5 at 5: Your Daily Digest for Real Estate Investing, 3/2/21

March Real Estate Trends: What Investors Need to Know

Courtesy of our very own Aly Yale, here are some of the top property trends currently being watched across the country, especially those that are affecting house flippers, landlords, and other investors.

The Millionacres takeaway: thumbs up for short term rentals in non-touristy areas (think families are free from pandemic isolation) and thumbs down for easy search for foreclosure deals. These are just two of the takeaways in this first edition of this Millionacres monthly update.

Should private REIT investors be concerned about the short-term leasing trend?

While the typical initial retail lease has historically been 10 to 20 years in the past, we are seeing more leases with timeframes in the three to five year range – and sometimes even less. Should Investors Be Concerned?

The Millionacres take away: Our Matt Frankel says yes, no and maybe. While short-term leases fill the space where it might otherwise be empty, they make it easier for tenants to come and go. On the other hand, if the economy warms up again, this space could be re-let or given to new tenants at a higher price. So maybe.

Even in today’s news

Drive-through streets get hotter during pandemics

The Wall Street Journal [subscription required] says today that real estate investors are taking note as Chick-fil-A, McDonald’s (NYSE: MCD) and other restaurant chains employ a socially distant business strategy to weather the COVID-19 crisis.

The Millionacres Takeout: These aren’t just big dine-in chains offering drive-up service for the first time. Checking out this piece might be thought-provoking about how mom and pop can get involved too.

Kohl’s says it has no plans to sell more properties and buy them back

Kohl’s (NYSE: KSS) said it had no plans to make further sales of its properties and then lease them back, despite a group of activists pressuring the company to go down that route to raise cash, reports CNBC today.

The Millionacres Takeaway: While such leasebacks are standard with retail real estate investment trusts (REITs), Kohl’s believes that in some cases it is good to own real estate and lease it in others. The company’s shares have performed well despite the pandemic and remain strong in shopping malls across the country.

Apartment rents in the coastal markets have officially bottomed out

GlobeSt.com reports today that nine of the ten markets with the largest rental declines in 2020 saw positive rental growth in February. For five of these markets, it was the first time rental growth has occurred since the pandemic began.

The Millionacres Takeaway: This is good news for property owners and managers in these iconic markets – like San Francisco and Boston – and a positive sign of the recovery from the pandemic in general. In New York, however, rents continued to fall.