Location Strategy Chartbook 082424

Powell says ‘time has come’ for Fed to cut rates. "The upside risks to inflation have diminished. And the downside risks to employment have increased," Powell said in a highly anticipated speech to the Kansas City Fed's annual economic conference in Jackson Hole, Wyoming. "The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."

He said the Fed's next move would "depend on incoming data, the evolving outlook, and the balance of risks.” The central bank's Federal Open Market Committee, which decides interest rates, next meets Sept. 17.

The July CPI report was roughly in line with expectations but rent inflation jumped

The national median existing-home price in July was $422,600, a 4.2% increase from a year earlier. That means prices remained near record highs

Leading indicators continue to signal slower housing inflation ahead

Rising inventory hasn't put much competitive pressure on builders yet—except in Texas and Florida.

According to U.S. homebuilders surveyed by Zonda in July 2024:

• 56% are seeing “very little competition” from the resale market

• 27% are seeing “a little competition” from the resale market

• 14% are seeing “moderate competition” from the resale market

• 1% are seeing “strong competition” from the resale market

• 1% are seeing “very strong competition” from the resale market

Q2 2024, United States REITs raised $16.6 billion through secondary offers, predominately from $12.5 billion in debt and an additional $4.1 in equity. REIT capital markets activity represents an important signal about the market’s appetite for real estate exposure.

During the second quarter there were no REIT IPOs, yet in July, Lineage Logistics completed a significant $5.1 billion REIT IPO. Additionally, Blackstone completed a $9.2 billion merger with Apartment Income REIT.

Overall, there has been a total of $272 billion of public REIT mergers and acquisitions since 2019.

Despite reduced equity issuance, debt issuance saw an uptick, culminating in $25.4 billion YTD. Acquisition trends favored the industrial, retail, and data center sectors. The financial activity indicates robust investor interest and a rise in strategic consolidation within the REIT market.

Start-up failures in US up 60% over past year––as founders run out of cash raised during the tech boom of 2021-22–– threatening millions of jobs in venture-backed companies + risking a spillover to the wider economy.

Since the beginning of 2024, retail market vacancy in Los Angeles has been on the rise.

The metric hit 5.6% in late August, and, year to date, the market has seen around 2 million square feet of negative net absorption — its worst posting since 2020.

Recent demand levels relative to market size were also among the weakest activity seen among major U.S. metros. Vacancy in the metro is above the national average of 4.1%. The local retail market has encountered several headwinds that continue to restrain activity.