April 21, 2021
Real Estate Investment SmartBrief
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Top News
The office vacancy rate now sits at 17% in Washington, D.C.'s central business district, and it is unclear whether it will revert to pre-pandemic levels once the health crisis passes. Even before the pandemic, the vacancy rate had risen from around 9% from 2014 to 2017 to around 11% in 2018, according to Colliers International.
Full Story: The Washington Post (tiered subscription model) (4/20) 
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Investment News
The strategy underpinning the mREIT KKR Real Estate Finance Trust has been tested during the pandemic and proved itself to be resilient. "We match our loan portfolio with one of the most conservative and diverse set of liabilities, which again has allowed us to differentiate ourselves during this volatile market," says Matt Salem, CEO of KREF.
Full Story: REIT magazine (March/April 2021) 
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Norges Bank Investment Management is continuing its joint venture with Prologis by buying a 50% stake in a logistics property in Daventry in the UK for £27.1 million ($37.8 million). The property is located in Prologis Apex Park.
Full Story: Investment & Pensions Europe Real Assets (4/20) 
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Global markets are reacting to a flare-up of coronavirus cases, with Asian markets bearing the brunt. The World Health Organization says cases are increasing everywhere except Europe, with Asia, particularly India, seeing the biggest rise. "Markets that have become too comfortable with the reopening trade and have loosened social restrictions can be in jeopardy with any COVID spike and variants," says Paul Sandhu of BNP Paribas Asset Management. "Markets with high vaccination rates somewhat circumvent this downside risk."
Full Story: The Wall Street Journal (4/20),  Bloomberg (4/21) 
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Real Estate Marketplace
As part of its ongoing strategy to reduce its suburban office footprint, Mack-Cali Realty has sold a four-property office portfolio in Northern New Jersey for $255 million. The Birch Group acquired the 843,300-square-foot portfolio.
Full Story: The Commercial Observer (New York City) (4/20),  Commercial Property Executive (4/21),  The Real Deal (4/20) 
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Some New York City office tenants have been successful in seeking reduced rates in rent negotiations, in some cases saving as much as $300,000 for the same space, according to tenant representation firm Norman Bobrow & Co. Norman Bobrow estimates that rents in Midtown Manhattan have fallen sharply.
Full Story: GlobeSt (free registration) (4/21) 
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Global Net Lease has acquired the McLaren Technology Centre in Woking in the UK in a $237 million sale-leaseback transaction. McLaren will lease the 840,000-square-foot site in a 20-year term.
Full Story: Professional Motorsport World (4/21),  Motor Authority (4/21) 
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Despite tech companies' efforts to allow remote work during the pandemic, Silicon Valley posted an 11% office vacancy rate for the first quarter, the lowest on a list of more than 50 places in the US, according to JLL. "It suggests the tech companies plan to continue to hire and, one way or another, have a pretty high percentage of their population back in the building," says John Gates of JLL.
Full Story: Bloomberg (4/20) 
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Health care technology company Imprivata will occupy 75,000 square feet at a Boston Properties building in Waltham, Mass., where it will move its headquarters. The deal means that the 211,000-square-foot office building will reach full occupancy.
Full Story: Bisnow (free registration) (4/20) 
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Policy & the Economy
Federal Reserve Chair Jerome Powell says that he expects a moderate inflation increase this year but that the Fed is monitoring the situation and is committed to maintaining control. "We do not seek inflation that substantially exceeds 2 percent, nor do we seek inflation above 2 percent for a prolonged period," Powell says in a letter to Sen. Rick Scott, R-Fla., who has voiced concern about a rise in inflation.
Full Story: Reuters (4/20) 
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ESG Developments
Shareholders are expressing greater interest in companies' lobbying on climate issues, especially for those firms that have publicly declared goals to cut greenhouse gas emissions. There have been a record 13 shareholder proposals on this matter this year.
Full Story: Politico (4/20) 
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Nareit Resources
Physicians Realty Trust (NYSE: DOC) is working to be a sustainability trailblazer in green initiatives across its portfolio by setting aggressive goals, emphasizing accountability, and adopting a building certification platform particularly well-suited to the assets in its portfolio. Learn more.
Full Story: REIT magazine (March/April 2021) 
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Jeff Smith, US Real Estate Leader at Deloitte LLP, said that private equity firms have raised funds and are ready to invest, but are waiting for the right opportunity, which could come via distressed sales, shifts to both hot and cooling markets, or real estate companies simply sticking to markets that they know. "Toward the backend of 2021, we'll start to see some activity [in REIT M&A]," he said. Learn more.
Full Story: Nareit (3/29) 
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