Good morning. Macy’s is closing 66 stores as part of its "Bold New Chapter" strategy, moving from regional malls to smaller, experience-focused locations. This shift poses both risks and opportunities for retail landlords and CMBS investors.

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Market Snapshot

*Data as of 01/13/2024 market close.

Store closures

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• CRE activity: LightBox's December CRE Activity Index saw a dip due to rising Treasury yields, but YoY growth highlights 2025 optimism driven by stronger investor demand and improving lending conditions.

• Distress in CRE: The CMBS special servicing rate hit 9.89% in December, the highest in 4 years, driven by high distress in office and mixed-use properties, while industrial remained stable.

• Simplify 2025 tax season: Equity Multiple improved K-1 delivery by 50%, boosted investor satisfaction, and shortened their filing process by 3 months—all while having a much smoother, stress-free tax season with the support of Agora's expert CPAs and accounting services. (sponsored)

• Billionaire’s bid: Bill Ackman’s Pershing Square Capital proposed a $1.5B deal to buy a majority stake in Howard Hughes (HHH), aiming to reshape the real estate giant with a 20% premium offer.

• Banking on risk: 59 of the largest US banks face high exposure to CRE loans, with some exceeding 600% of equity, raising concerns about potential regulatory scrutiny and financial strain.

• Sixers shift plans: The Philadelphia 76ers scrapped their $1.3B Center City arena project, opting instead to stay in the Wells Fargo Center, while Comcast Spectacor plans to build a new stadium in South Philly for both the Sixers and Flyers.

• Blackstone's strategy: Tim Johnson reflects on Blackstone's (BX) $22B real estate debt deployment, their focus on US assets, and the growing role of nonbank lenders amid global market uncertainty.

• Safe bond bet? Despite a global bond selloff and rising yields, some investors see opportunity in bonds, especially long-term Treasurys, which may be poised for growth amid potential central bank shifts.

• Market heating up: Capital influx, abundant new properties, and rising forced sales are all expected to drive a bustling CRE transaction environment in 2025.

• Suburban record: The E2 apartment complex in Evanston, IL, sold for $148M, marking a new suburban price record despite a quiet year for multifamily transactions.

• Tightening supply: Portland, OR, is on track for its lowest new apartment construction since 2013, potentially fueling rent growth as vacancy rates tighten.

• Strong market: Sunroad Enterprises landed a $188M loan for its 442-unit Vive Luxe community in San Diego, revealing the region’s strong multifamily appeal despite a slight slowdown in 2024.

• Resilient market: Despite a slight increase in vacancy rates, US industrial rents climbed 4.5% YoY, signaling sustained growth as demand continues to fuel expansion, particularly in logistics.

• New players: The self-storage lending market has evolved from a bank-dominated one to a more diversified space, with debt funds, private lenders, and insurance companies filling the gap.

• Strategic buy: Miramar Capital purchased Serrano Industrial Park in Jurupa Valley for $86M, a 332.7 KSF facility well-suited for manufacturing, with strong growth projections for Inland Empire.

• Bold retail shift: Burlington is downsizing to smaller, 18 KSF stores while aiming for 2K locations by 2029, diversifying its offerings, and prioritizing in-store experiences over e-commerce.

• Eking out a profit: Bridge33 Capital acquired the Shops at CenterPoint in Grand Rapids, MI, for $70M, a 444.7 KSF shopping center anchored by Nordstrom Rack, up $6.5M from its 2022 sale.

• Monumental expansion: Monumental Sports & Entertainment, owner of the Wizards and Capitals, secured a 75 KSF retail lease at DC's Gallery Place, repurposing former retail space for office use.

• Getting out: KBS Realty Advisors sold a nearly 180 KSF Fountainhead Tower in San Antonio to a JV led by SynerMark Properties, a strategic asset shift amid rising office vacancy rates.

• Making it there: KnitWell Group, owner of Ann Taylor, Talbots, and Lane Bryant, signed a 246 KSF lease expansion at BXP’s 7 Times Square, solidifying its presence in the iconic NYC location.

• Major move: The FDIC is relocating from the Empire State Building to a 147.5 KSF, 10-year lease at 1166 Avenue of the Americas, with asking rents of $80 PSF.

• Phasing out: New York City is ending migrant shelter contracts at nine hotels and other facilities, repurposing nearly 10K beds as the migrant crisis eases and tourism rebounds.

• Eyeing a return: The Trump Organization is in talks to buy back the lease for its former DC hotel in the Old Post Office building, currently a Waldorf Astoria, after a foreclosure on the property's debt.

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