From the Editor's Desk
Dear CCIM Members,

There is clearly a lot at stake in the upcoming U.S. general election with Election Day on November 3rd. No matter your political affiliation, it is your civic duty as American citizens of this great country to participate and exercise your democratic duty to vote. From the environment to social inequities, pandemic to economic stimulus, and commercial real estate to tax policies— all are on the ballot. Keep in mind that there many candidates down the ballot that will represents you and I at the federal and state levels. Speaking of elections, I would also like to take this time to congratulate the 2021 Leadership for willing to serve our local Chapter. I am honored and look forward to serving alongside you! These individuals are a cadre of dedicated and diverse CRE professionals offering their valuable time and talent to serve your needs!  


(646) 481-3801
President - JR Chantengco
Vice President - Tom Attivissimo
Treasurer - Robin Humble
Assistant Treasurer - Matt Annibale
Assistant Secretary - Susan Lee
Director at Large - Al Holloman
Director at Large - Chris Cervelli
Director at Large - Ian Grusd
Director at Large - Lee Barnes
Director at Large - Jason Crimmins
Director at Large - Scott Perkins
Director at Large - Julia Maksimova
How many leases do you have in your portfolio companies?
Average Answer: 10 to 50

Have you done any sale leasebacks pre-COVID to finance or recapitalize your company?
Average Answer: 33.3% Yes | 66.7% No

For the owned real estate, how successful were you in getting mortgage deferral?
Average Answer: 1 to 3 months

Do you own real estate in your portfolio companies?
Average Answer: Less than 10 properties 33.3% | 10-50 properties 22.2% | more than 100 properties 22.2% | no owned real estate 22.2%
The Real Estate Problem That Could Delay The Coronavirus Vaccine Rollout
As cases of the coronavirus reach new all-time highs, the production and distribution of an effective vaccine is the moment most of the world is waiting for before life can return to some sort of normal.
But as the race for a vaccine continues, a real estate problem has emerged that could slow its rollout, potentially delaying any real economic recovery in the process.

As cases of the coronavirus reach new all-time highs, the production and distribution of an effective vaccine is the moment most of the world is waiting for before life can return to some sort of normal. But as the race for a vaccine continues, a real estate problem has emerged that could slow its rollout, potentially delaying any real economic recovery in the process.

Some of the vaccines currently in development need to be kept at extremely low temperatures at all times from development to injection; some at negative 80 degrees Celsius or lower. Public health experts have raised serious doubts that the country has enough space to store hundreds of millions of vaccines at extreme subzero temperatures.

“We have never seen anything like this before,” said Catherine Troisi, an infectious disease epidemiologist at the University of Texas’ School of Public Health. “Distributing the vaccine through that cold chain, or a frozen chain … It’s going to delay when we get people vaccinated.”

Local, state and federal governments are still in the beginning stages of securing such storage space. While cold storage companies have seen an uptick in interest and demand for their product, commercial real estate owners and brokers said they have not seen an increased interest in cold storage industrial space for a COVID-19 vaccine from private companies or the government.

Pfizer, which is developing a vaccine with an ultracold temperature profile, is buying up freezer storage boxes to help transport and distribute the vaccine, but has not yet sorted out where they will store the doses once they get distributed, The Wall Street Journal reported earlier this week.

CVS, the largest pharmacy chain in the country, told Bisnow it has enough space to store most of the vaccines being developed, but declined to comment on its storage capacity until a vaccine is approved.
But Troisi, who has worked on coronavirus research at UTHealth, said only research labs have freezers that reach ultracold temperatures. There is not currently enough freezer space to store at least two of the vaccines in development — Pfizer and Moderna’s vaccine attempts both must be stored at or below negative 80 degrees Celsius from manufacturing to delivery, she said.

Commonly distributed vaccines, such as the flu shot, are stored above freezing. Even then, nearly 50% of vaccines worldwide are discarded because they weren’t kept cold enough before the vaccine could be administered, Troisi said.

A spokesperson for the New York State Department of Health said the state hasn’t yet identified spaces to hold the vaccine when it becomes available, but that officials are in the process of identifying a strategy for storage. Citing national security reasons, the U.S. Department of Health and Human Services said it couldn’t comment on which spaces it has secured for storage and distribution.

“In an effort to minimize the potential risk to delivery and distribution, we are unable to provide specific details regarding where vaccines are produced and stored,” an HHS spokesperson said in a statement.
The severity of the storage problem will largely be determined by how cold the vaccine that ultimately gets distributed will need to be. If Moderna or Pfizer’s vaccines — or one of the other candidates that also needs below-freezing storage temperatures — win approval, space may be hard to come by, presenting a real problem for vaccine distribution.

“You can retrofit for cold storage, but freezer space needs to be purpose-built,” said Tom Griggs, Hines’ East Region head of industrial and logistics. “The line of demarcation is whether it needs to be cold or if it needs to be frozen.”

‘Unknown Variables’

None of the groups involved in funding or distributing vaccines, from federal and state governments to pharmacies and supply-chain companies, have outlined comprehensive plans for vaccine storage.
Last week, all 50 states were required to submit plans for vaccine distribution to the Centers for Disease Control and Prevention. New York State, which public health experts say has been a leader in vaccine preparedness, released a public COVID-19 Vaccination Program Oct. 16, but the 96-page document is short on specifics.

“Refrigeration storage requirements is one of the unknown variables to be decided upon,” New York State Department of Health spokesperson Erin Silk said.

The DOH wrote in the program that it doesn’t yet know whether the federal government will be distributing the vaccine or whether local and state governments will. It states that once a vaccine is approved, it will work with local government and private companies to distribute it. Listed among the vaccine distribution sites are long-term facilities, pharmacies, community health centers, health departments and schools.

The DOH doesn’t outline a plan to create cold storage in these places, nor does it outline leasing any additional space for cold storage. Gov. Andrew Cuomo also created a distribution and delivery task force, which includes pharmacy trade organization leaders, state health officials and hospital and health center leaders.
‘There’s No Vaccine For Climate Change’: Here's What CRE Can Do To Help Save The Planet
In the wake of COVID-19, architects and their clients have all understandably been focused on air quality and cleanliness. But as massive as the pandemic has been in both scope and scale, it barely registers as a crisis when contrasted with climate change, experts say.

“It is a blip compared to the bigger issues of resiliency, sea-level rise and energy conservation,” said Bernardo Fort-Brescia, co-founder of the international architectural firm Arquitectonica, during an Oct. 16 Bisnow webinar on the future of development and design.

Fort-Brescia called upon architects, developers and government leaders to increasingly make that the driving force in all aspects of development. “There's no vaccine for climate change,” he said.

Architects have been making headway on this front already.

Lawrence Kline, managing director of Perkins & Will in Miami, said that his team has been working on understanding the science of storms. That may help develop resilient building materials and design for hurricanes and 500-year floods, which are likely to become more frequent with climate change. The firm even has a research lab to study materials.

“We are designing buildings with computational design that acts to actually reduce wind pressures on the buildings ... [and] specifying materials that are not off-gassing and materials that are renewable and sustainable,” Kline said.

He added that advances could be applicable across the spectrum of education, office and healthcare. “We're looking at clients who are saying, ‘We want buildings that are flexible, that are agile, that are transformable,' so that a corporate office today could be a multifamily residential tomorrow,” Kline said.
Anticipating a less car-dependent society in the future, Perkins & Will is designing a corporate headquarters in Palm Beach Gardens, Florida, with structured garages designed to be transformed into habitable space 15 years from now. The firm advises clients against certain materials that aren't renewable, not sustainable or not safe for the environment, Kline said.

“And those are challenging conversations with the client because sometimes they are more costly [but] long-term [it's] much healthier [to use] material to be a part of a building that will last for 75 or 100 years,” he said.

Michael Wolf, chairman and creative director of Michael's Design Associates, said that although part of his job is to oversee furnishings and interior specifications, it increasingly includes air filtration. “These things were already a part of the design in terms of wellness,” he said. “[But] it's accelerated with COVID.”
Garcia Stromberg CEO Jorge Garcia said his firm is increasingly focused on the entire life cycle of buildings, including the destruction at the end, and how they might be recycled. “There has to be an advancement of that kind of thinking,” he said.

Architects have long focused on buildings that are wonderful for a certain period of time but deteriorate very quickly, he said, adding that governments should work with more input from responsible architects
“We've got to play with the broader brush," Garcia said. "We’ve got to get involved with the governmental processes if we want to achieve anything, because just the government saying, ‘Over every 100 units you build, you're gonna build up one unit of social interest housing in that building.’ That's a joke."

Across the board, energy management is the key to tackling climate change via the built environment. Brian Koles, brand and marketing director of Property Markets Group, said it remains top of the list for most architects.

“Over the last 20 years, a lot of the less sexy and sophisticated energy management solutions have been implemented, and by that, I mostly mean lightbulbs and insulation,” he said.

Going forward, Koles predicts that companies will focus much more on systems for energy management.
"Which is good for everyone, right? It's lower bills for buildings; real estate’s worth more; it's good for the environment. Everyone wins," Koles said. "We're now demanding a bit more green tech and energy management built into the building from the core than we were years ago.”

On a separate webinar last week, Florida Power & Light’s Director of Major & Governmental Accounts Andy Marin said that HVAC units accounted for roughly 40% to 70% of a commercial property’s energy bill.

“Our business customers get an energy usage bill, and they're also charged for energy demand,” he said, with demand calculated around what the business uses at its peak. To minimize peak demand, he said, avoid turning on equipment all at the same time and stagger the start times of A/C units. FPL has an online tool, called the Business Energy Manager, that customers can use to assess their usage.
Ana-Mara Codina Barlick, CEO of Codina Partners, said that her business has more than 50 accounts with FPL across its operating properties. She said the coronavirus has provided a chance to assess energy needs across the portfolio, and finding savings of $1,500 just in one building.

“[The energy manager]'s insights have been very helpful analyzing our highest usage days and really knowing, you know, where the consumption is coming from and being able to work with individual tenants and individual schedules,” she said.

Bernardo Fort Brescia, founder of international architectural firm Arquitectonica, said that his profession is well-suited to lead for the challenges that lie ahead.

“Architects automatically are optimists," he said. "They are always thinking that the future is better, and we were educated to create a better future for society.”

Source: Bisnow
More than 58 million Americans have already voted
U.S. voters have cast 42.7% of the total votes counted in the 2016 election.

With nine days to go until Election Day, and President Donald Trump and former Vice President Joe Biden racing toward Nov. 3, voters are turning out in record numbers to cast their ballots early.

More than 58 million Americans have already voted in the 2020 election, reflecting an extraordinary level of participation and interest despite unprecedented barriers brought on by the coronavirus pandemic.

In the final weeks of campaigning, the president has continued to press as polls show him trailing nationally and in several battleground states key to his reelection hopes. The president had a campaign rally in New Hampshire Sunday to top off a weekend of events across multiple states, and Biden appeared at a virtual "I Will Vote" concert.

All 50 states plus Washington, D.C., have some form of early voting underway. Check out FiveThirtyEight’s guide to voting during the COVID-19 pandemic here.

Source: ABC
What Might Happen To Carried Interest Under A New Administration
The lower tax rate for carried interest, which largely benefits equity fund managers but also partnerships that own commercial real estate, might be at risk of disappearing under a Biden administration — might being the operative word.

"Carried interest" is accounting jargon for the share of a private fund's or partnership's profits that is paid to managers as part of their compensation. Federal law treats carried interest the same as a return on investment, meaning it is taxed at a capital gains rate, and not at regular income rate, which would be higher.

Long-term capital gains are subject to a current maximum tax of 23.8%, while regular income is taxed at a rate of up to 37%, though the exact amount depends on the income of the taxpayer and other factors.
Proponents say carried interest is an incentive to invest, which benefits the economy. But critics say it is an egregious tax loophole, and it has detractors on both sides of the political aisle — former Vice President Joe Biden has said he would eliminate the practice if elected president, as did President Donald Trump when he was on the campaign trail in 2015.

But so far carried interest has proved a durable part of the tax code. It took its present shape with the last major tax reform in 1986, though it was modified somewhat in 2017. All efforts in Congress in recent decades to eliminate it have come to naught, with lobbyists for private equity funds proving particularly adept at preserving it. It isn't clear whether a new administration would have any more success.
"I expect a Biden administration would try to end the carried interest loophole," Urban-Brookings Tax Policy Center Senior Fellow Steve Rosenthal said. "But who knows if Biden would succeed. Private equity is powerful."

Rosenthal said Trump promised to eliminate the loophole and made a "feeble" attempt in the 2017 tax bill.

"But the 2017 provision was riddled with new loopholes, and worthless in my view," Rosenthal said.
In a commercial real estate context, income from partnerships that own real estate can be, and often is, treated as carried interest. The Real Estate Roundtable estimates there are millions of real estate-oriented partnerships that would be adversely affected by any change to carried interest.

In response to the introduction of the Carried Interest Fairness Act (H.R. 1735) last year to eliminate the preferential tax treatment on carried interest, the RER penned a letter in support of carried interest that it encouraged its members to send to their representatives.

Real estate partnerships represent nearly 50% of the 3.7 million partnerships in the United States, the letter says, citing IRS data. Those real estate partnerships owned $5.9 trillion in assets, earned over $90B in net income and recognized roughly $50B in long-term capital gain in 2015.

The RER warned that the carried interest legislation would apply retroactively to real estate partnerships formed years or even decades earlier, disrupting the predictability of the tax system and discouraging long-term investment. In any case, higher taxes would be a disincentive to real estate investment and development, it said.

"In short, H.R. 1735 would make it more expensive to build or improve real estate and infrastructure, including workforce housing, assisted living communities, and industrial properties, to name just a few," the letter said. "Some development simply won’t happen, especially in long neglected neighborhoods or on land with potential environmental contamination."

Critics argue that carried interest amounts to a tax loophole for the already-wealthy because fund managers aren't risking their capital to obtain the return, and so it should be treated as ordinary income.
"Our contention is that using this rate for money that does not belong to the fund managers at the start of the venture is not only unfair, it is wrong," writes John Hooker, a member of the group Patriot Millionaires, which advocates higher taxes for high net worth individuals.
"Expertise and talent, no matter how great — and no one would claim otherwise — is a service. And every other American in this country is taxed for their services, or labor, as ordinary income. That is what carried interest is, or should be — ordinary."

"In the past, Biden has endorsed taxing carried interest as ordinary income," Urban Institute Fellow and Director of Economic Policy Initiatives Donald Marron said. "I expect he would pursue that in some way if he is elected. The question is how."

Marron notes that Biden hasn't emphasized the taxation of carried interest in the campaign. He has, however, proposed taxing all capital gains at the top ordinary tax rate for people earning $1M or more.
"In effect, that would tax carried interest at ordinary rates for anyone in the income range," Marron said. "Biden has also said that he does not want to raise taxes on people earning less than $400K. Some people below that level receive carried interests. So I don't expect him to propose taxing all carried interest at ordinary rates. Instead, he will focus on doing so for people with sufficiently high incomes."
Trump's 2020 campaign has put forth no specific proposals to change the way carried interest is taxed, though he had done so in his 2016 campaign and has mentioned his interest in changing the policy a few times in his tenure as president.

He claimed he could have insisted on the elimination of the provision in the negotiations ahead of the passage of the tax cut bill in 2017, but did not do so as a negotiating tactic to get a lower overall tax rate.
When H.R. 1735 was introduced in the House in 2019, Trump repeated that he would like to eliminate the special treatment of carried interest. But three days later, Treasury Secretary Steven Mnuchin said the administration had no plans to do so.

"If Trump is re-elected, I do not expect that he will push it," Marron said. "But there’s always room for surprises."

The future of carried interest depends on more than whether Biden or Trump occupies the White House beginning next year, New York-based tax attorney Marina Vishnepolskaya said. The composition of Congress is also critical.

"There haven't been any Republican sponsors of such proposed legislation, but Democratic lawmakers proposed a number of bills in the Senate and House following the 2017 tax reform," she said. "If Democrats gained control of the Senate and White House, they likely would want to use a carried interest provision as a revenue-raising measure to offset federal spending."

Soure: Bisnow
Redfin CEO expects ‘absolutely insane’ demand in housing market to last into 2021

  • Redfin CEO Glenn Kelman told CNBC the pandemic-driven boom in the housing market is likely to last into next year.
  • “There are so many people now who have decided they’re not going to be able to buy a home by year-end, who expect to do so going into 2021,” he said.
  • However, he said, “There’s no way it can last forever. This level of demand is absolutely insane.”

The CEO of real estate brokerage Redfin told CNBC on Thursday he anticipates the coronavirus pandemic-driven boom in the housing market will persist into next year.
Existing home sales increased 9.4% in September, surpassing expectations, and the median purchase price rose nearly 15% year over year, according to data released earlier Thursday by the National Association of Realtors.

“There’s no way it can last forever. This level of demand is absolutely insane. I would expect it to last into 2021, at least,” Glenn Kelman of Redfin said on “Power Lunch.” “There are so many people now who have decided they’re not going to be able to buy a home by year-end, who expect to do so going into 2021, especially as their kids shift school districts. I do think we’re going to see this for some time.”
The demand for housing is primarily being driven by affluent professionals who are able to work remotely, Kelman said. That has given them the option of moving out of major metropolitan areas into more distant suburbs or, he said, buying vacation homes “and then taking a permanent vacation where they’re working from those homes.”

Low interest rates are also motivating homebuyers, Kelman said. However, he pointed out that interest rates will not always be low.

“Part of what is fueling this boom is that the economy has just split into two and rich people are able to access capital almost for free, so, of course, they’re going to use that money to buy homes,” he said. “There’s just another group of Americans who are still struggling, who can’t access the credit because we’ve raised credit standards, and you have high unemployment. I just think those two trends, at some point, have to collide.”

Shares of Redfin, which has a market cap of $4.5 billion, were higher by more than 1% Thursday to around $45.60 apiece. The stock has soared more than 115% in 2020.

Tight inventory of for-sale homes has helped lead to the higher purchase prices. According to the National Association of Realtors data, there was just a 2.7-month supply available at the end of September, based on the current sales pace. It represents the lowest level since 1982, when the Realtors began tracking the metric.

Kelman said he believes supply is likely to increase in November after the presidential election, when uncertainty decreases somewhat. Since the process of listing and selling a home can take months, sellers typically have a lower risk tolerance than interested buyers, he said.

“Buyers, when they see a house they love, they pounce,” he said. “I think the sellers are just looking long term at the economy and still feeling some anxiety. Many of them are going to put their homes on the market in January and February.”

Source: CNBC
Coronavirus Forced Owners to ‘Accelerate’ Tech Options, CO Panelists Say
The coronavirus pandemic forced owners to “accelerate” their plans to adopt technology as they scrambled to make it safe for workers to return to the office and get construction projects back on track, panelists at a recent Commercial Observer event said.

Ken Fisher, a senior partner at owner Fisher Brothers, said during his keynote at CO’s Second Annual Building Technology Forum that the pandemic made his company implement measures like touchless entry, ultraviolet technology and improvements to his portfolio filtration systems quicker than originally planned so workers felt safe coming back to the office.

“So much of what we’re doing right now we had probably planned to do within the next couple of years,” Fisher said. “Because of what happened in the last six months, it forces us to accelerate the things that we were looking at.”

nd Fisher Brothers isn’t alone in speeding the adoption of technology in buildings. Other panelists during the forum reported that companies across the board have been more willing to embrace new tech during the pandemic.

“People are generally more open-minded about technology,” Jim Barrett, chief innovation officer at Turner Construction Company, said during the first panel. “People are recognizing we may be in a paradigm shift and that we just need new ways of going about our work. From this, I think we’re finding new ways of protecting people and new ways of working together.”

One of the biggest things on owners’ minds are technologies that allow tenants to get into their offices without touching a door or pushing an elevator button that could be covered in germs, said Nora Swanson, director of design technology for AKF Group.

“We want to be able to get people from the streets to their seat without having to touch anything,” Swanson said during the first panel. “That is going to impact how lobbies are addressed and how we use turnstiles.”

The first panel was moderated by Withum’s Justin O’Horo and also featured Fisher Brothers’ Mark Stutzman and Assembly OSM’s Brian Sweeney.

One way to help tenants get into buildings without touching anything is by using voice commands similar to Amazon’s Echo speakers, which Pete Coman, design principal at PTS, expects to come into the commercial environment soon.

“It’s only a matter of time before voice works its way into the workspace,” Coman said during the second panel. “We’re after a touch-less environment. We feel comfortable enough to use it at home, why aren’t we using it at the workspace?”

And it’s not just in getting tenants back to the office that owners have been willing to embrace new technology. For developers with projects under construction, reality capture techniques to give 360-degree tours or virtual mockups of job sites were crucial early on when construction halted, Alexis McGuffin, vice president of design and construction for Lendlease, said during the second panel.
“During peak lockdown, that was crucial,” McGuffin said. “We were brought in early to help design teams keep moving so we could deploy one person with a scanner or camera or both out to sites when sites were closed and capture everything and bring it back to the Zoom meetings.

“It’s like Zoom, it’s stuff we all had for years but now we really need it so we’re using it at its max,” McGuffin added.

JB&B’s Gabriel Peschiera moderated the second panel, which also featured Withum’s Dale Tuttle.
Part of the reason owners have been slow to adopt technology in the past was simply they didn’t know what it was capable of, something Coman said is an easy fix.

“I don’t think a lot of clients realize what you can do and we got to educate them,” he said. “It’s not terribly difficult to do all of this, you just need to get the right people involved.”

Source: Commercial Observer
Commercial eviction and foreclosure ban extended until January
The ban was set to expire Oct. 20

Landlords looking to boot non-paying commercial tenants will have to wait until the new year.
New York’s moratorium on commercial evictions and foreclosures due to non-payment of rent will be in place through Jan. 1, 2021, Gov. Andrew Cuomo announced in a press conference Tuesday.

The governor can only extend the ban for 30-day periods — meaning the latest order will need to be renewed again on Nov. 19. A spokesperson for the governor’s office said the ban would remain in place.
Cuomo said the commercial eviction and foreclosure moratorium would align with the rules governing residential evictions, although the legislation limiting some residential evictions is not a blanket moratorium — it allows tenants to raise a defense in non-payment cases, and allows landlords to seek a money judgments instead of eviction if the tenant is eligible. As of last week in Rochester, 27 eviction warrants had moved forward, while in Yonkers, 100 to 200 eviction cases are being tried each week, Law360 reported.

Like the rules governing residential evictions, the most recent iteration of the commercial eviction ban has some caveats. Commercial evictions initiated before March 17 have been able to proceed as of Sept. 4.
State legislators have also sought to address the concerns of mortgagors and business owners who are unable to make payments, although lawmakers in New York have taken a back seat to Cuomo in the day-to-day response to the pandemic.

Assemblymember Rodneyse Bichotte introduced legislation to offer one year of mortgage forbearance to small property owners — those with no more than four units — and small businesses. The bill, however, has faced steep opposition from the Department of Financial Services, according to Bichotte.
“Department of Financial Services hates the bill and they’ve been trying to stop it,” Bichotte said. The assemblymember added that DFS is concerned about the impact on smaller state-chartered financial institutions, which would lose out on mortgage payments. Since being introduced at the end of May, the bill has not gotten any closer to passage.

Source: The Real Deal
Affordable Housing Developers Build War Chests to Buy Properties
Some buyers that want to keep properties affordable are hoping to snap up assets that otherwise might be converted to market rate units if they fall into other investors' hands.

Affordable housing advocates are tired of losing bidding wars that result in losing some of the nation's already stretched supply of workforce apartments.

During the recovery from the Global Recession, developers with a mission to create and preserve affordable housing struggled to buy older apartment buildings with an aim of keeping the rents reasonable enough for low-income families to afford. They are trying to prevent the same thing from happening in the current cycle, with the economic crisis caused by the coronavirus likely to trigger another wave of property sales.

Affordable housing advocates are tired of losing bidding wars that result in losing some of the nation's already stretched supply of workforce apartments.

During the recovery from the Global Recession, developers with a mission to create and preserve affordable housing struggled to buy older apartment buildings with an aim of keeping the rents reasonable enough for low-income families to afford. They are trying to prevent the same thing from happening in the current cycle, with the economic crisis caused by the coronavirus likely to trigger another wave of property sales.

“In the last recession, a lot of private equity buyers swept in and picked up affordable housing properties,” says Kimberly Latimer-Nelligan, president of Low Income Investment Fund (LIIF), a national, nonprofit community development financial institution (CDFI) with $900 million in assets under management. “We plan to make sure the mission-driven organizations have access to capital to compete with investors who are going to take those properties to market-rate rents and displace all those residents."

To prepare this time, developers and investors dedicated to preserving affordable housing are now raising capital to make sure that they can successfully bid for properties, including affordable housing communities where existing restrictions on raising rents are nearing their ends. Affordale housing investors are also looking to buy older class-B and class-C apartment properties that have never been in official affordable housing programs as well as smaller properties with just a few apartments.

“There may be an opportunity for affordable housing buyers to purchase several types of properties—including smaller apartment properties,” says Deborah VanAmerongen, strategic policy advisor in the affordable housing practice group at the law firm Nixon Peabody, based in New York City.
Affordable developers prepare for the coming bidding war.

In October 2020, LIIF announced a partnership to raise $1 billion over the next five years to build, protect and preserve approximately 10,000 affordable homes across the country.

LIIF’s partners include Stewards of Affordable Housing for the Future (SAHF), a nonprofit collaborative of 13 affordable housing developers who own and manage a total of nearly 150,000 rental homes, and the National Affordable Housing Trust (NAHT), a nonprofit low-income housing tax credit syndicator with more than $1 billion in assets under management.

In the next 10 years, 500,000 apartments built with federal low-income housing tax credits (LIHTCs) will reach the end of their extended, 30-year compliance period, in which their rents have to be affordable to low-income households. For many of these properties, there will be nothing to stop the owners of these properties from raising the rents to prevailing market rates.

Latimer-Nelligan says that's where SAHF is hoping to step in, buy the assets and keep rents where the are now.

Affordable housing developers are likely to have a lot of competition from opportunistic and value-add investors who would have their sights set on renovating properties and raising rents. Over the last decade, some private equity buyers and other big players have perfected their ability to buy and manage affordable housing until the expiration of requirements that keep the rents low and then reposition them.
“Institutional investors have become more comfortable over time with the affordable housing asset class and a greater number of investors are in the market," says Jeff Arrowsmith, senior director for CBRE Affordable Housing, based in Seattle. “Pricing has increased for affordable product over time which makes yield buyers more competitive compared to a developer utilizing LIHTCs.” (LIHTCs are the most powerful federal tool to develop or purchase and redevelop affordable housing.)

 “We cannot let this happen again,” adds Lori Little, president and CEO of NAHT. Some of these properties may be recapitalized with LIHTCs. Others may need less work, and may remain as naturally-occurring affordable housing after a light rehab. “We are really excited about the power of this partnership.”

Bringing new money to affordable housing.

The partners began to work together in November 2018, when the U.S. economy was still enjoying the longest expansion in its history. Investors were hungry for real estate in general and apartment properties in particular, driving property prices higher relative to their income, pushing cap rates to historic lows.
“Even in normal times, there is a struggle to compete with investors to buy affordable housing properties,” says Latimer-Nelligan.

NAHT already uses capital from leading commercial banks and other investors to buy LIHTCs. Often NAHT, in its role as a LIHTC syndicator, buys these tax credits from affordable housing developers that are the members of SAHF, helping to pay for their developments.

LIIF brings capital from other investment sources to this partnership and different tools to put the money into action. “As a CDFI they bring a host of capital solutions,” says Andrea Ponsor, president and CEO of SAHF.

That includes investment funds that specialize in making loans to community development projects and expertise in programs like federal new markets tax credits.

Recently, LIIF issued a bond rated by S&P to raise money to support its mission. “The bonds was oversubscribed by a factor of 10 by investors seeking a financial return as well as a social return,” says Latimer-Nelligan.

Source: National Real Estate Investor
Pessimism Grows Among New York City Brokers
While the overall figures are discouraging, sector-level results indicate a divergence in sentiment, according to REBNY's latest report.

Dropping for the third straight quarter, REBNY’s Real Estate Broker Confidence Index Q3 2020 tells an increasingly grim story. The third-quarter Confidence Index declined to 3.08 out of 10, marking a 7 percent drop from the second quarter and a year-over-year decrease of 47 percent. While the overall figures are discouraging, sector-level results indicate a divergence in sentiment.

The Residential Broker Confidence Index decreased 14 percent quarter-over-quarter to 4.0, but the Commercial Broker Confidence Index increased 11 percent, rising to 2.15 percent. Furthermore, residential brokers’ Present Situation Confidence Index decreased from 4.06 in the second quarter to 3.61 percent in the third quarter, while commercial brokers’ Present Situation Confidence Index increased quarter-over-quarter, rising from 0.89 to 1.4. Commercial brokers’ comparatively positive assessment of the real estate situation in New York mirrors that of the national commercial brokerage community, which is also seeing gradual improvement in the commercial real estate market.


REBNY’s overall Future Broker Confidence Index, based on brokers’ expectations for market conditions six months from now, offered little encouragement, decreasing 10 percent from the second quarter to 3.51 percent. With brokers increasingly uncertain about the future of the market, the bad news is just getting worse for millions of New Yorkers who rely on the everyday government services funded by real estate-generated tax revenue, James Whelan, president of the Real Estate Board of New York, noted in a prepared statement.

As was the case with the Confidence Index, the Future Broker Confidence Index differed at the sector level. Residential brokers—queried about the future financing market for residential sales, upcoming rental market and anticipated commissions—noted that their confidence continued to sour quarter-over-quarter, with the Residential Future Confidence Index dropping from 5.11 to 4.3.

Commercial brokers’ outlook neither worsened nor improved, holding steady at 2.72 on the Commercial Future Confidence Index. Whelan added that unless Washington delivers the comprehensive federal aid needed to drive a strong economic recovery, New York City and state officials will be forced to choose between cutting those crucial government services or raising taxes to fund them—and neither option bodes well for the future of the market or for New Yorkers struggling.


Source: Commercial Property Executive
Data Center Construction, Leasing Surge in Western States 
In a banner year for data center expansion, several markets in the West are seeing heightened construction and leasing activity as demand for data storage and processing continues to climb.

A combination of remote work, cheap power and government incentives is driving up demand in markets like Utah, Colorado and Arizona, which enjoy proximity to Silicon Valley and a number of other appealing traits for data center firms. Industry experts say it is still early innings for data centers, with Western cities capturing much of the growth among secondary markets.

“People want to be near their data, and when you see tech companies migrating, you’ll see data centers,” said Greg Vernon, senior vice president with CBRE’s Data Center Solutions group.

Although Silicon Valley is still the largest data center market in the western U.S., and Northern Virginia is the largest overall, secondary markets like Salt Lake City are growing at a rapid clip. According to CBRE, the Salt Lake City metro area has 500K SF of data center space currently under construction, which will more than double its current volume of 482K SF. An additional 1.5M SF is planned.

Attractive tax rates, notably, a sales tax abatement on data center equipment enacted this year, have helped to lure more data centers and tech firms to greater Salt Lake City, which also boasts robust fiber infrastructure and low energy rates.

Facebook is building a 1.5M SF data center in nearby Eagle Mountain, and Novva, a large colocation provider, plans to invest $1B in a 100-acre campus in West Jordan. Other significant deals and developments are likely coming down the pike, said Mark Bauer, managing director with JLL’s Data Center Solutions group.

“The entire metro of Salt Lake City is very e-commerce-focused, with a lot of technology companies located there, and the labor base is strong,” Bauer noted.

The rise of remote work, and a steady influx of tech firms, has helped to drive up data center leasing activity in Denver.

Palantir Technologies, Salesforce, Facebook and Slack are a few of the major tech firms with a sizable Denver footprint or plans to establish one. Palantir, a big data analytics firm founded in Palo Alto, announced in August that it will relocate its headquarters to Denver. The city’s reasonable cost of living and strong base of tech talent has made it a natural place for tech companies to expand, and for remote workers to take up residence in COVID-19.

Those trends are reflected in high demand for data center space, Vernon said. Among secondary markets, Denver had the second-most data center leasing activity in the first half of 2020, according to CBRE. Favorable energy policies are expected to raise the region’s appeal even more: Xcel, Colorado’s largest utility firm, recently rolled out an economic development plan that slashes electricity rates for commercial and industrial customers.

Expect heightened activity in nearby Aurora, Vernon added. Colorado Springs, home to military and aerospace facilities, with robust infrastructure to match, appears primed for data center development as well.

“There’s available land, so much development, and proximity to the airport and new hotels [in Aurora],” Vernon said. “If you can find good affordable land with good infrastructure 15 minutes from an airport, that’s a good deal.”

Lured by competitive electricity rates, ample land and renewable energy, data-hungry cloud infrastructure firms are putting down roots in Phoenix, Bauer added. Oracle and Apple both maintain large data centers in the Phoenix metro area, with new Google and Microsoft facilities in the works.

“If there’s one thing that Phoenix has a lot of, it’s sun and land,” Bauer said.

With two utilities covering Phoenix, APS and Salt River Project, energy is both reliable and affordable, raising the region’s appeal for large colocation providers like Aligned.

Phoenix is the second-fastest-growing data center market in the U.S. by year-over-year net absorption, with 18.5 megawatts absorbed in the first half of 2020, according to JLL. Another 24 MW are under construction in the market, which places Phoenix fifth in the U.S. in terms of new build activity.

“It’s fortunate to see data centers thriving in Phoenix, which is impressive given the year we’ve had. It shows great promise for the future of this sector in the market,” Bauer added.

Source: Bisnow
2020 Chapter Leadership
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Ian Grusd, CCIM, SIOR
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