📊 Investors Hit Pause in 4Q23 per Burns + CRE Daily Fear and Greed Index. See the full report here.

Laid-Off Workers Turn to Entrepreneurship and Secure Prime Office Spaces at a Discount

As tech giants keep laying off workers and shedding office space, new startups could secure prime locations for cheap.

Laid-Off Workers Turn to Entrepreneurship and Secure Prime Office Spaces at a Discount

As tech giants keep laying off workers and shedding office space, new startups could secure prime locations for cheap.

Good morning. As tech giants keep laying off workers and shedding office space, new startups could secure prime locations for cheap. Warehouse pricing is expected to keep going up as NYC remains the nation’s busiest port. Meanwhile, more CRE brokers are now scoring eye-popping deals using social media sites like Tiktok.

This week our partner Bullpen is sharing three new freelance roles, including one focusing on debt investments. Current market conditions would make this one very interesting!

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🎧 Podcast of the day: Richard Fertig, Founder of Stomp Capital, explains how he attracted over 100K YouTube and Facebook Group members to Short Term Rental University, and how to win big in STRs on this episode of The FORT.

SILVER LINING

Laid-Off Tech Workers Can Rent Prime Office Locations For Cheap

With tech giants like Meta (META) and Salesforce (CRM) laying off tens of thousands of workers, there’s a lot of available office space on the market—and new startups could take advantage of the situation.

The Year of Layoffs: Facebook parent company Meta recently laid off 11,000 workers, while Salesforce plans to let go of 10% of its workforce. Both companies also plan on shedding or subleasing much of their office space. And they’re not the only tech companies doing this. Small wonder office prices are dropping like a stone.

Opportunistic renting: PayPal (PYPL) co-founder David Sacks recently tweeted that he just secured San Francisco office space for 2009 prices, to which Elon Musk replied, “It will go lower.” It’s an awful time for office landlords, but the best time for recently laid-off tech workers looking to start new companies and snag prime office space for bargain bin prices.

➥ THE TAKEAWAY

Making lemonade? Of course, new startups may just as easily decide not to save money and not rent any office space at all. Disney (DIS) CEO Bob Iger wrote to employees that “In a creative business…nothing can replace the ability to connect, observe, and create with peers that comes from being physically together.” He has a point. But if life after the pandemic has taught us anything, it’s that whatever the value of in-person work might be, it’s clearly below current office rents.

WAREHOUSE WARS

NYC Busiest Port as Holiday Markdowns Helped Move Inventories

Since the pandemic began, US warehouses have been filled to bursting with excess inventory, pushing up storage prices. But for the first time in some time, warehouse price growth was flat from Q3 to Q4 2022.

By the numbers: While national warehouse storage rates remain high due to all that unsold inventory, steep holiday discounts still helped retailers empty some shelves. Additionally, the cost for a “broad basket” of goods and services fell 0.1% in December (a sure of inflation easing), marking the largest monthly warehouse price decrease since April 2020.

The 2023 price forecast: Retail inventories were 17% higher in October 2022 compared to a year earlier. According to WarehouseQuote, “we still have a ways to go before reaching ‘normal’ inventory levels,” so warehouse pricing should continue its steady upward trajectory for some time. From Q2 to Q4 2022, Northeast warehouses enjoyed the highest price increases (12%), followed by the Midwest (8%) and West Coast (7%).

➥ THE TAKEAWAY

Changing the game: While warehouse prices won’t stay high forever, there’s already been a seismic shift in the coast-to-coast warehouse wars. NYC has been the busiest port in the nation for several months already, threatening California’s long-held lead. More shippers are moving away from the West Coast to places like Texas, Georgia, and New York due to prohibitive labor union and port management problems in LA and Long Beach, too.

SOCIAL SENSATIONS

CRE Brokers Now Using Tiktok And Social Media to Score Big Deals

Once upon a time, you cold-called off a Rolodex, met up with some guys for coffee a bunch of times, and maybe had a CRE deal on your hands a few years later. These days? You just need Tiktok.

What the cool kids do: Younger CRE brokers like Zelnik & Co’s Kyle Inserra, SVN Desert Commercial Advisors’ Eddie Gonzalez, and Arvo Realty Advisors’ Tiffany Ryland have between 16K–45K followers each on Tiktok and other social media sites. And it’s more than enough to get deals done. Inserra scored an Irvington, NY restaurant sale just by posting pictures of her French bulldog Taco on her Instagram page.

“Pictorial resume”: According to Ryland, who has 16,200 followers on Tiktok and 8,000 on LinkedIn, her social media pages are like a “pictorial resume” that helps potential partners quickly determine if she’s a good fit for their business. Gonzalez agrees. “You need to be the known, liked, and trusted guy,” he explained. “[Landlords] can go to my account and…decide if they like my style.”

➥ THE TAKEAWAY

If you can’t beat ‘em: Gonzalez recently met a friend at his gym who ended up hiring him to sell a 21 KSF office building for $2.6M, then used him to buy another building for $8.8M. With deals like that, bigger CRE firms should be wondering why they haven’t embraced the same personality-driven branding that residential brokerages take for granted. When you let your brokers be themselves, great things can happen.

📰 Editors' Picks
  • Where the money’s going: US homeowner confidence in real estate is at all-time highs compared with other investments, like stocks, funds, and bonds.

  • The Power of Prime: Amazon (AMZN) is rolling out a nationwide program called “Buy With Prime” that will let Prime members use the same 2-day shipping service on other e-commerce websites.

  • Cornerstore comeback: In 2022, the number of convenience stores around the country went up for the first time in over four years.

  • How much for an acre? Robert Knakal assembles a ‘groundbreaking’ study of NYC land cost projections in 2023 using data all the way back from 1984.

  • Never write your own listings again: More brokerages are discovering the power of OpenAI’s ChatGPT, which can function as a speedy virtual assistant or even write listings on demand.

  • Office dominates new transfers: The Trepp CMBS Special Servicing Rate dropped 3 basis points in December to 5.17%—the first such decline in five months.

  • Handicapping Hochul: Will NY Governor Kathy Hochul’s aggressive affordable housing agenda pass muster? Or will it more likely end up handicapped?

 💼 Talent Collective  

In partnership with Bullpen

Looking for a new role? CRE Daily has partnered with Bullpen to bring hand-selected, CRE freelance jobs to our readers. Join today for access to the below roles, as well as several other freelance openings.

  • Director, Multifamily Investment

💰 Hourly (Remote) 📍 Geography: Seattle, Denver and San Francisco
  • Director, Capital Markets

💰 Hourly (Remote) 🏦 Expertise in debt sector
  • Associate, Multifamily Brokerage

💰 Hourly (Remote) 📍 Geography: Midwest

Looking to hire? Connect with Bullpen 

🤝 Deals & Dealmakers
  • Wheelin’ and dealin’: Apollo Commercial Real Estate Finance (ARI) closed 2022 with $3.7B in annual loan originations.

  • Northeast land grab: National Development bought 300 acres in Connecticut, where it plans to build warehouses and R&D centers, from Pratt & Whitney for $78.5M.

  • Georgia on my mind: Spear Street Capital snatched up three Class-A Atlanta office buildings within Perimeter Summit for $247.5M.

  • Financing fail: After failing to deliver over $100M in construction financing for a Hyatt House and Hard Rock Hotel in Edwardsville, lender AltosGroups LLC filed for Chapter 11.

  • Howard Hughes’ blues: A judge stops the Howard Hughes South Street Seaport project yet again, citing an “impermissible quid pro quo.”

  • Auction of the day: The 147-room Williamsburg Hotel at 96 Wythe Avenue in Brooklyn was just sold at auction for $96M.

📈 Chart of the Day

There is a substantial amount of "dry powder," or unused capital, totaling over $40 billion, available for investment. However, the industry is faced with challenging questions regarding the potential decline of property values and the possibility of an impending recession. The dynamics of these ten funds provide insight into these pressing issues facing real estate investors.

😎 Offering-MEME-Orandum

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

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