Home Passive Income Shopping for US workplace REITs in 2023? Manulife and Prime REIT?

Shopping for US workplace REITs in 2023? Manulife and Prime REIT?

Shopping for US workplace REITs in 2023? Manulife and Prime REIT?

Not too way back, I mentioned that restarting my YouTube channel was an excellent factor and in additional methods than one. 

In response to my newest video on US workplace REITs, a reader left a really considerate remark which I’m publishing right here as a weblog for the advantage of readers who don’t comply with my YouTube channel. 

In case you might be questioning, right here is the video.


Reader says to AK: 

Hello, yep, I agree. I offered out at a painful loss, and since then they’ve dropped additional. 

I misinterpret it totally, pondering that workers could be eager to get out of the home and again into the workplace cultures. 

Nicely, that does not seem like it can occur. This seems to be like it’s a everlasting shift in behaviour. 

US Public transport is nowhere close to the extent of comfort in Europe and Asia, leading to utilizing non-public autos to commute. With no commute, it additional provides to the attraction of WFH. 

Additionally workers are capable of transfer to states with decrease taxes. 

You talked about that the emptiness price was 14% (??). I feel that is deceptive, the bodily occupancy stage is extra necessary, and I learn that is in some buildings nicely beneath 60%. 

As soon as the rental contracts expire over the subsequent couple of years, they’ll renewed at a a lot decrease house stage. 

Inflation is remaining very excessive within the US and Europe, rates of interest, as you say, will virtually definitely proceed to rise all through this yr, all issues being equal. 

I additionally do not know if the workplace buildings may even be offered. They may flip into derelict blocks, paying homage to the rust belt. 

Possibly some might be repurposed into condos, however in any other case I am unable to consider a use for them. 

Simply my ideas, FWIW. 

AK replies to reader: 

Working from properties (WFH) within the US as a substitute of going again into places of work does seem like a structural shift and it’s, due to this fact, extra everlasting than short-term. 

You’ve additionally rightly identified that the general public transport methods within the US are usually not nicely developed. I’ve tried them earlier than on my yearly visits in my youthful days and I used to be unimpressed with each buses and trains. 

Nothing like Japan, Hong Kong or Singapore. 

As for the emptiness price I discussed within the video, from my analysis, it’s a nationwide common. 

I’m inclined to agree with you that the quantity might be a lot greater for some older workplace buildings which could not be as nicely positioned. 

US workplace REITs are more likely to proceed struggling which is why if we need to put money into them for no matter motive, we need to search for these with sturdy steadiness sheets to see them to the top of the tunnel. 

Thanks very a lot for sharing your expertise and insights. A lot appreciated.