Letter from the Editors

[Excerpt] The Editorial Team is proud to release this 2016 14th Annual Volume of the Cornell Real Estate Review. This year’s issue explores a wide range of topics, including the deployment of new technologies in multifamily properties, the effects of autonomous vehicles on real estate, and the continued ramifications of the housing crisis through the legal tactics of certain mortgage lenders. Also included, a recent repositioning project– the unique turnaround of a former casino hotel property in Reno, Nevada. Furthermore, this release includes a discussion of value-added multifamily investment strategy, an analysis of the impact of rapid transit on the residential market in Hudson County, New Jersey, and a summary of federal affordable housing incentive programs in the United States. This year’s Pathways features an interview with Toll Brothers Division President Karl Mistry (Baker ’04), and the Baker Viewpoint piece explores the concept of curtailment mortgages.

Second Quarter 2016: Slowdown for Large Hotels Continues; Small Hotels Have Now Slowed as Well

Our Standardized Unexpected Price (SUP) metric continues to show a decline in the price of large hotels, and now also the price of small hotels has eased—even though hotel transaction volume has increased. Although debt and equity financing for hotels remain relatively inexpensive, we are concerned that the total volatility of hotel returns is greater relative to the return volatility for other commercial real estate. If this trend continues, lenders will eventually start to tighten hotel lending standards. Our early warning indicators all continue to suggest that the downward trend in hotel prices should continue into the next quarter. This is report number 19 of the index series.