Top Real Estate News for Thursday, Nov. 18, 2021: Office Space Subleasing Declines
Subletting of office space decreases for the first time in the pandemic, and CVS health (NYSE: CVS) plans to close 900 drugstores. Home profits are reaching new heights while mortgage applications are falling, and a senior housing REIT’s wage troubles provide insights into the industry.
Subletting office break-ins for the first time during the pandemic
Cushman & Wakefield says in its new 3Q21 report that the market for sublet space otherwise left empty by the pandemic is now in decline. The commercial property giant (CRE) also says the timing would coincide with previous recessions, as sublet space increased for about two years before peaking and then declining.
Corporations have snapped up the cheaper place, which can have an impact on income for property owners – including real estate investment trusts (REITs) – but it was better than no rent at all. The report also suggests that the central business districts are the main beneficiaries of the retreat when subletting.
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CVS plans to close 900 stores over the next three years
CVS Health announced today that it plans to close approximately 300 of its drugstores per year, nearly 10% of its locations, over the next three years as the company focuses on building more health services in the remaining locations.
The company expects to post an impairment loss of $ 0.56 to $ 0.67 per share of earnings in the fourth quarter of 2021. On the real estate side, these stores were solid pillars of the pandemic and stayed open while so many other brick and mortar stores failed. The impact of these closings on these retail REITs and other property owners and managers needs to be monitored.
Home profits are at an all-time high, exceeding $ 100,000 per sale
Record low interest rates and a nationwide housing shortage have pushed property prices to new highs. However, until then, profitability from home sales did not necessarily run parallel to it. Competition in the market, especially among fix-and-flip property investors, actually caused returns to decline.
But that could all change, according to the latest home earnings report from ATTOM Data Solutions. Motley Fool employee Liz Brumer-Smith analyzes the data here and explains why it’s a good time to sell but a bad time to buy.
New home, refinancing applications continue to decline in what is still a strong market
The Mortgage Bankers Association (MBA) reports this week that both purchase and refinancing requests continue to decline, a trend closely linked to rising interest rates. The MBA says new home applications were down 15.2% year over year in October, while refinance applications fell for the seventh time in eight weeks last week.
Mortgage applications were up 6% month-on-month, the trading group noted, and new home sales were at their strongest monthly pace since January. The average new home loan size was $ 412,000, another new record in the MBA surveys.
Ventas’ real wage problem is contract labor – what that means for a whole niche
Inflation is one of the big headlines right now. Employees across the country are demanding and receiving pay increases. One area that this is particularly true is the senior living space, a segment where demographics seem to be saying the only way up is.
Motley Fool employee Reuben Gregg Brewer explains why investors are in sales (NYSE: VTR) and other senior housing REITs need to keep an eye on the subject of agency work, but also understand that it will ultimately move from negative to positive as the job market balances out and senior housing operators hire new employees.
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