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5 at 5: Your Daily Digest for Real Estate Investing, 4/9/21


Apr 09, 2021 by Marc Rapport
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Return to office debate roiled, can suburbia save the mall, NY Fed looks at housing vs. stock investing, a taxing question about C corporations, and online groceries and the future of brick-and-mortar grocery stores.

In Today's News

Amazon and JPMorgan Highlight Unsettled Return-to-Office Debate

Amazon (NASDAQ: AMZN) recently told employees that it planned to return to an "office-centric culture." Just days later, as Bloomberg points out today [subscription required], JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon said some employees would likely continue working remotely at least some of the time, with the bank perhaps having just 60 seats for every 100 employees.

The Millionacres takeaway: This piece turns on its ear the assumption that tech firms are embracing remote work and banks want people back at the office. And, more broadly, it delves into just how much remains to be resolved about the fate of that vast inventory of office space across the land as we roll into what for many is a remote-first workforce.

Will Suburbia Save the Mall?

This piece posted today by Retail Dive digs into the idea put forth by big operators like Simon Property Group (NYSE: SPG) that the coronavirus-fueled flight from the central cities will help drive traffic in suburban malls.

The Millionacres takeaway: The writer points to projections that what happened since the pandemic struck only hastened by a few years the inevitable collapse of these big properties, and arguments from others that the actual beneficiaries will be businesses that can adjust to the new realities. That includes smaller strip centers, discount stores, and mall owners who can adapt their properties to mixed uses.

Do People View Housing as a Good Investment, And Why?

The New York Fed asks survey respondents if they would advise a couple in their early 30s from the respondents' ZIP code -- after receiving a gift the size of a down payment -- to invest that gift in housing or the U.S. stock market.

The Millionacres takeaway: The respondents favored housing, especially if it was for a primary residence rather than investment. It's an interesting survey that speaks to the resilience of that American Dream: owning your own place.

Today on Millionacres

Can a Closely Held C Corporation Qualify for Passive Activity Rules?

Now that tax season is upon us, you may wonder if the revenue you generated from your rental property is considered active or passive income.

The Millionacres takeaway: Our Lea Uradu says the general rule is that income derived from real estate activity is passive and is subject to the Passive Activity Loss Limits, and explains more about this timely topic, especially for the landlords among our Millionacres readers.

Instacart Says Online Shopping is Here to Stay. Should Retailers Worry?

Instacart just commissioned a survey that found that digital grocery shopping exploded during the pandemic and that it's likely here to stay. Should that be a concern for brick-and-mortar retailers, and by extension, for those who invest in grocery stores either directly or through retail real estate investment trusts (REITs)?

The Millionacres takeaway: Maybe, but not necessarily, especially if you're not particularly hitched to whose name is on the store. The new reality also means choosing carefully among players such as a warehouse and logistics REIT; a retail REIT; Amazon (NASDAQ: AMZN); Kroger (NYSE: KR); or Walmart (NYSE: WMT) themselves; or direct investment in a local property that can be a profitable part of this new food chain.

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