borrowers and investors, and secondly, what will happen from that, the opportunistic stuff, special situations, high-yield lending opportunities.”
This “lag effect” is critical, said Lauren Hochfelder, co-CEO and head of Americas for Morgan Stanley Real Estate Investing. Undue optimism related to high retail spending and consumer optimism leaves us “wanting to believe positive things…and easy to be lulled into this belief that it’s all good. The reality is that the impact on the consumer…will push us into a mild recession. Europe will be even more dramatic.
“Once we have more clarity, the markets will recover reasonably quickly, so we need to stay active during this market environment,” she said. “Once we get to a place where these guys get back to lending at an attractive rate and you can adjust your costs of capital back, it’s less interesting.”
Lack of certainty among the Fed is not unreasonable, given they’re dealing with the continued fallout from “one of the largest financial experiments of all time, which was $10 trillion in cash just being given out to the world,” Pollack said. “That just has to filter through somehow. I don’t think anyone can tell you how this plays out.”
Rate hikes and quantitative tightening, as well as increased regulation are putting pressure on the market. Spread conditions in the real estate market in the coming year are equally uncertain given market conditions. Risk versus capital type, in the absence of liquidity, coupled with rate instability, “the big traditional bond buyers are not as active as we want them to be,” de Haan said. “When they become active again, when we achieve some rate stability, even if that rate range is on the higher end, we should see the bond buyers come back in. They’re an important part of the ecosystem, because that will drive spreads down, and the second thing it will do, it will clear off some of the collateral from the bank’s balance sheets into the securities market.”
What will the future hold, once this settles out remains puzzling? Preferred property types, or those considered “lily pads” for safe investments will continue to be industrial, interim housing, self-storage, and life science in the right markets, Pollack said. Hochfelder believes capital will return to retail, somewhat in response to sales, yield premiums and creative financing, as well as those in preferred places.
Some take the view that “whether we’re right or wrong, we want to be leveraged in more secular tailwinds than cyclical ones. Twenty or 30 years ago, 75 percent of institutional real estate was in office and retail, and today, those are dirty words.”
Mellott wondered where there may be cause for concern. De Haan spoke of downsides affecting multifamily, which could face affordability or construction cost issues.
Statewide, Florida has outperformed other markets, from its influx of population and regulatory drivers, and investors have taken note. Asked whether they appreciate one Florida market over another, or if one outpaces the rest, Hochfelder noted that the entire state is enjoying the “demographic tailwinds,” yet Miami’s arrival as a “gateway market” sets it apart. “Some of the other markets referenced are very, very strong secondary markets.”
What should give investors confidence in Florida, from city hall to Tallahassee, is that “politicians are playing to win,” Pollack said. “If you want to be where there’s growth, there’s going to be growth in Florida because they all want the growth and they’re coming after it aggressively.”
De Haan has been asked whether Miami “will get a black eye” from the FTX debacle and crypto fallout. He believes quite the opposite.
“Miami showed everybody that they’re open and intelligent about attracting talent, they are business friendly, the infrastructure is here, and they’re open for business,” said De Haan.
Source: ULI
Smaller Banks Are Stepping Into The CRE Lending Void. For Now
The commercial real estate debt market crumpled last year, weighed down by historically aggressive interest rate hikes, but one little-watched corner of the sector has stepped in to partially fill the void.
Regional and community banks have grabbed a larger market share of commercial real estate loans as banking giants like JPMorgan Chase, Bank of America and Wells Fargo have retreated from the market.
But regional banks, with assets between $10B and $100B, and even smaller community banks can only fill so much of the vacuum, and if the Federal Reserve continues to raise rates, they will start to pull back themselves before too long, experts told Bisnow.
Banks overall have taken a larger market share in CRE as other lenders, such as debt funds, CMBS and insurance companies all saw activity plummet. Banks made up 46.4% of all nonagency commercial and multifamily lending in the U.S., up from 23.1% in the same period of 2021 and 30% in the second quarter, according to CBRE. Banks made up more than 30% of lending in the second quarter, according to a CBRE report.
Michael Riccio, CBRE senior managing director and author of the report, told Bisnow that community and regional banks were the main players during this period.
He said the volatile interest rate environment “essentially shut down” lending activity from major money centers. Overall loan closings dropped by 11% from the second quarter of 2022 and 4.7% year-over-year.
Truist Financial Corp., one of the country’s 10 largest banks with nearly $550B in assets, pulled back on commercial lending as its underwriting raised projected interest rates from 5.5% in the middle of 2022 to between 7% and 7.25% today, said Mark Hancock, senior vice president of Truist’s commercial real estate lending division.
As a result, Tony Marquez, the president of commercial banking at Bethesda, Maryland-based EagleBank, said he’s seen more traffic through his door among developers and real estate investors.
Smaller banks are able to fill this void given they receive less scrutiny from banking regulators compared to money center institutions, Sansosti told Bisnow. Money centers are subject to annual federal stress tests and limits on how much commercial real estate lending they’re able to add to their balance sheets.
Michael Barr, the Federal Reserve’s vice chairman of supervision, warned last month that the central bank could tighten stress test requirements further, even though 33 of the largest banks passed those stress tests last summer, indicating they could weather a severe recession and continue to lend, Banking Dive reported.
Smaller banks see the vacuum left by money centers as a way to grab more market share, Commercial Real Estate Finance Council Executive Director Lisa Pendergast said.
There are limits to the size of loans these banks can make, however. Most regional banks don’t lend more than $40M to $60M on any deal, Riccio said, which means investors and developers have to go to multiple banks to cobble together enough debt for bigger projects.
For now, Sansosti said the smaller banks have the upper hand, pushing potential clients to also open accounts and make deposits in exchange for loans while still tightening their own underwriting standards.
But unless the Fed ceases its interest rate hikes or reverses course in the event of a severe recession, smaller banks may soon have to pull back themselves, Sansosti said.
Some regional banks have slowed down already. Bridge Logistics Properties, industrial development and investment arm of Bridge Investment Group, has historically relied upon regional banks and debt funds for its projects, Eastern Region Managing Director Greg Boler said.
Boler said Bridge is getting construction loan quotes for a future project, but with higher interest rates pushing up borrowing costs, the quotes so far are “all pretty expensive.” It’s forcing Bridge this year to pivot toward acquiring warehouses instead of developing new ones.
Source: Bisnow
Why Sale-Leasebacks Are Especially Important Now
The current economic climate has been difficult, with Federal Reserve interest rate hikes chasing inflation. Even as some of the pressures might be reaching a plateau, the Fed has made clear that further rate increases are still planned. That has led corporate lenders to become more cautious. They’ve been tightening their standards and lowering the amount of leverage available.
Even as the corporate lending market has become less liquid and more expensive, capital remains available for sale-leasebacks at very attractive terms. Even as property values have been dropping — though they’re still largely at or above pre-pandemic valuations — the return to a company is still better. “They’re able to get 100% of the value today,” says Whiting.
The Advantage of Renting
There’s rent to pay, yes, but unlike interest on a loan, it’s completely deductible as an operating expense. The seller can also typically negotiate control for 20 years with options to extend.
And the longer the lease term, the better the value to both the buyer and the seller, making negotiation of that point easier.
With the future uncertain and rates potentially going higher, there is also value in locking down a strategy with certainty.
The more liquidity on hand, the easier it is to deal with unforeseen circumstances.
Why Working Capital Now Is King
Sale-leasebacks are also a great source of acquisition financing, particularly in the current market environment, where distress may drive opportunities for strategic add-on acquisitions. Companies can use sale-leaseback proceeds to help fund new acquisitions or expand upon existing platforms. A vertically integrated company might decide to buy a supplier. Sponsors can do the same, using proceeds of a sale-leaseback done at the time of an acquisition to lower their capital costs for the deal.
From Whiting’s view, the market uncertainty and potential for ongoing rate increases are also a source of danger, with a sale-leaseback being an option to consider sooner, not later.
Source: GlobeSt.
6 Things Investors Should Consider With CRE Market In Flux
South Florida’s commercial real estate market is certainly in flux. Owners, buyers and sellers are adjusting to higher interest rates, continued supply chain challenges and an uncertain economic outlook.
Deals are still being done and space is still being leased. But in this inflationary environment, deals have to make sense, with a cushion to account for the unpredictability of 2023 and beyond.
With all this in mind, here are some points to consider for companies and individual investors who are involved in the commercial real estate market or are looking to get into it.
1. With more properties now getting less attractive cash flows, sellers are often grouping assets together for sales.
This can make sales transactions more complicated, and buyers need to work with their banking partner to make sure the overall risk-reward equation works for them.
2. The demise of the office market seems to be overstated. Office is still a good niche to consider.
Certainly, more people are working from home, and many companies are adjusting with new hybrid models involving employees coming in for one to two days a week instead of every day. Smart owners are adjusting by being more flexible and offering smaller floorplans. That said, leases and sales are still being done and there are some real bargains available for opportunistic buyers.
3. Higher interest rates are slowing the market, but there are still plenty of opportunities to find favorable deals.
Deals are now more expensive, and as rates have increased, a buyer’s margin for error has significantly shrunk. So smart planning is more important than ever. But there is still significant liquidity in the market and buyers and sellers are still making deals work, so we predict a healthy CRE market in South Florida for the coming year.
4. South Florida can be expected to fare better than much of the country as the economy faces an unpredictable 2023.
The reason is simple — population growth. That means more companies are looking for office space here. It means there’s more need for distribution centers and other industrial real estate. And it means people are continuing to buy houses and condos.
5. In an uncertain market, a long-term relationship with a CRE banker is more important than ever.
To get a favorable deal, owners and buyers alike need an advocate who takes the time to make sure a transaction will work for their client for the long term. This is best accomplished by having a long-term relationship with a banker who has significant commercial real estate experience. The more you can share about your business plan and the more you can talk about both opportunities and challenges, the more successful that relationship will be.
For the client, it’s important to take the time to build a relationship based on trust and consistency versus finding a different partner for every deal. And for the bank, finding ways to help the client in a wide variety of ways will make the relationship even more impactful.
Source: SFBJ
Sperry Commercial Global Affiliates | RJ Realty’s Ron Osborne Reps Buyer In Purchase Of Davie Retail Building
Ron Osborne, Managing Director/Broker of SperryCGA | RJ Realty, represented GCDC4 LLC, a foreign investor, in the purchase of a 3,200-square-foot, free-standing retail building outparcel located at 9180 W. State Road 84 in Davie, Florida.
The buyer purchased the property from CR Ridge Plaza LLC for $2,400,000.00, representing a 6.2% cap rate.
The deal closed December 16.
The property is currently occupied by Metro By T-Mobile on a corporate lease with 4+ years remaining. Metro has occupied the property for 20 years.
The transaction marks the fifth in which Osborne has represented the investor in the last 12 months. They will continue to acquire prime real estate in which they find strong financial fundamentals. The last two transactions have shown the trend in adjusting capitalization rate increases as interest rates increase.
In October, Osborne represented GCDC LLC in the purchase of a 5,300-square-foot retail automotive repair facility in the same retail plaza. GCDC, LLC purchased the property from CR Ridge Plaza LLC for $2,967,9335, representing a 6.2% cap rate.
The property was listed by Stan Johnson Company.
Which CRE Assets Are The Best Options For 2023?
Commercial real estate investors in the Americas favour multifamily and industrial as their top investment choices for 2023.
In the evolving market, the recent survey by global real estate firm Colliers reveals that investors are anticipating asset value declines in the coming year, due to the higher cost of capital, construction, and operations, as well as availability of product.
There has already been a rapid pricing reset in the US, UK, and some other countries, but it has not been universal.
Colliers expects stabilization of the global real estate market by mid-2023.
David Amsterdam, president, US Capital Markets & Northeast Region, says that, in the US, investors will find opportunities in the gateway markets as liquidity events force decision making.
The report also shows that investors in the Americas are less concerned that their EMEA and APAC peers about deglobalization, demographic pressure, and currency fluctuation. Inflation remains a key concern for its impact on asset values.
The top investment choice for 2023, as cited by respondents to Collier’s global poll, is multifamily.
The asset class has led US sales volume in recent years and is set to continue.
Industrial takes second place with last mile distribution properties continuing to try to capture momentum from e-commerce. This is also seen as a defensive strategy due to strong occupancies and rising rental rates in this asset class.
ESG-compliant properties in central business districts are the key focus for office investors: “ESG is beginning to have a meaningful impact on investment decision making,” the report states. However, in secondary markets, value-add is more important than energy efficiency.
For retail, grocery-anchored centres are the top choice while luxury is the key for hotel investments.
Life science, data centres, and student housing are the main focus areas for alternative asset classes. Core investors have the most negative outlook on office, as 55% expect losses for the asset type.
The report highlights that investors have more capital on the sidelines than ever before, ready to jump on opportunities.
Source: Wealth Professional
CRE Predictions For 2023: Distress, Opportunity And Another ‘Roller Coaster’ Year
After the last three years, there are few real estate professionals brave enough to make confident predictions about what will happen in 2023 — other than to say once again to expect the unexpected.
Commercial real estate enters 2023 pointing in the opposite direction as it did a year ago. The Federal Reserve has pushed its benchmark rate to 4.5% after starting 2022 near zero, a rapid change in the state of affairs that has ground sales volume to a standstill and killed deals around the country.
Rents at multifamily and industrial properties have soared this year, but amid the Fed’s aggressive campaign to rein in inflation, demand for both has started to come down. More significantly, demand for office space has never approached pre-pandemic levels, and office occupancy is still below 50% of what it was in most large markets.
Meanwhile, predictions of a recession next year — and whether the overheated recovery will end with a hard or soft landing — have intensified. Nothing is predictable these days but something of general consensus is taking place on apartment rents, the U.S. economy, return to office and how the Fed may behave in 2023.
It might not turn into a nightmare year along the lines of 2008 — but it certainly “won’t be pleasant,” CBRE predicted — and it will likely be defined by what doesn’t happen more than what actually does.
Bisnow spoke to nearly a dozen industry leaders to gather predictions for the year ahead in CRE. Here is what stood out:
The Housing Crisis Won’t Abate, Even As Rents Stabilize
Eye-watering rent increases are expected to keep slowing down this year after posting records in 2021 and the beginning of 2022.
Shimon Shkury, founder of multifamily sales brokerage Ariel Property Advisors, saidrental growth will no longer see a rapid ascent, but he doesn’t expect it to start coming down because “there’s not a tremendous amount of new product that is opening up.”
That spells bad news for the tens of millions of Americans who are paying more than 30% of their income on rent. The housing crisis isn’t going away next year — and it will likely get worse, Nuveen Impact Investing Senior Portfolio Manager Pamela West said.
She said housing is a “purple” political issue and is on governments’ agendas more than in previous years, but the required urgency is not yet there, and it’s unlikely to show up in 2023.
Recession? Maybe. But Distress Is Coming
The predictions on the style of recession vary wildly, from deep to shallow to not coming at all.
Goldman Sachs, for its part, has put the chances of a recession at 35%. Almost uniformly, real estate players have arrived at the conclusion that some form of correction will come next year, particularly for deals made at the top of the market last year.
Marx Realty CEO Craig Deitelzweig is predicting a “shallow” recession, characterized by companies shedding employees following the hiring spree in 2021. His company has been lying in wait for opportunities to pounce on assets whose owners aren’t able to withstand the current market conditions.
A sluggish market makes for a tough time for appraisers, said Grant Norling, a co-founder at Valcre, a software company for appraisal firms, but next year is set to bring more activity for the industry as owners, and their lenders, face challenges with their assets.
Office Usage Will Rise With The Threat Of Layoffs
Office usage is top of mind for 2023 across the board, with some predicting workers will try to ease their fears about the state of the economy by heading into the office more frequently next year.
Deitelzweig predicted office occupancy will jump by 10%, while Shkury said he thinks usage “absolutely” is going to go higher. Steiker-Epstein of Charney Cos. said 2023 is more likely the year office owners accept the workplace is fundamentally altered.
Calanog took another viewpoint: While employers might demand more workers back at their desks — and some are already doing so — that phenomenon might proved short-lived.
Interest Rates Could Start Coming Down Before Year-End
Last week, the Federal Reserve hiked the benchmark interest rate half a percentage point, hitting its highest rate in 15 years. The targeted range reached between 4.25% and 4.5% — and Fed officials are now forecasting raises to be around 5.25% by the end of 2023. Real estate has a more optimistic take, however.
Industrial Down, Retail Up
Industrial real estate, long the darling of the industry, could be facing a challenging 2023.
Speculative construction has been the norm — of the record 700M SF of industrial space under construction in the middle of 2022, just 26% was pre-leased, according to Cushman & Wakefield.
But in a complete reversal of fortune, there is a growing sense that the worst is over for the embattled retail market.
Sublease space dropped nearly 11% last quarter and leasing velocity was up 7.4% year-over-year in Manhattan, per the brokerage.
Source: Bisnow
Florida Investors Remain Confident Despite Financial Knowns And Unknowns
The Chinese proverb—“may you live in interesting times” —seems to ring true in today’s financial market. Just ask real estate investors faced with the uncertainty of future Fed monetary policy, the path of inflation, the tough year for equities, and sagging retirement portfolios. The Business Roundtable just reported CEO sentiment is deteriorating, with falling earnings estimates, a shaky housing market, and remaining supply chain issues.
Meanwhile, consumer spending is up, savings are down, and borrowing is growing—even as interest rates are rising.
In a lunchtime capital markets panel at the 2022 ULI Florida Meeting in Miami, top real estate investment leaders shared insights on investing in today’s uncertain environment and more specifically, in Florida. The prevailing takeaway seemed to boil down to an investor’s risk tolerance in uncertain times.
In the face of these unknowns, what are investors expecting? Recession or not, we’re in much choppier economic waters today. Real estate can be complicated but at its core, it’s supply and demand, said Jonathan Pollack, Sr., managing director, Blackstone. Even with a focus on migration, job growth and asset classes, the unpredictability of interest rate cycles adds to market nuance.
Warren de Haan, managing partner and Co-CEO with ACORE Capital, compared this moment to the opening weeks and months of the pandemic. People thought “return to work” and normalcy was around the corner. “We all need hope,” he said.
This “lag effect” is critical, said Lauren Hochfelder, co-CEO and head of Americas for Morgan Stanley Real Estate Investing. Undue optimism related to high retail spending and consumer optimism leaves us “wanting to believe positive things…and easy to be lulled into this belief that it’s all good. The reality is that the impact on the consumer…will push us into a mild recession. Europe will be even more dramatic.
Lack of certainty among the Fed is not unreasonable, given they’re dealing with the continued fallout from “one of the largest financial experiments of all time, which was $10 trillion in cash just being given out to the world,” Pollack said. “That just has to filter through somehow. I don’t think anyone can tell you how this plays out.”
Rate hikes and quantitative tightening, as well as increased regulation are putting pressure on the market. Spread conditions in the real estate market in the coming year are equally uncertain given market conditions. Risk versus capital type, in the absence of liquidity, coupled with rate instability, “the big traditional bond buyers are not as active as we want them to be,” de Haan said. “When they become active again, when we achieve some rate stability, even if that rate range is on the higher end, we should see the bond buyers come back in. They’re an important part of the ecosystem, because that will drive spreads down, and the second thing it will do, it will clear off some of the collateral from the bank’s balance sheets into the securities market.”
What will the future hold, once this settles out remains puzzling? Preferred property types, or those considered “lily pads” for safe investments will continue to be industrial, interim housing, self-storage, and life science in the right markets, Pollack said. Hochfelder believes capital will return to retail, somewhat in response to sales, yield premiums and creative financing, as well as those in preferred places.
Some take the view that “whether we’re right or wrong, we want to be leveraged in more secular tailwinds than cyclical ones. Twenty or 30 years ago, 75 percent of institutional real estate was in office and retail, and today, those are dirty words.”
Mellott wondered where there may be cause for concern. De Haan spoke of downsides affecting multifamily, which could face affordability or construction cost issues.
Statewide, Florida has outperformed other markets, from its influx of population and regulatory drivers, and investors have taken note. Asked whether they appreciate one Florida market over another, or if one outpaces the rest, Hochfelder noted that the entire state is enjoying the “demographic tailwinds,” yet Miami’s arrival as a “gateway market” sets it apart. “Some of the other markets referenced are very, very strong secondary markets.”
What should give investors confidence in Florida, from city hall to Tallahassee, is that “politicians are playing to win,” Pollack said. “If you want to be where there’s growth, there’s going to be growth in Florida because they all want the growth and they’re coming after it aggressively.”
De Haan has been asked whether Miami “will get a black eye” from the FTX debacle and crypto fallout. He believes quite the opposite.
Source: ULI
Sale-Leaseback Market Comes In Hot To End 2022
The sale-leaseback market continued to shatter records in November despite declining M&A activity and rising interest rates, according to new research from SLB Capital Advisors.
There were 237 discrete transactions in the third quarter nationally, pushing the period to the strongest quarterly performance in deal count since Q4 2019. Dollar volume was down, however, over Q2 figures as no large casino transactions closed.
The Northeast led sale-leaseback dollar volume with $1.6 billion in deals, while the South had the most number of transactions at 87, followed by the West region with 72. Industrial was a major driver for sale-leaseback activity and accounted for 58% of all such transactions in the quarter.
The majority of all sale-leaseback deals are in the $5 million to $25 million range. However, marquee deals for Q3 included Boston Properties’ acquisition of Biogen’s HQ for $592 million and Oak Street’s acquisition of a QVC/HSN distribution portfolio for $443 million.
SLB analysts say the fourth quarter of 2021 was the ”best pricing environment to date,” with pricing holding strong throughout most of the first part of the year. Cap rates began to widen in Q3 as buyer caution ramped up, however. But “while pricing has widened, strong credits and robust business models are still driving attractive pricing from investors, even in non-core markets, particularly in the industrial real estate sector,” SLB analysts say.
In addition, net lease REITs had a banner quarter, reporting $4.4 billion in acquisitions for Q3 2022, a figure in line with the previous four quarters. Net lease REITs also continued capital formation in Q3 with $1.9 billion in equity offerings.
M&A activity also declined across the quarter, though SLB says “a massive amount of capital” estimated at $800 billion remains available for attractive acquisitions. M&A deal value for Q3 fell by 50% from the peak set in Q4 2021, and “with future earnings of companies discounted at higher rates, there is a significant impact to valuations across sectors,” SLB analysts say. All told, 4,457 deals closed for a combined value of $490 billion, declines of 19% and 4%, respectively from Q2 to Q3.
Source: GlobeSt.
Auto Dealership Breaks Ground In Coconut Creek With $16M Loan
A Mazda dealership broke ground in Coconut Creek after the dealer secured a $16.14 million construction loan.
Toyota Motor Credit Corp. provided the mortgage to Pompano Autoplex LLC, managed by Don Lia of Huntington, New York-based Lia Motor Group. His company owns 10 dealerships, including Mazda of Palm Beach.
The loan secures the 5-acre site at 3757 Coral Tree Circle. The dealer purchased the property for $5.1 million in 2020 and demolished an office building there. It was previously used by Waste Management.
Coconut Creek Mazda was approved for a two-story building of 16,094 square feet for a showroom, sales center and offices. It would be attached to a three-story building of 90,582 square feet, consisting of 8,898 square feet of auto service with 16 repair bays and a parking garage. There would be 455 parking spaces on the site between the surface parking and the garage, including 318 spaces for dealer inventory.
The dealership was designed by J.A.O. Architects & Planners in Boca Raton.
While it might seem odd for Toyota to finance construction of a Mazda dealership, the two automotive companies have been working closely together since forming an alliance in 2015. Toyota owns a minority stake in Mazda.
Source: SFBJ
Miami, South Florida Still Great Place To Invest, Financial Experts Say
In spite of rising interest rates and an uncertain economy, South Florida’s commercial real estate market is still an attractive place to invest in, finance experts say.
That was the general consensus among those who spoke at Tuesday’s Urban Land Institute’s Florida Summit at the JW Marriott Marquis Miami.
During a panel discussion on capital markets, panelists Acore Capital managing partner and co-CEO Warren de Haan; Morgan Stanley Real Estate Investing co-CEO Lauren Hochfelder; and senior managing director Jonathan Pollack said credit markets have tightened significantly as the Federal Reserve raised rates in an effort to control inflation. As a result, investors and lenders have become more particular with where they put their money.
However, South Florida and the rest of the Sunshine State are still appealing places for investors thanks to its rising population and openness toward business.
Due to remote working trends in most of the U.S., office buildings elsewhere are seen as a risky endeavor. But in South Florida, the return-to-work trend is about 86%, compared to New York and San Francisco which is “half of that,” Hochfelder added,
De Haas, who recently moved from Los Angeles to Miami, said he was struck by the positivity of the people living in South Florida who desire to “do good” and “move the economy forward.”
Since the pandemic, wealthy individuals, well-paid professionals, and businesses have been migrating to South Florida thanks to the lack of a state income tax, decent weather, and a pro-enterprise atmosphere, brokers and developers have told the Business Journal. This has resulted in rising rents for apartments, industrial, retail, and office.
CBRE’s Director of Research and Analysis Darin Mellott, who moderated the panel discussion, said the post-pandemic migration is part of a broader story across the Sun Belt, a region in the southern U.S. where taxes are generally low. However, he added, the growth that took place in South Florida outperformed other Sun Belt metropolitan areas.
Yet, rougher times are coming for South Florida. As the years go by, so, too, will the adverse effects of climate change and sea level rise.
In the more immediate timeframe, Mellott said the nation as a whole will likely face a mild recession next year with unemployment reaching as high as 5%.
Source: SFBJ