In the News

Foreclosure activity in the U.S. is rising, with nearly 32,000 housing units facing default notices or repossessions in July 2024, an 18% increase from June and a slight 0.2% year-over-year rise. Delaware had the highest foreclosure rate, with a 7.37% increase, followed by Nevada, Utah, New Jersey, and Illinois.

By Sean McCracken Hotel News Now Summary: Hyatt Hotels Corp. will remain active in the transactions market after completing a $2 billion hotel sales commitment. CEO Mark Hoplamazian highlighted the focus on strategic partnerships and acquisitions of hotel brands or...

By Paul Owers CoStar News Summary: Lennar, the largest U.S. homebuilder, reported a nearly 20% surge in orders due to a nationwide housing shortage exacerbated by higher interest rates deterring moves. Despite challenges like builder confidence declines, the company's...

By Candace Carlisle CoStar News Summary: Dallas County's new 12-story parking garage, designed exclusively for electric vehicles and built with future expansion in mind, reflects a forward-thinking approach to urban infrastructure. Costing $66.8 million, it...

By Mark Heschmeyer CoStar News, June 27, 2024 Summary: Blackstone's activities have the potential to significantly boost the issuance of commercial mortgage-backed securities (CMBS). Meanwhile, a loan for two high-rise buildings in Chicago has been downgraded,...

By Joshua S. Andino, CoStar News Summary: Walt Disney Parks and Resorts has reached an agreement with the Central Florida Tourism Oversight Board, allowing it to expand its presence in Orlando over the next 15 years. The deal, supported by Governor Ron DeSantis,...

By Moira Ritter CoStar News Summary: Lawrence Yun of the National Association of Realtors emphasized the urgent need for increased housing supply amid ongoing inventory shortages that have driven up home prices. Recent data indicates a slight increase in home...

By Katie Burke CoStar News Summary: Shorenstein, a San Francisco development firm, has handed back the Capella Tower, the second-tallest building in Minneapolis, to its lender MetLife after failing to sell the property amid market uncertainty. Despite efforts to sell...

By Paul Norman CoStar News Summary: Starwood Capital has restricted redemptions from its $10 billion Starwood Real Estate Income Trust (SREIT) to preserve liquidity amid a surge of investor exit requests. Starting in June, redemptions will be limited to 0.33% of net...

Red Lobster has abruptly closed about 100 of its roughly 700 restaurants and is auctioning off equipment from many of these sites. The closures come amid reports that the chain is considering filing for Chapter 11 bankruptcy protection. TAGeX Brands, a restaurant industry liquidator, announced it is conducting a large-scale auction of equipment from over 50 Red Lobster locations, with the first auctions ending soon. The closures and financial struggles have surprised employees and patrons alike. Factors contributing to Red Lobster’s difficulties include the pandemic, high interest rates, labor costs, and an unsuccessful all-you-can-eat shrimp promotion. The chain has been seeking a buyer to avoid bankruptcy, but its largest investor, Thai Union, has also expressed intentions to sell its stake due to sustained financial losses.
Read Full Article on CoStar HERE

The S&P Corelogic Case-Shiller Index revealed a robust 6.4% annual increase in single-family house prices in the United States in February, surpassing January’s record-high growth. All cities in the index reported annual price growth, with San Diego experiencing the largest increase for the second consecutive month. Despite economic uncertainty, fueled by inflation concerns and rising mortgage rates, housing prices continue to soar, reaching all-time highs in cities like San Diego, Los Angeles, New York, and Washington, D.C. However, this persistent growth, coupled with limited supply and higher mortgage rates, is exacerbating housing affordability issues, prompting more prospective buyers to opt for renting over buying.
Read the full article on CoStar HERE

The article reports that BH Kolter is set to acquire a Naples condo complex for $100 million. The property, known as the Mangrove Bay Condominiums, consists of 53 units and spans over 9 acres. The acquisition represents BH Kolter’s continued expansion in the Florida real estate market. The deal underscores the robust demand for luxury residential properties in desirable locations like Naples.
Read the full article onCoStar HERE

Blackstone has agreed to acquire Apartment Income REIT (AIR Communities) for approximately $10 billion, marking its largest multifamily transaction to date. The deal, valued at $39.12 per share, reflects Blackstone’s renewed interest in the property market following a pause in investments in 2023 due to increased interest rates. The acquisition aligns with Blackstone’s strategy to capitalize on prime multifamily markets and signals a potential uptick in commercial real estate activity in 2024 amidst stabilized interest rates.
Read Full Article on CoStar HERE

Bank of America, the largest tenant at Fifth Third Center in Charlotte, plans to vacate all 13 floors it leases before its lease expires in July 2025, indicating a trend of financial companies scaling back on real estate in Charlotte. The bank cited a preference for owning office space rather than leasing as a reason for the move. Cousins Properties, the landlord, intends to renovate the space to attract new tenants amidst a broader trend of consolidating office space among Charlotte’s major employers. This move by Bank of America aligns with its broader strategy of refining its real estate portfolio, including closing underperforming branches and expanding into new markets.

A bidding war for Macy’s, concurrent with the retailer’s plan to close 150 stores, has significant implications for shopping mall owners and the loans financing these centers. While a buyout could be beneficial with a financially strong new owner, closures may spell trouble for malls and lenders. Macy’s anchors numerous malls, totaling over 100 million square feet, with about $24 billion in loans linked to these properties. The potential closure of Macy’s stores could lead to reduced foot traffic, lower sales for neighboring tenants, and decreased revenue for landlords. Weaker-performing malls are likely targets for closures, exacerbating their decline. Co-tenancy clauses triggered by anchor store closures could affect inline tenants, potentially leading to reduced rents or concessions. Overall, these developments indicate possible repercussions for mall viability and associated loans.

The U.S. economy defied predictions of a recession in 2023, closing the year with a robust 3.3% annualized growth in the fourth quarter, as reported by the Bureau of Economic Analysis. The diverse growth was spread across consumer spending, business investments, trade, and government spending. A “Goldilocks scenario” was observed, with all major GDP components growing within a 1.5% to 4% range. Concerns about the sustainability of consumer spending arise due to increased reliance on credit cards, rising delinquencies, and a low personal savings rate, suggesting a potential economic slowdown.

Fitch Ratings anticipates a significant deterioration in the prospects for U.S. commercial real estate loan refinancing in 2024, leading to an increase in commercial mortgage-backed securities (CMBS) delinquency rates across major property sectors. The overall U.S. CMBS delinquency rate is projected to rise from 2.25% in November 2023 to 4.5% in 2024 and 4.9% in 2025, driven by factors such as maturity defaults, higher interest rates, tighter access to capital, and fewer special servicing resolutions. The office delinquency rate is expected to more than double by 2025 due to hybrid work policies, while retail, hotel, and multifamily loan delinquency rates are also forecasted to increase. Additionally, higher interest rates in 2023 led to a trend of shorter-term, five-year fixed-rate loans in the commercial real estate securitization market. Furthermore, Wells Fargo’s recent non-recoverability determinations for CMBS deal JPMCC 2013-C16 highlight a potential shift in servicer decisions based on deal-level parameters, impacting interest payments for bondholders but potentially offering a future upside through property liquidations.

Miami Worldcenter, a $6 billion, 27-acre mixed-use development, has faced challenges over the years, including delays due to the Great Recession and the impact of the COVID-19 pandemic. The project, the second-largest of its kind in the United States, aims to reshape Miami’s urban core by focusing on pedestrian-friendly spaces and creating a walkable neighborhood. Despite setbacks, the development is nearing completion, with over 90% of its 300,000 square feet of retail space leased. The project includes residential units, offices, public green areas, and a variety of amenities, contributing to Miami’s status as a growing global city.

U.S. commercial real estate sales prices have experienced a significant decline as the number of transactions hit near-pandemic lows, according to a CoStar Group analysis for November. The findings indicate that November’s transaction volume was the second-lowest since the depths of the pandemic lockdowns, with a 38.6% drop in sales, amounting to a $3.6 billion reduction from the prior month. The value-weighted U.S. Composite Index, reflecting larger property sales common in major cities, fell by 1.1% in November, marking the third consecutive monthly decline. Investment-grade property fundamentals have worsened in the past 12 months, with a negative contribution and a notable increase in the completion of new space.

In November, U.S. companies announced a total of 45,510 job cuts, marking a 24% increase from the previous month. Despite being 41% lower than the same period the previous year, the year-to-date job cuts in 2023 were more than double the figure for the first 11 months of 2022, totaling 686,860. The technology industry led in announced job cuts for the year, with 163,562, including 5,049 in November. Additionally, the House Energy and Commerce Committee advanced a bill to address the shortage of electrical distribution transformers, while jobless claims increased by 1,000 to 220,000 for the week ending December 2, indicating a tightening job market.

Holiday gift returns have become a significant driver for the third-party logistics industry, with these providers representing nearly 31% of all industrial leases of 100,000 square feet or more in the first three quarters of the year. In the past four years, third-party logistics providers, many of which provide reverse logistics services, have leased more than 100 million square feet of bulk warehouse space annually, according to CBRE.

The growth in e-commerce, expected to account for over 30% of sales by 2030, contributes to the increasing demand for reverse logistics services and the associated real estate. Additionally, some retailers are adopting strategies such as charging return fees and implementing shorter return windows to mitigate excessive returns, with technology and strategic approaches seen as opportunities to turn returns into a revenue-generating aspect of retail.