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Brookfield sells a manufactured housing portfolio for $325M. The L.A. office market hits a record high vacancy. A Swedish office developer decides to postpone new construction in the U.S. And data center development ramps up thanks to A.I. The SEC approves 11 Bitcoin spot ETFs after having claimed the announcement on their social media account was a hack. Amazon to layoff hundreds within their Prime Video and MGM Studios Organizations. The U.S. trade deficit falls in November. And bonuses on Wall Street are expected to be light again this year

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Capital Markets

Market News

• SEC Approves Bitcoin ETFs

  The SEC gave money managers approval to launch 11 spot bitcoin exchange-traded funds, allowing everyday investors to get exposure to the world’s largest cryptocurrency without having to own it. One SEC commissioner had a dissenting opinion stating: “I am concerned that these products will flood the markets and land squarely in the retirement accounts of US households who can least afford to lose their savings to the fraud and manipulation that appears prevalent in the spot bitcoin markets"

• Amazon to Layoff Hundreds Across Its Video Platform

  Amazon will be eliminating several hundred roles across the Prime Video and Amazon MGM Studios organization. The company said it would continue to increase its investment and focus on content and product initiatives that deliver the most impact. The company said it began to reach out to those impacted by role reductions immediately on Wednesday, with all U.S. roles being notified by the same morning

• U.S. Trade Deficit Shrinks In November

  The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced on Tuesday that the goods and services deficit was $63.2B in November, down $1.3B from $64.5B in October. November exports were $253.7B, while imports were $316.9B. The drop in imports is in line with businesses throttling back on inventory accumulation in anticipation of slower demand this year

• Banking Bonuses Expected to Fall for 2023

  This week, major banks like JPMorgan, Goldman, Citi, Morgan Stanley, and Bank of America will begin announcing year-end bonuses to staff. After a record year in 2021, 2022 saw quick downturn in deal making and bonuses were slashed across the board. 2023 is expected to be similar as the year was marked by industry-wide layoffs, bank failures, and limited deal activity. Bonus announcements are expected between January 16 and end of the month

CRE Headlines

• L.A. Office Vacancy Rises to Historic High

  Despite landlords offering higher concessions, leasing activity decreased 4.2% quarter-over-quarter, as companies continued to reevaluate their office requirements. Rents increased year-over-year as tenant demand shifts towards class A product. Los Angeles vacancy increased by 270bps from 2022, ending 2023 with 21.9% and marking the 6th consecutive quarter of negative net absorption

• A.I. Driving Data Center Demand

  The rapid growth of Artificial Intelligence (AI) is fueling demand for data centers with development reaching an all-time high. 30% of enterprises are expected to implement A.I. by 2025, up from 5% in 2021. That implementation is expected to result in ~$65B in cost savings for companies over the next 5 years. The result is that demand could go from 17GW (giga watts) in 2022, to 35GW in 2030 in the U.S. This demand is driven from the higher power usage that comes from using AI. Current power requirements for data centers average 10-14kw per rack, while A.I. requirements average 40-60kw per rack

  U.S. Data Center Development Pipeline 

  

• Swedish Developer To Postpone Future U.S. Projects

  Skanska, a Swedish developer with multiple new office projects across several U.S. cities, said it would be very cautious and postpone further growth of business in the U.S. Skansa said it is lagging behind its projected leasing schedules from when it first began many of its projects because of slow return-to-office trends. The company recently declared a ~$195M in impartment charges

Deals Deals Deals

Sales

• Multifamily: Brookfield sells 19 manufactured housing communities, consisting of 3,166 home sites, across the U.S. for $325M

• Multifamily: Standard Real Estate Investments and The Vistria Group acquire Haven on Long Grove, a 416-unit multifamily community in suburban Chicago, IL for $94M

• Industrial: BKM Capital Partners acquires three multi tenant industrial parks from Stockbridge Capital Group for $79M. Gateway University Park I & II in Temple, AZ were sold for $48M and Junction Business Park in San Jose, CA was sold for $31M

• Multifamily: Aker acquires Pelham Hall Apartments, a 148-unit multifamily asset in Boston, MA, for $70M

• Multifamily: Pagewood acquires Costa Mesa, a 152-unit multifamily asset in Houston, TX. The price and seller were not disclosed

• Industrial: EQT Exeter acquires a three-building, 203K sf industrial asset in San Diego, CA from Rockefeller Group

• Office: Novel Office acquires 3555 Timmons, a 226K sf office asset in Houston, TX. The asset was financed with a $5.5M junior loan from Woodbranch and a $9.7M senior loan from Business Loan Capital 

• Office: AJC Investment Group acquires 7974 UW Health Court, a 200K sf office asset outside Madison, WI, for $27M from Investors Associated LLP

Debt

• Industrial: Chestnut Properties secures a $91M construction loan from 3650 REIT for the development of a 386K sf industrial facility in San Diego, CA. The asset is expected to be completed in 2025

• Retail: Thor Equities secures a $36M loan from Deutsche Bank to refinance The Gallery at Beach Place, a 96K sf retail asset in Fort Lauderdale, FL.

• Multifamily: CREI Holdings secures a $41M loan from Lument to refinance a 244-unit affordable housing asset south of Miami, FL

Developments

• Multifamily: Shapack Partners and CRG to develop a 308-unit mixed-use multifamily asset in Chicago, IL’s Fulton Market neighborhood

• Industrial: Robinson Weeks Partners breaks ground on a 635K sf industrial asset in Charleston, SC

• Industrial: J.G. Petrucci Co. and Cabot Properties to develop a 320K sf industrial facility in Philadelphia, PA. Principal Asset Management provided a $36M construction loan

Distress

• Office/Retail: The 200K sf North Avenue Collection building in Chicago, IL hits the market with an auction scheduled for February. The asset is expected to sell for $20M, less than a quarter of what it was purchased for two decades ago. According to Ten-X, the asset is 55% leased

• Office: Watergate Office in Washington D.C. resolves delinquent CMBS loan. The owner attributes issues to a “lockbox error”

Leasing

• Industrial: Sylvamo North America extends its 432K sf lease at Whitesell Construction Co.’s 1500 John Galt Way in Florence, NJ

• Office: David Yurman, a luxury jeweler, expands its headquarters in New York, NY at Hudson Square Properties’ 200 Hudson Street. The jeweler signed a 15-year lease for a 150K sf

Meme Summary

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