Top Real Estate News for Wednesday, Nov. 17, 2021: New Highs in Industrial Real Estate
Record net absorption and rents in commercial real estate, while apartments in the Sun Belt helped apartment sales lead overall CRE volume. Housing construction is falling, but high prices push the expected new limits on secured credit to nearly $ 1 million.
Industrial real estate market sets new high water marks
The bull market in industrial real estate continues. A report released today by Transwestern says the sector has broken records on several key performance indicators (KPIs). That includes 540 million square feet of net absorption year over year, the first time KPI has grown more than 500 million square feet in a year. (The net absorption is the difference between square feet that have been physically occupied and the square feet that have been physically vacated during a given period of time.)
Asking rents also rose to $ 7.11 per square foot, Transwestern said in its 3Q21 report. These numbers suggest why private and institutional investors are investing money in this sector.
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Apartment buildings sell the fastest
According to a RealPage analysis of 2001 data from Real Capital Analytics, transactions totaled $ 241.9 billion for the 12 months ended September 2021, 27% more than the same period in 2019. for each type of commercial property . The industrial sector followed in second place, while the ailing hotel, retail and office sectors lagged.
A RealPage economist told Bloomberg in an article published today that these apartments were historically undervalued, particularly in the Sun Belt. The pace and price of sales in these markets mean that reality can change.
Housing construction is declining, but building permits are increasing in the monthly Census / HUD report
The country’s home builders started 0.7% fewer projects in October than in September, which was primarily limited by material, labor and land shortages. That comes from the monthly housing starts report released today by the US Census Bureau and the Department of Housing and Urban Development.
The same closely followed report found that the new start rate was still 0.4% above October 2020. And sellers of those 1.52 million units that have been started can expect to find willing buyers as supply in the residential real estate market is still lagging behind demand. That confidence is reflected in the Census / HUD report, which showed that home permits approved in October were up 4% from the previous month.
Fannie and Freddie support nearly $ 1 million in home loans
The rapid rise in house prices has now led the government-sponsored corporations (GSEs) that support these loans to raise the bar on jumbo loans when they announce the new limits on November 30th. The Wall Street Journal reported this week that the limit for Fannie Mae– and Freddie Mac-secured loans will soar to just under $ 1 million in high cost markets.
The Federal Housing Finance Agency places approximately 100 counties across the country in this category. The current limit is anywhere at $ 548,250 and in those markets it is $ 822,375. Raising these limits will allow more people to borrow in the face of rising house prices, but it could also raise questions about the role of government. After all, Fannie and Freddie were forced into conservatories in the 2008 housing crisis and now have access to more than $ 250 billion in Treasury support, the WSJ notes.
Realty Income is on an elephant hunt
Real estate fund (REIT) Real estate income (NYSE: O) recently completed the massive acquisition of peer VEREIT, valued at approximately $ 11 billion. There are many benefits to ancillary acquisition, but one thing investors should watch out for is size.
Motley Fool employee Reuben Gregg Brewer shares how Realty Income, bigger than its peers, can do things that others can’t, and how it could do more of them in the future. Realty Income is one of the most famous REITs, a company that has been paying monthly dividends without exception for decades and should always keep an eye on them.
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