A weekend topic starting with the Associated Press. "While REITs overall are lagging the broader stock market this year, apartment REITs are among the worst-performing. The 15 apartment REITs included in the Nareit index have a negative total return of 26.2%. 'It’s totally a renters’ market in those large metros,' said Joshua Clark, economist at Zillow Group. 'In many cities we’re seeing extremely high shares of listings with concessions, the vast majority being actual months of free rent.'"

The Real Deal on New York. "An appraisal of Kushner Companies’ 248,457-square-foot retail condo at 229 West 43rd Street slashed its value by 80 percent, to $92.5 million, from $470 million in 2017, according to Trepp. The property is now valued well below the $225 million commercial mortgage-backed securities loan backing the property. The appraisal’s drastic reduction shows how severe the pandemic’s impact has been on Times Square retail. With tourism falling by more than 80 percent and nearly 9 in 10 office employees still working remotely, retailers in Times Square are vacating and landlords are finding it difficult to find new tenants."

"Kushner bought the property for $296 million in 2015 from Lev Leviev’s Africa-Israel. The company soon secured $370 million in refinancing, including a $70 million mezzanine loan from Paramount Group, a $15 million mezzanine loan from SL Green and a $285 million CMBS loan from Deutsche Bank."

From New York 1. "One landlord in Brooklyn says many building owners are suffering like their tenants. Deferred mortgage payments may have helped earlier in the pandemic, but those amounted to 'kicking the can' down the financial road, and allowing debt to pile up. Garo Yellin is a landlord in Brooklyn. He agreed to give all his commercial and residential tenants a break but laments the lack of assistance for property owners who own one or two units or small buildings. He says many owners are not the commercial realty giants."

"'Mortgages, taxes, insurance, maintenance — all with zero, mainly zero, help with any of that,' Yellin says."

The Real Deal on Florida. "The pandemic brought especially bad timing for the owner of a South Beach hotel, which purchased it last year, embarked on a multimillion-dollar renovation, and ended up losing its investment. Leste Group and its partner, Moto Capital Group, last month foreclosed on the newly renovated Lord Balfour Hotel on Ocean Drive, The Real Deal has learned. In August of last year, the U.S. arm of Henley, a United Kingdom-based private equity firm, paid nearly $35 million for the Lord Balfour."

"More UCC foreclosures are expected in South Florida as some hotel owners opt to walk away from whatever equity they have in their properties. Experts say many highly leveraged borrowers are at a crossroads, deciding among selling at a discount, throwing the keys back to their lenders, or buying more time from lenders."

"Without a federal bailout, an estimated 38,000 U.S. hotels could close permanently, while another 28,000 are at risk of being foreclosed on, according to the American Hotel & Lodging Association. Last month, the Luxe Rodeo Drive Hotel in Beverly Hills closed for good, after having embarked on a full renovation just before Covid hit."

The Dallas Business Journal in Texas. "The Cooper’s 390 units that hit the market last month were among 6,665 apartment units completed in the third quarter of 2020 in Dallas-Fort Worth — the most completions in the nation, according to Richardson-based multifamily housing analytics firm RealPage Inc. DFW additionally remains the country’s construction leader by a big margin, with ongoing development totaling 40,349 units."

"Cindy Harris, vice president of development at Lang Partners, said she’s concerned that the market may be reaching an oversupply. 'Market-wide, DFW-wide, I think it’s going to be a real challenge over the next year or so at minimum,' Harris said. 'We have a declining job market and we have a growing level of supply. Those are not usually metrics that favor the apartment business.'"

"DFW apartment developers could be overbuilding if too many of the new units that hit the market by year-end are in luxury complexes, said Rob Warnock, research associate at Apartment List. 'Right now, a lot of people are looking to cut back on their housing spending, not promote themselves to a nicer apartment,' he said. 'Even before the pandemic, luxury apartments had been coming up faster than people were occupying them. Those are the units that are in oversupply.'"

From Bisnow. "Many CRE experts are predicting the worst pain is yet to come, and unless more federal stimulus or a vaccine hit the market in the next few months, the industry may see a larger wave of business closures, loan delinquencies and foreclosures. Nearly one-quarter — 22.94% — of lodging commercial mortgage-backed securities loans were delinquent at the end of September, according to Trepp Analytics data."

"One-third of hotel asset managers report fears of imminent default, foreclosure or a forced sale of their asset, according to Hospitality Asset Managers Association's October survey of 100 members. About 60% predict a 50% to 75% decline in revenue per available room compared to budget for their entire portfolio, HAMA noted. Some retailers also are on their last leg. Retail delinquencies associated with CMBS loans have been rising for months, from 7.86% in June to 14.76% in September, Trepp data shows."

"'We don’t subscribe to the idea that retail is dead at all, but obviously there are some headwinds, and I think we are in a period of price discovery around retail,' said CBRE Global Chief Economist Richard Barkham. 'Economists overall stress there is some runway left for asset owners facing a financial squeeze, but time is running out. 'We are starting to see a lot of distress in the CMBS and the lending market, so a lot of properties are behind on their interest payments and their mortgage payments for sure,' Moody's Analytics REIS CRE Economist Barbara Denham told Bisnow."

From Socket Site in California. "Rents in Oakland mostly held firm through June. But as we highlighted back in July, signs of weakness had emerged. And with the weighted average asking rent for an apartment in Oakland having just dropped to under $2,400 a month, asking rents in the city are now down 19.6 percent on a year-over-year basis and roughly 21 percent below a 2016-era peak of closer to $3,000 a month, with the average asking rent for a one-bedroom in the city having just dropped to under $2,000 a month (versus closer to $2,500 at peak)."

"At the same time, listing activity for apartments in Oakland has nearly doubled since the end of June and is up over 60 percent versus the same time last year. And while the jump in listing activity in Oakland still lags the even larger jump in San Francisco, as does the relative decline in rents, the gaps continue to close (with San Francisco rents now down around 23 percent on average)."

From The Counter on California. "It’s odd to talk about 'silver linings' when the National Restaurant Association says that 100,000 restaurants have closed, and another 40 percent predict they likely won’t survive another six months without further aid. But that’s how realtor Miriam Janousek described a spate of openings built on top of other businesses’ demise in Ocean Park, a beachside neighborhood in Santa Monica, California. For months, she said, the Main Street business district felt like 'a ghost town, a scary place with an ominous feeling,' but new businesses have begun to sprout in long-vacant spaces."

"Edobox is the first but not the last fast-casual project from Chef Makoto Okuwa, best known for full-service restaurants in Miami, Mexico City, Panama City, Panama and São Paolo, Brazil. One business partner, Sky Strouth, surveyed the work in progress just days before opening and agreed: For better or worse, and it’s both, this is the future, and they intend to make the most of it."

"'Smart people are making deals right now,' said Strouth. 'Deals are good—and unfortunately, the hard part of that is that someone went out of business to make it so. Capital’s frozen up at food halls, people sitting back and waiting' until indoor dining eases up, said Strouth, 'so we decided to do something else.' Another food-hall project in Washington, D.C., probably won’t open until the end of 2021."

The Portland Business Journal in Oregon. "Two separate Californian buyers bought apartments in Gresham for a combined $42 million. A Canadian real estate trust picked up ones in Hillsboro for $48.2 million. Yet another buyer snagged 90 multifamily units in Vancouver for $20.5 million. You might think the apartment-building market is hot right now. Not so, say the numbers."

"The pandemic has hit four pillars of the real estate market in different ways. Retailers are getting pummeled. Many offices are sitting unoccupied. Industrial properties are holding strong, reinforced by e-commerce. 'Multifamily kind of fits in the middle,' said Gary Griff, C&W’s senior director of capital markets. Even before March, the multifamily market was overbuilt, with plenty of new development coming in the past four or five years and vacancies increasing. 'Since the pandemic, it’s dramatic,' he said."

"Newer, amenity-rich apartments are leasing up slowly, Griff said, noting that he’s aware of some in town where occupancy has stalled at about 80 percent and rents are 10 percent to 15 percent lower than expected. Free rent and free parking have become tenant concessions, he said."

The Washingtonian. "The latest data evaluating Washington’s luxury apartment market shows the Covid-19 pandemic continues to seriously impact both rents and vacancies. On average, rents in the types of high-end, amenity-packed buildings that have proliferated in Washington are down 10.7 percent within the city of DC, and 7 percent metro area-wide, compared to the same time last year."

"Delta Associates, an authority on local commercial real estate, released the findings this week in its 2020 third quarter report, concluding: 'The unprecedented nature of the pandemic and the resulting prolonged economic slowdown in its wake has impacted the apartment market more than initially expected.' Indeed, the third quarter stats show the rental market has become even weaker than it was during the second quarter of this year."

"But even as prices fall, tenants are moving out: Inside the city, buildings are 7.8 percent vacant, up from 4.4 percent last year. Throughout Washington, the vacancy rate is 5.5 percent, compared to 4.3 percent in September 2019. Rents have been particularly affected in DC’s core downtown areas—including Logan and Dupont circles, Mount Vernon Triangle, and the West End."

"Combined, the average rent in those places is down 12.7 percent from last year. Capitol Riverfront and the Southwest Waterfront aren’t far behind—rent is down 12 percent there. Upper Georgia Avenue, Columbia Heights/Shaw, and NoMa/H Street have seen rents fall 11.7 percent, 10.6 percent, and 10.1 percent respectively."