Good Morning (Afternoon if you’re on the East Coast) to All!

Office usage hits highest levels since March 2020 with 50.5% of pre-pandemic occupancy across the 10 cities tracked by Kastle Systems. It continues to be cheaper to rent than own. Across the US. Industrial demand is weakening as companies seek to push out leasing to 2024 and beyond. Homebuyers are buying homes closer to work and mortgage rates drop to the lowest since September. Starbucks workers are on strike today, so you’ll have to brew your own coffee at work. Luxury brands are taking a sales hit, while the average American sees their savings drop below pre-pandemic levels.

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Capital Markets

Market News

• Starbucks workers to strike today, November 16th, across the US in an effort to unionize stores and attempt to pressure the company on one of its largest sales day during the promotional Red Cup Day which kicks off the holiday season (TheGuardian)

• Oil prices tumbled over 1.5% on Wednesday after a larger-than-expected rise in U.S. crude inventories and record production in the world’s largest producer. WTI fell ~2% to $76.66 a barrel (Reuters)

• Mortgage rates drop to their lowest since mid-September. The 30-year mortgage rate average went as low as 7.77% on Tuesday (Investopedia)

  30-Year Mortgage Rate Average

  

• Study reveals American households outside the wealthiest 20% are in a worse financial position than they were at the beginning of the pandemic. When adjusted for inflation, the bottom 80% of households have lower bank deposits and liquid assets now vs. March 2020. Meanwhile the wealthiest 20% still have savings 8% higher than at the start of the pandemic (Benzinga)

• Homebuyers are buying homes closer to work in 2023. The median miles between a buyer’s new home and previous residence dropped to 20 miles in 2023 vs. 50 miles in 2022. Buyers were increasingly buying homes in suburbs vs. small towns or in rural areas (Yahoo)

  Buyer Location Preference

  

• Burberry warns full operating profit will come in on the low end of guidance for the year amid a global slowdown in luxury spending. The luxury brand reported that comparable store sales growth slowed to just 1% in Q3 vs. 18% growth in Q2. Luxury group LVMH reported a sales slowdown last month and Cartier-owner, Richemont warned of weaker growth (CNBC)

CRE Headlines

• Office usage hits highest levels since March 2020 with 50.5% across the 10 cities tracked by Kastle Systems. Chicago, San Francisco, and New York lead the charge with 55%, 44%, and 50.5% of pre-pandemic usage. Wednesdays tend to be the most occupied days with 59.4% while Fridays are the lowest with 33.1% (Bisnow)

• Renting continues to be cheaper than owning with the spread between the two increasing by 15.4% in Q3, representing $994 saving in rent. Elevated mortgage rates are keeping would-be buyers on the sidelines, with applications to buy homes at a five-year low (NMRK)

  Cost of Homeownership vs. Renting

  

• Demand for industrial space is weakening according to a JLL survey. YoY demand fell by 7.6% to 807mm sf in 2023 vs. 873mm sf in 2022 with companies taking a more cautious approach to space requirements and in some cases pushing out leasing to 2024 or 2025. Manufacturing space demand increased while warehouse and distribution demand decreased (JLL)

  Warehouse & Distribution Facilities Demand

  

   Manufacturing Facilities Demand

  

Deals Deals Deals

Sales

• Medical Office: A JV between Remedy Medical Properties and Kayne Anderson Real Estate acquires a 93k sf medical center in Chicago, IL for $71mm from Rush Health. The property is leased to RUSH University System for Health and Midwest Orthopedics (commercialsearch)

• Multifamily: Wilshire Unlimited sold a 193-unit workforce housing property in Las Vergas, NV for $34mm. The sale to a private family trust was financed with a seven-year term, $18mm Fannie Mae loan with four years of interest-only payments and a 30-year amortization schedule (MHN)

• Retail: PMAT Real Estate Investments acquires a 317k sf shopping center from DRA Advisors for $32mm. The center was financed by b1Bank with a $20mm loan. Among the center’s tenants were TJ Maxx, Best Buy, Ross Dress for Less, The Fresh Market, and Ulta (commercialsearch)

• Office: PREG Scottsdale LLC acquired a 139k sf office asset in Scottsdale, AZ for $27mm from New York Life Real Estate Investors. The asset last traded for $39mm in 2006 (commercialsearch)

• Self Storage: SurePoint Development to acquire a 651-unit self storage facility outside of Houston, TX that is scheduled to be completed by spring of 2024 (REBusinessOnline)

Debt

• Hospitality: MCR Hotels and Island Capital Group closed on $260mm refinancing of the 1,780-key Sheraton New York Times Square hotel. The refinance retires a $250mm loan that was seller-financed in 2022. Funds managed by affiliates of Fortress Investment Group LLC funded the loan (JLL)

• Multifamily: Chetrit Group secures a $235mm loan for a Condo Tower in New York’s Upper East Side. G4 Capital Partners provided the financing (CommercialObserver)

• Multifamily: Greystar Real Estate Partners secures a $99mm loan from Otera Capital to refinance a 282-unit luxury multifamily building in Denver, CO (CommericalObserver)

• Retail: The owner of Gilbert Gateway Towne Center, Mega Furniture, secured a $81mm loan from Citi to refinance the 264k sf retail center in Phoenix, AZ (commercialsearch)

• Retail: Roxville Associates obtained a $30mm, 10-year, fixed-rate loan from Jackson National Life Insurance Co. to refinance a 700k sf regional power center in Succasunna, NJ (commercialsearch)

Developments

• Multifamily: FBL Development acquires a Qualified Opportunity Zone development site from RockFarmer Properties for $21mm in NYC’s Astoria (connectcre)

• Cold Storage: Vertical Cold Storage breaks ground on a 300k sf facility in Kansas City, MO. Operations are expected to begin at the end of 2024 (commercialsearch)

• Cold Storage: Karis Cold developing a 265k sf spec cold storage warehouse in Jacksonville, FL (JaxDailyRecord)

• Multifamily: Mill Creek files plans to build a 358-unit apartment building in Boca Raton, FL. The building will also include 6.5k sf of retail (connectcre)

Distress

• Office: Brooklyn office portfolio backing a $180mm CMBS loan drops to a $207mm valuation, down from the original $640mm valuation at the time Citi Real Estate Funding originated the debt (CommericalObserver)

Capital Raising

• Multifamily: Ease Capital forms $450mm partnership with Taconic Capital Advisors to originate loans by leveraging their tech platform in the multifamily space (Bisnow)

Leasing 

• Office: The Marcus Corp, a theater and hotel company, will relocate its HQ to a 52k sf space at the Associate Bank River Center in Milwaukee, WI (commercialsearch)

• Office: Morgan Stanley signs a 38k sf lease at Texas Tower in Houston, TX. Hines and Ivanhoe Cambridge own the 1.1mm sf office asset (commercialsearch)

Meme Summary

Merch Spotlight