Manhattan Residential Leasing Is Booming, But Is It Enough?

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With the presidential election behind us and the COVID-19 vaccine on the horizon, renters feel a bit more certain about the market. But is this boom point to a recovering leasing market? Leasing trends were already on a downturn when the pandemic hit in March. Manhattanites were leaving for suburban living. Rental rates spiraled downward to 17.3% lower than those of the previous year. The upward trend is encouraging, but there’s still a lot of inventory and record concessions and vacancies. Whether the lease boom is a mirage remains to be seen.

Downtown Detroit Has Glut of Condos – One Year Supply On Market

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Based on an analysis by a Detroit residential broker, there is a one-year supply of condos for sale in the Downtown Detroit market. According to the broker, 4-6 months is considered a “balanced” market, so the existing one-year supply is a clear buyer’s market. It appears the rush to develop new condos in Detroit to meet rising demand happened too quickly, with a glut now on the market. There are successes, to be sure, but the pricing of some condos appears to be aggressive for the market.

Allen Park’s “The Hill” Welcomes New Aldi Store

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Allen Park’s Fairlane Green Shopping Center, otherwise known as “The Hill”, is slated for an Aldi store. The exact date of the renovations or start of the project is unknown at this time. The new Aldi store will take the place of the Staples Office Supply store. In addition, Crafty Crab restaurant, Aspen Dental, and Dunkin’ will join the shopping center. Grocery is one of the more resilient retail categories.

Thousands of St. Louis Evictions Promise a Wave of Homelessness

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Thousands face eviction in St. Louis, Missouri. The backlog of eviction suits threatens to leave many homeless, especially low-income tenants. An eviction defense program and hotline that was set up in August 2020 has received 60% more calls than normal, and many of those calls concern illegal lockouts. The backlog of eviction suits is concerning, with the fear being that all of these tenants may be put out all at once when the eviction moratorium ends.

Postponed Detroit Projects Dependent on Pandemic Effects

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The pandemic brought Detroit area projects to a screeching halt. By summer, many of them had resumed. The outcome of these projects, ranging from apartment developments to a small-format Meijer, hinges on how many office workers return to Detroit, how soon sports fans will feel safe at sporting events, if restaurants and hotels will fill up again, and if Detroit-area lofts will remain as desirable as they were pre-pandemic.

Weekly Brief – January 18, 2021

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This week I want to focus the discussion on cannabis-related property. This has been one of the more interesting market segments the past few years, as the laws and regulations surrounding the use have evolved quickly.

The use of a property for a cannabis-related purpose is subject to significant obstacles. First, the property must be permitted for cannabis use under local zoning. Second, the property must be appropriately licensed under Michigan law. A property may be licensed for the sale of only medical marijuana, or for recreational marijuana. There are also licensing issues for individuals who own or work for the businesses operating at the cannabis business.

In order to complete the purchase or sale of a cannabis-related property, there are also private-market concerns. Most financial institutions will not loan against a cannabis-related property. This remains true notwithstanding the fact that marijuana is “legal” under state law. Marijuana remains illegal under federal law. Many financial institutions are concerned that lending on cannabis-related properties might run afoul of federal banking regulators.  There are, however, some financial institutions that are dipping toes into the water on this issue.

Another private-market concern is that there is currently only one national title insurance underwriter (Westcor Land Title Insurance Company) that will issue title insurance on cannabis-related uses. As most lenders will require a loan policy of title insurance, this poses another limitation on these transactions. (Shameless plug: Midwest Title issues title insurance for, among others, Westcor).

The federal regulatory and legal issues may change under the Biden Administration. Actually, the biggest chance for federal changes arose from the results of the Georgia Senate runoffs. Because those elections resulted in a shift of control from the Republicans to the Democrats in the Senate, there will be a change in the Chairperson of the Senate Banking, Housing, and Urban Affairs Committee. The current GOP Chairperson, Sen. Mike Crapo of Idaho, has been firmly opposed to the SAFE Banking Act, which would allow federally-chartered financial institutions to handle cannabis-related funds. With a change in control of the Senate, Sen. Crapo will no longer be Chairperson, and there appears to be a greater likelihood of passage of the SAFE Banking Act.

If cannabis-related uses are fully authorized at the state and federal level, there could be a flood of new cannabis-related market participants. We are already starting to see the “professionalization” of cannabis businesses, as national companies move into the segment. However, the zoning and state licensing requirements will still limit the available properties for cannabis use. This may have the impact of driving prices up for cannabis-related property further, as the demand may increase.

Industrial Development Plan in Western Oakland County Heads to City Council for Review

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The former Ford Assembly Plant on Wixom Road is the site of a a new redevelopment plan proposed by Flint Development, a Kansas City, Missouri-based company. The plan proposes to construct over 1.5 million square feet of warehouse and industrial space north of the current retail development on the site and promises to create 750 jobs in the first phase. Overall, it’s a $120 million investment.

First Cannabis Retail Location Opening In West Michigan

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The Gage Cannabis Company opened the doors to the first provisioning center in West Michigan, located in Grand Rapid. Gage prides itself on three things: Cannabis, culture, and community. The retailer is already working on the community focus by providing vouchers to area small businesses for their patients. The company is on the move with a goal to operate over 20 locations by the end of 2021.

Northern Michigan Small Retail Businesses Pivot in Pandemic Times

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Two Boyne City small businesses are vacating their store fronts. However, it’s not goodbye. The Outdoor Beerdsman, a retail store, is moving to online sales. The difficulty in securing available workers has pushed the owner toward a virtual storefront that will include a sister company.  The second business, Long Road Distillers, is relocating to Charlevoix and is awaiting its liquor license.

Home Value Disparity Cripples Detroit Black Homeowners

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The disparity between the average national home value and that of Detroit’s black homeowners has tripled in recent years and has far-reaching consequences for future generational wealth. While some attribute the gap to ongoing systemic racial issues and the foreclosure crisis, one professor of architecture and urban planning feels the study that produced the data is flawed. In the current year, there are no signs of the gap widening further, but also no signs the gap is shrinking. For a great discussion of the role of redlining in impeding African-American wealth, view the PBS documentary The House We Live In.