Weekly Advantage | August 18th

COVID challenges are hurting again, but not all the news is bad…..

Quote of the Week:

“The renewed plunge suggests the latest wave of virus cases driven by the Delta variant could be a bigger drag on the economy than we had thought…” – Andrew Hunter, economist at Capital Economics.

EconomyConfidence DropsReuters

  • Delta variant, plus growing inflation, is hurting consumer outlook.
  • Largest month-over-month drop in a decade.

We’ll stay tuned, and update.

However…some good news…..

Chart of the Week:

Business-sector productivity rose 2.1% from the second quarter of 2020 to the second quarter of 2021. Manufacturing productivity increased 6.8% from the same quarter a year ago, as output increased 16.5%.

InvestmentCRE deal volume upMultiple Sources

Industrial Logistics costs are actually downLogistics Management

  • Logistics only represented 7.4% of U.S. GDP, a decline from recent years, and near the all-time low of 7.36% of GDP in 2016.
  • By comparison, in 1980, business logistics costs were slightly above 19% of GDP.
  • Last year’s ratio was helped because the national economy shrank by 3.5% to $20.94 trillion while logistics costs shrank 4% to $1.56 trillion.

RetailMalls doing well Globe St.

  • Foot traffic in outdoor malls grew 20.8% in July from June, while visits to indoor malls went up 10.6%.
  • “It turns out that malls are much more resilient than many expected, and shoppers’ forced separation from these emblems of American retail seems to have rekindled an old flame.” – Shira Petrack,Placer

RetailTaco John’sIntrado

  • GR-based Meritage Hospitality is in agreement to open 50-150 new franchise restaurants.

Office Medical OfficeBisnow

  • Attracting workers/visitors back to a medical office is harder than ever. Amenities and “space” are as important as ever.

Office Continued shift to co-working/remote office spaceWall Street Journal

  • 500+ NYC-based State Street employees will be moved to remote or co-working office space.
  • Goldman Sachs is considering a similar move, citing cost and new work mentalities.
  • While Grand Rapids is not New York City, the evidence is clear that this is real and happening on a large scale.

Stat(s) of the Week:

  • According to the National Retail Federation, the average household will spend $848 on back-to-school supplies this year!
  • Core CPI was up 4.5%, the highest increase since 1991.

A Look Ahead from our friend KC Conway:

“The impact of COVID-19 will continue to be felt for years to come. For CRE professionals, this tumult can also be an opportunity. CRE professionals focused on the office sector may be called upon by tenants and office property owners to transition their office needs from one centralized site to various locations. Retail will continue to change and evolve to adapt to the transition from a shop-and-take-home economy to an order-online-and-deliver-to-me economy. And with respect to multifamily, we just don’t yet know what we don’t know until the rent forbearance and stimulus programs end. Like office, the opportunity in multifamily is likely in the suburbs and secondary MSAs where the remote workforce will settle out. Analyzing markets to answer these burgeoning issues are among the opportunities for industry pros to position themselves as essential advisers to existing and new clients in 2H2021 and 2022.”

Keep up the momentum!

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