One thing I have not done, but always wanted to do, is step inside the classroom. That is about to change. This fall I teach CRE Entrepreneurship at Georgia State. The course is an extension of how I mentor—this should be interesting for both me and the students.
Most people view making decisions about death with dread. No one likes to think about his own demise, but it is important to make smart decisions now, especially if you own real estate.
As we emerge from this economic catastrophe caused by the fear of COVID-19, we need to consider how we take advantage of the investment opportunities it will present.
Change will be our constant as we consider the impact of the coronavirus on the economy, urbanization, healthcare and, perhaps most importantly, people and their habits.
Coronavirus COVID-19 is impacting all commercial real estate sectors, some more drastically than others.
You never see the lightning bolt that hits you. Coronavirus COVID-19 has taken us all by surprise and continues to baffle us with its strength and uncertainty. It’s difficult to write a post about the current climate because it changes daily, hourly even. Every day, we hear of communities requiring residents to shelter-in-place as more orders are announced, clarifying which businesses can operate and which must shutter their doors. Real Estate Recessions: Causes Real estate market recessions are NOT always the result of real-estate activities, such as overbuilding, loose underwriting or easy financing. Sure, there have been real estate recessions caused by these actions, but not always. Often there are non-real estate triggers—think of the mid-70’s oil embargo, the Iraq War, inflation in the 80’s and 9/11. These events usually expose underlying market weaknesses and cause the debt markets to lock up, resulting in sharp declines in real estate fundamentals.
We are accustomed to seeing headlines about big philanthropic donations or seeing billionaire’s names on buildings, but do you ever stop to think about the massive multiplier effect these philanthropic donations have? On everything from job growth to real estate worth to quality of life? In Atlanta, we have a multitude of big givers—from Home Depot’s Bernie Marcus and Arthur Blank to the Coca-Cola-affiliated Robert W. Woodruff Foundation to CNN’s Ted Turner. Let’s take a deep dive into how philanthropic giving impacts Atlanta, focusing specifically on Bernie Marcus. Growth of The Home Depot The Home Depot got its start with two entrepreneurs and two Atlanta stores, one in Doraville and one in Decatur, in former Treasure Island locations. Marcus and Blank grew that humble beginning to 2,200+ stores, simultaneously profiting from the DIY craze and revolutionizing the industry. The growth of Home Depot in Atlanta significantly impacted Atlanta. First, think
For many, a new year means a new start in their personal or professional lives—whether it’s hitting the gym, abstaining from alcohol or seeking a new job. Whatever resolution or aspiration you set, you need a commitment and a plan to succeed. This is exactly what I tell my mentees entering the work force: Not only do you need a plan; you need to make yourself stand out. But how do you do that? Create a solid resume, prepare for and attend job fairs, seek relevant internships and market yourself with confidence. Atlanta’s Job Growth in 2020 The forecasts are in, and the good news is you can secure a desirable job in the ATL. Despite positive numbers, this is not easy. According to a recent Bisnow article, “Metro Atlanta’s rocketing job growth has slowed in recent years, from more than 4% in 2014 to 1.5% in August [2019].” But
Recent NREI article “Low U.S. Interest Rates Are Fueling a Bubble in Commercial Real Estate” claims it is not a matter of if the CRE bubble will pop, but when it will pop. I wholeheartedly agree with author Jay Rollins’ assessment and strategy. We’ve already seen investor push back on properties purchased post-2015 that are now back on the market. The current owners paid too much, thinking prices would increase, but in my opinion, the market has flattened—with further appreciation less likely than price deflation. The spreads between real estate yields and other financial instruments are historically low, and like Rollins, I have to believe that interest rates will increase sooner rather than later. I certainly don’t see them decreasing. The best opportunity for upside today is in new development, which has considerably more risk than buying existing assets. Historically, developers get caught by recession and rising interest rates. This time will be
A recent NREI slideshow “Breaking Down CBRE’s 2020 Market Outlook” reviewed economic development, tax rate cuts, CRE investment, cap rates and market trends, among other topics, when considering what’s in store for 2020. In general, I agree with CBRE’s assessment that a slowdown in absorption will occur in all sectors as supply continues to grow. We are gradually moving to the confluence of oversupply and slow down. When that becomes problematic and to what extent it creates opportunities or problems is hard to predict. I started thinking about this a few months back in “Development Market Phase: How Long Will It Last?” As expected, the impact on individual sectors will be uneven. In my opinion, retail faces the greatest degree of uncertainty due to online shopping and shifting consumer buying habits. I can’t believe that the multi-family sector doesn’t have significant overhang already, and office will be negatively impacted by the WeWork pullback.
Asset Servicing, Acquisitions, Investments
Stan Sonenshine
770-512-0496 office
404-290-0778 cell
Tax Credits
Steve Rothschild
404-350-4159 office
404-312-2414 cell
Address
1266 West Paces Ferry Road
Suite 415
Atlanta, GA 30327
