Happy Friday All!

Under leadership of new CEO, Walgreens will look to close multiple locations as part of a new cost-cutting initiative. HSBC will also be taking a look at its global portfolio and close down locations as needed. Residential foreclosure tick up in September. Office utilization seems to be leveling out at 50% nationally and industrial vacancy ticks up in Inland Empire following a wave of new deliveries.

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Capital Markets

Market News

• Latest inflation report showed a downward trend in price increases but still not at the Fed’s 2% inflation goal. The probability of a rate hike in November cam down to 12%, while the probability of rate hike in December rose to 37% (Yahoo)

• Ford says they are their limit with what they can spend on wages and benefits for United Auto Workers. Ford warned that striking at the company’s most profitable plant could harm workers and cut profits. UAW officials have argued Ford, GM and Stellantis can afford to pay workers beyond the 20% and 23% increases they have offered (Reuters)

• Bets on large bond gains have lead to a $10bn ETF loss. A Treasury ETF has seen additional investments all year as Wall Street bets on a interest rates peaking. The ETF is down 50% from its 2020 peak (Bloomberg)

• Biden administration to announce winners of $7bn in federal grants for regional hydrogen hubs. The move is expected to put the U.S. on a path to produce 50mm metric tons of clean hydrogen by 2050 (Reuters)

• Americans failed to pay $688bn in income taxes in 2021 according to the IRS. The IRS said they are adding resources to areas of concern such as high-income and high-wealth individuals, partnerships and corporations. Resources are being funded via the $80bn in funds received from the inflation act (Fortune)

CRE Headlines

• Walgreens to close 60 clinics as part of a $1bn cost-cutting program. Leadership will look to close unprofitable stores and alter hours. New CEO plans to reduce capital expenditures by $600mm as well (Bisnow)

• HSBC is looking to review its worldwide office and retail footprint as part of its effort to cut costs and streamline operations. In the UK, the bank plans to close at least 114 branches and upgrade the remaining 327. Plans for the U.S. are unclear (Bisnow)

• ATTOM’s Q3 2023 U.S. Foreclosure Market Report, showed 124,539 U.S. residential properties with foreclosure filings. This was up 28% from Q2 and 34% from last year. New foreclosure filings were up 11% in September from a month prior (ATTOM)

  U.S. Residential Properties with Foreclosure Filings

  

• Office utilization has stabilized near 50%, increasing in metros like New York and Chicago and dropped in metros like Austin as of Q3 2023. Businesses with confidential information and intellectual property have trended towards higher office space usage while information, insurance, and business services have adapted to hybrid and remote schedules (marcusmillchap)

• Inland Empire’s industrial market sees an increase in vacancy in Q3 to 3.9%, up for the sixth consecutive quarter. Net absorption was totaled 13.4mm sf with 36mm sf of new deliveries. Q4 is expected to see vacancy further increase as 29.4mm sf are slated to be delivered and only 9.5mm sf are pre-leased (Newmark)

• TWO Capital Partners and RAM Partners form a JV to develop over 2,300 single-family rental units over the next two years. The partnership will focus on the southeast (MHN)

Deals Deals Deals

Sales

• Industrial: Terreno Realty Corp. acquires a two-building, 112k sf industrial asset for $46mm from Link Logistics in Redondo Beach, CA (commercialsearch)

• Office: A partnership between three private investors has acquired the 130k sf office asset, Calabasas Courtyard, west of Los Angeles, CA from AEW Capital Management (REBusinessOnline)

• Multifamily: Vesper Holdings acquired a 427-bed student housing community suburban Dallas, TX from Nuveen Real Estate. Vesper secured a $11mm Freddie Mac loan from KeyBank (MHN)

• Multifamily: A JV between Capital Square and ITOCHU Corp. bought a 100-unit build-to-rent project in San Antonio, TX. Pulte Homes is finishing the development with first units expected to be available for occupancy next month and full completion next fall (REBusinessOnline)

Developments

• Data Centers: PowerHouse Data Centers and Harrison Street begin demolition of former AOL HQ for the development of a three-building 1.2mm sf data center campus with 265 megawatt capacity in Sterling, VA (commercialsearch)

• Mixed-Use: St. John Properties acquired a 30-acre site in Wake Forest, NC with plans to develop a 165k sf mixed-use project including flex, retail, and office uses (commercialsearch)

• Mixed-Use: Wynn Resorts gets approval to build a 142k sf expansion across from it Encore Boston Harbor casino. The expansion will include sports betting and poker rooms, a nightclub, and 979-seat theater (Bisnow)

• Multifamily: A JV between Conor Commercial Real Estate, Globe Corp., and Origin Investments will develop a 327-unit multifamily project in Dallas, TX. The five-story building is slated for delivery in spring 2025 (REBusinessOnline)

• Multifamily: Wood Partners opens a 325-unit apartment community outside of Dallas, TX. Comerica Bank funded $39mm in loans (MHN)

• Multifamily: CIM Group has opened The Wilson a 47-unit mixed-use asset with 15k sf of retail in Santa Monica, CA (REBusinessOnline)

• Office: Ace Hardware’s new 250k sf HQ finishes construction in suburban Chicago, IL (connectcre)

• Hotel: Howard Hughes Holdings announces plans to develop a Ritz Carlton-branded condo and hotel development in Houston, TX (RNR)

Leasing

• Industrial: Conair signs a 10-year, 2.1mm sf lease at Trammell Crow’s Mid-Atlantic Crossing Development in Washington County, MD (commercialsearch)

• Mixed-Use: Pebb Capital has signed 137k sf of retail and office leases in its mixed-use retail & office development, Sundy Village, in Delray Beach, FL (REBusinessOnline)

• Office: The American Chemistry Council signs a 93k sf office lease in Washington D.C. with Boston Properties and Douglas Development’s 762k sf office redevelopment (Bisnow)

Meme Summary