On the seventh episode of ‘The Inside Look,’ Senior Commercial Real Estate Economist Xander Snyder discusses the impact of office-to-apartment conversions on apartment supply.Watch below and subscribe to the CRE Insider blog for additional insights from First American Title NCS. 

Transcript:

Hi, I'm Xander Snyder, and this is First American's Inside Look. A recent report from Rent Cafe gave us an updated estimate on the number of apartment units that will be converted from office

On the seventh episode of ‘The Inside Look,’ Senior Commercial Real Estate Economist Xander Snyder discusses the impact of office-to-apartment conversions on apartment supply.Watch below and subscribe to the CRE Insider blog for additional insights from First American Title NCS. 

Transcript:

Hi, I'm Xander Snyder, and this is First American's Inside Look. A recent report from Rent Cafe gave us an updated estimate on the number of apartment units that will be converted from office buildings this year. And at first glance, it looks like a lot. Here, take a look. From 2021 to 2024, the number of apartments scheduled to be converted from office space more than quadrupled from 12,000 units to 55,000 units.Now, that's rapid growth, but what does growth tell us about the impact of office conversions on apartment supply more generally? Not a whole lot. For that, we need to know what portion of new supply these 55,000 conversions represents. According to the Census Bureau's new residential construction report, there were nearly a million apartment units under construction as of December 2023, a near-record high.So relative to this new supply of ground-up development, the 55,000 units of office-to-apartment conversions only represents about 5% of total new supply. Now, if we're talking about the total size of the pie – so the existing stock of apartments that are already out there – this million new units of ground-up development will add to the inventory of apartments by about 4%.Now, by contrast, the 55,000 units of office-to-apartment conversions will only increase apartment stock by about 0.2%. Not a whole lot, and certainly not enough to fundamentally shift the national supply-and-demand dynamic for multifamily housing. I'll be giving a talk about the state of the commercial real estate economy at ALTA’s Commercial Network Conference in New Orleans at the end of February, so hope to see you there. Thanks for joining us, and we'll see you next time on The Inside Look.

Welcome to the sixth episode of 'The Inside Look.’ Senior Commercial Real Estate Economist Xander Snyder discusses the Fed's expectations for this year and what market expectations have to say about them.Watch below and subscribe to the CRE Insider blog for additional insight from thought leaders at First American Title NCS. 

Transcript:

At its last meeting in 2023, the Federal Reserve decided to hold the Fed funds rate where it was, at about 5.3%. They also released their quarterly

Welcome to the sixth episode of 'The Inside Look.’ Senior Commercial Real Estate Economist Xander Snyder discusses the Fed's expectations for this year and what market expectations have to say about them.Watch below and subscribe to the CRE Insider blog for additional insight from thought leaders at First American Title NCS. 

Transcript:

At its last meeting in 2023, the Federal Reserve decided to hold the Fed funds rate where it was, at about 5.3%. They also released their quarterly set of economic projections, which have some people fairly excited as they revised down the Fed's rate expectations for the end of 2024. Today, we're going to take a closer look at the Fed's expectations for this year and what market expectations have to say about them.

I'm Xander Snyder and this is First American's Inside Look.

Making forecasts about interest rates is challenging, especially when there are forecasts about the future. But, joking aside, anticipating the future price of money is extremely challenging as almost anything in the world can impact it. Two ways to go about dealing with uncertainty like this in economics is to refer either to expert consensus opinion or an aggregated wisdom of the crowd approach.

Now, the Federal Reserve's own economic projections is clearly a form of expert consensus opinion, as there's arguably no expert more informed about the Fed funds rate than the people themselves who will be setting it in the future. Currently, the Federal Reserve is expecting the Fed funds rate to fall by about 75 basis points from 5.3% today to 4.6% at the end of 2024, or roughly three rate cuts. And this represents a downward revision compared to the Federal Reserve's last set of economic projections from September.

Of course, many disagree with the Federal Reserve's rate expectations for this year. Currently, market expectations, our wisdom of the crowd, are that there will be more than three rate cuts in 2024. In fact, a majority of the market, roughly two thirds, currently anticipates 6 to 7 rate cuts this year. About 30% expects 4 to 5 rate cuts and 3% expects eight or more rate cuts this year alone.

Only a tiny sliver of the market, about 1%, agrees with the Federal Reserve on three or fewer rate cuts. So our wisdom of the crowd agrees with the expert consensus opinion that there will be rate cuts, but the market is expecting many more of them than the experts.

The Fed's downward revise expectations for year end 2024 was certainly an encouraging data point to end 2023 on. Sure, there will be challenges in the commercial real estate world this year as debt comes due and certain buildings default. But if interest rates are lower by year's end, that will reduce the quantity of distress that ultimately does materialize.

I'll be giving a talk on the state of commercial real estate at ALTA's Commercial Network Conference at the end of February in New Orleans. Hope to see you there.

Welcome to the CRE News Digest from First American Title NCS, where we explore the biggest stories in commercial real estate. As a legacy brand working in CRE for more than 120 years, First American keenly knows the market and the forces that are impacting our clients’ businesses.

Big Picture: 2023 Rate Report 

Much of the commercial real estate conversation this year revolved around the implications of the Federal Reserve’s campaign to raise interest rates. According to Bisnow, while banks significantly increased direct lending to landlords during a period of “historically low” interest rates from roughly 2015 through 2021, the honeymoon period has long since ended. Increasing interest rates through 2022 and 2023 have contributed to instability in CRE lending. High borrowing costs have posed challenges for property owners looking to refinance ahead of looming CRE debt maturities. Recent data from S&P Global highlights that the delinquency rate for bank-backed CRE loans increased to 1.03% in Q3, marking the steepest quarterly jump “in at least five years” and surpassing the delinquency rates of the early pandemic era.

 Long-term high interest rates are also impacting transaction volume more broadly. In a recent analysis, First American Senior CRE Economist Xander Snyder highlighted that “higher rates typically lead to higher CRE mortgage rates, which make CRE deals less profitable… [incentivizing] buyers to wait on the sidelines until prices fall further.” However, the Federal Reserve’s November 1 decision to hold interest rates offers some hope as the industry looks to 2024.

 State of the Sector: Office

Across all commercial asset classes, the office sector garnered the most attention in 2023. The heightened focus was largely due to the sector’s struggle to recover from the COVID-19 pandemic. The rapid shift to remote work hit office properties particularly hard; national vacancy rates in October stood at 17.8%, a 150-basis-point increase over this time last year. Office loans also account for a significant share of the nearly $4.5 trillion dollars of outstanding CRE debt, of which nearly $1.5 trillion is expected to mature by the end of 2025. The sector’s troubles have gained renewed focus in recent weeks as former coworking giant WeWork filed for Chapter 11 bankruptcy. The move is likely to further drive up vacancy rates in key markets.

The current dynamic in the sector between vacancy rates, maturing debt, and the lingering effects of the pandemic has been nicknamed the “doom loop,” but CRE experts have cautioned that this term may be overblown. There are several bright spots moving into the new year, including an uptick in office-to-residential conversions, a decline in new construction, and a gradual shift back to in-office work policies.

Innovation: Proptech Year in Review

While proptech got off a slow start in 2023, investor confidence as well as total investment picked up in Q2 and were buoyed by a handful of key trends.

The rapid rise of AI was one of the most heavily discussed developments across the proptech industry and the tech sector more broadly. Key industry stakeholders ranging from top developers to startups to landlords have begun to incorporate AI into their business streams. While Commercial Observer cautions that the AI hype “remains for now more smoke than fire,” other experts over the course of the year have expressed their optimism for the technology’s future within the industry.

As climate change dominates the news cycle, proptech aimed at improving sustainability has also been on the rise. Propmodo recently hosted their sixth annual PropTech Challenge, in which firms competed to showcase their solutions to reduce carbon emissions from buildings. Contenders “[ranged] from purpose-built data models and emissions monitoring platforms to closed-loop geothermal wells, living walls, and carbon capture systems.” 

Proptech’s upswing in the second half of 2023 coupled with the CRE industry’s ongoing demand for innovation paint a promising picture for the new year ahead.

Ethics are an important component of our everyday lives, especially in business and in commercial real estate transactions. Ethics are the moral principles that guide a person’s behavior, or a code of moral principles practiced by a group of people, such as a code of conduct set by a business.

Since 1908, the American Bar Association's Standing Committee on Ethics and Professional Responsibility has promulgated model national ethics standards for lawyers and the judiciary and drafted ABA Formal Ethics Opinions interpreting and applying those standards. To provide guidance, the American Bar Association (ABA) has created the ABA Model Rules of Professional Conduct Rules to inform, guide, and educate lawyers. The Rules were adopted by the ABA House of Delegates in 1983.

Rule 5.1

Rule 5.1 in the ABA Rules focuses on the responsibilities of partners, managers, and supervisory lawyers. This rule states that a partner in a law firm, a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm, shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules.

Everyday Ethics in CRE

We all make mistakes, even attorneys. But what are the legal issues arising from a lawyer making a mistake? Can the issue be resolved? What steps need to be taken? Does the client need to be informed? How large was the mistake? How likely are issues to arise from the mistake? Are you familiar with ABA Opinion 481? The opinion confirms that it is a lawyer’s duty to inform a current or former client of the lawyer’s material error.

Ethics in the Digital Age

Technology and globalization have drastically changed the commercial real estate marketplace over the last two decades. Attorneys have numerous ways to communicate with their clients, store documents and interact using technology. Technology has provided the ability to shift to a global market and to offer services anywhere, anytime. All this positive technology and globalization can lead to issues with jurisdictional lines and crossing borders. To meet these new issues, the Rules were revised in 2012.

Continuing to Learn about Ethics in Business

First American Title Insurance Company’s National Commercial Services is pleased to offer our first ethics Title Camp CLE webinar in 2022. This 60-minute session will explore everyday ethics – including sources of information, disclosure of confidential information, communications, and more. Our webinar will also review ethics in the modern workplace – topics including technology, globalization, and the ABA Model Rules of Professional Conduct.

Written by: S.H. Spencer Compton and Andrew Jaeger

hbspt.cta._relativeUrls=true;hbspt.cta.load(17501, 'b2f29410-6505-4b50-bc40-f1c4d0d01cdd', {"useNewLoader":"true","region":"na1"});

Get the Latest News

PRIVACY NOTICE: Learn more about why we collect this information and how we use it.

Related posts

Governor Cuomo’s Executive Order 202.7 signed on March 19, 2020 authorized notaries public to officiate documents remotely using what is known as Remote Ink Notarization (“RIN”). RIN allows a person seeking a notary’s services, using audiovisual technology, to ink-sign a document signed at a location different from the notary.

Governor Cuomo’s Executive Order 202.7 signed on March 19, 2020 authorized notaries public to officiate documents remotely using what is known as Remote Ink Notarization (“RIN”). RIN allows a person seeking a notary’s services, using audiovisual technology, to ink-sign a document signed at a location different from the notary. The ink-sign document is then scanned and emailed or faxed to the notary who completes the notarial certificate and transmits the executed document back to the person whose signature has been acknowledged. This EO, as extended, was rescinded effective June 25, 2021.

For a foreclosure commenced in 2010 the Plaintiff elected to call due to the entire amount secured by the mortgage. That action was dismissed in 2012. In 2016, Plaintiff brought an action under New York’s Real Property Actions and Proceedings Law Article 15 (“Action to compel the determination of a claim to real property”)

For a foreclosure commenced in 2010 the Plaintiff elected to call due to the entire amount secured by the mortgage. That action was dismissed in 2012. In 2016, Plaintiff brought an action under New York’s Real Property Actions and Proceedings Law Article 15 (“Action to compel the determination of a claim to real property”) to have the mortgage canceled and discharged of record on the ground that the statute of limitations had expired. The Defendant-mortgagee asserted that Plaintiff had abandoned the property and that Defendant’s being in possession of the property since 2013 pursuant to paragraph nine of the mortgage (“Lender’s Right to Protect Its Rights in the Property”) had tolled the statute of limitations. Under paragraph 9, if the borrower abandoned the property, the mortgagee may “do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and Lender’s rights.”

Preventing wire fraud is an orchestrated effort.

At the end of yet another unprecedented year of change and evolution, the commercial real estate industry continues to thrive. But with so many transactions closing – particularly as we look toward the end of Q4 – continuing to protect our businesses from fraud remains one of our most important responsibilities.

Preventing wire fraud is an orchestrated effort.

At the end of yet another unprecedented year of change and evolution, the commercial real estate industry continues to thrive. But with so many transactions closing – particularly as we look toward the end of Q4 – continuing to protect our businesses from fraud remains one of our most important responsibilities. At First American Title National Commercial Services, we continue to practice considerable caution and employ advanced technology software that helps safeguard our clients’ transactions from fraud. That said, preventing wire fraud requires constant vigilance by all parties to the transaction, because cyber criminals are only getting smarter – and their methods more sophisticated.

We don’t just streamline your transaction. We protect it.

Each year, we see more attempts to divert transactional funds directly into fraudsters bank accounts – and every year, these fraudsters get sneakier. In fact, scammers target a third of all

We don’t just streamline your transaction. We protect it.

Each year, we see more attempts to divert transactional funds directly into fraudsters bank accounts – and every year, these fraudsters get sneakier. In fact, scammers target a third of all title wire transactions, according to ALTA[i], and in 2020 alone, more than $213 million in real estate funds went directly into fraudster’s pockets through fraudulent wires[ii]

As noted by the Supreme Court, Kings County, the issuance of a Yellowstone injunction must be predicated on an action for a declaratory judgment. Leases entered into in 2010 provided that the tenants waived the right to bring declaratory judgment actions

As noted by the Supreme Court, Kings County, the issuance of a Yellowstone injunction must be predicated on an action for a declaratory judgment. Leases entered into in 2010 provided that the tenants waived the right to bring declaratory judgment actions with respect to any lease provision or any notice sent pursuant to the leases. Based on that waiver, the tenants’ motion for a Yellowstone injunction was denied. In 2019, the Court of Appeals, in 159 MP Corp v. Redbridge Bedford, LLC (33 NY3d 353), affirmed the ruling of the Appellate Division, Second Department, holding the waiver in these leases was enforceable.