Macy’s Real Estate Value
Establishing Value in the Marketplace
Challenges in Commercial Property Deals
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Commercial Real Estate Market Facing Challenges
As we entered 2023, the commercial real estate market experienced significant changes. According to MSCI Research, approximately $3.2 trillion worth of commercial real estate assets were sold over 11 quarters when the yield on the 10-year Treasury was below 2%.
However, the market has faced volatility due to fluctuations in benchmark rates and their impact on loans and the broader economy. In October, the 10-year Treasury yield (BX:TMUBMUSD10Y) briefly reached a 16-year high of 5%, only to drop about 75 basis points in November.
This volatility has affected different types of properties differently. Retail properties subjected to new appraisals in 2023 saw an average reduction of 21%, while office buildings and multifamily properties fell by approximately 34%, as reported by BofA Global analysts.
In light of these developments, BofA Global analysts suggest that property values may still need to undergo further adjustments before reaching a new equilibrium. While the market remains uncertain, it is essential to carefully monitor property values.
Notably, both Arkhouse and Brigade Capital declined to comment on the situation. Additionally, Macy’s did not respond to a request seeking its own valuation of its real estate portfolio.
Over the past decade, Macy’s and other major department stores have been actively reducing their presence in struggling malls throughout the U.S. Instead, they have focused on more profitable locations, seeking higher returns.
On Monday, Macy’s shares closed 19.4% higher at $20.77, marking the most substantial daily increase in over two years, according to Dow Jones Market Data.
See: Macy’s bonds rally with stock after investor group reportedly offers to take the company private