Real Estate Newsletter 4.9.24
Weekly News Roundup
- AI Changing Real Estate Business
- Luxury RV Parks Next Big Thing
- Senior Living Bouncing Back Post COVID
AI Changing Real Estate Business
Artificial intelligence is already changing the business of commercial real estate. One of the most critical stages in any real estate transaction is due diligence, where both legal and business teams dive into the property’s details and ensure everything from the chain of title, property condition and zoning compliance checks out. AI-driven tools are revolutionizing this process by aggregating and analyzing vast amounts of data far more efficiently. Title companies’ use of AI and underwriter review provides quicker identification of potential title discrepancies, such as issues with chain of title or outstanding assessments or taxes.
Lease abstraction — the process of summarizing key information from detailed lease documents — is another area where AI is making significant inroads. AI algorithms, trained on thousands of lease agreements, can now extract critical data points, such as lease terms, renewal options and termination rights. Often, this permits high-level lease abstracts to be reviewed, verified or revised, and finalized by legal counsel in days instead of weeks, with critical business terms pulled and summarized even faster. In addition by leveraging historical data, current market trends and even social media sentiment, AI models can help predict future market movements. Source: CrainsCleveland.com
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Luxury RV Parks Next Big Thing
For decades, RV parks have ranged from bare-bones (dirt lots with barely defined spaces) to locales offering water and electricity hookups. In recent years, RV park owners have improved their spaces. These improvements are catching the attention of commercial real estate investors and lenders.
Luxury RV parks provide hotel-style amenities on the property, such as resort-style pools, fitness facilities, full-service restaurants and bars, package lockers, recreational sporting courts, office spaces and dog parks. These types of parks typically offer the same amenities available in most multifamily properties today.
Compared to traditional parks, luxury RV parks are intended for long-term residents. They cater to people who travel around the country, on vacation or short-term workers who travel for their jobs.The luxury RV parks are piquing the interest of investors due to their superior construction, high-end amenities, and their flexibility to cater to both short-term and long-term stays.
RV parks are no longer just for vacationers. There has been an influx of travelers and workers looking for a flexible environment that provides all the amenities offered in traditional multi-family communities. Remote work trends have continued post-pandemic, allowing individuals the freedom to travel and live outside of where they work. RV parks are an evolving asset class for investors and are becoming more sophisticated properties, similar to the trend we saw with self-storage properties. These properties have great potential as they transition from mom-and-pop run operations to more institutionalized ownership. Source: Connect CRE
Senior Living Bouncing Back Post COVID
Senior living rent increases are outpacing inflation as the industry approaches its early 2020 fundamentals, encouraging investors that formerly avoided one of the nation’s most pandemic-impacted asset classes. Investors bet billions and developers overbuilt in anticipation of baby boomers aging into the need for higher-level care only for coronavirus deaths to mount near the turn of the decade, bringing occupancy down to 77.8% by early 2021, The Wall Street Journal reported.
Occupancy rates were back up to 85.1% in the 31 largest U.S. markets in the latter half of 2023, according to National Investment Center for Seniors Housing & Care data. That is still 2 percentage points below the first quarter of 2020, but rent increases look promising and are outpacing inflation. A glut created by overbuilding before the pandemic has been mostly absorbed as development has slowed. NIC data shows only 10,000 new units were delivered last year, the lowest number in a decade. Green Street data shows the “sector is on the cusp of a significant demand versus supply imbalance.”
Yet many seniors are determined to stay out of senior living, according to a 2022 University of Michigan poll that showed 88% of adults 50 to 80 years old want to remain in their own homes as long as possible. Aging in place has become less expensive and less isolating due to improvements in healthcare and new technology as well as more relatives having flexible work schedules. The supply imbalance remains attractive to investors, though. Real estate investment trusts are investing in healthcare facilities as well, hoping to align the timing with baby boomers’ need for senior housing, outpatient care and healthcare assistance. Source: BisNow
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