On Friday, May 19th, Grandway successfully organized its second quarterly in-person investment seminar, focusing on the U.S. Multifamily sector. This educational seminar provided insights into the current state of the market sector, key trends, headwinds and tailwinds, and market outlook. We also discussed the most popular regions for investment and shared our recommendations.
Key points from the seminar include:
U.S. Multifamily sector is the nation’s largest commercial real estate sector with over $3 trillion market value
Stable cash flow and downside protection
Limited supply: lack of land and increasing cost of construction
Increasing demand: renters are increasing
Inflation leads to rent growth
High interest rate drives demand
Grandway extends our gratitude to all our esteemed guests who joined and hope we have provided some valuable insights. Stay tuned for the next seminar in Q3 2023.
For additional information, please contact: Grandway Group Email: Info@grandway.com Tel: +1 626-357-1200
Brasada Estates, a gated luxury community located in San Dimas, California, has been recognized as a Grand Awards finalist at the upcoming Gold Nugget Awards to take place on May 24th in Anaheim. The Gold Nugget Awards is the nation’s most prestigious residential design awards, distinguishing industry leaders who positively impact their communities through exceptional design, planning and development.
The nomination follows Brasada Estates’ receipt of two Awards of Merit: Best Interior Merchandising of a Model Home (Plan 2 Trevi, Model 1) and Residential Detached Collection of the Year. Award of Merit Winners are the top vote recipients in each category, rendering them finalists for the Grand Awards, which will be presented during the evening’s Gala Awards Presentation. These winners – which are carefully reviewed by a panel of experts and selected from nearly 650 entries – represent industry standouts among various categories.
“We are incredibly honored to receive this meaningful recognition – especially during such a significant milestone year for the renowned Gold Nugget Awards,” said Frederick Wang, Vice President of Grandway. “Since its inception, Brasada Estates has stood out as a truly timeless, one-of-a-kind community of European-inspired, luxury residences. We applaud our team for their meticulous planning, craftsmanship and interior curation for Brasada Estates, which not only receives continued praise from our industry peers, but from our proud homeowners as well.”
Set atop the scenic hillsides of San Dimas, Brasada Estates offers stunning views of Southern California’s most sought-after panoramas: twinkling city lights that extend as far as downtown Los Angeles, dramatic peaks of the San Gabriel Mountains, and tree-filled canyons brimming with natural beauty. While the community is nestled in a quiet, private enclave, it is ideally situated in the heart of Southern California, offering easy access to the region’s countless conveniences and amenities.
To explore Brasada Estates and schedule a tour, click here.
In March, Grandway introduced its investment seminar series with two educational events in person and online. The team covered pressing issues facing the finance and real estate industries and addressed growing concerns about the state of the U.S. economy.
The first seminar was held on March 3rd at the company headquarters in Pasadena, CA. The topic was “Protecting Wealth During Inflation and Rate Hikes.” During this event, we provided an in-depth analysis of the current state of the economy and housing markets, offered our outlook on primary real estate sectors, and discussed investment strategies and asset classes that are working in today’s environment.
The recent closures of U.S. regional banks – Silicon Valley Bank, Signature Bank and Silvergate Bank – caused a stir in the financial industry. In response to the breaking news, Grandway organized its second event – a special webinar on March 24th to discuss the impact of these failures. During the webinar, we shared our views on the major story, overall outlook on the banking industry and strategies for minimizing risk.
To view the webinar online, please contact our team (Info@grandway.com)
Grandway extends our gratitude to all our esteemed guests who joined and hope we have provided some valuable insights. Stay tuned for the next seminar happening in May.
U.S. commercial real estate investment volume fell by 63% year-over-year in Q4 to $128 billion. Total investment volume for the year fell by 17% from 2021 to $671 billion, which is still the second highest year in history.
In Q4, institutional and private investors were net buyers, while REITs and foreign investors were net sellers. Multifamily was the leading sector with $48 billion in transaction volume (down 70% year-overyear from 2021), followed by Industrial and logistics sector with $32 billion (down by 58% from 2021) and Office sector with $19 billion (down 66% from 2021).
U.S. Commercial Real Estate Investment Volume by Quarter (USD Billions)
U.S. Commercial Real Estate Investment Volume by Sector (USD Billions)
In 2022, Los Angeles was the most preferred market with total investment volume of $53 billion, followed by New York City with $51 billion and Dallas with $39 billion. Out of the 20 top markets nationwide, Nashville was the only city whose transaction volume in 2022 did not decline from the prior year.
U.S. Commercial Real Estate Investment Volume by Market (Last 4 Quarters) (USD Billions / % Figures Shows Change from Trailing 4 Quarters in Prior Year)
Multifamily Market
U.S. multifamily investment volume in 2022 totaled $278.8 billion, down by 19% year-over-year, but was still the second largest annual volume on record.
Vacancy rate in Q4 rose 0.70% from the prior quarter to 4.6%, which is still below the long-term average of 5.0%. The increase in vacancy was likely a result of delayed household formation due to economic uncertainty, and a surge in short-term supply caused by some developers rushing to complete construction in response to rising interest rate and market uncertainty.
U.S. Multifamily Vacancy Rate and YoY % Change
Vacancy rates across all property types within multifamily sector increased in Q4 2022, however, Class C continued to have the lowest vacancy rate at 3.9% versus Class B at 4.6% and Class A at 5.1%. The vacancy rate of Class C properties (lowest cost) seems to be moving in the same direction as Class A and Class B properties (higher cost). This suggests that, at least for the time being, households seem to be willing to maintain their current standard of living rather than moving towards lower-cost housing, despite the economic uncertainty and rising mortgage rates.
U.S. Multifamily Vacancy Rate by Class
Average rent nationwide increased by 6.7% year-over-year in Q4. This is down from the record 15.2% year-over-year increase in Q1 but it is well above the historical average of 2.7% annual increase.
U.S. Multifamily Monthly Rent and YoY % Change
For the multifamily sector, Q4 marked the third consecutive quarter of negative net absorption (net balance of newly leased space minus new construction), with 100,300 newly completed units and 84,700 new leases, resulting in an estimated -15,600 units of net absorption. However, the surplus in new construction is substantially less than the prior quarter, and analysts expect the net absorption to turn positive in 2023.
New construction completed in 2022 totaled 341,200 units, which is the highest new construction volume in more than 30 years. However, data suggests that new construction starts in Q4 were down considerably as the cost of construction and the availability of financing have been negatively impacted by rising interest rates. As a result, we expect the growth rate of new supply to slow down and a shortage of supply to develop in the coming years.
Commercial Retail Market
Commercial retail sector saw its average rent increase and vacancy fall in Q4 and in 2022, primarily fueled by strong demand for retail space and a lack of new supply. Retail vacancy fell to 4.9% in Q4, driven by strong demand from retailers and a lack of supply of new spaces. Vacancy fell across the board for all sectors of retail.
U.S. Retail Vacancy Rate by Property Type
Average retail asking rent grew by 2.5% in Q4 from the same period in 2021, to finish the year 2022 at $22.78 per SQFT. Neighborhood, community, and strip centers had the strongest rent growth of 0.6% from the prior quarter and 3.0% from the prior year. Meanwhile, lifestyle and mall properties were the underperforming sector which saw its asking rents fall by 0.7% from the prior quarter but remains up 0.4% from a year ago.
U.S. Retail Average Asking Rent
Retail sales remained strong despite economic uncertainties, and sales during the holiday shopping season in Q4 were 7.6% higher than the prior year. There also seems to be a continuous return to brick-andmortar retail and a return to in-person shopping experiences by consumers, versus purely online shopping, which contributed to demand for retail space. Furthermore, a return of tourism and travel within the country also contributed to retail sales in luxury markets. All of these factors resulted in robust demand for retail spaces in Q4 and 2022 generally.
U.S. Consumer Retail Sales Growth and YoY% Change
U.S. Retail Sales by Category
Q4 was the ninth consecutive quarter of positive retail absorption, during which the net absorption (net balance of newly leased space minus new supply) was a total of 12.7 million SQFT. Approximately 5.4 million SF of new retail space was newly completed in Q4, which is substantially less than the 10-year average of 12.7 million SF. This brought the total new construction volume for 2022 to just 22 million SQFT, which is a new annual low and the third consecutive year in which new construction set a record low. Furthermore, new construction starts in Q4 fell by 40% from the prior quarter and 18% year-overyear to just 10.7 million SQFT.
Commercial retail space has demonstrated resilience in the face of shifting consumer trends from productfocused sales to in-person experiences and restaurants. Demand for physical retail space is now stronger than it was pre-pandemic while new construction volume is at a historical low. We expect the sector to show robust growth for the coming years.
Data Sources：CBRE Research, CBRE Econometric Advisors, J.P. Morgan Asset Management, CoStar Realty Information Inc., Bloomberg, WSJ.com, Zillow Group, Redfin, Bureau of Labor Statistics, & U.S. Census Bureau
For additional information, please contact: Grandway Group Email: Info@grandway.com Tel: +1 626-357-1200
In 2022, U.S. financial markets experienced unusual volatility due to the confluence of higher interest rates, inflation, Russo-Ukrainian war, and fears of global and U.S. recession, leading to significant losses in most asset classes except for commodities. However, it appears that markets may be stabilizing in the year ahead, as inflation continues to fall, the Federal Reserve nears the end of its tightening cycle, and a U.S. recession is likely to be moderate rather than devastating.
U.S. GDP increased by 2.9% annualized in Q4 2022, exceeding prior expectations of 2.8%, and exceeding the 20-year average of 2.0%. Domestic consumption remained strong through the end of the year, with personal consumption (67.9% of GDP) being the largest contributor to quarterly GDP.
There are clear signs that the U.S. economy is likely to step into recession in 2023. Higher interest rates have started to weigh on business investment, private investment, and the real estate market. Home building and home sales have slowed down considerably due to the higher interest rates, as mortgage rates have more than doubled during 2022. Unemployment is still near historical low, but labor job market is showing signs of cooling off. The strength of the U.S. dollar, which rose by approximately 9% for 2022, combined with economic weakness internationally, will likely inhibit net exports in the near term.
Federal Reserve, Inflation, and Employment
The rate of inflation appears to be under control by the end of 2022, after a strong 2-year hike. Consumer prices rose by 7% and 6.5% in 2021 and 2022, respectively, but are expected to fall below 5% for 2023 by consensus estimate.
From a longer-term perspective, the inflation cycle in 2021-2022 seems more like part of a long-term economic cycle than an outlier. In the past 10 years from 2013-2022, the average annual increase in consumer prices has been 2.6%, which is still well below the 3.8% average price increase from 1960 to 2022.
The labor market remained strong in Q4, as unemployment rate remained at 3.7% in November 2022, which is near the historical low. However, it is clear that the market is slowing down. Hiring has slowed, as 263,000 jobs were added during November, the lowest number since April 2021. Unemployment claims have risen from their low in the first half of 2022, as workers who are laid off are taking longer to find new jobs.
The Fed’s final rate hike of 2022 was a 0.50% increase in December, as expected. This is after four consecutive 0.75% tightening moves throughout the year. The Fed remained firm on continuing its tightening cycle at the December meeting, however, the median expectation among FOMC members indicates that rates will rise to a range of 5.00% to 5.25% by the end of 2023, which is “only” 0.75% higher than at end of 2022. This data, coupled with recent inflation trends, seem to suggest that the tightening cycle is likely coming to an end in 2023.
U.S. Stock Market
U.S. corporate earnings have declined 5.7% during 2022, driven by rising labor costs and production costs, higher interest rates, and slowing nominal sales growth during the year. The consensus expectation is for earnings to be flat or down modestly in 2023 compared to 2022. A closer look at S&P 500 earnings data suggests that the rise in production costs, rather than a decrease in demand, was the main driver for declining earnings. This is evidenced by a sharp reduction in profit margins while revenue growth remained healthy and positive on average.
2023 Outlook
Higher interest rate, a recession (or the fear of one), and low consumer confidence will make the year ahead challenging for corporations and consumers. The Fed will likely continue raising rates until inflation comes down much further. Labor market appears to be cooling off but employment level is expected to remain strong compared to historical average. Asset values in general are likely to decline or stay flat amidst the weakening fundamentals and high cost of capital.
A recession in 2023 seems more likely than not at this time, but its extent may not be as devastating as some have feared. Corporate finances are in reasonably good shape and employers in general are not planning for excessive layoffs or downsizing (except for parts of technology sector). Household debt level is also low compared to the start of previous recessions. Inflation will likely be significantly lower by the end of 2023, allowing the Fed the possibility of quantitative easing. These factors altogether suggest a moderate recession if one should take place. Furthermore, if the current economic headwinds eventually lead to lower wages and easing monetary policy, they would also stage the U.S. companies for long-term growth.
Data Sources：CBRE Research, CBRE Econometric Advisors, J.P. Morgan Asset Management, CoStar Realty Information Inc., Bloomberg, WSJ.com, Zillow Group, Redfin, Bureau of Labor Statistics, & U.S. Census Bureau
For additional information, please contact: Grandway Group Email: Info@grandway.com Tel: +1 626-357-1200
Team members at Grandway recently had the privilege of attending the International Builder Show in Las Vegas, Nevada. This week-long convention, combined with Kitchen & Bath Industry Show and National Hardware Show, welcomed over 70,000 attendees, 20,000 companies and 1,300 exhibitors. The show was bustling with hands-on product demonstrations, inspiring educational sessions, and plenty of networking opportunities – an incredible experience for everyone.
Product launches showcased the latest advances in building technology, materials and products. From modular construction to energy-efficient appliances, attendees were able to get a first-hand look at what will soon be available in the market. Industry experts and manufacturers revealed their newest offerings and explained the features and benefits of these innovative products.
Education Sessions were offered in all learning levels and covered topics ranging from operations and management, to design trends and building practices. Experts shared their knowledge in their respective niches in the homebuilding industry. Our team walked away with the latest trends, newest techniques, forward-thinking business strategies and actionable items that can be applied to our operations right away.
Additionally, Grandway took home three silver awards at The Nationals award ceremony – Community of the Year, Single Family Detached Home of the Year, and Best Interior Merchandising of a Model Home. It was an honor to be recognized amongst some of the biggest builders, developers, associates and consultants in the homebuilding industry.
With such a wealth of resources attained through International Builder Show 2023, Grandway is equipped to offer our clients the best possible solutions for their building needs. Contact us today to start discussing your project needs with us!
Luxury Community Honored for Second Year in a Row by National Association of Home Builders
SAN DIMAS, CA, Jan 31, 2023: Brasada Estates, a private gated community of luxury residences in San Dimas, California, has been recognized as a finalist in three exclusive categories for The Nationals: Best Single Family Detached Model Home Over 4,000 Sq. Ft.; Best Interior Merchandising; and Detached Community of the Year. Already announced as a Silver Award Winner at the National Association of Home Builders’ (NAHB) The Nationals, Brasada Estates is now a Finalist for multiple prestigious Gold Awards, which will be presented at the sold-out awards ceremony tonight in Las Vegas, Nevada.
“It is truly an honor to receive this special industry recognition for the second year in a row,” said Frederick Wang, Vice President of Grandway Residential, homebuilder of Brasada Estates. “From its impeccable craftsmanship to its meticulous interior curation, every detail behind Brasada Estates is thoughtful, intentional, and timeless. We are deeply honored for this industry acknowledgment and commend our incredible team for their efforts in making this a one-of-a-kind, award-winning community.” Among Brasada Estates’ leading contributors were architecture firm Danielian Associates Architects + Planning, interior designer Ryan Young Interiors, and marketing agency Kovach Marketing.
Set atop the scenic hillsides of San Dimas, Brasada Estates offers stunning views of Southern California’s most sought-after panoramas: twinkling city lights that extend as far as downtown Los Angeles, dramatic peaks of the San Gabriel Mountains, and tree-filled canyons brimming with natural beauty. While the community is nestled in a quiet, private enclave, it is ideally situated in the heart of Southern California, offering easy access to the region’s countless conveniences and amenities.
Brasada Estates’ European-inspired home designs feature six unique floorplans and five exterior styles to choose from. One- and two-story homes are available, spanning approximately 4,476 to 6,261 square feet with 4-6 bedrooms, 4-6.5 baths, and 3-car garages. Impressive grand foyer entrances lead to dramatic two-story great rooms with ceilings up to 22 feet high. Exquisite culinary kitchens feature oversized islands, upscale Bertazzoni® & Wolf/SubZero appliances, breakfast nooks, and dual walk-in pantries. Spacious backyards, handsome courtyards, and elegant indoor-outdoor areas are made for entertaining. Every home offers the privacy of a lavish downstairs primary suite, complete with a retreat and spa-like bath. Solar panels and multizone cooling and heating systems offer energy efficiency, with a focus on luxury and comfort. Ongoing outdoor maintenance plus a gatehouse entrance add striking curb appeal and additional security to the community. Pricing starts at $2.9 million.
“This past summer, we announced our first closings and welcomed our first move-ins,” said Wang. “Brasada Estates homeowners appreciate the large array of options that allow them to further customize their homes. The result is a bespoke, semi-custom residence that is elegant and very personal.” Among the many possibilities, varying per plan, are adding a study or additional bedrooms, a second kitchen, extended great rooms, a pool bath, and wine storage. Exterior options include richly detailed features in a multitude of colors and textures.
Grandway Residential was the Designer and General Contractor for this Mediterranean Oasis located in Palos Verdes Estates, CA. This 6,885 SF custom residence consists of 5 Bedrooms and 7.5 Bathrooms
Enter the grand foyer of this tri-level custom home to view the spacious living room, formal dining room, and family room with a fireplace. Walk past the formal dining room to the open concept living room and gourmet kitchen that embody California casual elegance with its backdrop of windows overlooking breathtaking city and ocean views.
This home boasts two luxurious Primary Suites with one including its own private living room. Every bedroom has its own ensuite, walk-in closet, and most have their own balconies. The second level includes a roomy second family room that opens to an expansive patio with even more commanding views. Escape to the resort style backyard with a glistening swimming pool and built-in BBQ and bask in the warm California sun.
Grandway congratulates the new homeowners on their magnificent new home, and we hope it will be enjoyed for many years to come!
If you are looking to build your dream home, contact Grandway today!
