Happy Thursday… afternoon?

The amenity wars are over, as tenants in Manhattan seek out transportation hubs and cool neighborhoods over building amenities. New Jersey has a massive supply of industrial delivered in Q3. A handful of coastal markets see apartment rents increase by nearly $800/unit since 2018. And small border town in California could be the next hot industrial market. Real GDP comes in strong in Q3 with a 4.9% QoQ increase after strong consumer spending in the summer. A strategist warns of impending downturn and rates continue to impact everything as EV car makers begin to adjust plans in anticipation of a slowdown.

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Capital Markets

Market News

• Strategist warns the U.S. consumer could be headed towards cliff as a labor market downturn could kickstart a recession. Economic indicators are showing consumers are running out of excess cash and household savings are under pressure (CNBC)

• The US economy grew at fastest pace in nearly two years in Q3. The Bureau of Economic Analysis released data showing Real GDP grew by 4.9% in Q3 from the previous quarter. Activity was fueled by increased consumer spending, private inventory investment, and federal government spending. Real disposable income was down 1% in Q3 vs. up 3.5% in Q2. Personal saving was $777bn in Q3, down from $1.04tn in Q2 (Yahoo, bea)

  Real GDP - Quarter-over-Quarter % Change

  

• Ford reaches tentative agreement with United Auto Workers Union to a 25% wage hike over the next 4.5 years. Total pay increases could come out to 33% after cost-of-living adjustments. UAW mentioned other parts of the agreement include faster pay hikes for plant workers and eliminating lower-pay tiers in certain departments (Reuters)

• High bond yields are shifting investors out of stocks and into bonds. One bank is expecting bonds to outperform equities in the start of 2024 (Yahoo)

• High interest rates are slowing demand for EV vehicles. GM and Honda have scrapped a $5bn partnership to develop lower-cost EVs while an EV battery maker expects demand to be lower than expected in 2024 (Reuters)

• Turkey’s central bank increases its key interest rate to 35% from 30%. The central bank raised rates after prices came in higher than expected in effort to control inflation. This comes as the bank shifts away from lowering rates even as inflation skyrocketed (CNBC)

CRE Headlines

• Office amenities are no longer the key factor for tenants. In Manhattan office buildings close to mass transit hubs had cell phone traffic equal to 88% of their pre-pandemic levels, while those 15 minutes away had just 44%. Many are pointing at the fact that tenants would rather be in an area with walkable amenities rather than amenities the building itself offer (Bisnow)

• New York hotel rates rise with Airbnb crackdown and migrant crisis (Crain’s)

• Otay Mesa, CA is emerging as an industrial market. CBRE notes that the land port along the U.S.-Mexico border is the busiest commercial port in California and third busiest land port along the U.S.-Mexico border. Industrial supply has grown from 16mm sf in 2019 to 23mm sf today, with nearly 2mm sf underway. Otay Mesa received $150mm investment from the DOT to build a new international border crossing due to be completed in 2026 (CBRE)

• Handful of coastal markets saw apartment rent growth of $700-$870 per unit since 2018. Miami saw rents grow by $874 per unit on average while Santa Maria and Oxnard in California saw increases of $739 and $859 per unit (RealPage)

• Southern New Jersey Industrial vacancy rises to 9.4% in Q3 after delivery of 6.2mm sf of new product, more than double the amount delivered in 2022. 3.7mm sf remain under construction. Asking rents rose to $11.43/sf/yr/nnn from $11.10/sf/yr/nnn in Q2 (Colliers)

  Southern New Jersey Industrial Market History

  

   

• Morningstar agrees to pay $8mm settlement with SEC over complaints on its assessments of CMBS loans (Crain’s)

Deals Deals Deals

Sales

• Multifamily: MG Properties sells a 138-unit multifamily asset in Pomona, CA for $36mm (CRENews)

• Multifamily: Green Lead Capital Partners acquires a 141-unit luxury multifamily asset in North Portland, OR for $31mm from Fairfield Residential. The deal was financed with a $15mm Fannie Mae loan (MHN)

• Industrial: Boise Cascade, a manufacturer of building materials, bought a 120k sf industrial and office property in West Palm Beach, FL from JRB West Palm for $31mm (CommercialObserver)

• Multifamily: Waterton acquires a 346-unit apartment building in Chicago, IL’s South Loop neighborhood (YieldPro)

• Office: Shelbourne Global Solutions buys the 1.2mm sf Plaza of Americas office building in Dallas, TX from M-M Properties and Invesco Real Estate. MetLife Investment Management provided a $48mm loan as part of the deal. The previous owners originally paid $100mm in 2011 and spent an estimated $26mm in renovations (DallasNews)

Debt

• Multifamily: The Sobrato Organization obtains a $259mm Fannie Mae credit facility secured by six multifamily assets totaling 1,141 units. The portfolio is located in the west coast and financing was provided by PGIM Real Estate (REBusinessOnline)

• Multifamily: Fifteen Group secures a $163mm financing package from MF1 Capital to refinance a 1,175-unit multifamily community in Los Angeles, CA (Bisnow)

• Hospitality: Apollo Global Management and Newbond Holdings secured $78mm in acquisition financing from Blackstone for 2 Times Square, a 317-key hotel in New York, NY. The asset was bought from Sherwood Equities for $165mm (CommercialObserver)

• Student Housing: Safanad and Vie Management secure a $63mm three-year, floating-rate loan from Varde Partners for the refinancing of a 910-bed student housing community in Washington D.C. (REBusinessOnline)

• Multifamily: Rosso Development obtains a $45mm construction loan from Bank OZK to building a 12-story, 228-unit branded condo project in Miami, FL (TheRealDeal)

• Industrial: Wharton Industrial secures a $34mm five-year, fixed-rate loan for a 10-property. 443k sf industrial portfolio in the Philadelphia, PA area from Securian Financial (REBusinessOnline)

Developments

• Multifamily: JV between Tucker Development and Wingspan Development Group close on $100mm construction financing for 294-unit mixed-use development project in suburban Chicago, IL (YieldPro)

• Office: The Chiofaro Company begins work on a $100mm redevelopment of 1.8mm Boston, MA office complex (connectcre)

• Student Housing: The Dinerstein Cos. plan to build a $55mm, 217-unit student housing asset near UCF in Orlando, FL (BizJournals)

• Data Centers: Prologis seeking to rezone land in Loudon County, VA to potential data center use. The two parcels would potentially allow for up to 750k sf and 294k sf of development (DND)

• Mixed-Use: Hillwood acquires full city block in downtown Ft. Worth, TX. The company is still deciding on the best use (connectcre, DMagazine)

Distress

• Hospitality: Park Hotels & Resorts is sued by trustee on the $725mm loan tied to 1,921-key Hilton San Francisco Union Square and 1,024-key Parc 55 San Francisco in San Francisco, CA to place them into receivership (TheRealDeal)

Capital Raising

• Diversified: Public Officials Benefit Association (“POBA”), a South Korea- based public pension fund, commits $100mm in capital to 3650 REIT U.S.-based Bridge and Event Dirven lending strategy focused on shorter-term loans (BusinessWire)

• Multifamily: Macquarie’s Goodstone Living closes its first fund with £550mm investment capacity. The fund will target build-to-rent opportunities in the UK (PERE)

Leasing

• Office: Audubon Engineering signs a 72k sf lease with Azrieli Group’s 227k sf office building in Houston, TX (commercialsearch)

• Office: Navan, a California corporate travel and expense startup, signs 40K sf lease in New York, NY with Wasserstein Enterprises (CommercialObserver)

Deals on the Market

• Hospitality: Pebblebrook Hotel Trust is offering a 752-key hotel in Chicago, IL. The REIT has hired JLL to market the Westin at 909 N Michigan Ave (CRENews)

• Office: Gatsby Enterprises lists 800 Brickell Avenue, a 209k sf office building, in Miami, FL (TheRealDeal)

Meme Summary