Power Reads: 5 Interesting Articles That Will Help You This Week
/Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.
1. In Another Good Sign For Office, Tours Jump 20% In March
Tours of U.S. office spaces spiked in March, rising 20% over February numbers and 8.2% compared to March 2021, according to the latest VTS Office Demand Index.
“VTS tracks the number of unique in-person and virtual tours that prospective tenants take of office properties, which tend to be precursors of lease signings. The company’s national index now stands at 66, up 11 points over the month before. Before the pandemic, in March 2020, the index stood at 102. ”
Nearly all of the markets forming the index recorded monthly increases in tours in March. Boston, Chicago, Los Angeles, New York City, San Francisco and Washington, D.C., all saw demand rise. Boston and Washington experienced monthly gains of 38% and 30%, respectively, giving Boston the largest percent increase of any market, while Washington had demand levels not seen since July 2021.
2. Despite Lower Preleasing, New Office Buildings Still Offer the Most Upside
Although the amount of office space underway nationally has moderated from a cyclical peak just before the pandemic, an increasing share of that new construction is being built on a speculative basis, with no preleasing, which may present increased risk given higher remote-working rates.
“However, despite some challenges in the near term for new unleased office supply, the larger secular shift of tenant demand toward modern, high-quality buildings and the dearth of availability of that type of space in many markets should result in new office space outperforming older properties in attracting credit tenants over the longer term.”
Roughly 158 million square feet of new space was underway across 54 major U.S. office markets in the first quarter of 2022, equal to 1.7% of the existing inventory. That marks a decline from 186 million square feet in the first quarter of 2020 and lower than the amount of space that was underway at the peak of the last cycle.
Travelers are continuing their return to hotels, and they are paying record rates for their rooms.
“The national average daily rate for a room in March was $146.61, the highest for any month on record, according to hospitality data provider STR. However, STR did note that, when adjusted for inflation, the March ADR was about 2% below the same metric for March 2019.”
For example, the average rate in Miami last month was $329.50, an increase over the average rate of $252.80 in March 2019, according to The Points Guy, citing STR data.
4. Worker Pay and Benefits Grow at Record Pace, Pressuring Inflation
Compensation for American workers grew rapidly in the first quarter, as a tight labor market put more money in workers’ pockets while also keeping pressure on inflation.
“Business and government employers spent 4.5% more on worker costs in the first quarter compared with the same period a year earlier, without adjusting for seasonality, the Labor Department said Friday. That marked the fastest increase in records dating to 2001, and the gain eclipsed 4.0% annual growth in the fourth quarter.”
Compensation for workers also accelerated on a quarterly basis, rising a seasonally adjusted 1.4% in the first quarter compared with a 1.0% increase in the fourth quarter. The growth reflected strengthening wages, salaries and benefits.
5. ‘Prepare For The Worst And Hope For The Best’: How JPMorgan Chase Exec Views Today’s World
Since the dawn of the stock market, financial advisers have cautioned investors not to get distracted by geopolitical events that are outside of their control. That bit of wisdom remains true today, but it doesn’t mean it is a good idea to put one’s head in the sand in the hope that events such as the war in Ukraine or the threat of inflation will not impact the market.
“Instead, said Mary Callahan Erdoes, CEO of JPMorgan Chase’s asset and wealth management business, smart investors and their advisers need to understand and prepare for the risks they face in today’s world. Appearing on this week’s Walker Webcast with Walker & Dunlop CEO Willy Walker, Erdoes shared her thoughts on a range of topics including risk management in light of current events and JPMorgan Chase’s plans for a new headquarters.”
A 25-year veteran of JPMorgan Chase who today oversees $4T in client assets, Erdoes has faced her share of market challenges. Still, words like “confused and uncertain” best describe the investment community’s mood at the moment, she told Walker.
Your success blesses others. I wish you a great and hugely impactful week!
