RealEstateNews 11.4.24
Weekly News Roundup
- Return to the Office
- Top 10 Real Estate Topics
- Real Estate Foreclosures
Return to the Office
America’s historic retreat from the office building may finally be winding down. More companies are backing away from the looser workplace policies they adopted during the early years of the pandemic as executives increasingly recommit to promoting an office culture. One-third of all companies required workers to be in the office five days a week in the third quarter, up from 31% in the second quarter, according to Flex Index, which tracks workplace strategies.
This ended a streak over the previous five quarters when that rate had steadily fallen. One reason for that decline was because low unemployment gave employees leverage when pressing for more remote work. Now, the white-collar workforce isn’t growing as much, shifting the balance of power back to managers. Companies that offer space with gyms, outdoor decks and fine-dining restaurants in their properties say these amenities are luring workers back to their desks.
After eight consecutive quarters of contraction in office space, the amount of occupied office space essentially stayed flat during the second and third quarters, CoStar said. In New York vacancy is falling thanks in part to expanding financial-services firms such as Citadel, Ares Management and Blue Owl Capital. Artificial-intelligence firms, which have been one of the few bright spots in San Francisco’s hard-hit office market, have begun to lease space in other markets, such as Denver, Atlanta and Seattle. Source: Wall Street Journal
Top 10 Real Estate Topics
The Counselors of Real Estate released its annual list of the most pressing topics facing commercial and residential real estate in the year ahead. Political uncertainty, soaring insurance costs and the growth of artificial intelligence are among the hot topics that likely will have a big impact on the real estate industry in 2025, according to the Counselors of Real Estate, a global organization of property advisers. Each year, CRE releases its list of the top 10 challenges and opportunities that lie ahead.
Here are the issues that topped CRE’s list for 2025: Political uncertainty; High financing costs; Loan maturities deadlines; Geopolitics and regional wars; Insurance costs; Housing affordability; Artificial intelligence innovations; Sustainability; Office conversions; Price gap expectations. Source: NAR
Real Estate Foreclosures
Commercial real estate foreclosures jumped on a monthly and year-over-year basis in September, according to real estate data and analytics firm ATTOM. Commercial foreclosures rose 48% year-over-year in September. There were 695 foreclosures nationally, a report from ATTOM said. That’s slightly lower than where commercial foreclosures peaked earlier this year, but marked a 15% increase from the prior month, the report said.
Commercial foreclosures saw the biggest year-over-year increase in California, with foreclosures on commercial buildings soaring 238% from the same time last year. In New York, foreclosures rose 48% year-over-year, while in Florida, foreclosures rose 49% year-over-year. The delinquency rate for commercial mortgages also rose slightly in the third quarter, with the percentage of loans that were 60-90 days late rising to 0.3%, and the percentage of loans that were at least 90 days late rising to 2.7%, according to the Mortgage Bankers Association.
Real estate experts have been warning of more distress to come for commercial real estate, particularly in the office segment. Demand for second-tier office buildings has fallen since the pandemic, leading some to forecast a wave of forced sales and defaults as debt continues to mature in the sector. Meanwhile, other more optimistic forecasts see a rebound coming for the commercial real estate market. A Moody’s analysis found that transactions in the space had already bottomed, with sales volume rising for the first time in two years in September. Source: Business Insider