Each Wednesday, The Wrap
presents a compilation of recent noteworthy commercial real estate stories from
a variety of publications. Below are five stories that caught our eyes in
recent days.
• “Hurricane
Delays Nearly $3 Billion of Commercial Mortgage Bonds” by Al Yoon of The
Wall Street Journal.
Wall Street dealers delayed pricings of almost $3 billion of
commercial mortgage-backed securities (CMBS) as Hurricane Sandy closed
financial markets in the United States early this week, Yoon reports.
The delays come during a period of increased demand for CMBS.
“This will be a minor interruption,” Christopher Sullivan of United Nations
Federal Credit Union told Yoon. “There’s nothing that should affect investor
sentiment."
This month has been the busiest one for CMBS issuance since
2007, according to J.P. Morgan analysts, with $7 billion of CMBS priced or
announced so far. Transactions should be tough to complete for a few days,
however, after the early week closures of the bond markets, Yoon writes.
• “Hurricane
Sandy Threatens November Retail Sales” by Sapna Maheshwari and Renee Dudley
of Bloomberg.
In the aftermath of Hurricane Sandy, clothing and holiday-gift
sales could dip next month, but supermarkets and home-improvement stores will
benefit from the storm, the authors report.
November same-store sales could drop as much as 3 percent,
according to Oliver Chen of Citigroup. Foot traffic could fall 40 percent in
affected areas during the first week of November, Chen added.
Supermarkets and home-improvement stores benefited from
those stocking up on supplies.
Many retailers along the East Coast were forced to close stores
before the storm hit, and the loss of activity will be hard to make up,
according to Mark Vitner, economist at Wells Fargo.
Retailers also face possible inventory shortages if trucks
are unable to deliver goods due to flooded roads, Maheshwari and Dudley report.
• “Office
Market Recovery Continues in Third Quarter Despite Election Year Jitters”
by Randyl Drummer of CoStar.
After an unimpressive start to 2012, demand for office space
continues to pick up momentum, according to CoStar’s “Third-Quarter 2012 Office
Review & Outlook.”
The low levels of new office construction helped the
national vacancy rate drop slightly to 12.6 percent in the third quarter, and
net absorption rose from 13 to 15 million square feet during that time.
However, rents in most markets have not increased.
CoStar’s Walter Page said he originally expected demand to
fall a bit in the quarter based on uncertainty surrounding the economy and the
upcoming election, but now expects demand to hold as job growth improves.
• “Housing
Shortage to Benefit Coastal Apartment REITs” by Carisa Chappell of REIT.com.
Apartment REITs, especially those with properties near the
coast, will benefit from a predicted housing shortfall of 1 million homes
annually over the next few years, according to Jonathan Litt of Land and
Buildings Investment Management LLC.
Starts on new multifamily properties are 60 percent below
the units needed to keep up with demand, a good thing for apartments already on
the market, Chappell reports.
REITs with a high concentration of apartments on the coasts
can especially capitalize on the housing shortage because these areas feature stronger
household income growth, limited new construction and high cost of
homeownership, allowing landlords to push rents.
• “Survival
of the Fittest Starts to Play Out in the Office Supplies Sector” by Elaine
Misonzhnik of Retail Traffic.
Big-box office supply retailers are in trouble, Misonzhnik
reports.
Today’s consumers need less paper and paper-related products
as new technologies emerge. Given these dynamics, the market has too many
competitors, according to Doug Stephens of Retail Prophet. He expects at least
one retailer to consolidate or leave the market.
Staples has already announced plans to close 290 of its
North American stores, Misonzhnik notes. However, Staples is currently the
market leader and the least likely to go under, according to Liang Feng,
researcher with Morningstar.
Staples is working to adapt to the new retail environment,
cutting retail square footage, linking physical and electronic channels, and
working on cutting costs. But Office Depot and OfficeMax are seeing falling same-store
sales, Misonzhnik writes.