MetroIntelligence Economic Update by P. DUFFY
New home sales rise another 13.8% in June to highest rate in 13 years
Sales of new single-family houses in June 2020 rose by another 13.8 percent to 776,000 per year, for the highest rate in 13 years and also up 6.9 percent year-on-year. The median price of new homes rose 5.6 percent year-on-year to $329,200. At current sales rates, the 307,000 new homes for sale would sell in just 4.7 months, down from 5.5 months in May and also 5.5 months in June 2019.
July output index reaches 50.0, manufacturing edges into growth mode
Adjusted for seasonal factors, the IHS Markit Flash U.S. Composite PMI Output Index posted 50.0 in July (50 is the split between growth and decline), up from 47.9 at the end of the second quarter, signalling a stabilisation in private sector output. The latest data thereby indicated an end to the five-month sequence of decline that began in February.
June durable goods orders rise another 7.3 percent, mostly for autos and parts
New orders for manufactured durable goods in June increased 7.3 percent, following a
15.1-percent May increase. Excluding transportation, new orders increased 3.3 percent. Excluding
defense, new orders increased 9.2 percent. Transportation equipment, also up two consecutive months, led the increase, up 20.0 percent.
Conversions of retail space to industrial uses accelerating across U.S.
Retail-to-industrial property conversions are accelerating across the U.S., driven by the growth of e-commerce. There are now 59 such projects that have either been completed, proposed or are underway since 2017—up from 24 in January 2019. These projects total approximately 13.8 million sq. ft. of retail space converted to 15.5 million sq. ft. of industrial space. Underperforming retail sites have become an ideal location for last-mile warehouse developers. They are often located within population centers, connected to utilities and have large parking lots with multiple points of ingress and egress.
Less than 10% of companies planning to leave urban cores
70% of global real estate executives surveyed are confident in setting long-term real estate strategies even amid the pandemic; fewer than one in 10 companies are considering leaving high-density urban cores; one-quarter are exploring suburban satellite strategies. 73% of respondents expect flexible office space will play some role in future strategy. 41% said the importance of the physical office will decrease only slightly and 38% said it will remain as important, if not more. Most respondents indicated workplace transformation is still trending away from dedicated private space and toward shared collaborative space.