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. Here's why Atlanta ad agency Fitzco is returning to in-person work
Return to office plans have been fraught with fits and starts as Covid-19 variants compete against workers' desire to get back to some sense of normal.
“Advertising firm Fitzco took the plunge, calling its employees back to their West Midtown office on Feb. 15.”
It's not that the company has not been growing during the pandemic. Its workforce increased by 50% since shifting to remote work in March 2020. It hired nearly 30 employees. But the company's CEO Dave Fitzgerald says, for the ethos of the business, it was time to begin operating in person again.
2. KKR Closes on $1.7 Billion Office-Portfolio Refinancing in Workspace Bet
KKR & Co. completed a $1.7 billion refinancing of a U.S. office portfolio in a long-term bet on demand for in-person workspace.
“The deal roughly triples the value of the real estate since 2014, when KKR invested in Drawbridge Realty, co-owner and manager of the properties. KKR expects to double the portfolio’s holdings within two or three years from its current 45 buildings in eight states in the West and Southeast. ”
The investment comes at a time when offices, especially aging buildings in urban centers, face weak demand as employees continue to work from home and businesses re-evaluate their space needs. KKR’s portfolio focuses on suburban properties in markets with strong technology employment and population growth, according to Billy Butcher, chief operating officer of the firm’s global real estate business.
3. REITs Hit Record $126B In Capital Raised
Real estate income trusts had their best year ever — and it only took three quarters to do it. U.S. REITs raised more than $126B from equity and debt offerings, plus initial public offerings, during the first three quarters of 2021, more than any other full year, according to a new Nareit report. The final tally for 2021, once fourth-quarter figures are added, will be even higher, the organization says.
“As of Q3 2021, equity issuance by REITs totaled more than $54B. The bulk of that was from $33B raised via common equity offerings, but it also included $15B raised in at-the-market offerings and $6B raised through preferred equity offerings. Total equity raised in 2019 was $50B, with $33B raised in 2020.”
Debt issuance by REITs in 2021 totaled $73B raised at the secondary market, roughly the same as in 2020 but more than the $63B raised in 2019. A majority of the debt, 57%, was raised in the form of secondary debt, with 38% from secondary common equity and 5% from secondary preferred equity, according to the report.
4. Commercial, Multifamily Lending Hits Yearly Record With $1 Trillion in Sight
Commercial and multifamily mortgage loan originations hit a record high last year at $900 billion and may not be done climbing, according to the Mortgage Bankers Association’s quarterly survey released this week.
“Even while the capital markets are widely anticipating the Federal Reserve will start raising interest rates as early as next month, the MBA expects the volume in 2022 to surpass last year’s new high. Total commercial and multifamily mortgage borrowing and lending is expected to break $1 trillion for the first time in 2022, a 13% increase from 2021’s estimated volume.”
“Part of the growth from 2020 was a bounce-back from the worst of the recession. However, rebounding property fundamentals and strong valuations, record sales transaction volumes, and low interest rates all fueled commercial and multifamily borrowing and lending activity that easily outpaced previous periods,” Jamie Woodwell, MBA’s vice president of commercial real estate research, said in a statement.
5. Developers Can’t Build Atlanta Warehouses Fast Enough
Atlanta’s industrial market continues to post record leasing and net absorption totals as industrial users look to expand their logistics networks in this super regional distribution hub.
“Despite a strong speculative supply pipeline, demand has consistently outpaced new completions over the past few quarters and the region’s vacancy rate has plummeted far below its historical average.”
While speculative supply will put some upward pressure on Atlanta’s industrial vacancy rate in the near term, owners have plenty of breathing room before Atlanta industrial vacancies come even close to the metropolitan area’s pre-pandemic average. Due to the unusually tight market, owners are enjoying unprecedented pricing power in Atlanta and continue to push rents. Double-digit annual rent growth is expected to persist through the end of 2022.
Your success blesses others. I wish you a great and hugely impactful week!
