Good Morning Everyone!

Happy Monday to all. Lots of charts today so lets dive in. U.S. industrial vacancy rises to 5%, as new supply outpaces net absorption for the fifth consecutive quarter. A survey conducted by JLL expects the majority of hotel investors to be net-buyers in the next 12 months. YoY retail sales are expected to grow in Q4 but at a much slower pace relative to prior years. New multifamily supply was revised upward through 2026, following increased construction starts in the first half of 2023. In broader market news, Moody’s downgrades the U.S. credit rating, major banks deviate in their long-term interest rate predictions, used car prices continue to drop, and consumer spending falls slightly in October.

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Capital Markets

Market News

• Consumer spending falls in October according to CNBC/NRF Retail Monitor. Retail sales, excluding auto & gas, fell by 0.08%. Data showed weakness in gas station sales, electronics and appliances, and furniture & home stores. Sporting goods, internet sales, and health & personal care saw stronger sales (CNBC)

• The price for used cars continues to fall, reaching the lowest price levels since April 2021. Borrowing rates for used cars have surged from 3.85% in February 2022 to 7.3% today. With used car prices falling more, Americans who bought cars during the Covid peak will find themselves underwater on auto loans (Yahoo)

• Morgan Stanley predicts large interest-rate cuts over the next two years leading to a 2.375% fed rate target by the end of 2025 while Goldman expects rates to settle at 3.5%-3.75% by mid-2026. The two banks diverge greatly with Goldman following the Fed’s projections more closely as they expect two 25bps downward adjustments in 2024 (Bloomberg)

• Moody’s lowered its U.S. credit rating to “negative” from “stable” citing large deficits and a decline in affordability. Federal spending and political polarization have been a rising concern for investors that have triggered a selloff in U.S. government bonds contributing lower prices, initiated by the high Fed rate. Investors are worried continued issues between parties will prevent lawmakers from reaching a fiscal plan to slow the decline in affordability (Reuters)

CRE Headlines

• New multifamily supply over the next three years was revised upward in Yardi data due to elevated construction starts in the first half of 2023. The amount new multifamily projected to be delivered from 2026-2028 is expected to be lower than previous estimates due to slowing development activity (YardiMatrix)

  National Annual Multifamily New Supply Revised Estimates

  

• Landlords object to trucking company’s, Yellow, proposed amount to terminate 178 leases across the U.S. and Canada. Major landlords cited large amounts in unpaid rent, taxes, late fees, maintenance, and property damages that were only partially met by Yellow’s proposed payments. Yellow filed for Chapter 11 Bankruptcy in August after failing to refinance a $700mm federal loan take during the pandemic (Bisnow)

• Year-over-year retail sales are expected to increase by 3% this year after increasing by 7.5% in 2022 and 14.6% in 2023. High inflation, lower savings rates, and rising credit card debt begin to take a toll on consumer spending (CBRE)

  Q3 2023 Retail Sales Forecast 

  

• JLL’s global hotel survey for November reveals 81% of investors expect to be net-buyers over the next 12 months. 59% of those surveyed expecting the all-in cost of debt to remain the same over the next 12 months, while 30% expect increases, and 11% decreases. Investors have been targeting urban markets like London, New York, and Tokyo following the reopening of those cities post-pandemic. These markets have shown meaningful increases in ADR and RevPAR, with London adn New York exceeding 2019 numbers (JLL)

• U.S. industrial vacancy rises 141bps YoY in Q3 to 5.02%. The increase comes as new supply outpaces net absorption for the fifth consecutive quarter. QTD the new supply added has consisted of 451mm sf while only 179mm sf of net absorption has occurred. Despite this increase, asking rental rates have continued to climb with more modest increase expected in the future (Colliers)

  Historical U.S. Industrial Vacancy

  

Deals Deals Deals

Sales

• Office: The Napleton family purchases the 785k sf Oakbrook Terrace Tower. the largest suburban office asset in Chicago, for $60mm from Blackstone (REJournals)

• Retail: ACP Management acquires a 89k sf shopping center in Laveen, AZ from Lamar Cos. The asset was occupied by seven tenants (REBusinessOnline)

• Multifamily: JVM Realty acquired a 113-unit multifamily asset in suburban Chicago, IL (connectcre)

Debt

• Multifamily: Pair of private developers secure a $60mm construction loan from BridgeCity Capital for a 136-unit multifamily development in New York’s Williamsburg. The project is expected to be completed in 2025 (CommercialObserver)

• Self Storage: Rosewood Property Company secures a $32mm, 10-year, seven-year interest-only period loan for the acquisition of a three-property portfolio of self storage assets in Arizona, California, and Nevada totaling 2,101 units (Yahoo)

• Industrial: iBorrow provides a $13mm loan for the sale-leaseback of a 209k sf warehouse and distribution center in Toledo, OH. The facility was previously owned by a subsidiary of Stellantis (connectcre)

Developments

• Life Sciences: NexPoint wins approval to rezone a vacant 1.6mm sf former EDS campus outside of Dallas, TX into a $4bn redevelopment that will add over 4mm sf of lab/office/production space, 775 multifamily units, and a hotel to the area (connectcre, TheRealDeal)

• Industrial: Nissin Foods USA plans to develop a $228mm, 641k sf manufacturing facility in Greenville County, SC. The project is expected to be completed in 2025 and add 300 jobs to the area (commercialsearch)

• Industrial: Atlas Development Group planning a 3k acre manufacturing and logistics park in Winslow, AZ. The project is expected to kickoff the I40 TradePort Corridor, a planned 805-mile network of clean-energy logistics hubs (REBusienssOnline)

• Industrial: Rockpoint acquires an 88-acre industrial development site in Pompano Beach, FL for $180mm to develop 1.5mm sf of industrial space (CommercialObserver, PRNewsWire)

• Industrial: Woodmont Industrial Partners completes a 253k sf industrial facility in Jupiter, FL. The asset was financed with a $26mm construction loan from Valley National Bank in October of 2022 (commercialsearch)

• Multifamily: MBK Living and Hines to develop a 284-unit multifamily asset in Colorado Springs, CO on 9.7 acres (REBusinessOnline)

• Multifamily: Bozzuto completes a 250-unit multifamily development north of Philadelphia, PA (REBusinessOnline)

Distress

• Office: 601W Companies’ 410 Tenth Ave’s $565mm CMBS loan hit with cash management clause after First Republic’s lease termination at the 569k sf office asset in NYC’s Hudson Yards (CommercialObserver)

Capital Raising

• Diversified: TPG raises $750mm in capital for its debut real estate credit fund (PERE)

• Multifamily: UBS Asset Management provides an initial commitment of €120mm to Matter Real Estate’s Matter UK Residential Income Fund to invest in multifamily sectors across Europe (PropertyEU)

Leasing

• Industrial: Amerhart leases 145k sf at NorthPoint Development’s Blue Commerce Center Building IV in Kansas City, MO (connectcre)

• Industrial: Mullen Automotive leases 122k sf at Link Industrial’s 1500 E Walnut Ave in Fullerton, outside of Los Angeles, CA (connectcre)

Meme Summary

Merch Spotlight