Good Morning to All!

WeWork makes headlines again after withholding $33M in January rent, Detroit sees industrial vacancy creep up, nearly $100B worth of loans were watchlisted in the second half of 2023, and a Canadian industrial developer looks to expand into the U.S. A new poll show economists pushing their rate cut expectations in Q2, Conde Nast employees protest layoffs, union membership rates are down, and first wave of “buy now, pay later” payments comes due for holiday shoppers

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Capital Markets

Market News

• Fed Likely To Cut Rates In Q2 According to Reuter Poll

  According to 123 economists polled by Reuters, the majority (86) predict the Fed will cut interest rates in the second quarter, with June seen more likely than May and less easing forecasted this year than markets now expect

• Conde Nast Staffers Hold Walkout To Protest Layoffs

  Over 400 Conde Nast staffers walk out to protest layoffs. The company owns publications like Vanity Fair, Vogue, and GQ. Journalists formed a picket line outside the NYC headquarters to protest the expected layoff of 94 employees. The walkout comes after layoff negotiations between the company and the union led the publisher to revise its offer and half the amount of severance it was willing to pay, sparking worker outrage

• Union Membership Rates At All-Time Lows

  According to the U.S. Bureau of Labor Statistics, 10% of hourly employees were members of unions in 2023, down from 10.1%. Union organizing gains, are offset by the job growth in nonunion jobs and job loss in unionized sectors.

• Buy Now, Pay Later Holiday Debt Coming Due

  Buy now, pay later surged 14% year-over-year, but now the first wave of bills is coming due for Holiday shoppers who are uncertain in how they will pay. The surge in use of buy now, pay later comes as credit card debt is at a record high and delinquency rates have nearly doubled over the past two years

CRE Headlines

• WeWork Withholding $33M In Rent

  Landlords for the co-working company have claimed the latest lack of payment violates bankruptcy law. The $33M in rent is owed at locations where the company is trying to renegotiate it leases. Landlords argue the company continues to receive rent from its co-working tenants while avoiding paying rent to its landlords violating its restructuring plans

• Detroit Industrial Market Sees Vacancy Grow 20Bps In Q4

  Detroit’s Industrial vacancy grew 20bps to 3.30% in Q4 2023, while 113K sf was absorbed. New spec construction totaled 669K sf, with only 65% being leased. Leasing activity slowed down with industrial users vacating buildings at a high rate, most notably in the 20K to 80K sf buildings. 4.7M sf are under construction and expected to be completed in 2024, of those 2.6M sf is spec warehouse that is 90% complete. New supply is expected to add space to the distribution/logistics area where demand has been high, yet supply scarce

  Detroit Industrial Market Demand & Supply

  

  Source: Newmark Research

• Watchlist Loans Grow In H2 2023

  According to data from CrediQ, 15,373 loans were added to the servicer watchlist in H2 2023, nearly $100B in loans. While October had the highest number of loans added, December’s total value was higher. Maturity and low DSCR triggers made up nearly two thirds of the reasons for loans being added to the watchlist

  2023 Watchlist Additions

  

• Canadian Firm Plans U.S. Expansion

  Rosefellow, an industrial developer based out of Montreal, is planning its first developments in the U.S. for 2025-2026. Co-CEO Mike Jager has looked at Florida, New Jersey, and Chicago markets. The company has mix of public and private investors interested in the U.S.

Deals Deals Deals

Sales

• Multifamily: The Bascom Group acquires the Overlook Apartments, a 344-unit multifamily property in Albuquerque, NM from Sheiner Group. The deal was financed via TPG Real Estate Finance

• Office: Mission Cos. acquires a 117K sf office asset in Houston, TX. Mission secured a $23M CMBS loan from Morgan Stanley

• Industrial: Park 130, a 357K sf industrial asset in Whitestown, IN, sells for $25M at a 5.6% cap rate. Buyer and seller were undisclosed

• Industrial: Semi-Stow acquires a 20-acre outdoor storage parcel in Denver, CO from Hampton Yards for $19M. The site previously traded for $7M in 2021

• Multifamily: A six-building, 203-unit multifamily portfolio in the Bronx, NY trades for $15M

• Self Storage: DXD Capital acquires a 922-unit, seven-property self storage portfolio in Grand Junction, CO for $13M

Debt

• Office: Affinius Capital secured a 3-year loan from Sumitomo Mitsui Banking Corp. and Industrial and Commercial Bank of China Limited to refinance The National Cancer Institute Headquarters Building, a 587K sf office property in Rockville, MD

• Multifamily: Evolve Cos. secures a $51M financing package made up of a $37M construction loan from a regional bank and $14M in preferred equity for a 256-unit multifamily development north of Daytona Beach, FL

Developments

• Multifamily: TPG Angelo Gordon acquires a 41-acre plot from Lewis Group of Companies and Hillwood Development for $45M in California’s Inland Empire to develop a 429-unit condo building

• Hospitality: RREAF Holdings, in partnership Innisfree Hotels, to develop a 334-key, 300K sf, $250M Margaritaville Hotel & Resort in Galveston, TX

• Mixed-Use: GTIS Partners and Clyde Capital planning a $250M mixed-use development in Phoenix, AZ. The project will include a BTR community, a retail center, and a medical facility

• Industrial: The Missner Group and Wylie Capital acquired International Corporate Park, a 70-acre site in suburban Chicago, IL. The companies plan to demolish the existing office asset to build over 900K sf of industrial space across four buildings. An existing 258K sf warehouse will remain

• Multifamily: SRM and the Urban League to develop a 207-unit multifamily asset in Seattle, WA. The site was acquired for $7M and is being financed by with a $30M loan from Seattle’s Office of Housing, $8M from Amazon’s Housing Equity Fund, and $50M in tax-exempt bond financing from the Washington State Housing Financing Commission

Distress

• Office: Lexin Capital acquires the nonperforming $65M loan on its own property, the Caxton Building in New York, NY, from Aareal Bank at an undisclosed price

• Office: Thorofare Capital selling a 54K sf office asset in Los Angeles, CA after taking possession via deed in lieu of foreclosure from former owners Livwrk

Leasing

• Office: Sanpchat signs a 467K sf lease for 10+ years at BXP’s Santa Monica Business Park in Santa Monica, CA

• Industrial: HARIBO of America signs a 447K sf lease at HSA Commercial Real Estate’s Bristol Highlands Commerce Center in Kenosha County, WI

• Office: Evercore signs a 12-year lease for 95K sf of expansion space at Fisher Brothers Park Avenue Plaza in New York, NY

• Office: M&T Bank signs a 39K sf lease at Millennium Partners’ 1.8M sf Winthrop Center in Boston, MA

• Office: ICBC Standard Resources signs a 15K sf lease at SL Green’s 1185 Avenue of the Americas office in New York, NY

Meme Summary

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