RealEstateNews 5.12.25
Weekly News Roundup
- GenZ Shapes Rental Market
- Tariffs Pause Retail and Industrial Real Estate
- California Home Sales Languish
GenZ Shapes Rental Market
From baby boomers to Gen Xers to millennials, American professionals used to have a somewhat common trajectory. Young adults graduated, moved to the city and rented a basic apartment. Eventually, the city became a community. Not so for some Gen Zers, who are opting for a new urban way of life: Hunkering down in amenity-rich, high-design rental complexes that offer not just a place to live, but also a self-contained world that creates its own instant community.
Born from the mid-1990s to early 2010s, Gen Z’s ages range from 15 to 30. They represent 47% of recent U.S. renters, and comprise 25% of all U.S. renters, according to Zillow. As of 2023, there were 9.1 million Gen Z renter households, says Alexander Hermann, senior research associate at Harvard University’s Joint Center for Housing Studies.
According to Zillow, 44% of Gen Z renters live in apartment-style buildings. Today, some complexes have perks like pools, fitness centers, coworking spaces, social lounges and pet salons. These amenities are efficient and foster community. But they also provide a real world buffer, allowing residents to curate their own mini universes, not unlike personalizing a social-media feed. Source: Wall Street Journal
Tariffs Pause Retail and Industrial Real Estate
While it’s too soon to know exactly how tariffs will impact the commercial real estate market, some early cracks are emerging in the retail and industrial sectors, according to Whitley Collins of CBRE, the commercial real estate services company. “If you just look at the tariffs…the biggest impact is on retailers and then the knock-on effect, is in manufacturing and distribution, so retailers for sure are the ones bracing the most,” said Collins, global president, advisory and transaction services, occupiers for CBRE said in an interview last week. “Retail is trying to figure out, ‘what’s it going to mean for our business,’ so there’s a lot of pausing right now on retail transactions and similarly with industrial.”
In Q1, the retail real estate sector that includes malls, big box stores and power centers in the U.S. market saw its first quarterly period in which the net absorption of space turned negative since early in the pandemic in Q3 2020, according to CBRE’s Q1 retail report. The shift reflected “a cautious start to the year as retailers reconsidered expansion plans amid economic uncertainty.”
Many industrial warehouse tenants are also taking a “wait-and-see” approach to making industrial real estate decisions and the widespread tariffs are expected to have “a significant impact on market activity,” according to CBRE’s Q1 report on the industrial market. At the same time, the overall U.S. industrial real estate market’s vacancy rate rose to 6.3%, the highest since Q2 2014, or just over a decade. Source: CFO Dive
California Home Sales Languish
The supply of homes listed for sale in California continued to surge last month, as home sales activity in the Golden State remained weak and hovered below the lows of the Great Recession. The number of active listings in California topped 64,900 in April, a post-pandemic high and beating the April 2020 level, according to the Realtor.com® economic research team’s monthly housing trends report.
Inventory has been rising across the country, but the gain is more pronounced in California, where the number of active listings was up 50% in April from a year earlier, compared to a 31% rise nationally. More sellers are entering the market in California, with new listings up 9% in April from a year earlier, similar to the national gain. But the biggest driver of the state’s inventory boom is a prolonged, historic slowdown in sales.
Since mid-2023, total sales of single-family homes and condos in California have hovered below the depths reached during the Great Recession in 2008 on a 12-month rolling total basis, according to real estate data provider ATTOM. Sales of existing homes in California remained sluggish in March, falling 2.3% from February, to 277,030, on a seasonally adjusted annualized basis, according to the California Association of Realtors. Source: Realtor.com