01/06/2023
Featured Blog Post
Reflecting & Reevaluating
It may be reevaluation time from projects you purchased or developed in 2019/2020.
Have you ever thought, "I've owned this property for a few years, and I would like to compare my initial proforma projections with the actual performance?"
Furthermore, you want to combine historical performance with updated future projections and see how it compares to your pre-purchase estimations.
Going even deeper, you may desire to forecast the price you'd need to sell your asset to achieve the original IRR projection you initially made years ago.
In this week's blog post, I show you how you can amend the IRR waterfall model to combine past historical performance with future projections to stress IRR return parameters.
If you read this blog post and think the tutorial would be a good long-term addition to the paid models, please reply to this email and let me know.
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Economic Trends Affecting CRE
More Tech Layoffs: Amazon announced that they'd lay off 18,000 employees, while Salesforce plans to lay off 8,000 workers (about 10% of the workforce).
National Debt: Per FiscalData, the current national debt sits at $31.3 Trillion, and the 2022 "Debt to GDP" ratio was 124%, slightly lower than the all-time high of 128% in 2020 (1).
December Jobs: The December Jobs report was a minor beat, with the U.S. adding 223,000 jobs, slightly above the estimated 200,000 (2).
Unemployment & Labor Force: December unemployment fell to 3.5%, and labor participation increased from last month to 62.3% (2).
Moderate Wage Growth: December annual wage growth came in at 4.6%. To put that in perspective, the annual wage growth in January 2022 was 5.7% (2)(3).
*Source articles () are linked at the end of the email. These source articles are jam-packed with interesting data points that should be investigated further.
Labor Statistics Snapshot
Year-over-Year Labor Force Growth Summary (November)
Top 5
#1 Idaho, #2 Nevada, #3 Utah, #4 Florida, #5 Vermont
Bottom 5
#1 District of Columbia, #2 Wisconsin, #3 Tennessee, #4 Massachusetts, #5 Maine
Year-over-year labor force trend U.S. heat map.
Check out the BLS Dashboard.
It’s a free resource where you can glean valuable insights like above.
Debt Markets Today
Below is a summary of pricing from StackSource.
Live commercial mortgage rates ranges.
Average Rate Trend by Loan Product Trailing 1-Year
Loan pricing trend trailing one year.
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Disclaimer: If you use our affiliate link and receive funding through StackSource, Tactica will receive a small commission.
Weekly Feature
Focus: Attracting Tenants in a Declining Rental Market
Google search bar displayed on laptop.
A lot of apartment supply is coming online across the U.S. in 2023. Competition for renters is picking up, and I'd be shocked if vacancy rates don't rise in most cities.
One of the best, most cost-effective things you could do this year is to develop an SEO strategy for your properties by providing thoughtful expertise on the submarket via a City Guide.
SEO (search engine optimization) is an incredibly low-hanging fruit that only a few managers execute well. You can set yourself apart by creating quality blog content that emphasizes the unique features of your building's city/neighborhood and all the amenities it offers residents. In turn, you could get free tenant leads.
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Economic Trends Sources:
(1) https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
(2) https://www.bls.gov/news.release/empsit.nr0.htm
(3) https://www.bls.gov/news.release/archives/empsit_02042022.htm
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