Sam McGill, SIOR, MCR’s Post

On the occupier side, the impact of Covid accelerated a significant trend for some companies. Many occupiers shifted to remote work, perceiving the office as a commodity due to cost pressures or job function. This move aimed to enhance competitiveness as an employer. However, those considering the workplace a competitive advantage had to readjust to the shock in the labor market, leading to what seems like an overcorrection. Presently, occupiers continue to adapt to the new work landscape. Firms valuing the workplace as a key asset are strategically investing in it. This strategic move reflects a belief that the workplace adds substantial value to the overall enterprise.

The pandemic revealed that not every business task needs to happen in the office, but there won’t be a single shock bringing everyone back overnight. While this shift came with unintended consequences, firms are addressing these challenges and incorporating them into their business planning. Companies are becoming more intentional, recognizing that there’s no one-size-fits-all solution for the future of work.

I pay close attention to public equities because they can hint at where industries and businesses are heading. When the stock market shows signs of growth, it often means companies are expanding and looking for more space. This insight helps us anticipate trends in real estate needs and adjust our strategies accordingly. Watching the stock market isn’t just about tracking numbers—it's about understanding the bigger picture of economic growth and how it impacts real estate.

Ever wonder why the S&P 500 tends to struggle in September? Historically, it's been the worst month for returns. It seems like the market is still recovering from summer vacations while gearing up for the end-of-quarter frenzy. If your portfolio feels sluggish this month, you’re not alone—September just has a knack for being a market slacker.

Choosing optimism takes real bravery. It’s easier to expect the worst, but having the courage to hope and believe in a brighter future shows true strength. Stay positive and keep pushing forward!

Confused by inflation numbers? Here’s a quick breakdown: Headline PCE includes all items, like food and energy. It provides the broad picture of how prices are changing overall. Core PCE focuses on everything except food and energy, offering a clearer view of underlying inflation trends without the big swings. Here's a quick glance at the July numbers: Headline: Increased 0.2% month over month and 2.5% year over year vs. expectations for a 0.2% MoM increase and a 2.6% YoY increase. Core: Increased 0.2% MoM and 2.6% YoY vs. expectations for a 0.2% MoM increase and a 2.7% YoY increase. In the Core PCE, housing costs, including rent and owners' equivalent rent (the estimated rent homeowners would pay if they were renting their homes), typically account for a substantial portion of the index. To give you a rough idea, housing costs can represent about 30% to 40% of the Core PCE index. This can vary slightly depending on the specific weighting and changes in consumer spending patterns, but housing is consistently one of the largest and most impactful categories in the Core PCE.

U.S. GDP for Q2 2024 exceeded expectations, reaching $27.3 trillion and showcasing robust economic growth. Technology and consumer services led the expansion, while manufacturing experienced slower growth. GDP serves as a lagging indicator, reflecting past economic performance rather than current conditions or emerging trends in real time. Despite this lag, it's encouraging to see the economy's continued growth.

In today's market, tenant improvements can sometimes be worth more than the office building itself. Custom features, labor, advanced tech, and high-quality finishes can really drive up value. This can make things tricky, especially if the tenant moves out or the building is sold. It’s worth thinking about how these improvements impact the property’s overall value. This impacts how a tenant will negotiate with its landlord.

NVIDIA Q2 earnings today at 5 pm EST! $NVDA

A lender needed to create liquidity in its office loan portfolio and sold the loan. We will continue to see more of this. CRE is a cyclical business. Buy the dip!