Good morning. Federal cuts are hitting affordable housing just as the country faces a 7.1M-unit shortfall for extremely low-income renters—leaving millions with even fewer options.

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Market Snapshot

*Data as of 03/13/2024 market close.

Affordable Housing

• Deficit hits record: The US budget deficit reached $1.15T over the first five months of fiscal 2025, driven by rising Medicare costs and government debt interest.

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• Deal-making momentum: February saw the LightBox CRE Activity Index go up 20 points, indicating more investment and lending, though market uncertainty may affect future trends.

• Deadline pushed: Howard Hughes (HHH) and Bill Ackman's Pershing Square extended their standstill agreement until April 7, aiming for a more attractive offer.

• Salaries go up: A CoreNet Global survey revealed that 78% of corporate real estate professionals saw salary growth in 2024, with an average raise of 4.8%.

• Big Apple bidding wars: Manhattan rents hit a record $4.5K in February, thanks to tenant bidding wars, while Brooklyn and Queens also saw rising rents and increased competition.

• Frozen federal funds: The Trump administration halted funding for the $1B Green and Resilient Retrofit Program, delaying crucial affordable housing upgrades nationwide.

• Wealthy urbanites: Wealthy renters now occupy larger shares in 35 of the top 50 US metros, with cities like Raleigh and Orlando seeing notable increases.

• Garden-style living: Greystar acquired 17 acres in Sarasota, FL, for its Marlowe Sarasota development, featuring 336 garden-style apartments set to break ground soon.

• Targeting squatters: A Texas bill proposed easier eviction rules for landlords, eliminating notice requirements and allowing summary judgments, in response to statewide squatter issues.

• Filing for bankruptcy: Zips Car Wash filed for Chapter 11 due to rising competition, debt, and high rents, leading to lease rejections and property sales to restructure.

• Bay Area expansion: Rockefeller Group plans a 442K SF industrial distribution center in Antioch, CA, a significant expansion in the Eastern Bay Area logistics market.

• Data center surge: Data center rents soared 12% in 2024, thanks to high demand and rising construction costs, with tenants facing steep rent hikes and fewer concessions from landlords.

• Shopping never stops: Despite a record 9.9K store closures in 2024, strong demand for service-based tenants means continued retail openings, particularly for discount chains and grocers.

• Small-format experiment: Small-format neighborhood retail, especially grocery-anchored stores, remains attractive, with growing consumer demand for accessible, flexible shopping locations.

• AI reshapes San Fran: AI firms in the Bay Area are driving a 200% growth forecast in office demand, revitalizing the San Francisco market.

• Global restructuring: RXR Realty (RXR) and SL Green (SLG) secured a modification on a $940M Worldwide Plaza loan after a major tenant's departure, setting a new plan for the office building's future.

• Groundbreakings hit low: New office construction in Atlanta fell to a historic low in 2024, impacted by high vacancy rates and higher borrowing costs.

• Mixed-use plans: Related California moves forward with plans for a 41-story office and hotel tower in San Francisco’s recovering North Financial District, set to break ground in late 2026.

• Loan of the day: Extell Development is moving forward with plans for a 1,067-ft supertall hotel in NYC’s Theater District, featuring a thrill ride and observation tower, with $1.3B in financing lined up.

📈 CHART OF THE DAY