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12 Must Reads for the CRE Industry Today (June 2, 2020)

Chain restaurants have shuttered 500 locations year-to-date in 2020, reports Business Insider. Silicon Valley apartment rents plunge, according to the San Francisco Chronicle. These are among today’s must reads from around the commercial real estate industry.

  1. Can 8 Million Daily Riders Be Lured Back to N.Y. Mass Transit? “Before the crisis, eight million people in the region each weekday — including over 50 percent of the city’s population — used a complex network of subways, buses and railways that has long been a vibrant symbol of the largest metropolis in the United States. After the outbreak hit, though, ridership plummeted as workers stayed home to slow the spread of the virus. Now the city faces a dilemma: Encouraging people to return to mass transit could increase the risk of new infections. But the region’s roads, tunnels and bridges cannot handle a surge in car traffic, and there are few alternatives.” (The New York Times)
  2. April Construction Spending Falls 2.9% as Virus Upends Work “U.S. construction spending fell 2.9% in April, the largest drop in 18 months, with broad declines across all building activity as shutdowns hobbled projects and workers were told to stay home. The Commerce Department said that the April decline was the biggest monthly drop since a 3.% fall in October 2018. It followed a basically flat reading in March. Spending on residential construction dropped 4.5% in April with single-family construction down 6.6% and the smaller apartment segment down 9.1%.” (Associated Press)
  3. Sign Here First: U.S. Salons, Gyms, Offices Require Coronavirus Waivers “As U.S. businesses reopen after weeks of pandemic lockdowns, many have been posting coronavirus disclaimers or requiring employees and patrons to sign waivers before entering. From hair salons and recreation centers to stock exchanges and wedding photographers, the notices have sprung up across the country, asking guests to acknowledge they might contract a disease that has so far killed over 100,000 Americans.” (Reuters)
  4. Chain Restaurants Have Permanently Closed Over 500 Locations So Far in 2020. Here’s the Full List “As soon as the pandemic hit, restaurant-industry experts knew that many restaurants wouldn't make it through. On April 1, UBS predicted that one in five restaurants may close as a result of the pandemic. While independent restaurants have been hit much harder than many chains, chains aren't immune. Chains often rely on independent owner-operators to run restaurants, and these franchises often don't have the same robust financial resources of the brands they represent.” (Business Insider)
  5. Protests May Derail What Was Expected to be a Strong Opening for Las Vegas Casinos “Las Vegas is getting ready to launch a “Welcome Back” ad campaign to encourage visitors to come. But now guests will have to weigh not only the risks of coronavirus but also of civil unrest. Thursday is the scheduled reopening for Nevada’s casinos, but over the weekend, the National Guard was called up to respond to riots in Reno, and the mayor declared a citywide emergency. In Las Vegas, squads of police shot rubber bullets at protestors and released tear gas on the Strip.” (CNBC)
  6. Office Space Demand to Decrease, NAIOP Predicts “National economic upheaval and surging unemployment will push U.S. office market absorption into negative territory through the second quarter of next year. That’s according to the NAIOP Research Foundation’s Office Space Demand Forecast for the second quarter. NAIOP anticipates that the steepest declines could happen in the third quarter, to the tune of about a 16.3 million-square-foot drop.” (Commercial Property Executive)
  7. Increases in Apartment Rent Are Slowing Down to a Crawl Thanks to the Pandemic “Most apartment renters are keeping up with their monthly payments during the pandemic. But the job losses and economic downturn caused by the COVID-19 outbreak are having an impact on apartment rent increases. Dallas apartment rents are up a scant 1.1% from a year ago, according to the latest estimates by Apartmentlist.com. That’s slightly better than the nationwide 0.8% year-over-year average rental rate rise.” (Dallas Morning News)
  8. Marriott Opens All Hotels in China, Sees Steady U.S. Recovery: CEO “Marriott International has reopened all its hotels in China and is seeing a steady recovery in the United States, its biggest market, Chief Executive Officer Arne Sorenson said on Monday. Shares of the hotel operator, which owns the Ritz-Carlton and St. Regis luxury brands, rose as much as 8.1% to $95.64 in afternoon trading after Sorenson said the occupancy rate in China was 40% currently, up from 7% to 8% in February, when COVID-19 started spreading.” (Reuters)
  9. Pier 1 Is Officially Going Out of Business “Pier 1 is officially closing up shop after receiving approval from a bankruptcy court to cease and liquidate its retail operations. The troubled home goods retailer had its plans authorized Friday to begin liquidation sales across its 500 remaining stores once they can reopen. Its stores have temporarily closed because of Covid-19. Pier 1 aims to have all its stores permanently shuttered by October.” (CNN)
  10. SF, Silicon Valley Rents Plunge Amid Downturn: ‘Never Seen Anything Like It’ “Rents for a one-bedroom apartment dropped most in the cities richest in high-paying tech jobs, falling 9.4% in San Francisco compared with May of 2019. In Mountain View, home to Google, rents fell 15.9% year over year, while in Apple’s hometown of Cupertino rents dipped 14.3%, according to the rental search engine Zumper. In San Bruno, where YouTube has its offices, rents tumbled 14.9%.” (San Francisco Chronicle)
  11. Parents Hoping to Get Back to Work Face a Childcare Crisis “Congressional Democrats are introducing legislation to provide $50 billion to help child care providers offset the costs of opening safely, including procuring protective equipment and possibly enrolling fewer children to meet health guidelines. Prospects for passage are unclear, but two Republican senators, Joni Ernst of Iowa and Kelly Loeffler of Georgia, have called for the next pandemic relief package to include $25 billion for the child care industry. Congress already allocated $3.5 billion for the child care industry under a pandemic relief bill passed in March, but the aid has been slow to reach providers. Many also have struggled to qualify for loans under a separate payroll protection program.” (Fortune)
  12. Investors: Elliman’s Howard Lorber Is Overpaid “Shareholders are sending Vector Group’s C-suite a message — and it’s aimed at their wallets. On Thursday, the publicly traded parent of brokerage Douglas Elliman and new development firm New Valley asked its investors to bless the pay packages its top five executives received last year. And for the second year in a row, shareholders balked.” (The Real Deal)
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