Going for Distressed Sales and Leases - It's Happening Again

It happens every time there's a shock, a crisis, an upheaval, and now a pandemic. It's important to note that even in these times, some people are benefitting off of distressed real estate. Some businesses who haven't been hit with revenue issues have been leasing and buying commercial spaces at excellent terms.

LA DWP just signed on for a 10 year lease for a property in DTLA. 132,000sf. https://therealdeal.com/la/2020/05/20/power-lease-ladwp-inks-deal-for-132k-sf-at-downtown-office/

Jellyfish just left WeWork and signed on for 2 entire floors of the Valentino building in NYC's midtown. They probably wanted to keep their staff isolated a bit more.
https://commercialobserver.com/2020/04/marketer-jellyfish-leaves-wework-for-10k-sf-in-midtown/

The historic building dubbed the "Pottery Barn Building" in Old Town Pasadena just sold for only $16m. A steal for a corner property that will go up in value once things calm down.  https://labusinessjournal.com/news/2020/may/18/retail-site-pasadena-fetches-16-million/

Facebook is about to sign a lease for a humongous space at the Farley Post Office building in NY. https://www.vno.com/office/property/the-farley-building/3313609/landing

The Centinela, a 48-unit building in Santa Monica just sold. Only $12M. In SANTA MONICA. Upside potential on this place for sure. https://labusinessjournal.com/news/2020/may/04/santa-monica-multifamily-sells-12-million/

Housing + Necessity Spending = The New Normal

One thing's certain, and that is the future is uncertain. For most of us, there's no frame of reference for what is happening. Even the folks who grew up during the Great Depression know this is different, because the economy wasn't global back then. 

For housing, what does this mean? No doubt housing is taking a hit in terms of lowered activity, price plateaus, etc, but the fact remains, housing is a necessity.

What studies are showing is that on average, many Americans who are in a position to save even a little bit, are saving like never before. They are spending less on unnecessary items, and spending conservatively on food and housing. If there's any silver lining in all of this, it's that people have become more conscious of the value of money, and how having even a small amount of savings will be absolutely necessary. This is the new normal. Until there's a vaccine, of course.

Culture is also changing. Working from home is going to be the new norm for sure. Twitter just said that their employees can work from home forever. More companies will follow, I'm sure of it. And why not? The companies won't have to own or lease out expensive office space, and have all the crazy overhead. But of course, employees will be making their own overhead in their homes. They'll need a office corner, or if the space permits, an entire room for a home office. No doubt some people will upgrade their homes for a larger space to accommodate working remotely. 

At least until there's a vaccine, the way we socialize will be changed too. In the short term, people will travel less abroad, and more people will have local outings. Some city dwellers will want a yard--I have clients who've said this experience has made them want to have a little piece of the outside for themselves. I also have a few clients who have said that the isolation of living in a suburb is making them go insane, and they want to move where there's some amount of social interaction where there is more life and walkability. At least for the time being, this is helping move real estate in an unprecedented time. 

April Real Estate Lockdown Debrief - DTLA and Surrounding areas

April 2020 is behind us. As depressing, catastrophic and upending as this is, it will pass. The world might be a little different, but it will pass. If you think about it, events like the 1918 Flu, the Great Depression, the Vietnam War, 9/11, the Great Recession...the world changed afterwards, but these events did pass. 

And because I'm in real estate 24/7, that's what I focus on when the day's activities are done, and how real estate is affected by these events. March 2020 was weird. The early part of month was okay, some fears setting in, watching Italy closely, but seemed like it wasnt a big problem yet here in the U.S., aside from toilet paper. Properties were hitting the market, selling steadily if they were nice and priced right. Then the city-mandated lockdowns hit, things started grinding to a halt, and then on April 1, 2020, the city deemed real estate a non-essential business. 

April 2020 marks a full month of lockdown in L.A. For real estate, this was not good. On April 1, there were to be no open houses and in-person showings, no inspections and appraisals. Sellers pulled their listings, buyers backed out, escrows fell out, though some managed to push through and close. Then on April 13, 2020, real estate was considered essential, but with major restrictions on showings, etc. Amidst this roller coaster, the activity in April wasn't as terrible as you'd think. Even I was surprised. May 2020 should be interesting. 

Quick stats for April 2020 - Single  Family Homes

1. The number of listings to come on the market fell about 20% from the year before. This is significant in that April-May is the BUSIEST time for real estate. However, considering a pandemic, it's amazing inventory fell only 20%.

2. Average # of new listings on the market: 358

3. Average Days on the market: 63

4. Average sold Price/SF: $691/SF

5. Average price drop from original listing price to actual sold price: 9%

Quick stats for April 2020 - Condos

1. The number of listings to come on the market fell about 40% from the year before. This is significant in that April-May is the BUSIEST time for real estate. 

2. Average # of new listings on the market: 21

3. Average Days on the market: 70

4. Average sold Price/SF: $645/SF

5. Average price drop from original listing price to actual sold price: 3%