- Vincent - Real Estate Report
- January 9th, 2024 - This Week in Real Estate
January 9th, 2024 - This Week in Real Estate
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What’s new in the world of Real Estate
Office space vacancy hit a record high
Industrial vacancy is also rising
The hottest housing market for 2024
Rents fell nationwide for the third straight month
Plus: People are feeling better about mortgage rates, homebuying demand is up, a proptech company lays off its whole staff on Google Meet, and more.
Listing of the week: A baseball stadium in Illinois.
Freddie Mac 30 Year Fixed
Dow Jones Real Estate Index
S&P U.S. REIT
Green Street CPPI - Dec.
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The national office space vacancy rate hit 19.6%, the highest level on record. This comes from a report from Moody’s Analytics, which had previously recorded highs of 19.3% in 1986 and 1991. The rate jumped 0.4% last quarter, the highest increase in nearly three years, bringing the office market into “uncharted territory”. With hybrid and remote work here to stay, the long-term outlook for office buildings is hazy, and suburban building owners are responding by converting office space into industrial space, such as warehouses, distribution centers, and storage facilities. The conversion rate has risen by 33.7% in the past two years, as demand for office space has declined.
Meanwhile, industrial space is also seeing higher vacancy rates. For the first time in three years, the vacancy rate exceeded 5%, according to a report from real estate firm Cushman & Wakefield. Last quarter, the rate rose by 0.6%, but it is still below the 15-year average of 6.4%. Because of industrial real estate’s relatively strong performance the past few years, new construction ramped up to meet the demand, rising by 17.6% in 2023. That, along with slightly lowered demand, has seen rent growth drop for the fifth straight quarter, another indication that the market has slowed, and likely will continue to slow in 2024.
Buffalo, New York, leads Zillow’s list of the hottest housing markets for 2024. The list looked at the 50 biggest U.S. metro areas and is based on metrics such as the days a listing stays on market, projected home appreciation and projected job growth - the latter metric being the one that pushed Buffalo to the top spot. It is followed by Cincinnati, Ohio and Columbus, Ohio, as more affordable markets in the Great Lakes and Midwest dominated the rankings. Last year’s #1 market, Charlotte, dropped to 7th, while San Antonio took the biggest drop, from 13th all the way to 49th.
The median U.S. asking rent fell for the third straight month. Redfin’s rental report showed a -0.2% decline in rents nationwide, representing a -0.8% drop year-over-year - a huge change from the 10-15% range in most of 2022 . Higher supply due to new construction has helped renters, and if mortgage rates fall and incentivizes some renters to become buyers, rental demand could drop in 2024, further reducing prices. It is region-dependent, however, as rents actually rose in the Midwest and Northeast while they fell in the South and West. For rental property investors, it is always advisable to acquire property in high-demand areas that are less sensitive to rising supply concerns.
Listing of the Week
A property that caught our eye
Ever wanted to own a baseball stadium? Here’s your chance - Rivets Stadium, located just outside Rockford Illinois, is home to the Rockford Rivets of the Northwoods League - a wooden bat collegiate summer league team, as well as the Rockford University baseball team. It has previously been home to independent minor league professional teams and seats 3,279 but a total capacity of around 4,000. The property includes 6 parcels covering 27 acres, including the stadium and parking lots, and is listed for an even $10 million.
More stories worth checking out
Consumer optimism about mortgage rates increased significantly last month, according to Fannie Mae’s National Housing Survey, which also saw its Home Purchase Sentiment Index to rise by 4.5%.
As mortgage rates have gone down, early-stage homebuying demand rose 10% in the last month, another good sign that the housing market is picking up steam.
The president of the National Association of Realtors resigned due to a “blackmail threat” after her predecessor resigned last summer and the CEO resigned in November, highlighting the leadership issues at an organization reeling from its major losses in commission-related antitrust lawsuits last year.
The Green Street Commercial Property Price Index ended 2023 down 10%, but its co-head of strategic research believes that “[t]he correction in real estate pricing that began two years ago appears to have run its course.”
Missouri banned six foreign countries (including China) from owning its farmland, if that land is within ten miles of critical military facilities - a small part of the market, but the ban continues the trend towards restricting foreign ownership of farmland.
Short-term rental management company Frontdesk, which had previously raised $26 million in venture capital funding, laid off its entire 200-person staff in a 2 minute video call.
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