Limon Net Lease Group

Archives for January 2021

Is 2021 Poised to Bring a Major Revival for Commercial Real Estate?

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Is 2021 Poised to Bring a Major Revival for Commercial Real Estate?

By Marcus & Millichap Research Services

  • Prospects for new stimulus and renewed virus containment efforts strengthen the 2021 economic outlook
  • Additional stimulus checks and extended/expanded unemployment benefits will support spending activity
  • Furthermore, if the vaccine rollout continues as expected, trillions in savings could be unleashed
  • Nearly all types of real estate stand to benefit as spending activity and job growth accelerate
  • Retail and Hospitality in particular could see a revival as consumers re-engage with the marketplace
  • Employment growth supports the Apartment and Office sectors and indirectly supports Industrial demand
  • As a result, the outlook for commercial real estate in 2021 and beyond is looking brighter

$900 Billion Stimulus Package to Support  Economy, Bolster Real Estate Outlook

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COVID-19 STIMULUS PACKAGE SPECIAL REPORT
1/15/2021 by Marcus & Millichap Research Services

After significant delay, Congress passed a stimulus bill that will serve to limit the threat of a double-dip recession after economic growth faltered in December. The bill includes additional support for the unemployed, rental assistance, and direct cash payments to individuals. Small businesses, cultural institutions, and other hard-hit industries will also receive help.

Key Features Include:

  • How the stimulus package will support commercial real estate revenues
  • Impact of legislation on economic growth prospects in 2021
  • Specific industries targeted by bill for additional support

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What’s Driving Interest Rates Higher?

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By Marcus & Millichap’s Research Services

Economic Outlook Placing Pressure on Interest Rates

  • The Georgia Senatorial run-off results reduced political uncertainty and raised the chance of additional stimulus
  • This has strengthened the 2021 economic outlook
  • As a result, the 10-Year Treasury is back up to 1.1% from 0.5% back in August, but still far from 1.8% a year ago

Rising Rates Already Impacting Commercial Real Estate

  • Apartment loans have seen rates rise 30-40 basis points over the last few weeks to the upper 2% to mid-3% range
  • Quality Office & Industrial rates run in the low 3% range; Retail Centers & Self-Storage can fall in mid-to-upper 3%
  • Hotels financing remains challenging, but available

Upward Momentum Likely to Continue

  • Advancements in the economic and health care fronts are signals that interest are likely to continue rising
  • Diminishing uncertainty is also taking more investors off the sidelines, increasing competition in the market
  • For inventors who plan to buy this year, locking in these favorable rates may prove beneficial in the long-ter
* Average cap rate through December 2020; 10-year treasury through January 13, 2021
Includes apartment, retail, office, and industrial sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, Federal Reserve

 

2020 Election Results Together with New Stimulus and Vaccine Distribution Bolster Real Estate Investment Outlook

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Political division in Congress will limit the scope of legislative reform, providing consistency in policy that will help lay the groundwork for future commercial real estate investment decisions. Recently enacted stimulus and continued vaccine distribution create potential for notable economic growth in the second half of 2021, while low interest rates emphasize the returns of real estate assets.

Key Features Include:

  • Tax reform outlook and other notable legislation
  • Role of new stimulus and vaccine rollout on 2021 economic outlook
  • Key stimulus provisions for real estate investors

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Jesse Limon’s Top 40 List of National Tenants for 2021

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After a tumultuous year, and working on and with many 1031 exchange buyers and deals over the past decade, here’s my current Top 40 Tenants from an investment perspective with a goal of creating safe and secure yields over a long term:

1. Amazon/Whole Foods/etc
2. Dollar General
3. CVS/Pharmacy
4. FedEx
5. Walgreens
6. Family dollar/Dollar Tree
7. Walmart
8. McDonald’s
9. Chick-fil-A
10. Burger King
11. Taco Bell
12. KFC
13. Panera Bread
14. Home Depot
15. Lowe’s
16. 7-Eleven
17. Wawa
18. Starbucks
19. Five below
20. Schwarz Group/Lidl
21. Aldi
22. Burlington
23. Tractor Supply co
24. Ollies Bargain Outlet
25. Sherwin Williams
26. Harbor Freight Tools
27. AutoZone
28. Oreilly auto parts
29. Pet Suites of America
30. TJ maxx/Marshalls, HomeGoods, HomeSense, Sierra
31. BestBuy
32. Gap/Old Navy/Athleta
33. Chipotle
34. Ahold Delhaize/Stop & Shop/ Giant/Hannaford/Food Lion/
35. BJ’s Wholesale Club
36. TD Bank
37. Bank of America
38. Wells Fargo
39. Fifth Third Bank
40. Kohl’s

Let me know your thoughts or feedback and happy new year!

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