Wendy’s has built 7,000 restaurants around the world. And now they’re opening their first location in the metaverse. Wendy’s has teamed up with Facebook (now known as Meta), to open a virtual-reality restaurant on the Horizon Worlds platform.
Like many brands, Wendy’s is trying to see how they can use the metaverse to enhance their business. Wendy’s is known for connecting with its customers in unexpected ways and places – particularly with their funny and engaging social media presence. Wendy’s hopes that their metaverse location lets them meet with their customers in a new and unique manner.
Users with a set of virtual reality goggles can enter Horizon Worlds and visit the Wendyverse. Once there, they can go to a virtual restaurant, meet friends, and even go behind the counter. Wendy’s even has games for their visitors to play. You can take a turn at virtual shuffleboard or shoot some basketball free throws – using a Wendy’s bacon burger as a ball.
But Wendy’s is not the only restaurant opening in the metaverse. Panera Bread, Hooters, Arby’s, Buffalo Wild Wings, and McDonalds are all moving there as well. Some are even allowing customers to order in the digital world and get actual food delivered to their door.
CRE Activity Nationwide and in the Inland Empire in Q1 2022
In February, nationwide commercial property prices came down from their recent historic peaks, which was the first monthly drop since the same time last year.
According to CoStar, this past December had an exceptionally high transaction volume, making it hard for January and February to hold up in comparison. But remarkably, sales volumes are still up 16% compared to last year, and 23% compared to before COVID.
Costar reports that property prices climbed rapidly from August through the end of 2021. This was because a bunch of capital built up during the height of the pandemic came flooding back onto the market. During this time, sales volumes averaged more than $23 billion per month – more than twice the amount seen over the previous three years.
I wanted to see if these nationwide trends were also true about the market I focus on, retail properties in the Inland Empire, so I did a little bit of research myself. Let’s take a look at some retail leasing and sales statistics for the Inland Empire.
It’s no surprise to see that retail vacancies rose during COVID, from a historic low in 2019. But according to CoStar, vacancies have dropped throughout 2021 to match the historic lows we saw two years ago, at 6.54%.
Rent per Sqft
These rates have been on a steady increase, even through 2020, and are at a historic high of $24.25 per square foot per year, or $2.02 per square foot per month.
On the sales side, what we saw in the IE was consistent with the national trend that the second half of 2021 had very high transaction volume – in fact, the fourth quarter had by far the highest sales volume that we’ve seen in at least the last 10 years. The first quarter of 2022 was $517 billion, which is still very strong compared to other quarters historically.
Sale Price Per SF
Average sales price per square foot took a dip in 2020 but have climbed back up to historic highs at $283 per square foot.
And cap rates just continue to compress, and we are at a historic low of 5.06 percent on average.
So, in conclusion, even if February was a bit weak for commercial real estate nationwide, the numbers are showing a very strong trend in Inland Empire retail, in both leasing and sales.
Tremendous Growth of the Inland Empire
The Inland Empire is booming and there has been tremendous population growth into Riverside and San Bernardino counties.
So how are Riverside and San Bernardino counties doing it? In short, two main factors: job growth and favorable cost of living.
Next, look at the cost of living. The Inland Empire’s lower housing prices helps it to have a cost of living that is lower than Los Angeles County but growing quickly. The IE has a median house price of $551,000 compared to $725,000 in LA county. And the IE had a year-over-year price gain of 17.2%, versus 11.7% for LA county. Prior to COVID, many people lived in the IE because that’s what they could afford, but they had to suffer long commutes to LA. Now with more available jobs in the IE and many jobs that allow remote work, IE residents can live affordably and not have to deal with long hours in the car.
This lower cost of living and better lifestyle is especially appealing to young families – with the Inland Empire having more than 13,000 births than deaths, 7th best in the country.
The bottom line for Southern California is that the Inland Empire, which has long been considered the red-headed stepchild to LA and Orange Counties, is really coming into its own.
California’s Assistance with Gas Prices
How much have rising gas prices affected you? Although I’m working remotely most of the time, it still hurts to have $100 dollar fill-ups in my gas guzzling SUV. This election year, California politicians are offering plans to offset the recent sharp increase in gas prices.
In one proposal, Governor Gavin Newsom would distribute $400 debit cards per registered vehicle, plus provide free public transit rides for three months and delay a scheduled increase in the gas tax.
The most popular opposing plan comes from the Republicans, who have proposed suspending the gas tax for 6 months. It would save every driver about 50 cents per gallon starting immediately, but the Democrats have rejected this option because the gas tax is also used to fund other transportation projects, such as road maintenance, which they feel would fall by the wayside.
Whatever the solution, I think many people, especially those with long commutes, would welcome some sort of relief from these insane gas prices.
I hope you enjoyed this week’s newsletter and learned something. Thanks for reading and I’ll see you next time!
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