Profimex Market Review Update – December 7, 2020
Institutional Investors Show Increased Interest in Suburban Office Assets
As Covid-19 accelerated a demographic shift from urban areas to suburban areas amongst younger populations, investor appetite for suburban office properties has risen in tandem. A combination of lower cost of living and larger living spaces has driven people to move to the suburbs. “The top-performing suburban assets over the past several years and amid the pandemic are those that best emulate the environment of a CBD within a lower-cost, lower-density environment,” explains Bruce Miller, a senior managing director in the capital markets group of real estate services firm JLL. “Core suburban investments have averaged about 100 to 150 basis points higher total returns than core CBD investments,” Bruce continues. “Again, much of the interest in suburban assets is in stabilized properties. Investors are also taking advantage of record low interest rates to enhance cash-on-cash returns.”
Citi CEO Says Long-Term Productivity May Suffer with Remote Work
With the pandemic continuing to keep workers at home, such as those of Citigroup, many are beginning to question the long-term productivity of working from home. Citi’s CEO, Michael Corbat, explained that he is worried about potential negative effects to long-term productively as a result of his employees working from home for most of 2020. “People talk about the productivity that comes with working remotely,” Michael Corbat said in a televised interview for a Bloomberg Invest Talks event that aired Friday. “Well, if I worked seven days a week, 15 to 16 hours a day and I don’t take any holidays, at least for a period of time I’m going to be more productive.” While he acknowledges the risks of having all of his employees return to the office too soon, he explained that he would like to see some return to normal in order to be able to maintain a strong skilled workforce.