December 29, 2022 by Ankush Agrawal 0 Comments

Grandway Gives Back for the Holidays

This holiday season, Grandway has partnered with two nonprofit organizations that support causes that are close to our hearts. Our mission is to help enrich the lives of those in need within our community and beyond with a focus on these areas: homelessness, youth and education.

Families Forward Learning Center, located in Grandway’s headquarter city of Pasadena, California,  provides free education and social services to low-income families with children. During the holidays, their ‘Adopt-a-Family’ program gives others the opportunity to spread warmth and bring holiday joy to families in need by donating gifts and essentials. Grandway adopted three families this holiday season, and our team had such a fun and meaningful experience shopping and wrapping gifts for each family member.

The second organization Grandway had the pleasure of partnering with is Lov Movement, a grassroots organization that does work locally and globally. This year, they built an innovative childcare and education facility in Kenya, Africa called Ascend Education Ecosystem. The center provides disadvantaged young children with a safe and loving environment to learn, live, and grow. Grandway’s monetary donation will supply the school with desks, whiteboards,  and other essential school supplies for two new classrooms opening in January 2023.

It was a privilege to help individuals and families in need during this holiday season. With warm hearts and enthusiasm, Grandway pledges to continue giving back through various efforts in 2023.

Happy holidays!

November 18, 2022 by Ankush Agrawal 0 Comments

Q3 2022 Commercial Real Estate Overview

U.S. commercial real estate investment volume fell by 24% year-over-year in Q3 to $154.5 billion. Multifamily was the leading sector with $69 billion, followed by industrial and logistics with $31 billion each. Within the last 4 quarters, Los Angeles was the top market with the largest transaction volume with $66 billion, followed by New York City with $64 billion. This was a 40% increase y/y.

Construction and development cost continue to escalate, making replacement cost higher across all asset classes. This combined with higher borrowing costs for developers, is curbing the supply of new inventory generally across the board.

U.S. Commercial Real Estate Investment Volume by Quarter

U.S. Commercial Real Estate Investment Volume by Sector

U.S. Commercial Real Estate Investment Volume by Market (Last 4 Quarters)

U.S. Real Estate – Multifamily Market

Q3 was the second consecutive quarter of negative net absorption, with new units completed exceeding new units rented. Although demand is typically the strongest in Q3, renters have become more cautious this year amid growing economic uncertainty. On top of that, Q3 delivered 91,900 new units of multifamily, the highest level since the 1980s.

Vacancy rate increased to 3.9%, but is still below its long-term average of 4.9% and the pre-pandemic level of 4.1%.

New multifamily development starts has slowed, primarily due to financing issues, construction delays, and supply chain issues, while demand for rental units continue to increase. The increase was consistent across all classes of multifamily assets, with Class A at 4.5%, Class B at 4.0%, and Class C at 3.1%. The spread between Class A and C has also elevated, indicating a demand shift to lower-cost housing, as a result of economic uncertainty.

Nominal wages continue to increase as a result of ongoing inflation, making the long-term outlook for the multifamily sector favorable. Average rent increased 10.5% y/y in Q3. However the pace of rent growth is beginning to cool off, following the 14.6% y/y growth in Q2, and the 15.2% y/y growth in Q1. In addition, it is important to monitor the risk of contracting discretionary income, caused by the rising price of consumer goods and services. That being said, multifamily remains the most popular commercial real estate sector for new investments, accounting for over 45% of the total investment volume in commercial real estate.

U.S. Multifamily Vacancy Rate and YoY % Change

U.S. Multifamily Vacancy Rate by Class

U.S. Multifamily Monthly Rent and YoY % Change

U.S. Real Estate – Commercial Retail Market

Retail vacancy fell to 5.0% in Q3, with limited delivery of new spaces. Asking rents growing by 2.5% y/y. The consumer sentiment hit a record low in Q3, but retail sales remained strong. This will be important heading into the holiday season of the 4th quarter.

High construction costs have also pushed retail tenants to renew existing leases rather than search for new spaces, which often require some level of tenant improvement construction.

U.S. Consumer Retail Sales Growth and YoY% Change

U.S. Retail Sales by Category

U.S. Retail Vacancy Rate by Property Type

U.S. Retail Average Asking Rent

Data Sources:CBRE Research, CBRE Econometric Advisors, CoStar Realty Information Inc., Bloomberg, Zillow Group, Redfin

For additional information, please contact Grandway:
Grandway Investment Management, LLC
Attn:    Client Relations
Tel:      +1 626-357-1200
Email:     Client-Relations@grandway.com

November 16, 2022 by Ankush Agrawal 0 Comments

Q3 2022 Economic & Market Overview

In July, the U.S. market participants were hopeful for the possibility of interest rate cuts by the Federal Reserve in 2023, given concerns about the global slowing growth. However, such hopes vanished at August’s Jackson Hole summit of central bankers, where the Fed reaffirmed its commitment to fighting inflation. This sent stocks lower in the second half of the quarter. The Fed raised the federal funds rate by 75 basis points (bps) to 3.25% in September; the third consecutive 75bps increase. As a result, U.S. equities fell in Q3. The communication services sector, including both telecoms and media stocks, was among the weakest sectors over the quarter, along with real estate. The consumer discretionary and energy sectors proved the most resilient.

The core personal consumption expenditure index (the Fed’s preferred measure of inflation) ticked up again in August and increased, on a year-on-year (y/y) basis, from 4.7% to 4.9%. GDP data confirmed that the U.S. economy is in a “technical recession” with GDP falling by -0.6% y/y in Q2 after a -1.6% contraction in Q1. However, other data showed resilience, such as the August non-farm payrolls report that showed 315,000 new jobs added that month. Following two consecutive quarters of negative GDP growth, Q3 broke the trend and grew by a 2.9% y/y. Many believe that the uptick in GDP growth was primarily driven by an increase in export, as a result of lifting of trade restrictions with the rest of the world, while growth and inflation are still on a negative trend.

With the economy still facing challenges in multiple fronts including continued supply chain issues, labor shortages, inflation, and Ukraine/Russia geopolitical uncertainly, the key focus will be the Fed’s critical balancing between raising rates to curb inflation, versus preventing the economic growth turning into contraction.

In their September Open-Market Committee statement, the Fed announced another 75bps increase to its target rate, bringing it to 3.25%. Once again, the Fed reiterated its goal of maintaining high employment while bringing inflation rate down to 2%, and stated its intention of further rate increase.

Overall CPI inflation for the last 12 months was 8.2%, down from over 9% last quarter. Transportation and travel sectors achieved double-digit levels, while energy increases were much lower than Q2.

With another quarter of solid employment levels, by the end of Q3 the entire past 12 months are now hovering between 3.3% to 4.4%, with Q3 ending at 3.3%, as reported by the U.S. Bureau of Labor Statistics. In its October press release, the BLS reported that notable job gains occurred in leisure, hospitality, and healthcare industries, with professional services and business services sectors also growing.

After recovering some of the losses experienced in Q2 early on in the quarter, the U.S. stock market turned negative at the later half of Q3. All equity markets have now reverted back to pre-COVID levels. The sell-off was broad-based, but technology companies were hit the hardest, causing the NASDAQ to decline 1.1%.

Data Sources:CBRE Research, CBRE Econometric Advisors, CoStar Realty Information Inc., Bloomberg, Zillow Group, Redfin

For additional information, please contact Grandway:
Grandway Investment Management, LLC
Attn:    Client Relations
Tel:      +1 626-357-1200
Email:     Client-Relations@grandway.com

October 3, 2022 by Ankush Agrawal 0 Comments

Grandway Launches REIT at The House Club’s Elite Realtor Conference

On August 31, 2022, Grandway introduced its flagship U.S. REIT (Real Estate Investment Trust) program in front of over 300 attendees at The House Club’s Elite Realtor® Conference, marking a significant milestone for the company’s longest standing business division.

Grandway’s REIT consists of a diversified portfolio of income-producing residential and commercial real estate investments throughout the United States. The investment strategy focuses on properties with stabilized cash flow, strong fundamentals, and value-add potential. We target markets with robust economic drivers, favorable demographic trends, and employment growth. Our experienced team undergoes a stringent multi-phase due diligence process to ensure superior risk-adjusted returns and capital protection for our global clientele.

Throughout the all-day event, Grandway welcomed attendees, answered questions, and handed out brochures and goodies at our lively booth. We also raffled out Tiffany & Co. wine glasses to two lucky winners! It was a pleasure introducing our flagship investment program at this successful conference.

To learn more about our REIT, please visit www.GrandwayREIT.com

September 19, 2022 by Ankush Agrawal 0 Comments

Just Sold – Grand Tuscan Manor

Grandway Residential is the Designer and General Contractor for this Grand Tuscan Manor located in The Country Estates in Diamond Bar, CA. This astounding 9,734 SF custom residence consists of 6 Bedrooms and 6.5 Bathrooms.
The main level includes a guest bedroom, study or home office, mudroom and elevator leading to the second and third floors. The second floor boasts a spacious family room, game room, home theater room, laundry room, junior suite and two additional ensuite bedrooms.
Nestled on approximately 63,000 square feet of lush, landscaped grounds, this opulent three-story estate boasts quality finishes with splendid terraces. The serene and private outdoor spaces include balconies and patios that capture magnificent panoramic views to create the essence of alfresco living.

Congratulations to the new homeowners of this marvelous manor! We wish you many beautiful memories in your new home.
Contact us today to get started on building your dream home!

Q2 2022 Commercial Real Estate Market Overview

U.S. commercial real estate investment volume rose by 10% year-over-year in Q2 2022 to $167 billion. Multifamily was the leading sector with $78 billion in Q2 volume, due to the resilience shown by this asset class as well as continued housing shortage. Industrial and logistics properties had $32 billion in total volume for the quarter; the pandemic not only created a boom in online retail, but also caused a permanent migration of consumer behavior towards online retail. In third place was office properties with $24 billion in transaction volume, driven by workers returning to the office.

While a sharp rise in interest rate will generally drive down real estate prices, there are many other factors at play. The Federal Reserve’s multiple increases to its target rate have both short-term and long-term effects. In the short-term, rate increases will discount the prices of real estate assets, as the market now demands a higher rate of return on those assets for sale given the same rental income. Furthermore, those assets whose mortgages are structured with variable rate without an interest cap built in will be facing increased monthly mortgage payments, which cut into net operating income and asset value. Lastly, many lenders will experience a sudden increase in their cost of capital (borrowing costs), which may cause some lenders to temporarily pull back from lending altogether. Nonetheless, the long-term impacts to the industry are positive – once the interest rate increases implemented by the Fed takes effect in reducing inflation, the U.S. economy should emerge out of recession relatively quickly and return to growth. Comparatively this is a manageable short-term sacrifice in order to prevent a much more painful longterm decline.

U.S. Commercial Real Estate Investment Volume by Quarter

U.S. Commercial Real Estate Investment Volume by Sector

U.S. Commercial Real Estate Investment Volume by Market (Last 4 Quarters)

U.S. Real Estate – Multifamily Market

In Q2 we saw an increase in the overall U.S. multifamily vacancy rate to 3.1% from 2.4% in Q1. This was the first increase in five quarters, but this vacancy level is still well below the long-term average of 4.9%. The increase was largely a result of high inflation and loss of consumer confidence, causing families to consolidate rather than rent separate units. This increase seemed to be consistent across all classes of multifamily assets in both city centers as well as surrounding areas. Not surprisingly, the average rent per unit also reached a historic new high of $2,080 per month, buoyed by continued inflation and low unemployment rate.

U.S. Multifamily Vacancy Rate and YoY % Change

U.S. Multifamily Vacancy Rate by Class

U.S. Multifamily Monthly Rent and YoY % Change

U.S. Real Estate – Commercial Retail Market

Total retail sales growth dropped to 3.8% even during an inflationary environment, a sign that the recovery in the retail sector is nearing its end, and consumer confidence may be eroding and hurting spending. Retail space absorption fell by 40% compared to Q1 and fell by 20% compared to Q2 2021, also indicative of the end of the retail recovery. Average retail asking rent grew by 2.4% year-over-year, the highest increase in more than 5 years, but it is still lagging the wage growth of 4.4% year-over-year.

U.S. Consumer Retail Sales Growth and YoY% Change

U.S. Retail Sales by Category

U.S. Retail Vacancy Rate by Property Type

U.S. Retail Average Asking Rent

Data Sources:CBRE Research, CBRE Econometric Advisors, CoStar Realty Information Inc., Bloomberg, Zillow Group, Redfin

For additional information, please contact Grandway:
Grandway Investment Management, LLC
Attn:    Client Relations
Tel:      +1 626-357-1200
Email:     Client-Relations@grandway.com

Q2 2022 Economic & Market Overview

Markets in the first half of 2022 have been generally disappointing, with sharply rising inflation and interest rates, falling stock prices, a rampant wave of Omicron virus, and Russia’s shocking and brutal invasion of Ukraine. These factors, combined with a partisan political environment, have driven consumer sentiment down to its lowest level on record. On the positive side, however, while real GDP shrank in Q1, recent monthly data suggested solid growth during the course of Q2 as the Omicron variant subsided and spending picked up in the industries that were impacted the most by the pandemic such as travel, restaurants, leisure, and entertainment.

Entering Q3, several factors continue to weigh on economic momentum. After two years of record stimulus, the U.S. economy is facing significant fiscal slowdown, with the federal budget deficit likely to fall from 12.4% of GDP in 2021 to less than 4% of GDP this year, which would pose the single largest decline since the end of World War II. This decline reflects an end to stimulus checks, enhanced unemployment benefits, enhanced child tax credits, and a host of other programs that were supporting lower and middle-income households during the pandemic. In addition, a surge in 30-year mortgage rates is weighing on the housing sector and an 8%+ rise in the trade-weighted dollar year-to-date is impeding U.S. exports. All of this, combined with collapsing consumer confidence, has raised the risk that the U.S. economy would fall into recession in the near term.

The U.S. Federal Reserve has two main mandates: to control inflation and to control unemployment rate. As expected, the extraordinarily strong labor market and persistent inflation have pushed the Fed to adopt a much more hawkish stance. At its June meeting, the Fed increased the federal funds rate by 0.75%, following increases of 0.25% in March and 0.50% in May. In addition, the median expectation among FOMC members is for the rate to be further increased by 1.75% this year and by 0.5% next year, bringing the federal funds rate to a range of 3.25%-3.50% by the end of 2022 and 3.75%-4.00% by the end of 2023. On quantitative tightening, the Fed is also increasing the pace of reduction of their massive bond holdings to up to $95 billion/month by September.

Notably, the Fed expects inflation will fall towards its 2% target over the next few years. The latest Federal Reserve forecast suggests that annual PCE core inflation may fall from its current 4.8% to 4.3% by Q4 2022, to 2.7% by Q4 2023, and eventually to 2.3% by Q4 2024. Futures markets seem to generally agree with the Fed’s forecasts of the federal funds rate for the rest of 2022, but it appears that market participants expect the Fed to ease policy starting in the first half of 2023, suggesting the possibility that the aggressive moves by the Fed may tip the economy into recession and cause the Fed to again start easing monetary policy.

The labor market in the U.S. continues to be a bright spot. In an otherwise gloomy economic environment, the unemployment rate remained at 3.6% for the third consecutive month in May, just 0.1% above its 50- year low in 2019. There continues to be massive excess demand for labor, with roughly 5.45 million more job openings than unemployed workers in May. This excess demand should fade over the next few months, reflecting slowing economic momentum and diminished business confidence. However, it is likely to keep wage gains elevated and hopefully encourage an increase in labor force participation, particularly as an aging baby-boom generation and limited immigration continue to reduce labor supply.

High inflation in the U.S. has been a result of strong consumer spending combined with supply shortages across major sectors of the economy. More recently, this has been amplified by a general recovery in airfares, hotel rates, and rents from their pandemic lows. Inflation has been further exacerbated by continued supply chain problems due to the Russian invasion of Ukraine and China’s attempts to maintain a “zero-COVID” policy. By the end of 2022, we do expect some of the supply-driven issues to fade, alleviating the current inflation. However, the longer high inflation persists, the stickier it gets and the more likely core PCE inflation would remain above 3% year-over-year throughout 2022 and 2023. The potential persistence of inflation above the Fed’s 2% target over the next two years will have major implications for monetary policy.

Following a spectacular 2021, during which S&P 500 earnings-per-share (EPS) rose by 70%, profits are growing much more slowly in 2022. In the first quarter, EPS rose just 4.2% year-over-year and analysts are currently expecting an increase of less than 8% for the entire year 2022.

However, even these estimates may be optimistic. Companies are facing a number of different headwinds – rising wages, higher commodity prices and input costs, higher interest rates and slowing nominal sales growth. While energy companies will continue to benefit from high margins, in most other industries these headwinds are likely to cut into profits. A much higher dollar will also hinder exports and overseas sales, while recession concerns could cause company managements to cut discretionary expenses.

A recession would certainly lead to a sharp decline in corporate profits. However, if this eventually leads to less wage pressure and easier monetary policy, it could create a better long-term business environment all around. Furthermore, gridlock in Washington and the prospect of a Republican takeover of Congress after midterm elections later this year suggest that we are unlikely to see an increase in corporate taxes, suggesting that after-tax profit margins are likely to remain at the current high levels.

The global economy presents a mixed picture entering the second half of 2022. On the positive side, the effects of the pandemic are fading in most parts of the world due to widespread immunity gained from both inoculation, infection, and virus variants becoming less deadly. However, the Chinese economy continues to be impacted by the pandemic as it struggles to sustain a “zero-Covid” policy. European economies are also being badly impacted by much higher energy prices resulting from the war in Ukraine.

Inflation has become a global concern and most central banks are tightening policy to combat it. While we do not expect this to result in a global recession, it should slow the pace of economic recovery around the world. This should, however, relieve some of the pressure on commodity prices if 2023 sees positive economic growth but less inflation around the world.

Data Sources:CBRE Research, CBRE Econometric Advisors, CoStar Realty Information Inc., Bloomberg, Zillow Group, Redfin

For additional information, please contact Grandway:
Grandway Investment Management, LLC
Attn:    Client Relations
Tel:      +1 626-357-1200
Email:     Client-Relations@grandway.com

Just Sold – Charming Rustic Hideaway

Grandway Residential is the Designer and General Contractor for this Charming Rustic Hideaway located in prestigious La Cañada Flintridge, CA. This remarkable 7,486 SF custom residence, tucked away in secluded woodland, consists of 6 Bedrooms and 6.5 Bathrooms.
Endearing shiplap, hardwood floors, and coffered ceilings can be found throughout this luxurious estate. The unique gourmet kitchen, inspired by colors of flora found in scenic trails, anchors the open floor plan. The bold statement of blue color in the cabinetry and subway tile backsplash adds a contemporary flair while complementing the homestead theme.
Upstairs, the primary suite continues the rustic warmth design with its elegant fireplace and step-out balcony that looks out to gorgeous nature views. This panoramic landscape can be appreciated throughout the home, creating a serene getaway effect to complete the atmosphere.

Congratulations to the new homeowners! Our team at Grandway wishes your family many years of joy in your new home!

Contact Grandway today to begin the process of building your dream home!

Just Sold – Modern Spanish Estate

Grandway Residential was the Designer and General Contractor for this award-winning Modern Spanish Estate located in prestigious La Cañada Flintridge, CA. This impressive 9,282 SF custom residence consists of 6 Bedrooms and 9 Bathrooms.
Amenities of prestige fill the space, including the marble and walnut floor-to-ceiling fireplace and the disappearing pocket glass doors that open the living room to the terrace. The incredible patio spans the entire rear of the estate, giving panoramic views of the impressive backyard and lush nature beyond.
Mature trees surround the area, creating an intimate setting to admire the home and its many amenities that expand to the park-like backyard. An attractive zero-edge pool pairs with a jacuzzi and pool house consisting of a fully equipped outdoor kitchen and fireplace, offering the perfect space for all day fun. The exquisite qualities of this estate are the makings of a luxurious dream home.

This stunning estate caught the eye of a high-profile celebrity who now calls this residence home. Our team at Grandway congratulates the family and wishes them many precious memories to come.

Click here to contact Grandway today to begin the process of building your dream home!

Brasada Estates First Move-ins

Brasada Estates, a magnificent enclave of luxury homes nestled atop the hillsides of the San Gabriel Mountains in San Dimas, has announced a significant milestone: its first official closings and move-ins, set to take place this month. Since its inception, this esteemed community of 65 exquisite residences by distinguished luxury homebuilder Grandway Residential has garnered strong interest and demand.
“We are elated and honored to welcome home the first owners of Brasada Estates,” said Frederick Wang, Vice President of Grandway Residential, homebuilder of Brasada Estates. “From the moment they drive through the stately gates, surrounded by a lush 277 rolling acres of stunning natural beauty with those incredible panoramic views that extend as far as downtown Los Angeles, they’ll know they have arrived. Brasada Estates immediately imparts the feeling of entering an Old-World European village. It’s truly unlike anything else.”
Brasada Estates presents superior craftsmanship in every detail of its one- and two-story residences ranging from 4 to 6 bedrooms, 4 to 6.5 bathrooms, 3-car garages and approximately 4,476 to 6,261 square feet. The generously proportioned home sites showcase impressive designs with courtyards, grand foyers, great rooms, formal dining rooms, culinary kitchens, breakfast nooks and dual walk-in pantries, per plans. Multiple covered patios provide elegant indoor-outdoor entertaining spaces and master alcoves allow for private escapes

Personalization options are also available, such as a second kitchen, extended great room, additional bedrooms or study, pool bath and wine storage. All features have been curated for luxury and comfort with energy efficiency throughout. Homebuyers can choose from a variety of richly detailed exterior options, including many colors and textures.

Following its highly popular initial release, the next phase of Brasada Estates residences is now available for sale. Prospective homebuyers are invited to tour the beautiful model homes and discover the available customization options to create their perfect homesite. “The best way to experience this community’s artistic grandeur is to see it in person,” stated Frederick. “Our Welcome Center offers incredible interactive tools to help you explore the various floor plans while giving you the opportunity to take in the pan-European architecture and grand views.”

To schedule a private tour of our models at Brasada Estates, please click here.