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June 1, 2023

Health Systems Re-Examine Real Estate Footprints Amid Financial Pressures, Changing Demand

IQHQ's Jenny Whitson Discusses Prioritizing Sustainability At The 1M SF Fenway Center Project June 13

Healthcare systems, facing financial pressures from staffing shortages and stagnant revenues, are exploring ways to save money in their real estate portfolios.

Industry executives speaking at Bisnow’s Boston Healthcare Real Estate Summit last week said providers are making the offices and medical spaces they have more efficient rather than expanding. Some have even looked toward more creative ways to bring care to patients, including home care and mobile clinics.

Healthcare systems are also pushing more services into outpatient facilities, which can create challenges for providers but serve as attractive targets for investors.

Health Systems Re-Examine Real Estate Footprints Amid Financial Pressures, Changing Demand

“We cannot afford to be inefficient with space anymore because it’s too costly,” Nancy Hanright, senior director of real estate and space planning at Boston Medical Center, said at the event, held at the W Boston hotel. Medical centers have been hit hard as the demand…

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Chinese Green Energy Company Signs Full-Building Lease In Burlington

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A Chinese green energy company plans to open a facility at Nordblom Co.'s Northwest Park campus in Burlington. Envision Energy USA, the company's U.S. arm, signed a 30K SF lease to occupy the full building at 10 North Ave. for a research and…

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Seeking Better Share Prices, REITs Rack Up $22B In M&A

Seeking Better Share Prices, REITs Rack Up $22B In M&A  

Upheaval seems to be the new normal in the real estate industry, at least for now, and as they try to navigate the changing tides, REITs are seeking safety in numbers through mergers and acquisitions, with several major marriages taking place so far in 2023.

Five real estate income trust acquisitions totaling about $22B occurred in the first five months of this year, putting it on pace to beat 2022 in deal count, if not dollar volume, as REITs look to boost their share prices or insulate themselves from market shocks. 

“REITs aren't pleased with where their share prices are, but they can still do public-to-public mergers because those are relative value transactions,” CBRE Capital Advisors Americas leader James Scott said. “When you see one public REIT do a stock merger with…

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A Guide To Buying And Selling Delinquent Office Space

A Guide To Buying And Selling Delinquent Office Space  

The fate of the millions of square feet of office space sitting empty in downtowns across the country has the capacity to shift the landscape of the overall economy and commercial real estate. That outcome is increasingly falling into the hands of distressed asset specialists, whose job it is to facilitate the least painful result for troubled properties.

New York University professors estimate office property nationwide will lose a collective 49% of its value by 2029. Distressed sales of office space are likely, Colliers Research Director of U.S. Capital Markets Aaron Jodka told Bisnow in April, due to elevated vacancies and difficulty meeting debt service covenants. Specialists in distressed assets see “a reckoning” on the horizon. And buying, and financing, these assets won’t be easy, either.

“An investor I was talking to tells me he feels the banks are pulling out, they’re starting to view commercial real estate like crypto, that it’s very risky,” said Esther Reizes-Lowenbein, a New York-based equities connector and fund manager who started Esther Reizes & Co.

But this larger narrative will play out in thousands of smaller stories, building by building, asset by asset. As defaults look more certain, downward pressure on valuation leads to more sales, and funds to invest in distressed office assets begin to coalesce and seek buying opportunities, a wave of…

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