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Organized crime rings in New York, San Francisco, Los Angeles and Houston are targeting retail inventories, causing more financial loss, according to a report by the National Retail Federation (NRF), a trade group representing U.S. retailers, Reuters reported. Big-box retailers such as Target and Kroger as well as dollar stores have sounded caution over increasing inventory theft and organized retail crime that could worsen this year's headwinds from weakening consumer demand. In 2022, inventory "shrink" as a percentage of total retail sales accounted for $112.1 billion in losses, up from $93.9 billion in 2021, according to the NRF report on Tuesday. "Retailers are seeing unprecedented levels of theft coupled with rampant crime in their stores, and the situation is only becoming more dire," said NRF Vice President for Asset Protection and Retail Operations David Johnston. Retailers are either being forced to close a specific store location, reduce operating hours or alter in-store product selection to deal with the spike in retail crime, the report added.

Commercial property owners, already struggling with high interest rates and rising vacancies, face exploding insurance costs that keep hitting new highs, the Wall Street Journal reported. Natural disasters, inflation and a shrinking reinsurance market have pushed insurance premiums to record levels, echoing the surge in home insurance rates for much of the U.S. That leaves many landlords in a bind. Their building values and rental income are down, yet expenses keep rising. Commercial real-estate insurance costs have risen 7.6% annually on average since 2017, according to Moody’s Analytics. Those increases can result in hundreds of thousands of dollars or more in additional annual costs, depending on location and size of the property. They can be steep enough to wipe away a year’s worth of profits. While insurance premiums are rising virtually everywhere and for all building types, some cities have been particularly hard hit, especially for multifamily buildings. Costs to insure rental-apartment buildings rose 14.4% annually on average in Dallas, 13% in Los Angeles and 12.6% in Houston. Some owners struggle to find anyone willing to insure their buildings, Moody’s said.

Atlanta has been one of the Sunbelt’s biggest boomtowns, where the population and job market are growing fast. But you would never know that from its slumping office market, the Wall Street Journal reported. Vacancy rates are soaring and companies are competing to unload space in the sublease market. Office values and rents are falling. Developers are delaying new office projects, while office defaults are mounting. Atlanta’s commercial-property turmoil shows that even Sunbelt cities with thriving economies can’t escape the office-sector meltdown. Strong job growth hasn’t made up for the city’s anemic return-to-office rate, a glut of new office supply in the years leading up to the pandemic and companies shedding space as leases expire. It offers an ominous warning to other cities that are hoping their office towers will fill up again when more robust economic growth returns. “In the past, you could take the job numbers and see a one-to-one-relationship to how much office space we’re going to add,” said Madelyn Shields, associate director of real-estate-data firm CoStar Group. Today, she said, “there’s a total disconnect.” Now, the jump in interest rates that began in 2022 is pushing many property owners over the edge. Miami-based Banyan Street Capital gave up six office towers and an underground mall inside Atlanta’s downtown Peachtree Center in a foreclosure auction last year. More recently, Starwood Capital Group defaulted on an office-building mortgage that it was unable to refinance, according to loan documents.

Atlanta has been one of the Sunbelt’s biggest boomtowns, where the population and job market are growing fast. But you would never know that from its slumping office market, the Wall Street Journal reported. Vacancy rates are soaring and companies are competing to unload space in the sublease market. Office values and rents are falling. Developers are delaying new office projects, while office defaults are mounting. Atlanta’s commercial-property turmoil shows that even Sunbelt cities with thriving economies can’t escape the office-sector meltdown. Strong job growth hasn’t made up for the city’s anemic return-to-office rate, a glut of new office supply in the years leading up to the pandemic and companies shedding space as leases expire. It offers an ominous warning to other cities that are hoping their office towers will fill up again when more robust economic growth returns. “In the past, you could take the job numbers and see a one-to-one-relationship to how much office space we’re going to add,” said Madelyn Shields, associate director of real-estate-data firm CoStar Group. Today, she said, “there’s a total disconnect.” Now, the jump in interest rates that began in 2022 is pushing many property owners over the edge. Miami-based Banyan Street Capital gave up six office towers and an underground mall inside Atlanta’s downtown Peachtree Center in a foreclosure auction last year. More recently, Starwood Capital Group defaulted on an office-building mortgage that it was unable to refinance, according to loan documents.

The company that has been sued by various states for alleged deceptive business practices surrounding 40-listing agreements, has filed for chapter 11 bankruptcy protection in 33 states, the Real Deal reported. Florida-based MV Realty came under scrutiny for allegedly paying homeowners a few hundred dollars in exchange for the right to be the listing agent in the event a homeowner decided to sell their home. Under the 40-year contracts, MV Realty would receive money if the company sold the property, the homeowner canceled the agreement or if the property was transferred in some other way, including foreclosure or a transfer when the owner dies. The contracts also allegedly permitted MV Realty to obtain mortgages on the homes, unbeknownst to the homeowners. North Carolina, Florida, Pennsylvania, and Massachusetts, among others, have sued MV Realty for alleged deceptive, unfair trade practices. The lawsuits in every state seek to stop MV Realty from entering into new contracts, void the existing contracts and have courts assign civil penalties to the company. MV Realty, which operates in 33 states nationwide, previously denied it engaged in any false or deceptive practices.

The steepening downturn in China’s real-estate markets has led China Evergrande to scrap a $35 billion debt-restructuring plan designed to ensure the property developer’s survival, a sign that China’s ongoing housing crisis could still get worse, WSJ Pro Bankruptcy reported. China Evergrande, among the largest property developers in China, popped the country’s real-estate bubble in 2021 when it spiraled into insolvency and set off a chain of developer defaults. Evergrande’s parent company was on the verge of a restructuring deal with its creditors when the Chinese housing industry sputtered yet again in recent months. Now, Evergrande’s plan to stay alive is falling apart. In a securities filing on Friday, Evergrande said it needed to scrap its restructuring plan because of worse-than-expected property sales and would look for another path forward that “reflects the company’s objective situation.” Evergrande also said in the filing that it has started initial talks on renegotiating the plan with its creditors, including Chinese banks and international bondholder groups. Without a new deal, bondholders who lent around $15 billion to Evergrande could pursue a liquidation of the company and put more pressure on an already-anemic real-estate market in China. Read more.

A new reality has finally started to set in across American households: Higher interest rates are here to stay, according to a Wall Street Journal analysis. The economy has held up relatively well ever since the Federal Reserve started aggressively raising rates early last year. Many households have breathing room because they locked in low rates on their mortgage or car loan before the rate increases started. And in at least one significant way, the high rates can help consumers: Savers can get more bang for their otherwise idle cash. But these higher-for-longer rates are starting to exact a toll on households that need to borrow now, especially for major purchases such as homes and cars. Those who have to rely on credit-card debt, where rates rise along with the market interest rates, are also feeling the bite. In some ways, this tightening is what the Fed wants, because its rate hikes are meant to slow down the economy to curb inflation. The Fed this week signaled it could raise interest rates once more this year. In other words, rates aren’t expected to go down soon. Inflation, for the first time in a long time, is stinging less. This summer, wage gains surpassed inflation for the first time since 2021. Price increases have slowed more than expected, while competition for workers has put pressure on employers to raise pay. Consumers have continued to spend, including on travel, restaurants, clothes and other discretionary purchases. Households have drawn down the glut of extra cash they were able to save early in the pandemic. Still, account balances are elevated compared with 2019 levels.

A federal program that provides critical flood insurance is set to lapse unless renewed by the end of the month, potentially stranding new home buyers in need of coverage, the Wall Street Journal reported. The National Flood Insurance Program provides a safety net for the increasing number of communities that are vulnerable to flooding and might not have access to any other coverage. Now lawmakers are deadlocked over extending the program, which is facing a backlash over a new pricing model intended to make premiums better reflect a home’s risk. “The only thing worse than what we have is nothing,” said Sen. John Kennedy (R-La.), whose bill to extend the program by one year was blocked last week. Congress may find a way to renew the program before it lapses on Oct. 1 or shortly after, as in years past, through legislation that is either separate from or part of the budget fight to prevent a government shutdown. The deadline comes at a critical juncture for the 55-year-old program. The Federal Emergency Management Agency is being sued by 10 states that want to block the program’s revamped pricing, which was intended to help address its decadeslong funding shortfalls and to prevent homeowners in relatively low-risk areas from continuing to subsidize those in flood-prone ones. The new pricing will take several years to be fully implemented and result in rate hikes for two-thirds of the program’s 4.7 million policyholders, according to the Government Accountability Office. The states suing FEMA say the new rates could drive people out of flood zones, slam property values and even lead to people losing their homes because they can no longer afford insurance that is a condition of their mortgages.

Chinese developer Sunac China Holdings has filed for chapter 15 protection from creditors in a U.S. bankruptcy court, court documents showed, Reuters reported. Creditors of Sunac China Holdings approved its $9 billion offshore debt restructuring plan on Monday, marking the first approval of such debt overhaul by a major Chinese property developer. Sunac is among a string of Chinese property developers that have defaulted on their offshore debt payment obligations since the sector was hit by a liquidity crisis in 2021, roiling global markets.

A retailer in the Fashion District has shuttered and filed for bankruptcy protection as the Center City mall and its tenants struggle to recover from the effects of the pandemic, the Philadelphia Business Journal reported. RBJ Philly LLC, which operates the Beef Jerky Experience store, filed for chapter 7 bankruptcy protection in U.S. Bankruptcy Court for the Eastern District of Pennsylvania on Aug. 30 and closed its doors the same day. Beef Jerky Experience set up shop on the mall's concourse level shortly after the Fashion District opened in late 2019. Brad Sadek of Sadek Law Offices, the attorney representing franchisee owners Randy Giandonato and Richard Kromer in the chapter 7 case, said that the duo chose to file for bankruptcy because reduced foot traffic in the Fashion District and the “rapid pace” of store closures have resulted in low visitation levels over the past four years. Handicapped by COVID-19 shutdowns and the accelerated rise of e-commerce, the Fashion District has not lived up to the expectations co-owners Macerich and PREIT had when it debuted on East Market Street in September 2019 following a $420 million redevelopment of the former Gallery mall. Prior to its opening, PREIT CEO Joe Coradino told the Business Journal he believed the retail complex would be a "resounding success" and would "transform" the struggling company. Instead, the Fashion District was derailed when COVID-19 hit the U.S. six months later. PREIT gave up most of its involvement after going through chapter 11 bankruptcy in late 2020, and Macerich has substantially controlled the Fashion District’s operations and decisions since then.