Real Estate

Malls. In the third quarter of 2020, vacancies in malls hit their highest rate in 20 years rising from 0.3% to 10.1%, and the average mall asking rent dropped 0.7% in Q3 and 0.6% over the course of the year.

Throughout this year we have been covering the decline of the mall, but recent bankruptcies and shutdowns are pushing the crisis further. Movie theaters and gyms are increasingly unable to make rent payments, and for malls, this is a massive blow for hopes of a timely recovery.

“Retail has gone through a radical transformation the the last five years… You are getting a knock-on effect as lessees move out. A fundamental reset is what you should be thinking about.” Read the latest on the status of malls.

Opportunity Zones. A new report showed that opportunity zones, similar to the housing market at large, had a strong third quarter leading to an increase in median home prices.

“Home prices in opportunity zones around the country continued rising in the third quarter of 2020, riding the wave of a nationwide boom that has defied the economic damage from the widespread coronavirus pandemic.”

“The increases point toward signs that some of the country’s most distressed communities have great potential for revival. At the same time, prices remain depressed in opportunity zones, and a notable number actually dropped in the third quarter… Those dueling trends will be important to watch over the coming months amid a highly uncertain economic outlook.” Read the full story here.

Innovation. The residential real estate industry was slow to adopt digital transactions – until this year. Most transactions have shifted to using digital products in order to streamline the homebuying process during the pandemic. The commercial real estate industry has been quicker to adopt virtual platforms such as DocuSign, but this is a good sign for the entire industry overall.

Technology has proven to be invaluable in real estate this year by moving towards virtual tours, digitized lending and mortgages, drive by appraisals, using audio-video notaries, and using smart contracts.

The COVID-19 pandemic has also given a boost to the multigenerational home business as homeowners have begun building and adapting properties that are equipped to house extended families. This has become crucial to many homeowners that are reluctant to send their parents to senior-living facilities that lack necessary resources to keep everyone safe from community spread.

Robots. The latest in last mile delivery of consumer products is the use of robots in micro-fulfillment centers. This is another new for the warehouse and retail industry as they try to meet increased e-Commerce demand.

Travel and Hospitality. The hotel industry is rushing to innovate in order to draw travelers back. Automation, marketing promotions, smart hotels, and tiny house adventures are all in vogue. At this point in the COVID-19 induced economic crisis, investors have begun seeing major opportunity in throwing a lifeline to hotel owners via loans in order to stop fire sales or foreclosures.

“Bailing out financially strapped hotel owners is becoming a booming new business.” Read more from the Wall Street Journal.

Climate. Cities and states across the country are beginning to reckon with climate change’s long-term impact on property owners. Costs are increasing due to floods, wildfire, and other natural disasters. Plus: this week the Federal Reserve Chair Jerome Powell came out with a powerful message:

“What we’re really working on is: how do we incorporate climate change risk into all that we do. It has potential implications for monetary policy, for bank regulation, for financial stability, and I would say we’re in the very early stages of trying to work through what that means for our goals.”

Learn About The Sortis Opportunity Zone Fund