Offices Reach 50% Occupancy: Post-Pandemic Milestone

Workers are still returning to their workplaces, boosting office occupancy in the country’s 10 biggest metros.

Offices Reach 50% Occupancy: Post-Pandemic Milestone

Workers are still returning to their workplaces, boosting office occupancy in the country’s 10 biggest metros.

Good morning. Looks like the 9-5 grind is back in full swing. Over 50% of workers in 10 major US cities made their triumphant return to the office last week, finally breaking past pre-pandemic levels. Elon Musk is joining forces with Lennar to bring employees closer with a new housing development near Austin.

Meanwhile, Las Vegas casinos have been raking in the big bucks, with more than $1 billion in gaming revenue for 22 consecutive months and record-breaking annual gaming revenue on the Strip. Let's dive in!

⚡ Want to share the CRE Daily? Click here to forward this email.  

BACK TO WORK

Office occupancy hits 50% for the first time since the pandemic started

It appears there may be a sea change on the horizon for office occupancy in the waning days of the pandemic. In the 10 biggest US cities, office attendance is above 50% of pre-pandemic averages, according to Kastle systems.

Changing tides: A weakening economy and mass layoffs have gradually tipped the balance of power back to employers, who now have more leverage to get employees out of the house and back into the office. CEOs from companies like Disney (DIS), Starbucks (SBUX), and Salesforce (CRM) have led the charge, advocating for hybrid work schedules at the very least.

Tech troubles: Metros most affected by rising office occupancy levels included techy ones like San Jose, where occupancy jumped 2.9% last week, as well as Austin and San Francisco, where occupancy rose 2.6%. While this is good news, everything is relative. These metros may be enjoying an office occupancy rebound because they were sitting at much lower levels than other major metros nationwide.

➥ THE TAKEAWAY 

Persistence pays off: Starting in Fall 2022, employers have been doggedly trying to coerce (or force) workers back into offices. It looks like their efforts are finally paying off in the face of a wavering economy and lower job certainty. This could mean that office demand will start recovering faster than before. But a lot can happen with an impending recession on the horizon.

JOINING FORCES

Elon Musk, Lennar team up on workforce housing for Boring Co. east of Austin

It appears that Lennar Corp. (LEN) will be joining forces with Elon Musk’s Boring Company to construct housing for its employees. The new development, codenamed “Project Amazing,” will be a 110-home subdivision in Bastrop County, near Austin.

Screenshot of documents filed by The Boring Company in Bastrop County

Company town: Project details are still hazy, but the discussion around residential development for Boring Co. employees has been going on for quite some time now. Construction is expected to happen on nearly 450 acres of land owned by a number of Musk’s shell companies. Buildings have already been constructed in the area for Boring Co. and SpaceX.

Something amazing: The existence of “Project Amazing” was released last year after approval for the development was received from the Bastrop County commissioner on Sep 12, 2022. This will continue the relationship between Boring and Lennar after the developer invested in Boring’s 2022 $675M funding round. The second-biggest homebuilder in the US raked in $25B in revenue last year.

➥ THE TAKEAWAY 

Assessing the impact: Since Musk moved his base of operations to the Lone Star state, employee housing has remained a persistent concern. Some claim his Tesla factory has nearly 10k employees, many of whom have to be bussed in from Austin. Building closer employee housing could also help with Austin’s housing affordability, as the existing stock would be freed up thanks to “Project Amazing.”

THE HOUSE ALWAYS WINS

Las Vegas casinos break gaming revenue record in 2022 despite odds

“Never betting against the house” remains good life advice. Because despite economic concerns and pandemic restrictions, Las Vegas casino revenue still managed to set an annual record in 2022.

We’re in the money: Data disclosed by the Nevada Gaming Control Board revealed that the strip saw total revenues of $8.29B last year, up 17% from 2021. Casino success was felt statewide as Nevada enjoyed 11% growth, resulting in statewide revenues of $14.8B. 

Record year for sports betting: In 2022, Nevada's sports betting industry broke its previous record with a revenue of $446.7 million and total wagers of $8.7 billion. Mobile sports betting contributed to almost half of the revenue, with $5.9 billion in wagers, which is 68.3% of the total sports betting wagers. This percentage has increased from 64.6% in the previous year.

Work to be done: While gambling revenues exceeded expectations, there is still work to be done before Las Vegas returns to its pre-pandemic glory days. Last year, 38.8M people visited Vegas, over 21% more than in 2021. But it’s still 8.7% below 2019 levels. Likewise, convention attendance reached 5M, still 1.6M below 2019 levels.

➥ THE TAKEAWAY 

Why it matters: It is clear that while trade shows and conventions are still climbing out of the pandemic pit, the demand for leisure travel keeps recovering. Not only has this led to record employment levels in Vegas, but it’s also a worldwide sentiment. Macau saw 82.5% more gaming revenue last year as well, due to China’s grand re-opening and the Lunar New Year. However, it remains to be seen if Nevada's revenue growth will continue indefinitely.

📰 Editors' Picks
  • Who turned off the tap? As the tech industry prepares for further layoffs, Seattle’s CRE market hit 16.7% total vacancy in Q4. 

  • Robots love RE: Columbia University has begun to apply AI technology to address challenges faced by the NYC real estate sector.

  • Magnifying glass: This Q1 forecast of the construction cycle for residential housing details the negative housing impulse currently experienced by the markets.

  • All a-loan: A blockbuster self-storage deal and 5th Avenue skyscraper topped the charts for the largest real estate loans of 2022.

  • By the renters, for the renters: LA county has extended its eviction moratorium through March as the city council passes more tenant-friendly rules.

  • The ‘right’ rights? Experts give their thoughts on the White House’s proposal for the Renter's Bill of Rights unveiled on January 25th.

  • Just right: According to the Dept. of Commerce, the US economy grew 2.1% in 2022, similar to pre-pandemic levels.

  • What to do with all this money? Blackstone’s BREIT hits its January redemption request limit as the fund eclipses $69B. 

  • No signs of stopping: As other sectors feel the burn, industrial RE is set to continue expanding, albeit at a slower pace.

  • Fighting inflation: The Fed raised interest rates by just 0.25% on Wednesday. But uncertainty about their plan to tackle inflation will stall commercial real estate transactions.

 💼 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. 

  • Controller/Accountant

💰 Hourly (Remote) 📍 Geography: Upper Rocky Mountain area
  • Development Associate, Multifamily

💰 Hourly (Remote) 📍 Geography: Florida
  • Associate, Multifamily

💰 Hourly (Remote) ❗️ Work with a PropTech company

Looking to hire? Connect with Bullpen 

🤝 Deals & Dealmakers
  • Breathing room: Philadelphia has established a rental assistance fund, intended to help tenants behind on rent catch up with $30M allocated for the fiscal year.

  • PGIM pivots: PGIM Real Estate has invested ¾ of its $996M closed-end fund towards housing for seniors.

  • Liquidity in LA: California Landmark Group (CLG) has sold an 84-unit apartment building for $47M.

  • Through the SeaGlass: The SeaGlass Jupiter Island condo has been sold to undisclosed equity investors for $168.8M. 

  • Establishing an Inland Empire: A Brookfield (BAM) fund acquired a 1.8 MSF logistics center from Shopoff Realty Investments and Artemis Real Estate Partners.

  • Enteligence: Solar and EV tech developer Enteligent has raised $7M from strategic and institutional investors in their seed round.

📈 Chart of the Day

This chart reveals Amazon’s priorities — namely, more delivery stations to get products into the hands of consumers.

😎 Offering-MEME-Orandum

What did you think of today's newsletter?

Login or Subscribe to participate in polls.

You share. We listen. As always, send us feedback at [email protected].

Latest NEWSLETTERS
View All
Steve Ross Steps Down from Related, Launches West Palm Firm
July 12, 2024
READ MORE
Private Equity Seeks Bargains in US Real Estate
July 11, 2024
READ MORE
Powell Hints at Possible Rate Cut Amid Risks of Higher-for-Longer
July 10, 2024
READ MORE
REVIEWS

podcast

No CAP by CRE Daily

No Cap by CRE Daily is a weekly podcast offering an unfiltered look into commercial real estate’s biggest trends and influential figures.

Back to top