Three weeks ago, Bisnow published an obituary to return-to-office dreams. 

We spoke to a bunch of researchers and academics who pointed to stagnant data for office usage and said they don’t expect it to ever get much better than where we are: about 63.7% usage nationally compared to prepandemic. 

Did CEOs take that as a challenge? 

In the last two weeks, CEOs are coming out of the woodwork to ramp up their in-office demands again. The most notable was Amazon, which said it will mandate five days a week in office starting Jan. 2.

“When we look back over the last five years, we continue to believe that the advantages of being together in the office are significant,” CEO Andy Jassy wrote.

Now a new survey of 1,300 global CEOs by KPMG found 83% expect to get fully back in the office within three years, a big jump from 64% saying so last year. The older the CEO, the more likely they were to call for five days a week, and male CEOs are more likely than female ones to do so. The U.S. is a little behind the broader globe — 79% of American head execs told KPMG they’re going fully in-office. 

That might not mean much for CRE demands: A CBRE office occupier sentiment survey last month found 64% of companies don’t expect to change their office usage, and Amazon is scaling back its office footprint even while it increases its in-office expectations. 

And CEOs have been talking a big game about forcing employees back for years now but have found enforcement is very tricky. KPMG’s survey found they intend to lean more toward the carrot than the stick, offering incentives to people who come in. 

But what do you think? Will mandates move the needle this time, or will this just be another incremental wiggle that doesn’t bring us anywhere close to prepandemic levels? 

— Kayla Carmicheal, Catie Dixon, Jay Rickey and Mark F. Bonner

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On Our Radar

• China's stimulus push sparks a market surge, but challenges loom. The second-most-powerful economy in the world rolled out a series of measures today that include interest rate cuts and government support for the slumping property sector. The People’s Bank of China reduced key rates, injecting liquidity into the banking system to boost demand, but economists warn that without more direct fiscal spending, the growth outlook remains bleak. The measures come amid weak consumer sentiment and muted loan demand — fueled by property market woes. It has been reported that 70% of the public’s savings are in real estate. 

• Hurricane Helene is gaining strength as it approaches Florida's Gulf Coast. The National Hurricane Center said Helene could make landfall later this week as a Category 3 storm. As the eighth named storm of the 2024 Atlantic hurricane season and the fourth to hit the U.S., Helene may become the strongest storm to impact the country this year — and the fifth hurricane to strike Florida since 2022. As CRE knows, Florida, on a variety of fronts, is the state most vulnerable to powerful tropical storms.

• Murders in the U.S. fell by 11.6% from 2022 to 2023. That is the largest annual drop in two decades, according to the FBI. Other crime rates also declined, and early 2024 data suggests the trend is continuing. Public perception remains misaligned with the data. Nearly 80% of Americans believe crime is rising, likely influenced by social media, criminologists say. Around the U.S., actual crime, as well as perceptions of it, have driven developers and investors to reconsider where they build from Washington, D.C., to Philadelphia to San Francisco. 

• Kmart’s last full-size store is closing, marking the end of an era. It’s in Avenel, New Jersey. At its peak, Kmart operated more than 2,000 stores across the U.S. and was a dominant force in the retail landscape, but years of declining sales, competition from big-box retailers and mismanagement led to its downfall. Now just a few smaller Kmart stores remain.

• The Cure is about to drop their first new music in 16 years. The iconic band, led by Robert Smith, will debut the new track Alone on Thursday, their first official release since their 2008 album, 4:13 Dream. A new album will probably follow in November. Goths everywhere unite.

This Morning's News

CAPITAL MARKETS — Do CRE Valuations Have More Clarity? (Bloomberg): "Everybody seems excited and we’re calling it the beginning of a new liquidity cycle,” said Michael Gigliotti, a senior managing director at Jones Lang LaSalle Inc. Prices are down 19% from their peak in 2022. The signs of life sprouting around CRE.

RETAIL — Tempur Sealy To Sell Stores To Win Approval For $4B Mattress Firm Deal (CoStar): To gain regulatory approval for its $4B acquisition of Mattress Firm, Tempur Sealy plans to divest about 180 stores to Mattress Warehouse. Read more here.

Today’s Deep Dive: Private Equity Drinks Up Pub Opportunity As Work-From-Home Changes How And Where We Drink

For a nation known to love a cheeky pint, the Brits have been slowly but surely abandoning pubs for the past two decades. The forced lockdowns of the pandemic were a hammer blow to an already struggling industry — but it also brought about changes in what and where the British drink, which some investors are now capitalizing on.

With more people working from home rather than the office, city center pubs are out, and suburban pubs are in favor with private equity firms that have bought into the sector even as traditional real estate investors are selling out. And in a reversal of the trend of the last decade, pubs that make most of their revenue from booze rather than food are the top performers. Maybe the Brits haven’t changed so much after all.

Read the full story here.

DATA CENTERS — Possible $40B IPO Could Mark Data Center Shift Toward Wall Street (Bisnow): In what would be the first IPO from a major data center firm in almost half a decade, Switch’s potential listing could spark the shift some industry players think has been a long time coming. Learn why.

ECONOMY — A Looming Port Strike Could Shake The Economy (NYT): Transportation analysts from JPMorgan estimate a strike could cost the economy $5B every day. It would take about 6 days to clear the backlog for each day the ports are shut. A new contract must be agreed upon by Oct. 1st.

ECONOMY — Harris To Pitch U.S. Manufacturing Revival (WaPo): Kamala Harris is set to outline plans to revive U.S. manufacturing. Harris will attempt to contrast her plans with former President Donald Trump’s pledge to impose trillions of dollars in new tariffs. Harris is reportedly eyeing tax benefits for advanced domestic manufacturing from industries like biotech, shipbuilding, semiconductors, data centers and clean energy. Harris is expected to deliver her speech Wednesday.

RETAIL — Is The American Dream Miami Mega-Mall Dead? New Hurdle’s Test Project’s Future (Bisnow): Almost a decade after being proposed, the future of the 6M SF American Dream Miami hangs in the balance as a necessary land sale hasn’t gone through. Here's what you need to know about the proposed mall.

OFFICE — Success In Office … With Unique Amenities (WSJ): A real estate investor in New Jersey has “cracked the code” for office market success (according to WSJ) by incorporating amenities like golf simulators and outdoor spaces in a newly acquired building. The suburban building is almost fully leased. These are the amenities boosting office attendance.

LEGAL — CoStar Gets A Win In Trade Secret Suit (Real Estate News): CoStar scored a legal victory in its ongoing courtroom battle with Move Inc., the parent of Realtor.com. The judge issued preliminary decisions rejecting Move's request for an injunction and approving CoStar's motion to dismiss additional claims from Move. Get the details of the case here.

OFFICE — Flex Operators Look To Expand As Occupancy And Lease Lengths Hold Up (Bisnow): About 80% of flexible workspace providers are looking to expand as occupancy rates have stabilized around 80%, though that is below the breakeven point for most operators. Operators are banking on increased demand as businesses adapt to hybrid work models, making flexible leases more appealing. Read more. 

CAPITAL MARKETS — Fed's Bowman Urges Caution (Seeking Alpha): Federal Reserve Governor Michelle Bowman, the sole dissent in the FOMC’s decision last week, advocates for a “measured” approach to rate cuts, citing ongoing inflation risks. Her stance highlights internal differences within the Fed. Here's Bowman's full take.

CAPITAL MARKETS — Fed’s Goolsbee Foresees Multiple Cuts Ahead (Seeking Alpha): Chicago Fed President Austan Goolsbee anticipates "many more" rate cuts over the next year as the central bank looks to manage economic stability and inflation. The FOMC is leaning toward another 50 bps cut by the end of 2024.

ECONOMY — Walker & Dunlop CEO: CRE Crisis Averted (CNBC): Willy Walker, CEO of Walker & Dunlop, joined “Squawk on the Street” and said he believes the commercial real estate sector has avoided a crisis. Watch Walker's full interview.

PROPERTY MANAGEMENT — JLL Consolidates Building Operations (Seeking Alpha): JLL is merging its building operations services and plans to accelerate the build-out of its digital leasing platform. The shift will lead to changes in management.

REITs — 3650 REIT Secures $430M In Commitments (3650 REIT): 3650 REIT has secured nearly $430M in capital commitments from major investors, including Singapore’s Temasek and CalSTRS. It also launched a capital formation team led by Jared Carney and Patrick Repko. The cash will be used across the REIT's credit strategies.

REITs — U.S. Equity REIT Capital Offerings Decline (S&P Global): U.S. equity REITs saw a nearly 20% decrease in capital offerings month-over-month in August, but capital collected during the month was over six times higher than the $1.1B raised in August 2023. Dig into the numbers.

REITs — FrontView REIT Eyes $267M IPO (Market Watch): FrontView REIT, which is focused on outparcels, seeks to raise up to $267M in its initial public offering. Here's the deal.

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The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at firstdraft@bisnow.com.