Goooood Morning!!!

30-Year fixed-rate mortgages hit 7.31%, the highest in 23 years, according to Freddie Mac. Bank of America credit card spending is down from last year, signaling a potential pullback in consumer spending. California gas shoots past $6.00 a gallon, prompting politicians to look into suspending a gas tax. More dry powder for distressed assets continues to pile up as investors wait for the CRE market to bottom out. New reports show Philly office is well below pre-pandemic occupancy, with tenants primarily in attendance Tuesday through Thursday. Industrial deals continue to dominate the deal sheet, with industrial leases taking up the majority of the leasing and development section. Also a rouge NYC office-to-multifamily conversion project made the list, will track this project as more info becomes available.

Enjoy your weekend and stay frosty!

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Capital Markets

Market News

• Mortgage rates hit a 23-year high according to Freddie Mac. The 30-year fixed-rate mortgage hit 7.31%, the highest since December of 2000 when the average was 7.42%. Note that the chart below shows average rates without buydown of discount points (Yahoo, Investopedia)

  30-Year Fixed-Rate Mortgage Average 

  

• Data from Bank of America shows spending on credit cards was down 0.3% compared to a year ago for the week ending in Sept 23. This continues a trend of lower spending after a summer stronger-than-expected consumer data (Yahoo)

• The US Debt to GDP ratio sits at 120%, with total debt sitting at nearly $33tn, the largest of any nation in the world. Data shows the total debt has been growing faster than total GDP over the last 10 years. China and Japan rank 2nd and 3rd in terms of total debt (Barron’s)

• Average California gas prices top $6 a gallon prompting politicians to call for a special session of the legislature to temporarily suspend California’s gas tax. The average price per gallon in California is over $2 higher than the national average (nbc)

• Bank deposits contracted in the first half of 2023 for the first time since S&P Global started keeping records in 1994 (GlobeSt)

CRE Headlines

• Billions of dollars are piling up on the sidelines as investors wait to acquire properties at a steep discount. The problem for many investors and firms, is identifying when commercial real estate prices will bottom out and identifying what new pricing should be (Bisnow)

• Seattle office market sees first two sales of non-medical office assets in Q3 2022. Q3 sales volume dropped 70% from a year prior and 76% from 2021. Vacancy reached 25.2%, more than double from the beginning of the pandemic (Colliers)

• A report from Cushman & Wakefield reveals office attendance in Philadelphia, PA remains well below pre-pandemic averages. The report also shows office attendance is strongest in the middle of the week with Monday and Friday having the lowest attendance. There were no major trend differences between office and CBD based on the data collected (CW)

• Artificial intelligence companies have attracted robust venture capital investments despite a broader slowdown in VC funding. The result has lead to 13mm sf in leased space from A.I. companies since 2019 (JLL)

  A.I. Cumulative Leased Space and VC Capital Raised

  

• Damac International, a Dubai-based developer, wins approval to build a 12-story, 52-unit, condo property on the site of the 2021 condo collapse in Surfside, FL. Commissioners approved the development with a 3-2 vote during a town commission that saw members of the public removed (Bisnow)

Deals Deals Deals

Sales

• Industrial: Stockbridge Capital Group buys Miami, FL industrial portfolio from Principal Asset Management for $49mm. The six-building portfolio spans 233k sf (CommercialObserver)

• Office: MediaWill, in partnership with Tony Park, acquired a Midtown Manhattan, 113k sf, office building from RJF Realty for $37mm. The partneship will seek to convert the office into a 77-unit residential building with ground floor retail and build out various amenities (connectcre)

• Office: HQ Development buys a 28k sf office asset in West Hollywood, CA for $19mm (REBusinessOnline)

• Multifamily: Argyle Real Estate Partners acquired a 184-unit garden-style community outside of Nashville, TN. The company will seek to do a minor property refresh (ArglyeREP)

• Multifamily: SPI Advisory acquires a 164-unit multifamily asset outside of San Antonio, TX. Previous owners updated approx. 25% of the units prior to the sale (REJournals)

Debt

• Industrial: PGIM Real Estate provided a $66mm fixed-rate loan for the refinance of two industrial assets totaling 760k sf in suburban Chicago, IL. The borrower, Logistics Property Co. will use the proceeds to payoff the construction debt, cover closing costs and return equity (REBusinessOnline)

• Multifamily: Acadia Realty Trust secured a $33mm loan to refinance a 21-unit apartment building in Manhattan from Bridge Investment Group (CommercialObserver)

Developments/Redevelopments

• Office: AmTrust RE announced a $50mm capital improvement program for One East Wacker and 33 North Dearborn offices in Chicago, IL. The improvements will include hospitality-inspired amenities, modern finishes and furniture, and elevated conveniences (connectcre)

• Healthcare: Advocate Health Care buys a 6.5-acre lot for $4.1mm in suburban Chicago from Conor Commercial. The group plans to build a 36k sf outpatient center with an expected cost of $34mm (Patch)

• Industrial: CapRock Partners acquired 85 acres of land in North Las Vegas, NV to develop two freestanding warehouses totaling 1.5mm. Construction is scheduled to begin in 2024 (REBusinessOnline)

• Industrial: A JV between Hunt Midwest and Marshall Planning Mill is planning to build a 3.4mm industrial park outside of Louisville, KY. Phase I will include a 208k sf rear-load building and a 487k sf cross-dock building (REBusinessOnline)

Distress

• Retail: Goldman Sachs Urban Investment Group buys Empire Outlets from BFC Partners in a foreclosure auction for $10mm. Goldman was the senior lender on the loan for the Staten Island, NY mall. The mall originally cost $350mm to build, with $100mm in city and state grants (GlobeSt, NY1)

Leasing

• Office: Capgemini signs new 30k sf lease in Tishman Speyer’s new residential and office development in San Francisco, CA (connectcre)

• Industrial: ML Realty Partners announces 883k sf in leasing activity across suburban Chicago, IL. Major leases include Kane Warehousing at with a 372k sf lease in Lockport, IL and Arrow Home Products Company with a 218k sf lease in Elk Grove Village, IL (REJournals)

• Industrial: Zoox Inc., a self-driving start-up, leased 219k sf with Hines in Hayward, CA (Bay Area). The building is part of a 620k sf industrial campus in the process of being developed (connectcre)

• Industrial: Mazzella Lifting Technologies, a manufacturer and supplier of lifting products, signs a 52k sf lease with The Missner Group and RealTerm Logistics in East Chicago, IN. The tenant relocated from Romeoville, IL (REJournals) 

Meme Summary