Losses elsewhere could prove metro Denver’s gain in commercial real estate

Losses elsewhere could prove metro Denver’s gain in commercial real estate

Brokers are hopeful more investment dollars and people will flow Denver’s way.

 
The Esquire Theatre, seen here on March 7, is closing its doors after 93 years in business. More commercial real estate is expected to become available due tot he fallout from the pandemic. (Josie Sexton, The Denver Post)
 

“Restaurants have been hit really hard. We expect to see a lot of carnage and vacancies there,” Courtney Key, a partner at SullivanHayes, said Thursday at a webinar hosted by the Denver Metro Commercial Association of Realtors.

Retail in general was already under stress as more consumers shifted their purchases online. It is now staring down a chasm.

“Landlords and tenants are working two to three times as hard to make half as much money,”  she said. But the big rent discounts some tenants are holding out for have yet to materialize.

He estimates that office lease rates could drop 10% to 20% in Denver, although he expects the declines will average closer to 10%. Foley also expects the setback downtown Denver has suffered between the pandemic and civil unrest this year will prove temporary.

The apartment market will likely continue to struggle in the months ahead, said Shane Ozment, vice chairman with Newmark Knight Frank Multifamily.

If there is a saving grace, it is that developers were already pulling back well before the pandemic hit. Multifamily permits are down by half this year, which will dramatically reduce supply two to three years out, he said. As more residents from crowded and expensive cities take flight, Denver is among the places where they are expected to land.

Likewise, investors are reconsidering where to target their money, said Tim Richey, a vice chairman at CBRE. Money that once flowed to favored cities like San Francisco, Seattle, Portland, Ore., and Chicago, could be increasingly redirected to smaller markets like Denver, offering them a strong base of support. He also expects suburban markets will get much more attention than they have in the past.

“Six months from now we will be shocked by how active things are,” Richey predicted.

Hotels, which face perhaps the bleakest outlook, are on track to see a surge in defaults. But even there, investors are likely to swoop in and buy them at sharply discounted prices. They will continue to operate, just under new owners.

Author:

Aldo Svaldi | Economy and Residential Real Estate Reporter — The Denver Post

Aldo Svaldi has worked at The Denver Post since 2000. His coverage areas have included residential real estate, economic development and the Colorado economy. He’s also worked for Financial Times Energy, the Denver Business Journal and Arab News.

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Florida sees nearly 1,000 people move there daily as high-tax residents seek shelter: report

Florida sees nearly 1,000 people move there daily as high-tax residents seek shelter: report

Palm Beach County saw a 268% increase in single-family home contracts worth more than $1 million.

Nearly a thousand people are moving to Florida every day, as those living in high-tax states seek shelter during the coronavirus pandemic.

Home sales have doubled in some parts of Florida, and the state is bringing 950 new residents in per day, The New York Times first reported, citing data from the International Sales Group’s summer 2020 Miami Report and an August report from Douglas Elliman.

Florida’s 35-year average daily population growth sits at 777 domestic migrants, according to the Miami report.

“Florida has consistently been one of the most desirable states in terms of weather and tax climate, maintaining a strong daily average population growth throughout the last couple of decades,” the Miami report notes.

People sit on Hollywood Beach during the new coronavirus pandemic, Thursday, July 2, 2020, in Hollywood, Fla. (AP Photo/Lynne Sladky)

Migrants have been flocking to Florida from Northern states such as New York, Illinois, New Jersey, Connecticut, and Massachusetts based on tax return filings.

 

“The U.S. is experiencing a domestic trend toward and population shift from states in the Northeast and Midwest to states in the South like Florida and Texas,” the Miami report states. “According to U.S. Census data, Florida had the highest level of net domestic migration from 2017-2018.”

The Elliman report found that new contracts for single-family homes and condos continued to surge in five Florida counties after doubling in July. Palm Beach County saw a 268-percent increase in single-family home contracts worth more than $1 million in July.

Meanwhile, new single-family home and condo contracts in a number of New York boroughs and suburbs except for Brooklyn and The Hamptons are also lower than years prior, but higher than they were in April, according to an August Elliman report.

People look at the New York skyline and the Empire State Building on August 19, 2020 in Weehawken, New Jersey. (Photo by Eduardo MunozAlvarez/VIEWpress via Getty Images)

Jonathan Miller, president of real estate appraisal firm Miller Samuel, which prepared the Elliman report, told the Times that for Florida home and condo buyers who were on the fence about moving, “the pandemic forced the issue, the recognition of advantages that weren’t fully appreciated before.”

Florida residents pay no state income or estate tax and get homestead exemptions of up to $50,000 on primary residences, as well as a 3% cap per year on home assessments, Jill DiDonna, senior vice president of sales and marketing of developer group GL homes, told the Times.

New Florida residents told the Times that they were able to get more space and better-quality homes in their price ranges compared to the states they fled from. For some, coronavirus accelerated plans to move.

Author:

FOXBusiness

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150 Big Businesses Warn Mayor of ‘Widespread Anxiety’ Over N.Y.C.’s Future

150 Big Businesses Warn Mayor of ‘Widespread Anxiety’ Over N.Y.C.’s Future

Leaders of companies like Goldman Sachs and JetBlue implored Mayor Bill de Blasio to take more decisive action to halt the city’s decline.

 
 

More than 150 business leaders in New York City joined together on Thursday to warn Mayor Bill de Blasio that he needed to take more decisive action to address crime and other quality-of-life issues that they said were jeopardizing the city’s economic recovery.

Chief executives of companies like Goldman Sachs, Vornado Realty Trust and JetBlue sent a letter to the mayor portraying a bleak assessment of life in New York City during the pandemic, and suggesting a vote of no confidence in the mayor’s ability to correct it.

The letter asserted that there was “widespread anxiety over public safety, cleanliness and other quality of life issues that are contributing to deteriorating conditions in commercial districts and neighborhoods across the five boroughs.”

And if the mayor did not address those issues, the business leaders warned that people who have left the city would be slow to return because of legitimate concerns over “security and the livability of our communities.”

 
The letter, which was sent nearly six months after the outbreak forced New York City into a lockdown, represented something of a watershed moment in the fraught relationship between the business community and Mr. de Blasio, a progressive Democrat elected in 2013 who has long portrayed himself as a champion of the city’s poor and working class.

Business leaders had largely refrained from criticizing the mayor and his administration as they fought the coronavirus outbreak. But schools are about to reopen, and companies are following suit: JPMorgan Chase wants some of its senior officials to return to the office starting Sept. 21.

And as that transition continued, the executives grew anxious about what they saw as the city’s deterioration.

They acknowledged the city’s success in containing the coronavirus, but highlighted that “unprecedented numbers of New Yorkers are unemployed, facing homelessness, or otherwise at risk.” They offered to help and advise the mayor on restoring essential services.

The letter might roil the debate over President Trump’s repeated claims that Democratic-run cities have been allowed to “deteriorate into lawless zones” following the George Floyd protests, and is likely to be cited in Republican messaging leading up to the November election.

The letter’s political repercussions may also stretch to the 2021 mayoral race in New York; business leaders have yet to coalesce behind any of the current candidates.

 

Mr. de Blasio responded in a conciliatory tone, urging business leaders to work with him and arguing that the city needed federal funding and new borrowing capacity.

“We need these leaders to join the fight to move the city forward,” the mayor said on Twitter.

The letter reflected a divide in how people perceive the effects of the outbreak, which has killed more than 20,000 city residents and left hundreds of thousands unemployed. While some New Yorkers have departed for the suburbs or to vacation homes, many who have remained have taken issue with the portrayals of a city abandoned and overrun by disorder.

Indeed, signs of normalcy have returned, from outdoor dining to socially distanced gatherings at parks. By the end of the month, in-person education at public schools and indoor dining will return. The main reason the city has been able to start reopening is that the infection rate has remained low, with only about 1 percent of virus tests coming back positive.

“We’re grateful for the business community’s input, and we’ll continue partnering with them to rebuild a fairer, better city,” Bill Neidhardt, a spokesman for Mr. de Blasio, said in a statement. “Let’s be clear: We want to restore these services and save jobs, and the most direct way to do that is with long-term borrowing and a federal stimulus. We ask these leaders to join in this fight because the stakes couldn’t be higher.”

The de Blasio administration has had to make cuts to city services in an effort to close a two-year, $9 billion budget gap. In the letter, the business leaders offered no specific solutions for how he might balance the budget.
 
 

Kathryn Wylde, the president of the Partnership for New York City, said in an interview that the letter had been in the works for about a month, as many of the executives’ companies were preparing to have some workers return to the office.

“All these employers are committed to the city, they want to see economic recovery, but they’re getting pushback from their employees about, will the city be safe, will the city be clean,” Ms. Wylde said.

One leader who signed the letter, Scott Rechler, chief executive of RXR Realty, placed the blame squarely on Mr. de Blasio, who is in his second and final term.

“The problem right now is leadership,” Mr. Rechler said in an interview. “We need a strong leader to address these problems, to encourage people to feel comfortable coming back to the city.”

Another signatory to the letter, Douglas Durst, chairman of the Durst Organization, a major city landlord, said the city must close its budget deficit while maintaining city services.

“It’s hard to bridge that gap, but I think that’s why it would be helpful to bring in the private sector to figure out what’s the best way to do it,” Mr. Durst said in an interview.

Michael Gianaris, a Democratic state senator from Queens, said it was hypocritical for business leaders to call for better city services without helping to pay for them through higher taxes on the wealthy.

“Where do they think this money comes from?” he said. “If these business leaders are calling for better sanitation, they must know that comes from money we don’t have.”

Mr. de Blasio has often had a strained relationship with the business community and has repeatedly called for higher taxes on millionaires. Asked over the summer why he did not work more closely with business leaders, Mr. de Blasio quoted Karl Marx and disparaged the annual Davos gathering of global elites.

“We will work with the business community, but the city government represents the people — represents working people — and mayors should not be too cozy with the business community,” Mr. de Blasio said in a radio interview on WNYC.

Another leader who signed the letter, Barry M. Gosin, the chief executive of Newmark Knight Frank, a commercial real estate firm, said Mr. de Blasio needed to work with business leaders.

“The business community is not an enemy of the people,” he said. “We are people. We are part of it.”

The letter came two days after Mr. de Blasio, heeding concerns from Upper West Side residents, announced he would move hundreds of homeless people from a hotel in the upscale neighborhood.

That same day, his own sanitation commissioner, Kathryn Garcia, called his cuts to the department’s budget “unconscionable” as she resigned. According to Ms. Garcia, the department has lost some 400 positions through attrition.

In recent weeks, real estate executives and corporate leaders have expressed frustration at what they view as rising levels of dirt and disorder in city streets, particularly in Midtown Manhattan, where the absence of both tourists and office workers has left the streets eerily empty.

While state and city guidelines permit offices to be filled to half-capacity, most buildings are below 10 percent occupancy. Companies have for the most part not required workers to return, and few have.

But City Hall has not been receptive to the concerns, according to a person with direct knowledge of the discussions, because the de Blasio administration has been focused on reopening schools.

The economic crisis spawned by the pandemic has drawn comparisons to the New York City fiscal crisis of the 1970s and other difficult chapters in the city’s history.

In response to the executives’ letter, William J. Bratton, a police commissioner under Mr. de Blasio, compared his former boss to David Dinkins, another mayor who he said had failed to address crime and quality-of-life issues in the 1990s.

“Déjà vu, all over again,” Mr. Bratton said.

Author:

NY Times

J. David Goodman and Jeffery C. Mays contributed reporting.

 

Emma G. Fitzsimmons is the City Hall bureau chief, covering politics in New York City. She previously covered the transit beat and breaking news. @emmagf

Dana Rubinstein is a reporter on the Metro Desk covering New York City politics. Before joining The Times in 2020, she spent nine years at the publication now known as Politico New York. @danarubinstein

 

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Commercial Real Estate: Post-Coronavirus Market Outlook

Commercial Real Estate: Post-Coronavirus Market Outlook

 
A global view of the pandemic’s impact on the commercial market


The world has changed dramatically since the coronavirus outbreak, and global real estate markets have not escaped its impact. The pandemic has magnified and accelerated a number of sector trends for the longer term. Even in a post-pandemic world, it is widely accepted that many of the new practices, such as increased remote working and greater e-commerce, will continue to be observed. Here, we’ll take a look at three core commercial property sub-sectors and how they might be affected by the recent changes in how we live and work.

Retail
The pandemic meant a sudden and disastrous hit for high-street retailers in cities around the world who were forced to close down, halting their revenues, while many costs remained. This resulted in some well-known names entering administration: J. Crew, J.C. Penney, Victoria’s Secret and Debenhams, to name a few. Retail experts at KPMG previously expected the UK’s high-street retail space to shrink by 25 percent by 2025, but now see that happening up to three years earlier. Online spending could reach 50 percent of the UK total by 2025—five years earlier than previously anticipated. With the hospitality sector also facing unprecedented struggles, the empty space left on high streets and in city centers could have negative repercussions. In the U.S., there is a sad tradition of retail parks and malls being abandoned if they are not making money or cost too much to refurbish. The impact of coronavirus could also see this trend increase. The pandemic has shifted focus onto the relationship between retailers and property owners, and this needs to be urgently addressed if we are to avoid long-lasting damage to malls and high streets. This may mean repurposing the space—as has been done with some malls in the U.S., which have been converted into tech company headquarters, churches, libraries or even community spaces.

Warehouses and Logistics Centers
The rapid global shift to e-commerce caused by the pandemic has seen warehouse and logistics markets receive a timely boost. E-commerce increases demand for space because online retailers must stock a wider variety of products to match consumer demand. Amazon reported a 26 percent year-over-year increase in sales in the first month of lockdown, and we’ve seen both Chinese and overseas investors looking to increase stakes in China’s logistics property sector. In the U.S., it has taken decades for online shopping to claim a double-digit share of retail spending. The e-commerce share is now as high as 40 percent, with statewide lockdowns rapidly accelerating the shift. Consumers who realized the benefit and convenience of e-commerce during the pandemic may not be rushing back to the high street any time soon.

Office Space
A gradual shift in working patterns before COVID-19 meant we were already seeing fewer and fewer companies looking for traditional long leases, opting for more flexible working space. As a result, co-working space providers have surged in recent years. Now, many commentators are heralding the success of remote working during the pandemic as the dawn of a new work-from-home revolution. This may be far-fetched, but the need for office space and the accompanying large overheads will undoubtedly be questioned by businesses that managed just fine with remote-working staff. The property industry is all about people, and apps such as Microsoft Teams, which, while incredibly useful, do not provide face-to-face contact. As things slowly creep back toward a semblance of normality, we will likely see a mix of new and old. Companies will be looking to keep some office space, but perhaps reduce the size as they allow for more remote and flexible working. Firms may look for buildings where they can better control the environment and ensure the well-being of their workforce—in some cases expanding space to allow for greater social distancing within the office. Skyscrapers in cities like New York, London and Seoul, where thousands of people pass through every day and access higher-level floors by cramming into elevators, may suffer.

Author:

RIS Media
Chris Dietz is executive vice president, Global Operations, for Leading Real Estate Companies of the World®. To learn more, please visit 
www.leadingre.com.

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9 retailers that are avoiding the industry’s shakeout and opening stores

9 retailers that are avoiding the industry’s shakeout and opening stores

 
The coronavirus pandemic has upended the retail industry and pushed dozens of companies into bankruptcy. 

But there are still pockets of growth, with a number of retailers looking to open additional stores. 

 

Altogether, as of Friday, retailers have announced 7,707 store closures and 3,344 store openings so far this year, according to a tracking by Coresight Research. 

While much of the turmoil in the industry has stemmed from apparel chains and department store operators, the expansion finds itself in a number of other categories: beauty, home goods, discount and grocery chains. 

Here are 9 retailers opening more stores in 2020 and beyond. 

At Home

The new At Home store in Foothill Ranch, CA will have its official opening on Saturday, March 30, 2019. The 75,000 square foot store promotes itself as a home decor superstore.
The new At Home store in Foothill Ranch, CA will have its official opening on Saturday, March 30, 2019. The 75,000 square foot store promotes itself as a home decor superstore.
Paul Bersebach | MediaNews Group | Orange County Register via Getty Images

Market capitalization: $966 million
Stock performance year-to-date: +173%

At Home Chief Executive Lee Bird said earlier this summer the company could grow from the 219 locations it has today to more than 600 shops nationwide, building on the momentum it has seen at its stores and online during the coronavirus pandemic. While shoppers have curtailed spending on apparel and other accessories, more are shopping for furniture and other items to spruce up their homes. Companies like Wayfair and Pottery Barn have benefited from the trend as well. 

 

Earlier this month, At Home said its fiscal second-quarter sales rose roughly 51% to $515.2 million, while it turned in its best quarter of same-store sales growth (42.3%) and profitability in its history. 

As the home goods chain Pier 1 Imports liquidates, At Home is also expecting it will gain some of that market share. Bird told analysts that about 90% of At Home’s stores are within six miles of a Pier 1 store, and a third of its locations are within a mile of a Pier 1.

“I would tell you those customers have to find a place to shop for decor, and we’re the place to go,” he said. 

Five Below

Shoppers place purchases into vehicle outside a Five Below store in Bloomington, Illinois, on Wednesday, July 25, 2018.
Shoppers place purchases into vehicle outside a Five Below store in Bloomington, Illinois, on Wednesday, July 25, 2018.
Daniel Acker | Bloomberg | Getty Images

Market capitalization: $7 billion
Stock performance year-to-date: -1.5%

Five Below is planning to open 110 to 120 net new stores this year alone. CEO Joel Anderson said it has the potential to grow to more than 2,500 stores nationwide up from roughly 1,000 today. 

When the discount retailer reported its quarterly results last week, it said its revenue climbed slightly, up 2% to $426.1 million from $417.4 million a year earlier. But fiscal second-quarter same-store sales growth during the time its stores were reopened rose 6%.

The company, which competes with the likes of Dollar General and Dollar Tree, said people have been visiting its stores during the pandemic to stock up on hand sanitizers, wipes and masks, as well as kitchen and bath products, clothes and items for pets. Five Below has carved out somewhat of a niche audience by catering more to teens than some of its rivals in the discount sector. 

Anderson has said the new locations set to open will have sections in the back of them called Five Beyond, selling items that cost more than $5 apiece. They will also have self-checkout kiosks and expanded snack selections at the front, he said. “Just being value driven … the timing couldn’t be more right as the country went through this pandemic.” 

BJ’s Wholesale

Customer shops inside a BJ's Wholesale Club store in Falls Church, Virginia.
Customer shops inside a BJ’s Wholesale Club store in Falls Church, Virginia.
Andrew Harrer | Bloomberg | Getty Images

Market capitalization: $5.7 billion
Stock performance year-to-date: +81%

BJ’s Wholesale is using the boost it’s gotten from the pandemic to venture into uncharted markets with new stores. The company is aiming to open two clubs in New York before the fiscal year is over, followed by six new ones next year. 

“Our hope is that next year we’ll be able to open significantly more than we have in the past,” CEO Lee Delaney told analysts during an earnings call last month. “We are moving aggressively to make those numbers or even larger ones a reality.” 

During its fiscal second quarter, BJ’s said its digital sales soared more than 300%, with shoppers using its curbside pickup option in droves. The company, which currently operates 219 clubs and 148 BJ’s Gas locations, said it has seen an “avalanche of new members” during the Covid-19 crisis — bringing its total base to more than 6 million. 

“We expect this landscape … will increase our relevance to members and prospective members alike,” Delaney said. “Almost regardless of the level of economic uncertainty, we should be well-positioned versus competitors given our low-price positioning and the fact that we have grown our membership.” 

Lidl

Shoppers check with their groceries during the grand opening of a Lidl grocery store, June 15, 2017, in Virginia Beach, Va.
Shoppers check with their groceries during the grand opening of a Lidl grocery store, June 15, 2017, in Virginia Beach, Va.
Steve Helber | AP

The German-based grocery chain Lidl is plotting opening 50 new stores by the end of 2021, rivaling the likes of Aldi, Trader Joe’s and Walmart. 

The company, which currently has a little more than 100 locations in the U.S., said it will allocate about $500 million to open the new stores. It said it plans to expand the most in New Jersey and Maryland. 

Lidl entered the U.S. about two years ago, opening its first store in the Southeast. Its initial, aggressive growth plans were stalled. But its pace of expansion looks to be picking back up, as a number of regional grocery chains like Lucky’s and Fairway have filed for bankruptcy in recent years and shut down. 

Burlington

Burlington Coat Factory store
Burlington Coat Factory store
John Greim | Getty Images

Market capitalization: $14 billion
Stock performance year-to-date: -7%

The off-price retailer Burlington is expecting to open 62 new stores in the fiscal year 2020. It plans to relocate or close 26 locations, resulting in 36 net new store openings, it said when it announced earnings last month. 

“We believe that the Covid-19 pandemic is likely to create an even stronger consumer need and desire for value, and it’s also likely to increase the number and the pace of competitor store closures,” CEO Michael O’Sullivan said during a call with analysts. “So, if both of those things turn out to happen, then the pandemic could actually increase the longer-term market share opportunity for off-price.” 

For the second quarter ended Aug. 1, Burlington’s sales fell 39% to $1.01 billion. It also swung to a loss during the quarter, as its inventories did not match up with consumer demand. But the retailer, which competes with TJ Maxx and Ross Stores, said the pace of sales at stores as they have reopened “significantly exceeded” internal expectations. 

Old Navy, Athleta

An employee rings up a customer's purchases at the Athleta store in New York.
An employee rings up a customer’s purchases at the Athleta store in New York.
Ron Antonelli | Bloomberg | Getty Images

Market capitalization: $6.5 billion
Stock performance year-to-date: -1%

Gap Inc. is planning to grow two of its brands while it scales back two others. 

The company said last month it is planning to shut 225 Gap and Banana Republic stores, many of which are in malls, this year. However, it is planning to roll out a number of new Old Navy and Athleta stores, it said, not disclosing an exact number for those planned openings. 

Sales during Gap’s second quarter ended Aug. 1 fell about 18% to $3.28 billion, as robust online growth wasn’t enough to make up for the losses from its stores being temporarily shut. 

Sales at its namesake Gap brand were down 28%. At Old Navy, which has been one of Gap’s strongest performing brands of late, sales fell 5%. Banana Republic sales dropped 52%. Within Athleta — Gap’s athletic apparel brand for women that competes with the likes of Lululemon and Nike — sales were up 6%, making Athleta the only division within Gap Inc. to see overall revenue increase. 

“Old Navy continues to believe that they are under-penetrated compared to their competitive set in the smaller markets where their competitors are but they are not,” CFO Katrina O’Connell told analysts. “And Athleta, still at only [50%] brand awareness and under-penetrated in their store fleet, still has an opportunity to open some stores here and potentially elsewhere.” 

Tractor Supply

 
Tractor Supply Co.

Market capitalization: $16.5 billion
Stock performance year-to-date: +52%

Tractor Supply, the largest rural lifestyle retailer in the U.S., is still growing as its business booms thanks to the pandemic and people escaping the cities for houses on more land. 

During its fiscal second quarter, it opened 18 new Tractor Supply stores, and is planning to open 75 to 80 new shops altogether this year. As of June 27, it had 1,881 stores. 

“We’re seeing that as people have left the cities where we don’t have stores, they moving into suburbia … or they’re moving out to the rural communities,” CEO Hal Lawton said during an earnings call. “They’re embracing the ‘out here’ lifestyle, and they’re shopping Tractor Supply because we are that lifestyle.” 

The retailer’s net sales for the quarter ended June 27 surged 35% to $3.18 billion. Its net income jumped 54.5%. Same-store sales, which tracks revenue at locations open for at least 12 months, climbed 30.5%. Its e-commerce business also saw triple-digit sales gains. 

Ollie’s Bargain Outlet

 
Source: Ollie’s Bargain Outlet

Market capitalization: $6 billion
Stock performance year-to-date: +41%

Ollie’s Bargain Outlet is still planning to open 50 to 55 stores per year, as its business sees incredible momentum during the Covid-19 crisis. 

The retailer just had its best period in its 38-year history, according to CEO John Swygert, ending the second quarter with 366 locations. Its total net sales for the period ended Aug. 1 surged 58.5% to $529.3 million. Its net income jumped roughly 295% to $99.4 million. 

As the bargain retailer looks to expand, however, Ollie’s is not looking to grow at malls. 

“We have zero interest in being attached to a mall and having mall access into the stores,” Swygert told analysts during a conference call last month. “Most malls are starting to die and they’re changing them out. … We want to do one [new store] per week.” 

Ulta Beauty

Pedestrians pass in front of an Ulta Beauty store in New York.
Pedestrians pass in front of an Ulta Beauty store in New York.
Gabby Jones | Bloomberg | Getty Images

Market capitalization: $13.5 billion
Stock performance year-to-date: -5%

Ulta Beauty thinks it can grow to as many as 1,700 stores, as it plans to open at least 30 locations next year. It currently has 1,264 locations. 

“The role of physical retail in beauty remains crucial to the shopping experience,” CEO Mary Dillon told analysts during a conference call last month. “And while we know that e-commerce will continue to grow, we also continue to believe we can ultimately operate between 1,500 to 1,700 stores in the U.S.” 

With its stores temporarily shut during the pandemic, Ulta said its e-commerce sales soared more than 200% during the fiscal second quarter. Overall, its net sales fell 26.3% to $1.2 billion. 

“Given continued disruption from the pandemic … and economic uncertainty, we expect sales will continue to be challenged for the rest of the year,” Dillon cautioned. “Longer-term, we are confident that beauty will recover and thrive.” 

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U-Haul prices jump amid high-tax city, state exodus

U-Haul prices jump amid high-tax city, state exodus

Company says price differential tends to indicate higher demand for moves in one direction

U-Haul prices are starting to reflect growing demand among residents to leave high-tax cities and states during the coronavirus pandemic, costing individuals more to flee these populated areas than to move there.

The trend was first pointed out on Twitter by Brian Wesbury, who is the chief economist of First Trust Portfolios LP.

Wesbury was citing data for a move from a two-bedroom home to three-bedroom apartment.

SUBURBS BOOM AS NYC RESIDENTS LOOK OUTSIDE THE BIG APPLE

Here’s a look at the rates for Sept. 15, for a move from a studio to a one-bedroom apartment:

Sacramento to Phoenix: $809

Phoenix to Sacramento: $199

Manhattan to Virginia Beach: $722

Virginia Beach to Manhattan: $275

Miami to Raleigh: $1,195

Raleigh to Miami: $699

Los Angeles to Phoenix: $939

Phoenix to Los Angeles: $142

A spokesperson from U-Haul declined to comment on specific migration patterns, but did say prices often reflect ongoing trends

“When there is a substantial difference in pricing for the same one-way equipment, and for the same dates, between two markets, it is reasonable (and generally accurate) to conclude there is far greater demand for one-way equipment in the market reflecting higher costs for departures,” the spokesperson said.

The migration from densely populated, expensive metropolitan areas to less expensive cities or nearby suburbs has been observed across many cities – from New York to San Francisco.

As previously reported by FOX Business, real estate activity in New York picked up in many areas last month – besides Manhattan.

Residential sales contracts in the Big Apple fell 31% when compared with the same period last year, according to a report by Miller Samuel Real Estate Appraisers & Consultants for Douglas Elliman, with the largest decline seen among the most expensive listings.

On the other hand, activity in the suburbs was booming.

In the Hamptons, specifically, single-family contract totals were described as continuing a “torrid upward pace,” two-fold what they were last year.

Even moving companies have described an “insane” uptick in moves out of Manhattan.

San Francisco has been dealing with similar challenges as remote work policies allow the technology industry more freedom when choosing a place of residence.

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7 Rules for Using Real Estate Investments for Passive Income

7 Rules for Using Real Estate Investments for Passive Income

Real estate can provide funds from rent payments while your investment appreciates.

 

7 Rules for Using Real Estate Investments for Passive Income

 
Modern residential district viewed from above.
 CREDIT

Here’s how to use passive real estate investing in your portfolio.

Investing in real estate can be a smart move if you’re interested in creating new income streams. “Real estate can be a great way to generate passive income that’s not dependent on your principal employment,” says Rick Myers, founder and president of Integrated Financial Services in Grand Rapids, Michigan. As a landlord, you can reap the dual benefits of appreciation from your investment and ongoing rental income. That can help to ensure a more comfortable retirement or help to keep you afloat if an economic downturn results in the loss of your primary job. If you’re interested in using passive real estate investing strategies in your portfolio, here are seven rules to follow.

Pick your game plan.

Investing in real estate for passive income isn’t one-size-fits-all. Before wading in, first figure out what strategy fits best, says Colton Brausen, commercial broker for Kris Lindahl Real Estate in Minneapolis. For example, consider whether you’re more interested in owning an apartment building or multifamily home to generate real estate passive income versus a commercial building in which you’re dealing with business tenants. Also think about how involved you want to be when it comes to things like collecting rent or handling repairs, and whether you’d prefer to hand off those duties to a property management company. “There is no right answer,” Brausen says. “It depends on you as the investor and where your comfort lies.”

Passive doesn’t mean hands off.

Generating real estate income passively can help you make money in your sleep, but it requires putting in some work up front to get that income flowing. “Too many people are passive about the investment decisions themselves, and that can lead to very active headaches,” says Adam Kaufman, co-founder and chief operating officer of ArborCrowd, a real estate investment firm. While there are plenty of opportunities to create passive income, rental property investors can’t skip out on due diligence. Kaufman says investors should be proactive in thoroughly researching investment properties. That means asking questions about the property and the seller before committing to the purchase. And if the answers you get leave you with even more questions, you should probably move on, he says.

Business concept illustrations of diversification.
 CREDIT

Diversification matters as much as location.

When using real estate for passive income, it’s important to consider the level of diversification in your portfolio. “Investing in a portfolio that’s diversified by property type, tenant mix and geography will greatly increase the probability that it will provide a stable and predictable stream of income over the long term,” says Scott Bennett, a real estate advisor with Wells Fargo Private Bank. Depending on how much you have available to invest in passive real estate, that may mean owning multiple rental properties. Or you could choose to spread your investment dollars across different real estate mutual funds, real estate investment trusts or crowdfunded rental properties. Diversifying real estate income streams is key to balancing risk and reward.

Business investment planning on device technology
 CREDIT

Pick your game plan.

Investing in real estate for passive income isn’t one-size-fits-all. Before wading in, first figure out what strategy fits best, says Colton Brausen, commercial broker for Kris Lindahl Real Estate in Minneapolis. For example, consider whether you’re more interested in owning an apartment building or multifamily home to generate real estate passive income versus a commercial building in which you’re dealing with business tenants. Also think about how involved you want to be when it comes to things like collecting rent or handling repairs, and whether you’d prefer to hand off those duties to a property management company. “There is no right answer,” Brausen says. “It depends on you as the investor and where your comfort lies.”

 

Passive doesn’t mean hands off.

Generating real estate income passively can help you make money in your sleep, but it requires putting in some work up front to get that income flowing. “Too many people are passive about the investment decisions themselves, and that can lead to very active headaches,” says Adam Kaufman, co-founder and chief operating officer of ArborCrowd, a real estate investment firm. While there are plenty of opportunities to create passive income, rental property investors can’t skip out on due diligence. Kaufman says investors should be proactive in thoroughly researching investment properties. That means asking questions about the property and the seller before committing to the purchase. And if the answers you get leave you with even more questions, you should probably move on, he says

Diversification matters as much as location.

When using real estate for passive income, it’s important to consider the level of diversification in your portfolio. “Investing in a portfolio that’s diversified by property type, tenant mix and geography will greatly increase the probability that it will provide a stable and predictable stream of income over the long term,” says Scott Bennett, a real estate advisor with Wells Fargo Private Bank. Depending on how much you have available to invest in passive real estate, that may mean owning multiple rental properties. Or you could choose to spread your investment dollars across different real estate mutual funds, real estate investment trusts or crowdfunded rental properties. Diversifying real estate income streams is key to balancing risk and reward.

Pay attention to real estate market trends.

Certain segments of the real estate market may perform better than others during periods of market volatility or broader economic shifts, such as a recession. For instance, Jeff Holzmann, CEO of IIRR Management Services, points to the multifamily sector as potentially being more resilient than commercial properties such as hotels or office buildings during challenging economic environments. While multifamily housing isn’t completely risk-free, it may offer better opportunities for returns if demand for residential rental units remains high. Learning how various parts of the real estate market react to changing economic conditions can help you find the best opportunities to keep passive real estate income coming in consistently when the country is experiencing a downturn.

Choose the right capital sources.

When buying real estate for passive income, taking out a loan is an obvious choice – but don’t overlook the benefits of leveraging retirement assets to create rental income. “A self-directed IRA gives you the opportunity to make investment decisions in areas based on your knowledge and expertise,” says Kelli Click, president of Strata Trust. You can use a self-directed individual retirement account to purchase residential rental properties, commercial rentals or even land to generate passive income. Leveraging IRA assets can help you avoid taking on debt and having interest payments on a loan detract from your returns. There are certain IRS rules you need to follow when taking this route, so Click suggests bringing a third-party property manager on board to avoid overstepping.

Know your time horizon.

Passive real estate investing is something you could include in your portfolio for years to come, but it’s important to know your time horizon when deciding which properties to invest in. “High-quality real estate is more illiquid in nature and designed for the long term,” says Peter Brunton, chief investment officer at Strategic Wealth Partners. That means if you anticipate needing the cash you’re planning to invest in a rental property in the next five to 10 years, you’ll need to think ahead about how easy it will be to eventually offload that asset. Again, that goes back to performing due diligence and studying market trends so you have an idea of what demand for the property will be like down the line.

Professional help can make passive real estate investing easier.

Whether you’re investing in real estate for passive income for the first time or you have several years of experience owning rental properties, consider calling in the professionals for help. That starts with connecting with an experienced agent who can walk you through the pros and cons of various investment options, Brausen says. Once you find a rental property for passive income, your team may expand to include a property manager, real estate attorney and contractors to get the property in shape or keep it maintained. Some of your profits will go toward paying them, but it can be well worth it if you’re able to generate real estate income without doing any heavy lifting yourself.

Seven rules for using real estate investments for passive income:

  • Pick your game plan.
  • Passive doesn’t mean hands off.
  • Diversification matters as much as location.
  • Pay attention to real estate market trends.
  • Choose the right capital sources.
  • Know your time horizon.
  • Professional help can make passive real estate investing easier.

Author:

US News

By Rebecca Lake, Contributor

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New York real estate trails other major market recoveries

New York real estate trails other major market recoveries

The state’s unemployment and mortgage delinquency rates remain high

It’s making more sense for wealthy to leave NYC: Councilman

The New York real estate market is still experiencing a challenging recovery period  driven largely by hardships in Manhattan, which was severely hit early on in the coronavirus outbreak.

New York’s housing market was the most affected by the coronavirus-related recession as of last month, according to Bankrate’s Housing Hardship Index.

The index is based on Black Knight’s mortgage delinquency rate for July and the state unemployment rate, two metrics where the Empire State ranked particularly high.

As of last month, the New York state unemployment rate was 15.9% and the mortgage delinquency rate was 8.38%.

“States experiencing high unemployment will see mortgage delinquencies surge if unemployment remains elevated as forbearance periods expire,” Greg McBride, Bankrate chief financial analyst, said in a statement. “This year may see the worst for unemployment, but 2021 will likely bring the worst for mortgage delinquencies and defaults.”

Following New York, Nevada and New Jersey ranked second and third, respectively, among the states with housing markets most affected by the recession. Mississippi and Massachusetts rounded out the top five.

Jonathan Miller, president of Miller Samuel Inc. in New York City, told researchers that Manhattan home sales had slowed significantly  but activity had begun to pick up in the city’s outer boroughs and in the suburbs.

According to data from the Real Estate Board of New York, total investment and residential sales activity in New York City in July decreased by 52 percent year over year.

As previously reported by FOX Business, three moving companies noted a significant uptick in move-outs from the Big Apple.

Roadway Moving president Ross Sapir told FOX Business that it is the busiest summer he has ever had.

New York’s Democratic Gov. Andrew Cuomo joked during a press conference that he has been bribing his friends to return to Manhattan with promises of free dinners and drinks.

“We’re trying to get people to come back,” Cuomo said. “They’re not coming back right now.”

 

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REAL ESTATE New York City may take a decade to recover from coronavirus pandemic, says developer Don Peebles

REAL ESTATE New York City may take a decade to recover from coronavirus pandemic, says developer Don Peebles

KEY POINTS
  • “I think New York will ultimately come back. It’ll come back differently. It’ll be a different place, and it will be much more affordable,” real estate developer Don Peebles told CNBC on Friday.
  • But Peebles, CEO of privately held Peebles Corporation, said, “I think it’s going to take New York about a decade or so to dig out of this. Maybe longer. But it’s not going to be soon.” 
  • Peebles said New York City is facing increasing competition from places like South Florida and Nashville, Tennessee. 

Real estate developer Don Peebles told CNBC on Friday that he anticipates a slow economic recovery for New York City in the wake of the coronavirus pandemic

“I think New York will ultimately come back. It’ll come back differently. It’ll be a different place, and it will be much more affordable,” said Peebles, CEO of privately held Peebles Corp., which has a corporate office in lower Manhattan. 

He added on “The Exchange,” “I think it’s going to take New York about a decade or so to dig out of this. Maybe longer. But it’s not going to be soon.” 

Peebles said he foresees challenges ahead for New York City in attracting and maintaining new residents and businesses going forward. Among them is the strength of other U.S. cities, especially in places with a more tax-friendly environment, he said. 

“New York City can come back, if it becomes competitive and if we all recognize that we’ve got to go and compete with South Florida,” he said. “We’ve got to compete with Nashville, [Tennessee]. We’ve got to compete with Austin, Texas, and Dallas, Texas. Absent of that, if we keep these blinders on, New York City’s hole is just going to dig deeper.” 

Previously rumored to have weighed running for mayor of New York, Peebles said Friday that “probably I will focus on my business, but we’ll see.” The city’s next mayoral election is 2021. The current officeholder, Mayor Bill de Blasio, is term limited. 

The death of New York City has been debated often, especially following seminal events such as the Great Recession, 9/11 and the fiscal crisis of the 1970s. In each case, the most dire forecasts for the city haven’t materialized. But the coronavirus pandemic, Peebles contended, has been “worse than all three of them.”

 

The city — once the epicenter of the United States’ Covid-19 outbreak — has only seen an acceleration of troubling trends that predated the health crisis, Peebles said. 

“There was an exodus out of New York prior to Covid. New York was becoming less competitive in terms of it becoming a business-friendly environment. It was less competitive and less attractive to high net worth individuals, and as result of that people were leaving,” he said. 

Now, Peebles said many realized they could work from anywhere. From a real estate lens, in particular, he said markets such as South Florida are likely to see a “massive growth.” Peebles Corp. has developments in that region.

“New York City, I mean some major projects are selling now at 50% discounts for new construction,” he said. “I think that shows some real stress.” 

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New report finds confidence in commercial real estate market on the mend

New report finds confidence in commercial real estate market on the mend

 

The most recent iteration of Lightbox’s monthly CRE Confidence Index strikes a hopeful note for the commercial real estate industry. The June survey of engineers, appraisers, brokers and lenders found sentiment in the commercial space skyrocketing from the despondent levels seen a month earlier.

The index was 108.2 in May. In June it had climbed to 142.4. (The index’s base of 100 was established in April 2020.) The percentage of respondents who said their activity had improved over the previous month increased from 17 percent in May to 51 percent in June.

The accompanying report explains that commercial stakeholders had begun re-initiating deals that were halted by the COVID-19 shutdown, but adds that the recovery remains slow. The increase in coronavirus infections seen over the past two months casts a shadow over the data.

“The number of inquiries by firms seeking advice on the market is up,” read a comment from one survey respondent. “It is a feeling-out period, but there’s a great deal of uncertainty so clients’ attitudes are tempered with caution about a possible second wave of the pandemic necessitating further economic contractions.”

Even so, the percentage of respondents expecting a return to pre-pandemic levels in the fourth quarter increased moderately, from 47 percent to 55 percent, and the percentage of respondents who said commercial real estate markets are improving increased from three percent in May to a far sunnier 35 percent in June. Also improving was the percentage of respondents who reported experiencing worsening market conditions, which fell from 57% in May to 20% in June. More than half of respondents anticipated that their commercial real estate activity in July would be higher than in June, with only 13 percent expecting a month-over-month decline.

“As the lockdown is being lifted, demand is coming right back,” said another respondent. “Everyone we speak with is anticipating things will pick up very quickly.”

On average, respondents were operating at 71 percent of their usual capacity in June, with a further nine percent reporting that they had already returned to pre-pandemic levels. One quarter of respondents said they expect to return to pre-pandemic capacity by the fourth quarter, while 31 percent project their recoveries won’t begin until 2021.

A similar survey conducted by Transwestern and Devencore found heightened concerns over demand for traditional office space and, somewhat surprisingly, medical office space, which is expected to suffer over the short-term as medical practitioners deal with budget shortfalls triggered by the pandemic shutdown of their operations. Industrial, according to the report, “will remain the belle of the ball” thanks to the rise of e-commerce.

“Select respondents are concerned about the long-term impacts to office demand, as tenants could embrace telework as a long-term solution,” reads the report. “However, optimism stems from the occupier side, with increased activity from tenants looking to right size office space, as well as potential for suburban demand for affordable, social-distanced options.”

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