Part 1: Keeping a Close Eye on the Commercial Real Estate Market

Jul 24, 2023 | Macro Insights, No Bull Economics

The banking crisis is over, or is it? We suggest that it is a good idea to closely monitor the condition of the banks’ commercial real estate loan portfolios which have expanded to $2.9 trillion currently from $1 trillion in 2004. There are important challenges to this asset class for us to consider…

Commentary

Given higher post-covid telecommuting and increasing inner-city crimes, office occupancy rates are down and the cost of capital to fund transactions has increased significantly, pressuring commercial office prices and making it difficult to appraise collateral value.
The Green Street Commercial Property Price Index, which tracks the pricing of institutional-quality commercial real estate, is down -16% from its March 2022 peak through the end of June 2023.
Notably, the office tower at One South Street in downtown Baltimore made news after it recently sold for $24MM, representing a -64% decline from its $66MM sale price 8 years ago.
With fewer people commuting to the cities, retail demand in the urban metros is also down, pressuring retail commercial real estate values as well.
In our next post we discuss how banking regulators are preparing to deal with this challenge.

Commerical Real Estate Prices and Commercial Real Estate Loans Graph

← Learning From S&P 500 Results for YTD Period Through 7/19/23 Part 2: Regulators Make Accommodations for CRE Collateral Stress →

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2Q23 Retail Same Store Sales

NoBull’s Retail Same Store Sales Report benchmarks 80+ large consumer retail companies by domestic same store sales including annual (2019 – 2022) and quarterly results (2Q22 to 2Q23).

Walmart Investor Presentation: Inflation Here to Stay

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Interesting Conversation with Fed Chair Powell

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The Problem with Investment Diversification

Every investment advisor and business student knows that portfolio diversification is key to wealth building. Show me an investor who can beat the S&P 500 Index by buying a few handpicked stocks and I will show you a hedge fund manager in the making. However, there is a huge problem with this strategy that no one is talking about.

Part 3: Analyzing Performance of Low-Income Oriented Retail Companies

We created an index for the financial performance of 5 low-income oriented retail companies to assess the health of this demo. While we recognize that these companies have benefited from the trade-down of higher-income consumers, things look reasonable at least through calendar 2Q23.

Part 2: Incremental Interest Payments Squeeze Disposable Income

In this post, we quantify the pressure on disposable income driven by credit card & auto loan payment increases since the onset of the Fed rate hikes in early 2022 in addition to the impact of the coming resumption of student loan payments in October 2023.

Part 1: Keeping an Eye on the Consumer’s Top-Line

The consumer’s top-line benefits from a high employment rate, generous raises, and a healthy savings rate which indicates an income surplus.

Teenage Wasteland No More

The American youth (15 – 24-year-old) unemployment rate makes our country look downright productive compared to the rest of the world!

The Fight for Global Manufacturing Gets Personal

Post-covid U.S. exports of goods & services have skyrocketed as American companies have worked hard to onshore their supply chains, providing them with products to sell overseas. Correspondingly, U.S. imports from China have fallen considerably since late 2022 after China’s extended covid lockdowns left their American customers without product to sell.

China’s Deflation Looks Pretty Good Compared to U.S. Inflation

While the U.S. has been suffering from severe post-covid inflation, China’s prices have been spiraling lower. What’s up with that?

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