A Very Good Tuesday to All!!!

National Multifamily rent growth is being carried by increases in Class A buildings, however certain markets with large deliveries are seeing increases in B & C spaces while Class A rent growth remains stagnant. CRE Transactions are down 50% in 2023 vs 2022. Build-to-rent continues to receive investor demand as limited housing supply and high interest rates make it difficult for would-be homeowners to buy into the market. The restart of student loan payments could have an impact on retail and multifamily assets as people buckle down on expenses.

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Capital Markets

Market News

• United Auto Workers’ strike could escalate to impact a broader number of factories. Impact on lost GDP could complicate Fed decision making at a time when recession fears mount. Auto production accounts for 2.9% of US GDP (CNBC)

• Ford could face strikes at two V8 engine plants in Canada (Axios)

• US-led initiative will comprise two economic corridors that will link the Middle East with India and Europe. The deal will include a railway to supplement existing sea and road transport routes. The deal will involve India, UAE, Saudi Arabia, Jordan, Israel, and Europe (CNBC)

• Real median household income after taxes fell 8.8% between 2021 to 2022. The poverty rate after taxes increased by 59% to 12.4%, as measured by the Supplemental Poverty Measure. The large difference was attributed to key changes in federal tax policy (census)

• US import prices rose 0.5% month-over-month in August but were down 3.0% year-over-year. Fuel import prices were up 6.7% month-over-month, but down 19.0% from a year prior (BLS)

• US commercial bankruptcies are on the rise with August seeing a 14% YoY increase and 17% increase MoM (TheGuardian)

CRE Headlines

• National multifamily rent growth has slowed significantly in 2023. In August Class A apartments had 0.7% YoY effective rent growth while Class B and C space had 0.0% and -0.4% change in rents. In some markets the story was reversed, with Class A space seeing minimal increases while Class B and C space drastically outperforming (RealPage)

• Q2 2023 CRE transactions down 50% YoY according to Green Street report (GlobeSt)

• Economic uncertainty impacting demand for third-party logistics space according to CBRE (GlobeSt)

• The South leads the build-to-rent movement with over 61k units under construction as of September. Limited supply of single-family homes and high interest rates have many potential homeowners turning to rentals (RealPage)

• Student loan payment restart could impact consumer spending at luxury retailers and cause a shift to cheaper, more affordable rental units (Bisnow)

Deals Deals Deals

Sales

• Datacenter: Sears sells 197 acre Chicago HQ to Compass Datacenters for $197mm. Compass is expected to demolish the existing structure and develop a 2.4mm sf datacenter (Bisnow)

• Industrial: EQT Exeter buys $50mm warehouse from StarPoint Properties in San Bernardino, CA. The site is located in an Opportunity Zone (TheRealDeal)

Debt

• Healthcare: Kayne Anderson Real Estate Debt buys Synovus Bank’s medical office loan portfolio for $1.3bn. The loan consists of 106 floating rate mortgages secured by 308 medical office assets (Yahoo)

• Datacenter: Chirisa Investments secures $200mm construction loan from one of Brookfield’s infrastructure funds to develop a 242k sf data center in Chester, VA (CommerciaObserver)  

• Multifamily: Darwin German Real Estate obtains $56mm in acquisition financing for a 355-unit multifamily asset in Weatherford, TX. The package consisted of a $38mm loan and $18mm in preferred equity (REJournals)

Developments

• Multifamily: The Miami Urban Development Board is reviewing proposals from Lalezarian Proerties and Abbhi Capital that would add up to 2.1mm sf in the Miami Worldcenter master development (Bisnow)

• Datacenter: Sabey Data Centers bought a 60-acre site in Umatilla, OR for $3mm to develop a $950mm datacenter campus comprised of two buildings totaling 700k sf and offering more than 100 megawatts of capacity (Bisnow)

• Life Sciences: Lendlease and Ivanhoe Cambridge top out $545mm, 350k sf life science project in Boston, MA (REBusinessOnline)

• Multifamily: New Jersey Economic Development Authority board approves $90mm in tax credits for a 350-unit residential building. Total cost is expected to be $150mm (NJBiz)

• Industrial: Brookfield Properties buys 40 acres in Inland Empire (Rialto, CA) for $72mm (CommericalObserver)

• Office: US Soccer will relocate from Chicago, IL to Atlanta, GA and has received $50mm in funding to acquire and develop a new home (Bisnow)

• Industrial: BBX Logistics and PCCP buy 40-acre site to develop an industrial campus in Delray Beach, FL (CommercialObserver)

• Mixed-Use: Presidio Bay Ventures opens Springline, a 6.4-acre residential, retail, and office development in Silicon Valley (REBusinessOnline)

Distress

• Office: Shorenstein Properties defaults on $350mm CMBS loan tied to 1.1mm sf office asset in Times Square (CommercialObserver)

Capital Raising

• Diversified: CalPERS invested $1.5bn into Blackstone Real Estate Debt Strategies V and $350mm into Mesa West Real Estate Income Fund V (IPE Real Assets)

• Diversified: Illinois SURS and South Carolina Retirement approve $75mm and $100mm to be invested into Brookfield Strategic Real Estate Partners V fund (IPE Real Assets)

Leasing

• Industrial/Office: Latch.com, smart door tech company, relocating HQ from NYC to St. Louis into a leased 48k sf space which combines office and warehouse space. The move comes after a delisting from the NASDAQ, the departure of various executives, and layoffs earlier this year (businesswire, Bisnow)

• Office: Rogers Towers, a law firm, has renewed its 35k sf lease in Jacksonville, FL with Acram Group (JaxDailyRecord)

• Industrial: Monster Energy signs 218k sf lease in Fort Worth, TX with Cabot Properties (REBusinessOnline)

• Healthcare: Praesum Healthcare Services signs 58k sf lease in Philadelphia, PA (REBusinessOnline)