Mexico’s nationwide house price index rose by 0.41 percent in Q1–2022 from a year earlier, according to Global Property Guide. For comparison, the year-over-year growth in Q1–2021 was 2.5 percent.
Between 2016 and 2021, real house prices in Mexico increased by an annual average of 2.75 percent, according to the report, and a typical city-center Mexico City apartment currently sells for about $279/sf with rent yields between 4.9 percent to 5.4 percent.
CRE analytics firm Green Street reports that its Commercial Property Price Index declined by 3.7 percent in June. Among its sector-level indexes, “Strip Retail” and “Net Lease” showed the biggest declines (-7 percent) over the past month, whereas the “Health Care” index declined by only two percent. Notably, the sector-level indexes indicate significant price appreciation in the “Industrial” (+42 percent) and “Self-Storage” (+58 percent) indexes from pre-COVID values.
According to Green Street, its Commercial Property Price Index is “a time series of unleveraged U.S. commercial property values that captures the prices at which commercial real estate transactions are currently being negotiated and contracted.”
The amount of cash held by U.S. companies has increased from $1.6 trillion in 2000 to about $5.8 trillion in 2022, according to the Kellogg School of Management. Thirteen non-financial companies in the S&P 500, including Apple, Alphabet and Microsoft, are holding cash and investments in excess of $1 trillion, accounting for almost 40 percent of the $2.7 trillion held by all of the companies in the S&P 500, according to Investor’s Business Daily.
There are a number of reasons why companies decide to hold cash, including covering unexpected payments and preparing for M&A activity. Short-term, liquid investments, such as money market funds and Treasury Bills, are often considered to be cash reserves, whereas long-term investments, buybacks and dividends are ways for companies to reduce cash reserves and return value or cash to shareholders.
Shanghai-based real estate developer Shimao Group Holdings Ltd. has missed the interest and principal payment of a $1.02 billion offshore bond due on Sunday, according to Reuters. This was the first missed public offshore payment for Shimao, which has an outstanding $6.1 billion international bonds and is the sixth largest issuer among Chinese developers, according to the report (citing Refinitiv).
Shimao develops large-scale residential projects, hotels, and other commercial real estate. It owns Shimao International Plaza, a 1,094-ft tall skyscraper in Shanghai’s Huangpu District. In March, the company estimated that its 2021 net profit had dropped by about 62 percent from a year earlier, according to CNN. Three of the top five Chinese property developers – Evergrande, Kaisa Group and Sunac China – have already defaulted their dollar bonds, according to Reuters.
Wisconsin-based Kohl’s is a department store retail chain with roughly 1,150 stores. According to CoStar, as of January, the Kohl’s Corporation owned 410 locations, leased 517 locations and operated 238 stores at ground leased sites.
Kohl’s is considering monetizing its real estate portfolio by engaging in sale-leasebacks. In June, Kohl’s entered into a three-week exclusive negotiating period with Franchise Group (the owner of a number of brands including Sylvan Learning, The Vitamin Shoppe and Pet Supplies Plus). Finance Group was looking to finance the acquisition (at a price of $60 per share) by selling Kohl’s real estate assets and contributing $1 billion in capital to the transaction, according to CoStar.
Although the exclusive negotiation period with Franchise Group ended without a sale, The Real Deal reports that Kohl’s continues to evaluate the possibility of monetizing some or all of its $8 billion real estate portfolio.
The legal industry is returning to the office at higher rates than other businesses, according to research from Kastle. In metropolitan Chicago, legal office usage is at 86 percent of pre-pandemic levels compared with 41.9 percent for all industries. Nationally, the number is 76.2 percent for law firms, compared with 44.2 percent for all industries.
The 2.5-acre vacant lot at 1201 Brickell Bay Drive (in Miami’s Brickell neighborhood) sold on April 20, 2022 for $363 million ($145,200,000/acre), according to Miami-Dade Office of the Property Appraiser. TWJ 1201 LLC, an entity linked to Tibor Hollo’s Florida East Coast Realty, previously purchased the lot in October 2000 for $15.5 million, affording it a gain of over two thousand two hundred percent. Bloomberg (citing “people familiar with the matter”) reports that Kenneth C. Griffin and his company Citadel are the true/end buyer.
According to The Next Miami, in 2016 the Federal Aviation Administration (FAA) approved plans to build a supertall tower rising 1,049 feet on the property and those plans were resubmitted in 2020 after approval expired.
British multinational hospitality company IHG announced today that it is “in the process of ceasing all operations in Russia consistent with evolving UK, US and EU sanction regimes and the ongoing and increasing challenges of operating there.” The company had previously announced the suspension of future investments, development activity and new hotel openings in Russia and it had closed its corporate office in Moscow.
IHG owns 17 brands under four collections. As of 2019, the company had 33 hotels operating under six brands in Russia, CIS and Georgia.
Average house prices in the UK increased by 12.4 percent to £281,000 ($344,097) over the year ending April 2022, according to the UK Office for National Statistics. Among the countries that comprise the UK, England has the highest average house price at £299,000 ($366,139) and Northern Ireland has the lowest at £165,000 ($202,050).
London remains the English region with the lowest annual house price growth (twelve-month percentage change of 7.9) and the highest average house price (£529,829 ($648,799)).
Adaptive reuse is the process of updating an existing structure and adapting it for a new use. In 2020 and 2021, a total of approximately 32,000 converted apartment units were delivered to market, according RentCafe, with Philadelphia and Washington, DC leading in total conversions. Forty-one percent of these 32,000 units (13,120) are in former office buildings, according to the report, and it is estimated that in 2022, office to multifamily conversions will produce an additional 12,300 apartments units.
Office pricing would have to go down by 25 to 50 percent from current rates for an adaptive reuse wave to have greater than a marginal impact on housing production and commercial property use, according to The Wall Street Journal (citing analysis from Moody’s).