Net Lease News

B+E Weekly Newsletter

August 06 – August 12, 2024

MARKET

CRE MARKET SHOWS RESILIENCE DESPITE RECENT ECONOMIC VOLATILITY | Globe St.

• The commercial real estate market has been largely unaffected by broader market volatility for July, including disappointing indicators about job growth, unemployment and wages.
• During the month, the CRE market showed several encouraging signs, including more portfolios changing hands, an influx of bidders on individual property listings, and a new round of sales across asset classes and geographies. Interest in listings for multifamily and retail are above the national average across all property types, suggesting prices are unlikely to fall much further.
• We saw high volatility in the market in July, yet the CRE market continued to soldier on. Lenders are lending. Sales are taking place.
• The second half will challenge investors to find the best opportunities despite potentially continuing market volatility, particularly in re-developing older properties into desirable uses with amenities valued by today’s tenants. Although distressed properties made headlines last month, loan modifications and loan sales were up, indicating fewer distressed assets are likely to filter through to the market.

Q2 INVESTMENT SALES SHOW PROMISE OF MORE GROWTH | Globe St.

• Portfolio and entity trades increased 24% over the past year, indicating that institutional capital is returning to the market.
• Does the volume of commercial real estate transactions have nowhere to go but up? Some signs point in that direction.
• The analysis cites some positive data. Volume rose 15.8% in the three months through June and was down just 1.2% compared to the prior year, while pricing was little changed in the period.
• Portfolio and entity trades increased 24% over the past year, indicating that institutional capital is returning to the market.
• In retail, there are signs that pricing may be stabilizing. Volume in 15 of the top 25 markets rose in the first half, some by 100%-300%.
• Volume in hospitality increased on both a quarterly and annual basis. Single-asset sales dominated. Entity and portfolio deals rose. Of the top 25, 10 markets enjoyed annual price increases, many up 100%-450%. First-half records were set in Nashville, New York City boroughs, Ventura County, CA, and Madison, WI.

RETAIL

ACE HARDWARE TO INVEST $1B TO ROLL OUT NEW EXPERIENTIAL STORES | Bisnow

• Ace Hardware is drilling into the experiential retail trend with a big bet on a new store concept. The hardware retailer plans to invest $1B to launch the Elevated Ace concept in new and existing locations over the next five years.
• The new concept includes new showrooms, new product assortments and an outdoor space with plants and grilling demos. The company has been in the process of reimagining the brand to build stores that highlight the company’s core categories — paint, power tools, backyard grilling and home preservation — while embracing the community and creating an experience consumers can’t find online. 
• Ace has been busy in other ways, opening 111 new stores throughout June that brought it to over 5,000 locations across the U.S. The company plans to open 200 stores by the end of the year. Globally, Ace has 5,800 locations in 60 countries.
• Other retailers have also been playing around with the experiential business model. Dick’s Sporting Goods rolled out its own concept called Dick’s House of Sport, which features its normal merchandise as well as batting cages, golf simulators and rock walls. By 2027, the company plans to roll out 75 to 100 of the stores.