Above the Fold

Could Rent/Ownership Conversions Buoy the Commercial Real Estate Market?

There’s an obvious shift happening across America as some retailers retool to meet the changing social and shopping trends that include a heavy ecommerce presence. Despite a growing digital need, others are finding opportunities to alter physical locations and distribution centers to improve logistics. At the end of the day, price is a large determining factor for many businesses looking to expand or augment their physical footprint, and commercial real estate deals abound. 

While the pandemic has negatively impacted many malls, shopping centers and storefronts, owners of these properties are finding ways to cope, including selling entire sites for deep discounts — and investors are buying. According to the Wall Street Journal, there’s a growing trend among new and legacy retailers to not only “trade spaces” and store formats, but improve store efficiency and even shift from a rental model into ownership given the deep acquisition discounts. The logic is that the newly purposed and redesigned spaces will not only serve local communities better, but will also have an increased chance for appreciation when restrictions lift and life normalizes. 

Three Things 

1. Salesforce.com Is Now the Biggest Slacker – In its largest deal yet, CRM (customer relationship management) giant Salesforce.com has agreed to purchase enterprise messaging company Slack Technologies Inc. for a massive $27.7 billion cash and stock deal. The CEOs will reportedly work beside one another in an effort to capture business from competitive titans like Google and Microsoft. 
2. Mobile’s New “Snappy” Epicenter – Qualcomm just announced its latest Snapdragon 888 processor that will power the next-generation Android flagship phones coming in 2021. The new hardware sports an integrated 5g modem that will save critical space and offers big improvements in graphics, processing and imaging capabilities over its last generation. 
3. American Airlines Serves Up Its Own Dog Food – American Airlines will immediately begin flying the Boeing 737-MAX aircraft, but only for its own employees and management. CEO Doug Parker noted that American Airlines will have to “eat [its] own dog food,” which is industry jargon for building trust by using your own products. After a 20-month grounding, the plane was given the blessing to fly again by the Federal Aviation Administration on Nov. 18, 2020. 

Did You Know?

The So-Called “January Effect” Actually Starts Mid-December

The stock market’s January Effect is a general theory that investors sell off underperforming stocks at the end of the year, and then turn around and purchase those stocks and others in January, leading to a tendency of strong performance in the first month of the year. 

Taking that theory a step further, the Stock Trader’s Almanac found that not only does the rally tend to start around mid-December (on average), but the best annualized returns were from small-cap stocks held between Dec. 15 and Dec. 31. Their data show that over the last 32 years (since the stock market crash of 1987), the Russell 2000 has averaged a 3.0% gain over that period, equating to an annualized return of nearly 97%!