10 minute read
Five Trends in Commercial Leasing
more and more de-risked. Developers are beginning to realize that working from home is no longer a trend, but rather a lasting impact of the pandemic. Additionally, government officials are easing restrictions on these conversions. NYC Mayor Eric Adams, for example, recently tried to encourage more investment in the conversion space. Increased appetite for residential apartments coupled with a lack of demand for office space leases suggests that more real estate developers will take on these projects in the coming years.
Defaults rates by commercial lenders
will rise. While the CMBS delinquency rate skyrocketed to 10.32% as a result of the COVID-19 pandemic, the CMBS default rate has dropped dramatically to all-time lows as of July 2022, according to data from Trepp. At just above 3%, the low delinquency rate suggests that commercial real estate lending is largely de-risked. However, we believe that in future months we will see the default rate tick back up.
The Federal Reserve is likely to continue to raise rates in the coming months, which will add more pressure to existing and future projects. Additionally, we believe the unprecedented amount of liquidity throughout 2020 and 2021 led to loose underwriting standards and overinvestment in some markets, but we have yet to see a correction in the real estate market in the same way that we have seen a correction in the broader market. As noted earlier, banks have become unwilling or unable to forbear notes, which will continue to cause an abundance of distressed opportunities to materialize if alternative lenders do not step in and bear the risk of these projects. Consequently, we predict that we'll see more borrowers fail to make their mortgage payments in 2023.
Adjustable-rate mortgages will increase
in popularity. According to the Mortgage Bankers Association, during the first half of 2022 the share of adjustable-rate mortgages (ARMs) nationwide rose from 3% to 10% of all mortgages, the highest percentage since before the 2008 housing crash. ARMs become more popular when interest rates rise, as homebuyers are forced to turn to cheaper alternatives than traditional fixed-rate mortgages. As the Fed has increased interest rates in 2022, mortgages have become less affordable and demand for housing across the board has fallen substantially. However, ARMs are one area in the mortgage market where activity has increased.
The rise in popularity of ARMs demonstrates that Americans are struggling to find affordable housing and are desperate for alternative ways to finance their homes during a period of rising costs and limited housing supply. When used appropriately, ARMs can serve as a useful tool to give Americans more flexibility and freedom to purchase homes. ARMs can help homebuyers save in the near term, but it’s important to note that they result in higher payments over the life of the mortgage. It is critical that homebuyers and lenders alike approach ARMs with caution.
While useful, ARMs are not a solution to the current housing shortage. Instead, they serve as a short-term fix to larger hurdles such as unsustainably low housing availability, rising interest rates, higher material and building costs and government regulation, which discourages homebuilding and multifamily investment in many cities. However, with mortgage rates rising we believe this trend will continue and it’s important that lenders carefully assess the financial stability of their borrowers, both large and small.
More borrowers may fail to make mortgage payments in 2023.
ANNUAL GOLF OUTING
HONOREE
Bob Knakal Chairman, NY Investment Sales Capital Markets
Itinerary
8:30 AM Arrival and Registration 9:00 AM Breakfast/Brunch 11:00 AM Call to Carts 11:15 AM (SHARP)Shotgun Start 5:00-6:00 PM Hors D’oeuvres and Cocktails 6:00-7:00 PM Dinner and Presentation of Golf Winners and Honorees
Founded in 1947 by Harry Helmsley and other leading real estate legends, the NRC is the most enduring organization of its kind in the industry.
OCTOBER 3, 2022
Join us at the National Realty Club Foundation golf outing at the lovely Fresh Meadow Country Club in Lake Success, New York for a great day of golf, food, and networking.
The National Realty club was founded 75 years go. Harry Helmsley was a founder member along with, David Rose, Irving Mann, Herb Tenzer, Alvin Schwartz and Bernard P. Day; attorneys Lawrence Wien and Harry J. Halperin, Esq.; architect Hyman I. Feldman and developer Jack D. Weiler. Real estate legends Barbara Corcoran, Aaron Gural and Louis Smadbeck have also been involved with the NRC. We have come back bigger and stronger than ever and have added a charitable arm to raise money to support NYC and with many of the other problem areas that we face now.
Tickets
GOLF
$750
FOURSOME
$3,000
DINNER & COCKTAILS
$250
For more information, please contact penny@nationalrealtyclub.org
$15,000 SPONSOR OF THE DAY: SPONSOR WILL BE FEATURED AS “YOUR COMPANY NAME” PRESENTS THE NATIONAL REALTY CLUB’S ANNUAL GOLF OUTING.
$10,000 | STEP AND REPEAT SPONSOR
Taken by Meridian Capital Group Sponsor’s name all over the step-and-repeat. Reservation for one golf foursome and a pin flag.
$10,000 | DINNER SPONSOR Sponsor’s name in the dinner area. Reservation for one golf foursome.
$10,000 | COCKTAIL RECEPTION SPONSOR
Sponsor’s name on signage at cocktail reception. Reservation for one golf foursome.
$10,000 | Glove SPONSOR
$7,500 | GOLF CART SPONSOR
$7,500 | GOLF BALL SPONSOR
$7,500 | BIB SPONSOR
$7,500 | SCORECARD SPONSOR
$4,000 | BRUNCH SPONSOR
$4,000 | VALET SPONSOR
$4,000 | HOSPITALITY SPONSOR
$2,500 | SPORT MEMORABILIA AUCTION SPONSOR
$2,500 | REGISTRATION SPONSOR
$2,500 | PUTTING GREEN SPONSOR
$2,500 | DRIVING RANGE SPONSOR
$2,500 | HOLE IN ONE SPONSOR
$2,500 | BAR CAR SPONSOR
Sponsor’s name & logo on signage next to the designated spa area. Reservation for two golfers.
$2,000 | MASSEUSE SPONSOR
$2,000 | BALLOON SPONSOR
$2,000 | CIGAR SPONSOR
$2,000 | TEE MARKER SPONSOR
Sponsor’s name & logo on tee markers per hole. Reservation for one golfer.
$1,500 | PRIZE SPONSOR
$1,500 | MENS/WOMENS LOCKER ROOM SPONSOR
$1500 | RAFFLE SPONSOR $1500 | CLOSEST TO PIN
On holes 4, 7, 11, 13 & 15 (sold separately)
$1500 | LONGEST DRIVE
On holes 10, 2 & 16 (sold separately)
$1000 | FLAG SPONSOR: SPONSOR ONE HOLE
Flag framed and sent to you after event.
$500 | TEE GREEN SIGN
Sponsor’s name on tee green sign.
All Aboard:
Storylines Developing a Residential Community at Sea
The internet is filled with stories of retirees selling homes and living on cruise ships, but the founders of Storylines are creating a full-time residential community scheduled to set sail in 2024.
Storylines’ MV Narrative ship will be 741 feet long and 98 feet wide with 547 fully furnished residences ranging from 237 to 1,970 square feet. The prices of the residences range from $1 million to $8 million for the lifetime of the vessel with a limited number of 24-year leases available starting at $647,000. Targeting young families as well as traditional cruise goers, the MV Narrative will offer travelers the ability to work and have a full life as they circumnavigate the globe over three years.
The ship will spend an average of three and a half days in each port, with a minimum of an overnight docking to allow the residents time to visit. In effect, the plan is to combine a world tour, while still allowing visitors to spend each night in their own, owned bed if they wish.
“The ship is your base. It’s your home that just happens to travel,” observed Alistair Punton, Storylines co-founder.
COVID-19, which shut down the vacation cruise industry, delayed the process, but has given impetus to the concept as people re-evaluated how they want to live their lives. With technology allowing many jobs to be performed remotely, the ship also accommodates people who must continue to work.
“This is not just for one demographic; it really is for everybody,” Punton said. “We have a lot of families coming on board, retirees and more.”
In fact, the entire world will be the residents’ home. The ship will have no home port, and at times the team will offer “Residents’ Choice Days,” where they will vote on the next port of call.
The MV Narrative will set sail in 2024.
The team, which boasts a background in real estate, considered acquiring a ship, but decided that the needs of full-time residents required new construction built to Storylines’ specifications. The buyers helped a bit, too.
“We went to our resident community in the early design phase; it’s a ship for the residents,” Punton said. “We got that feedback and put it into the ship.”
Owners will enjoy an all-inclusive experience with dining, cultural enrichment programming and wellness and fitness facilities available 24 hours a day. Just beginning construction in Croatia, the ship will boast 20 dining and bar venues, a microbrewery, marina landing with personal watercraft, three pools with sundecks, pet exercise area, business center and a beauty salon. Religious observances also will be accommodated. Entertainment options include a 10,000-book library, movie theater, art studio and bowling alley. Active and adventurous travelers will enjoy an outdoor running track, full gym, yoga studio, golf simulators, dance floor and more.
A range of one-to-four-bedroom residences are outfitted by leading maritime design teams. Owners may choose from coastal or contemporary interior design styles. Some will come with kitchenettes and cooking options, and most have balconies. Each residential deck will have a lounge where owners can grab a bite or even host a dinner party. Families and owners’ guests are welcome aboard and owners can rent out their residences when not in use. Just as with any residential property, owners can sell at any time.
The ship also features a youth education program, the first of its kind world traveling school.
“That’s really important for a lot of people,” Punton said. “I have two kids who will be on board. What better education about Rome can you get than standing in the Colosseum?”
The ship will boast a medical clinic with a doctor, nurse, pharmacist, nutritionist and physiotherapist. A 10,000-square-foot health and wellness center will offer medical services including wellness visits, weight loss, anti-aging, immune therapies, detox treatments, dietary planning, meditation room, relaxation pods and more. The facilities also include a hospital for emergency medicine and a helicopter landing pad for medical evacuations. But giving birth to a genuine citizen of the world on board? It’s not happening. Just as airlines ban flying after a certain number of weeks, pregnant residents of the Narrative will be required to depart the ship and have their babies on land.
The ship has been sustainably designed with liquid natural gas propulsion (LNG), the most environmentally friendly option currently available for powering ships. Other initiatives include converting waste into energy and growing produce onboard at the solar powered hydroponic garden. A first-of-its kind zero waste farmer’s market will also be available with locally sourced products where everything is compostable or recyclable. Residents will be able to grill their own meals at barbecue stations.
Some 75% of the buyers thus far have come from the U.S., but interest is growing from Europe, Australia, New Zealand and Canada.
“Traveling isn’t much fun, anyway, with what we’re experiencing with airports and airlines,” Punton said. “We’re taking the good parts of cruising and the good parts of traveling.”
Each deck will have lounges to encourage community.
