5 at 5: Your Daily Digest for Real Estate Investing, 3/24/21
Newly built home sales, what constitutes a retail sale, is an option, retailers expanding distribution capacity, the PRO Act and the real estate industry, and a possible extension of the CDC eviction ban.
In today’s news
Sales of new buildings fell by 18% in February: NAHB names rising costs and prices
Newly built single-family home sales fell 18.2% in February to a seasonally adjusted annual rate of 775,000, the US Department of Housing and Urban Development and the US Census Bureau said this week. This is the lowest level since last May.
The Millionacres Takeout: The National Association of Home Builders (NAHB) cites rising interest rates and construction costs, and says this is leading to even more potential homebuyers being excluded from the newly built home market.
Retailers and landlords argue over what counts as a sale
Shops are reopening and customers are flocking back so retailers who withheld rent during the COVID-19 shutdown can now pay. But first they need to agree with their landlords how to define a sale, the Wall Street Journal reports today [subscription required].
The Millionacres Takeout: According to WSJ, landlords are increasingly offering deals where retailers pay a percentage of their monthly sales in rent rather than a fixed amount. That has advantages and disadvantages, and e-commerce only clouds the water further.
Williams-Sonoma adding manufacturing and sales capacity
Williams-Sonoma (NYSE: WSM) plans to increase its manufacturing and order fulfillment capacity by 20% to 30% over the next year, including expanding its distribution network by approximately 2 million square feet, reports Retail Dive.
The Millionacres Takeaway: This article lists similar steps taken by other, much larger, retailers. This is a reminder that while brick-and-mortar retail is dumped for many, the long-term outlook for real estate investment is positive, for example below the outlook. industrial REITs (Real Estate Investment Trusts). Our Maurie Backman adds a look here at what Target (NYSE: TGT) is up to in that regard.
Today on Millionacres
What could the PRO Act mean for real estate?
The Law to Protect the Right to Organize (PRO) was recently passed by the US House of Representatives and will be put to the Senate for a vote. If passed, it could represent a massive change in labor laws in the United States and have a significant impact on the real estate market.
The Millionacres Takeout: Our Deidre Woollard points out how the fundamental change in the contractor-to-employee relationship could affect the entire industry.
CDC appears ready to extend the eviction ban again
It looks like the Centers for Disease Control (CDC) will extend their ban on home evictions, which currently expires on March 31. This could have serious effects on the landlord, writes our Aly Yale.
The Millionacres Takeaway: Enforcing the ban has been a mixed bag and there are legal battles over its constitutionality. However, if the ban is extended and tenants make greater use of its protection, the effects will only exacerbate the pain felt especially by mom and pop landlords and increase the importance of rent relief programs.