Current Affairs
January 29, 2025
Office Market Rebounds
Investors Who Shunned the U.S. Office Market Are Coming Back
Investors who shunned the beleaguered U.S. office market in recent years are coming back, brightening the outlook for the sector after five years of turmoil.
Some investors are buying premium-quality buildings that are burdened with debt, or scooping up half-empty towers for pennies on the dollar. Others are bidding on obsolete office properties with an eye toward converting them to apartments. Some big foreign investors are showing renewed interest, hoping to beat what they believe will be an even larger surge of buying later in 2025.
“People are making their bets,” said Gary Phillips, managing director of real-estate investment banking firm Eastdil Secured.
The volume of office building sales increased to $63.6 billion in 2024, up 20% from 2023, according to data firm MSCI. That activity still pales compared with 2015 to 2019, when volume averaged $142.9 billion a year. But it marked the first increase since 2021.
And with a lot of cash sitting on the sidelines, brokers expect sales activity to continue to accelerate in 2025. Opportunistic real-estate funds had $196.8 billion available at the end of last year, up from $179.9 billion at the end of 2020, according to data fund Preqin.
Norges Bank Investment Management, the giant Norwegian sovereign-wealth fund, last month purchased the 50.1% stake it didn’t own in eight office properties in Boston, San Francisco and Washington, D.C., in a deal that valued them at $1.9 billion.
Norges last year also bought an office building on Sand Hill Road in Menlo Park, Calif., a strip filled with venture-capital firms. The two deals last year were the fund’s first U.S. office investments since 2018.
“We see an opportunity being a very large capital source that is willing to write checks in a sector that most of our peers are still not willing to invest in,” said John McCarthy, head of U.S. real estate for Norges.
The budding buying spree offers more encouraging news after the rise of remote work and the increase in interest rates greatly depressed office values.
Now, investors point to a pickup in leasing activity as businesses start requiring workers to be back in offices more.
“We hear from customers they’re going to continue bringing more workers back to the office. In many cases, they don’t have enough space to accommodate the transition,” said Colin Connolly, chief executive of Cousins Properties. His firm bought office properties in Atlanta, Austin, Texas, and Charlotte, N.C., recently.
Certain business districts are also experiencing shortages of the most desirable space and rising rents because there has been practically no new development in recent years.
Owners of high-quality office buildings in good markets “should be on much better footing to start the new year than they have in recent memory,” real-estate analytics firm Green Street said in a January report.
A venture of investment manager Hines and Rialto Capital has raised nearly $750 million for a debt fund, after banks and other lenders have fled the office market.
The partnership is targeting well-leased office buildings that are having trouble finding lenders. It is also looking to lend to buyers of office buildings sold at huge discounts from what they were worth before the pandemic.
Office towers acquired at cut-rate prices offer the new owner a lot more flexibility. “By financing an asset reduced in price, it allows owners to lower rents,” said Alfonso Munk, co-head of investment management for Hines.
The office market still faces a number of challenges, including high vacancy rates and loan delinquencies. Many investors remain leery about the sector and favor other types of commercial real estate, such as multifamily buildings or warehouses.
Values for less than premium grade A office buildings are about 35% to 60% lower than they were before the pandemic, according to Green Street.
But more sellers are finally capitulating. Many had been hoping that interest rates would fall further this year, boosting commercial property values. Recently, the Federal Reserve indicated that it would likely keep rates steady, convincing more owners to put their properties on the block.
“Rates aren’t going to be the saving grace that a lot of people thought,” said Dylan Burzinski of Green Street.
Some buyers are even ready to take a chance on buildings that are located in prime locations near transport hubs but are struggling with debt and too much empty space. New York landlord RXR this month acquired a 49% stake in a Midtown Manhattan tower. (The building is home to Fox Corp. and Wall Street Journal owner News Corp.)
The 2 million-square-foot building is losing one of its largest tenants, which will drive vacancy up to about 25%. It also has $1 billion of debt coming due this year, making it tricky to refinance because of high rates.
RXR is planning to invest more than $300 million to attract new tenants by adding a new entrance, new plaza and gym. The firm can afford to do this because its purchase of a 49% stake values the building at $1.3 billion, including the new capital. That is about $700 million less than the building was worth in a 2015 refinancing.
“If we can come in and fix the capital structure, we’ll have no problem leasing the space because the market has gotten stronger,” said Scott Rechler, RXR’s chief executive.
January 23, 2025
Wood Coatings Update
Wood coatings market to reach $15.18 billion by 2030
By Dakota Smith
January 22, 2025 | 11:49 am CST
NEWARK, Del. — The global wood coatings market is poised for significant growth, with demand expected to reach $15.18 billion by 2030. Driven by increasing construction activities, furniture production, and the rising demand for protective and aesthetic solutions, The market is projected to expand at a robust CAGR of 6.2% during the forecast period from 2025 to 2035.
Residential end-user is the largest market for wood protection products, driven by maintenance demand for items such as fences, siding, and decks. Non-residential and non-building use account for a much smaller market for wood protection products.
Market growth drivers:
- Housing market expansion: The steady growth of the housing sector, especially in emerging economies, has significantly boosted the demand for wood coatings. The need for durable and visually appealing wooden furniture and flooring is a major contributor to market growth.
- Preference for eco-friendly solutions: Consumers and industries alike are shifting towards low-VOC (volatile organic compound) and water-based coatings to meet stringent environmental regulations and reduce the carbon footprint.
- Rising renovation and remodeling: The increased frequency of home renovations, spurred by urbanization and lifestyle changes, has escalated the use of wood coatings in the maintenance of doors, cabinets, and furniture.
- Technological advancements: Innovations such as UV-cured coatings and nanotechnology-based products have enhanced the durability, scratch resistance, and aesthetic quality of wood coatings, broadening their applications.
Trends in the wood coatings market:
- Sustainable coatings: As sustainability becomes a priority, manufacturers are developing bio-based coatings derived from renewable resources. These products cater to environmentally conscious consumers and comply with global sustainability goals.
- Growth in UV-cured coatings: UV-cured coatings are gaining traction due to their quick drying times and superior finish, offering cost-effective solutions for industrial applications.
- Customization: Consumers’ demand for unique and personalized finishes has spurred the development of customized color palettes, matte finishes, and textured coatings.
- Expanding applications in construction: Beyond furniture, wood coatings are finding increased use in architectural applications such as wood paneling and decking, driven by growing infrastructural projects worldwide.
January 20, 2025
Another Gulf Coast Freeze This Week
Extreme Cold, Snow Places Texas Power Grid & Permian On Alert
by Tyler Durden
Monday, Jan 20, 2025 – 03:00 PM
Texas’ top electricity regulator issued a “Weather Watch” from Monday morning through Thursday, citing “extreme cold weather” and the potential for snow, which could send electrical demand soaring across the state.
According to the National Weather Service, snow is forecasted to begin in Houston on Monday evening and accumulate to upwards of 4 inches by Tuesday. After the snow, frigid temperatures are expected to sweep in, bringing dangerously cold conditions that could jeopardize the power grid and energy infrastructure.
“Weather Watch goes into effect today through January 23 due to forecasted extreme cold weather across the ERCOT region, higher electrical demand, and the potential for lower reserves,” the Electric Reliability Council of Texas wrote on X, adding, “Winter precipitation is also expected across parts of the state. Grid conditions are expected to be normal.”
Tony Fracasso, a senior branch forecaster at the US Weather Prediction Center, said, “It’s a significant storm for so far south.”
“It looks like almost the entirety of Texas has some chance of wintery precipitation,” Fracasso noted.
The early alert issued by ERCOT implies that extreme cold could pressure the power grid. ERCOT stated that peak electricity demand is expected to rise over the next two days, reaching about 77.2 gigawatts. Even though ERCOT predicts high demand, it anticipates having sufficient supply to meet demand.
“As freezing temps blanket Texas, the power grid is performing better than ever,” Governor Greg Abbott wrote on X Sunday evening, adding, “There is ample supply of power available to meet your needs.”
Besides potential grid strains, frigid temperatures could curtail natural gas supplies due to the freezing of oil and gas wells and pipes, known as “freeze-offs” by energy analysts.
On Tuesday, West Texas temperatures will average around 29F. Through Saturday, average temperatures in the oil-rich Permian basin will remain below the 30-year average of 47F for this time of year. This cold could disrupt oil and gas output by freezing water in wells and pipelines.
Ahead of the snow, Houston Airports announced that flights at George Bush Intercontinental Airport, William P. Hobby Airport, and Ellington Airport will be suspended on Tuesday morning.
The storm is expected to blanket snow across the Gulf Coast and Deep South coastal areas.
Meteorologist Tony Pann questioned if this wintery weather for the Gulf Coast was a “once-in-a-lifetime event“…
Here’s our latest reporting on the polar vortex and energy markets:
- Goldman: “Cold January” & “Record LNG Demand” Drive Upside Risk In Natty Prices
- Incoming: “Big Dumps Of Cold Air. Reminiscent Of 2013/14 Winter”
- Doesn’t Fit MSM Narrative: Parts Of US Could Rival Coldest January Since 1977
- Polar Vortex, Back-To-Back-To-Back Winter Storms Target Eastern Half Of US
Where did global warming go? Please come back.
https://www.zerohedge.com/weather/extreme-cold-snow-places-texas-power-grid-permian-alert
January 20, 2025
Single Family Starts Increase in 2024
Housing starts end 2024 on an up note
By Larry Adams
January 17, 2025 | 10:32 am CST
Photo By NAHB
WASHINGTON — The National Association of Home Builders is reporting that housing starts in 2024 ended on an “up note.”
The association representing more than 140,000 members said the positive results were fueled by solid demand, single-family construction moved higher in December despite several headwinds facing the industry, including high mortgage rates, elevated financing costs for builders and a lack of buildable lots.
Overall housing starts increased 15.8% in December to a seasonally adjusted annual rate of 1.50 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the highest rate since February 2024.
The December reading of 1.50 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 3.3% to a 1.05 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 61.5% to a 449,000 pace.
Total housing starts for 2024 were 1.36 million, a 3.9% decline from the 1.42 million total from 2023. Single-family starts in 2024 totaled 1.01 million, up 6.5% from the previous year. Multifamily starts ended the year down 25% from 2023.
“Single-family home building increased 6.5% for 2024, as builders added more supply in a market continuing to face a housing affordability crisis due to elevated mortgage interest rates and higher construction costs,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “Nonetheless, the industry expects to see a slight gain for single-family home building in 2025 because of a persistent housing shortage and ongoing solid economic conditions.”
“While December was a solid month for apartment starts, the sector ended 2024 down 25% in terms of total starts,” said NAHB Chief Economist Robert Dietz. “In December, and on a three-month moving average basis, there were 1.7 apartments completing construction for every one apartment starting construction. Multifamily construction will stabilize later in 2025 as more deals pencil out, with the industry supported by a low national unemployment rate.”
Looking at regional housing starts data for 2024, combined single-family and multifamily starts were 9.1% higher in the Northeast, 0.1% lower in the Midwest, 5.2% lower in the South and 7.7% lower in the West.
Overall permits decreased 0.7% to a 1.48-million-unit annualized rate in December and were down 3.1% compared to December 2023. Single-family permits increased 1.6% to a 992,000-unit rate but were down 2.5% in December compared to the previous year. Multifamily permits decreased 5.0% to a 491,000 pace.
Looking at regional permit data for 2024, permits were 1.5% higher in the Northeast, 3.5% higher in the Midwest, 3.1% lower in the South and 6.6% lower in the West.
Total permits for 2024 were 1.47 million, a 2.6% decline from the 1.51 million total from 2023. Single-family permits in 2024 totaled 981,000 up 6.6% from the previous year, a positive sign for 2025.
The number of single-family homes under construction was down 5.3% from a year ago, at 641,000 homes. The number of apartments under construction was down 21% from a year ago, at 790,000. The count of apartments under construction peaked in July 2023 at 1.02 million and has been trending lower since that time.
https://www.woodworkingnetwork.com/news/woodworking-industry-news/housing-starts-end-2024-note
January 12, 2025
Bankruptcies Up in 2024
Commercial Chapter 11 Filings Increase 20 Percent in Calendar Year 2024
Commercial Chapter 11 Filings Increase 20 Percent in Calendar Year 2024
Total Bankruptcy Filings Up 14 Percent
NEW YORK/ALEXANDRIA – Jan. 3, 2025 — Commercial chapter 11 filings increased 20 percent in calendar year 2024 to 7,879 from 6,583 filings the previous year, according to data provided by Epiq AACER, the leading provider of U.S. bankruptcy filing data. Overall commercial filings increased 17 percent to 30,009 from the 25,731 registered the previous year.
Small business subchapter V elections within chapter 11 also experienced a substantial increase in calendar year 2024, as the 2,381 filings represented a 32 percent increase from the 1,808 recorded in 2023. Note that the pace of subchapter V and consumer chapter 13 filing increases slowed after enhanced debt limits for both filing categories expired on June 21, 2024.
Total bankruptcy filings in calendar year 2024 were 508,758, a 14 percent increase from the 445,286 registered during calendar year 2023. While representing a substantial year-over-year increase, total bankruptcy filings remain lower than the pre-pandemic total of 757,816 recorded in CY2019.
“As anticipated, we saw a steady increase in bankruptcy filings throughout 2024 and expect that growth trend to continue throughout 2025,” said Michael Hunter, Vice President of Epiq AACER. “If the current trend continues, new bankruptcy filings will return to pre-pandemic normalized volumes over the next 24-30 months. Modest rises in household debt and elevated delinquency rates reveal the stress households are experiencing and are reflected in the steady increased bankruptcy filing trends.”
Overall consumer filing totals for calendar year 2024 were 478,749, representing a 14 percent increase from the 419,555 consumer filings the previous year. Consumer chapter 7 filings increased 19 percent to 288,968 in CY 2024 from the previous year’s total of 242,919. The 188,934 consumer chapter 13 bankruptcy filings during calendar year 2024 registered a 7 percent increase over 2023’s total of 175,977.
“The continued increase in bankruptcies over the past year reflects the growing list of economic challenges faced by consumers and businesses,” said ABI Executive Director Amy Quackenboss. “Rising interest rates, inflation, increasing geopolitical tensions and shifts in post-pandemic consumer spending have more struggling businesses and families turning to bankruptcy for a financial fresh start from their growing debt loads.”
Total bankruptcy filings were 38,121 in December 2024, an 11 percent increase from the December 2023 total of 34,486. The consumer bankruptcy filing total of 35,793 also represented an 11 percent increase from the 32,391 consumer filings in December 2023. Consumer chapter 7 filings were 21,918 in December 2024, up 17 percent from the 18,718 chapter 7 filings in December 2023, while consumer chapter 13s only increased 1 percent to 13,804 in December from 13,629 the previous year.
Overall commercial filings also increased 11 percent in December 2024, as the 2,328 filings were up from the 2,095 commercial filings registered in December 2023. The 553 commercial chapter 11 filings in December represented an 8 percent increase from the 510 chapter 11 filings in December 2023. Subchapter V elections within chapter 11 increased slightly, as the 188 filings in December 2024 were up 2 percent over the 185 filings recorded in December 2023.
ABI has partnered with Epiq AACER to provide the most current bankruptcy filing data for analysts, researchers, and members of the news media. Epiq AACER is the leading provider of data, technology, and services for companies operating in the business of bankruptcy. Its Bankruptcy Analytics subscription service provides on-demand access to the industry’s most dynamic bankruptcy data, updated daily. Learn more at https://bankruptcy.epiqglobal.com/analytics.
About Epiq
Epiq, a global technology-enabled services leader to the legal industry and corporations, takes on large-scale, increasingly complex tasks for corporate counsel, law firms, and business professionals with efficiency, clarity, and confidence. Clients rely on Epiq to streamline the administration of business operations, class action, and mass tort, court reporting, eDiscovery, regulatory, compliance, restructuring, and bankruptcy matters. Epiq subject-matter experts and technologies create efficiency through expertise and deliver confidence to high-performing clients around the world. Learn more at www.epiqglobal.com.
About ABI
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 10,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abi.org. For additional conference information, visit http://www.abi.org/calendar-of-events.
Friday, January 3, 2025
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