Happy Monday!

Hope you are all recovering from multiple thanksgiving dinner plates. The Houston-based REIT, Silver Star, sold three of the 30 properties backing a $217mm CMBS loan and is looking to sell additional assets to pay down its debt and refinance after filing for bankruptcy earlier in the year. The tech sector is making an A.I. fueled recovery. High Street retail rents have largely recovered globally with NYC’s 5th Ave leading the charge for most expensive retail market. Renters are starting to see a rise in concessions, especially in markets with vast amounts of multifamily being delivered. Thanksgiving saw Black Friday shoppers splurge online. On the table this week, the PCE Index will be released for October which will give a better picture on inflation and Fed policy.

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Capital Markets

Market News

• Black Friday Shoppers Spend $9.8bn in U.S. Online Sales

  Black Friday sales generated 7.5% more sales than a year ago as consumers sought to take advantage of deals ahead of the Holidays. It’s expected that spending will taper following cyber Monday deals

• Oil Prices Fall, With Brent Falling Toward $80 a Barrel

  Oil prices slip as investors await the OPEC+ meeting later this week for an agreement to curb supplies into 2024. Both Brent and WTI crude futures fell to $80.21 and $75.18 by 2:31am GMT. The International Energy Agency expects a slight surplus in global oil markets in 2024 even if the OPEC+ nations extend their cuts into next year, as of result of forecasted demand only growing by 0.9mm bpd in 2024 vs. 2.4mm bpd in 2023

• October’s Personal Consumption Expenditures (PCE) Index Due on Thursday

  Economists expect “core” PCE inflation for October to have risen by 3.5% annually, and 0.2% over the prior month. The annualized monthly increase would put inflation in the 2.5%-2.6% (after rounding) which is near the Fed’s 2% annual inflation target. JPMorgan’s chief US economist noted they don’t expect the Fed to ease monetary policy until Q3 2024

• $7.6tn of U.S. Government Debt Will Mature in 2024

  The amount represents 31% of all outstanding US government debt and is placing upward pressure on U.S. rates. With the federal deficit and interest rates continuing to rise, the Treasury has opted to issue more T-bills vs. longer-term bonds. Recent auctions have been met with weak demand

CRE Headlines

• Landlords are Offering More Concessions to Multifamily Tenants

  43 out of the 50 largest markets in the U.S. have more rental concessions than they did a year ago. Markets with large amounts of construction are seeing the highest concession amounts. Markets with the least amount of concessions include: New Orleans, Providence, Miami and New York

  Share of U.S. Multifamily Rental Listings with Concessions

  

• Tech Industry Slowing Recovering

  U.S. tech industry leasing volume has started to rebound with tech’s share of overall office leasing rising from 9% (3.9mm sf) in Q4 2022 to 17% (7.3mm sf) in Q3 2023. Austin, Denver, and Salt Lake City saw 26.1%, 23.7%, and 22.9% high-tech job growth rates in 2021-2022. Despite the high growth, New York and Seattle both added more jobs than the top three growth markets. The total share of Venture Capital funding for Artificial intelligence funding rose from 17% in H1 2019 to 25% in H1 2023. At the same, overall VC funding has drastically dropped to ~$60bn from the peak of ~$150bn in 2021. Monthly layoffs in tech have slowed down in 2023, with September 2023 marking the lowest number since June 2022

  Tech Share of U.S. Office Leasing Activity in Top 50 Markets (>10,000 sf)

  

   

• U.S. Prime Retail Locations See Rents Jump to Almost 18% of Pre-Pandemic Levels

  Globally, rents for prime retail markets rose to pre-pandemic levels in Q3 2023 while in the U.S. rents were 17.9% higher than pre-pandemic. New York’s 5th Ave (49th to 60th Streets) remained the most expensive retail corridor globally with rents at $2,000/sf/yr, roughly 14% higher than pre-pandemic. Milan and Hong Kong’s Via Montenapoleone and Tsim Sha Tsui markets were the second and third most expensive markets with rents at $1,766/sf/yr and $1,493/sf/yr. Via Montenapoleone saw rents 31% higher than pre-pandemic while Tsim Sha Tsui rents were 39% below

  America’s Top High Street Retail Markets

  

  Source: Cushman & Wakefield

• Silver Star REIT Sells Properties to Pay Down $217mm CMBS Loan

  The Houston-based REIT sold three of the 30 properties backing a CMBS loan for $41mm. The REIT is looking to sell off another nine properties to shave another $80mm off the balance. The loan was transferred to KeyBank Real Estate Capital for special servicing after the REIT filed for bankruptcy earlier this year. The loan matured on October 9, and the REIT is hoping to refinance following additional asset sales

Deals Deals Deals

Sales

• Office: Penzance acquires Rosslyn Gateway, a two-building 255k sf office portfolio in Arlington, VA for $52mm. The company plans to renew a development plan which was previously approved for 1mm sf of office, retail, and residential space

• Industrial: Reich Brothers acquire a 310k sf industrial facility in Toledo, OH via a sale-leaseback with Stellantis. iBorrow provided a $13mm loan to finance the acquisition

Debt

• Multifamily: A JV between LYND and Dania Beach Marina Corp. obtains a $12mm loan to refinance a 2.9-acre development site in Miami, FL. The development will feature a 380-unit, 15-story apartment building

Developments

• Mixed-Use: Intrinsic Development breaks ground on $900mm mixed-use project in suburban Kansas City, MO. The 3.9mm sf development will include two hotels totaling 230 rooms, 2,791 luxury apartment units, office space, medical office buildings, and retail. The development will consist of four phases through 2031

• Hospitality: The Crescent Hotel Forth Worth opens in Ft. Worth, TX. The hotel is part of a larger $275mm mixed-use development which includes a 167-unit apartment building, 168k sf of office, and a wellness club

• Multifamily: WinnDevelopment breaks ground on a $55mm adaptive reuse project of a historic mill complex into a 88-unit senior-living affordable housing project north of Hartford, CT

• Multifamily: Dart Interests LLC acquires a 305k sf vacant data center in Salt Lake City, UT for $19mm from Unico Properties. Dart plans to redevelop the 2.32 acre site into a residential high-rise

• Student Housing: Ascendant Development opens a 200-unit, 649-bed luxury student housing community in Houston, TX near University of Houston

Distress

• Office: RBC Real Estate Capital Corp has scheduled a public auction for 1812 North Moore St. in Arlington, VA. The 538k sf office asset was built by Monday Properties and is scheduled for public auction on December 18 for the property’s equity

• Hospitality: Lender files request to initiate foreclosure on Kirkland Development’s 90-room hotel development in Portland, OR

Leasing

• Industrial: Middleby Residential signs a 204k sf lease in York, PA at an affiliate of Core5 Industrial Partners’ building

• Industrial: Transwestern Development Co. lands a 66k sf lease with Robert Madden Industries. The wholesale distributor of heating and air products signed a lease at 801 Harry McKillop Blvd in suburban Dallas, TX

• Industrial: J&P Warehousing/Tardella Foods sign a 65k sf lease at Molto Properties’ 102k sf warehouse at 2250 W 75th Street in Woodridge, IL

• Office: Intrusion, a cyber security company, signs a 11k sf lease a Boxer Property’s 225k sf Plano Tower in Plano, TX

Meme Summary

Merch Spotlight