Texas Courts Begin to Allow Evictions

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Texas courts are indicating that they will not enforce a federal order that would stop evictions during the coronavirus pandemic. While Congress has approved billions of dollars to help people pay their rent to avoid eviction, many of those tenants have yet to receive any of that money. The Texas Supreme Court did not extend its emergency order, and the Texas Justice Court Training Center issued guidance essentially telling judges it’s not their job to enforce the CDC’s order. Legal aid attorneys are gravely concerned about the tens of thousands (and possibly more) who will be left homeless.

Upward Retail Trend Predicted to be Short-Lived

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Even with retail businesses taking advantage of cheaper rents and ample space, UBS predicts the upward trend will be short-lived. They estimate that 80,000 retail stores across the country will be closed by 2026.  Online shopping had contributed to the downturn for retail storefronts pre-pandemic. Stimulus dollars and consumers’ focus shifting to goods over services has recently bolstered retail, with store openings outpacing store closings for the first time in years. UBS predicts that retailers that sell office supplies, sporting goods, clothing and accessories will be the hardest hit.

Mall Vacancies Set New Record

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The vacancy rate for regional malls in the United States hit a record 11.4% in the first quarter of 2021 from 10.5% in the fourth quarter of 2020, according to Moody’s Analytics’ commercial real estate division. Shopping traffic to enclosed malls has been steadily decreasing for years due to Americans spending more online. In it’s latest quarterly report, Moody’s finds that other commercial real estate sectors are showing better progress, retail is still in crisis.

Home Appraisal Gap Causing Trouble For Home Buyers

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With the quick turn around in the home market, buyers are entering into bidding wars to secure their dream homes. Homes are selling above appraisal values creating a gap for buyers to make up. Many are tapping into retirement accounts or accepting loans from family in order to purchase their homes. With many sellers waiting in line to purchase one property, buyers must be prepared to come to the table with a substantial amount of money.

Michigan Real Estate News Headlines – April 12, 2021

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Evictions

Texas Courts Open Eviction Floodgates: ‘We Just Stepped Off A Cliff’

National

Mall vacancies jump at fastest pace on record, hitting new high, as retailers cull store counts

Amazon Is Buying Dead Malls – and the Reason Why Is Fascinating

Retailers expected to close thousands of stores even after pandemic

More retail pain ahead: UBS predicts 80,000 stores will close in the U.S. by 2026

The appraisal gap is complicating deals across the country

Detroit

Real Estate Insider: A rare opportunity to buy a former Macomb County cider mill

New office building opens next to Little Caesars Arena

Grand Rapids

WMU Cooley Law School building in downtown GR listed for $19.8M

30-unit apartment development near Medical Mile approved over neighborhood concerns

Southeast Michigan

Metro Detroit Commercial Market Report from P.A. Commercial

Historic house on 80 acres in Milford quietly sold for $1.6 million in pandemic

Real Estate Insider: A rare opportunity to buy a former Macomb County cider mill

It’s tough to be home buyer in Michigan right now — and new construction isn’t helping much

Millennials are looking for dream homes, but Michigan’s competitive housing market keeps them out of reach

Joe Dumars Fieldhouse in Shelby Township to get $1.6 million rehab as new multisport complex

Outstate

Buyers flock to Bay City, Michigan for ultra-low home prices

Weekly Brief – April 5

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My focus this week is on the impact of COVID-19 on the future of office space. Although I have previously discussed the impact of the global pandemic on retail (bad) and industrial uses (good), I have not devoted much time to the impact on the future of the office sector.

At this point, there is not a lot of hard data on the impact of the acceleration of remote work caused by COVID-19 on office users. This is mainly due to the fact that most office leases have not yet expired post-pandemic. So the choices made by tenants about the contraction of office space have not become evident in the market.

We are, however, starting to see some anecdotal evidence that office space needs will contract in the near term.

Ford will likely be reducing the number of employees working on-site. This decision will necessarily reduce the office space needs of Ford. This could have a significant impact on the Dearborn marketplace, especially. (This may have a double impact on Fairlane mall, as the mall is being reused as office space by Ford after the closure of anchor retail tenants).

DTE Energy recently announced it would be selling its office building in downtown Ann Arbor. The 400 employees at the site are either going to work remotely or be relocated to existing DTE office space in Detroit.

This week Crain’s also provided more anecdotal stories. Some smaller office users are reducing office space. New entrepreneurs are reducing office space. A large law firm is maintaining its office usage in Detroit. However, that decision may be due to the space being completed, and the lease having been signed pre-pandemic.

Also anecdotally, I have spoken to office users who have renegotiated existing leases to reduce square footage. Apparently, some landlords have decided that getting 100% rent on 50% of space from a tenant is better than receiving 0% rent on 100% of space, notwithstanding existing lease terms.

As this year progresses, I expect we will receive more hard data about the contraction of office space. Each month, more office leases will expire and be renegotiated for a renewal. I expect tenants will be signing leases for less space, and the vacancy rates will start to tick upward.

DTE Energy Pulls Out of Downtown Ann Arbor

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DTE Energy is seeking a buyer for its office building on 414 S. Main Street in downtown Ann Arbor. DTE is accepting offers for the property but has yet to set an asking price. In April 2020, the utility company pulled 400 workers out of the Ashley Mews office. Those employees began to work from home amidst the pandemic. DTE has over 5,000 employees who are working from home. The 400 employees from the Ashley Mews office will either continue to work from home or relocate to the Detroit headquarters. The utility company is protecting the arrangements they have with other tenants in the building, so the remaining occupancy in the building will remain unfazed.

Mortgage Servicers Warned to Prepare for Disaster

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The Consumer Financial Protection Bureau warns that mortgage servicers should begin reaching out to affected home owners now in order to best advise them on ways they can modify their mortgage loans. The CFPB is concerned about mortgage firms that may cause harm to struggling families and homeowners. A separate compliance bulletin said that companies that are unable to successfully manage loss mitigation can expect the bureau to take enforcement or supervisory action. According to the bureau, as of January, over 2 million borrowers have postponed their payments or failed to make them for at least three months.

Home Price Index Jumps

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According to the S&P Corelogic Case-Shiller National Home Price Index, home prices continued their acceleration in January. They jumped 11.2% year over year, the biggest gain in 15 years. Month over month, prices rose in 19 of the 20 cities tracked. Year over year, prices rose in all 20. Detroit data was included in January’s indices for the first time in a year due to interruptions in data collection due to Covid-19 shutdowns.

Shipping Container Homes Coming to Ypsilanti Township

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Darius Smith, a local developer and founder of ASJ Homes and the “What’s Up Detroit” show, has plans for at least two luxury homes built out of shipping containers, in Ypsilanti Township. He plans to have one of the homes built by this summer, which will start at $250,000. Incorporating the shipping containers, which he gets from California, keeps building costs down. The unit he’s building this year will use 6 containers to create a 1,600 square foot 3-bedroom, 2-bath home. Smith has also designed a container micro-hotel, along with a cryptocurrency utility token.