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Good morning. Manhattan's office leasing market reached a new peak in 2024, with 25.8 MSF leased, driven by big Midtown moves. However, due to fewer large deals and a shift to smaller office footprints, it is still behind pre-pandemic levels.

Today’s issue is brought to you by Central Capital Partners.

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Market Snapshot

*Data as of 01/02/2024 market close.

NEW RECORD

TOGETHER WITH CENTRA CAPITAL PARTNERS

Invest in an Already Successful Real Estate Development

Centra Capital Partners presents a rare investment opportunity in North Branch Fox Run, a thriving build-to-sell single-family home community with proven success.

The development is already gaining traction: the first four homes are under construction, and two have already sold!

Now, accredited investors can participate in the development and sale of the remaining 30 homes, slated for completion within the next 15 months.

Highlights:

• Projected 21.8% IRR & 1.25 EM

• 80% of homes Centra builds are sold BEFORE construction is complete

• Centra builds SFHs in ~100 days

• List price for homes in North Branch have increased 9.1% YOY

• Since 2020, North Branch’s population has grown by +12%

*Disclaimer: This is a paid advertisement for Centra Capital Partners. See full disclosure at the bottom of the newsletter.

• Word to the wise? Bill Ackman believes Fannie (FNMA) and Freddie (FMCC) could exit conservatorship within 2 years of a 2nd Trump administration, potentially adding over $300B to the US Treasury.

• Like an emperor: Elon Musk’s Texas real estate portfolio, valued at $3.4B, includes self-sustaining communities like Snailbrook, industrial sites like SpaceX’s Starbase, and key properties for Tesla.

• Deal of the day: A 4.25-acre waterfront site in Miami's Brickell district sold for $520M, marking the city's largest land transaction to date and paving the way for ultra-luxury condo developments.

• Valuation gap threat: Rising uncertainty in CRE valuations is shaking the PE real estate model, with huge discrepancies between appraised values and actual sale prices raising concerns.

• West Palm’s future: Steve Ross, the 84-year-old billionaire behind NYC’s Hudson Yards, aims to transform South Florida with bold mixed-use urban projects to make it the next Silicon Valley.

• Sustainable future: Neutral ends 2024 by securing new $133.3 million in construction financing from Bank OZK and Pearlmark for The Edison mass timber tower in Milwaukee, WI. (sponsored)

• Very affordable: Thrive Living will build a groundbreaking 800-unit affordable housing complex above a Costco (COST) in Baldwin Village, LA, offering a fresh solution to the city’s housing crisis.

• Branded boom: South Florida saw a surge of luxury branded condos in 2024, with global brands—from automakers to Michelin-star chefs—getting in on the action.

• Longer stays: More US renters are staying in the same home for 5 years or more, with 16.6% staying in place for a decade, as high mortgage costs and fewer rent hikes make renting more appealing.

• Housing vision: Livermore is advancing its housing goals with a 253-unit Cornerstone development and a broader 1.1K-acre project that includes over 4K residences around a planned light rail station.

• Changing hands: Prologis (PLD) bought a 10-acre site near the Greenpoint waterfront for $122M from ExxonMobil (XOM), potentially for logistics or vehicle storage, though plans remain uncertain.

• Silicon Sound: Silicon Bridge Industrial acquired a 315.4 KSF industrial portfolio in Kent, WA for $64.2M, securing financing from PGIM Real Estate for the deal.

• Bigger footprints: Terreno Realty (TRNO) wrapped up 2024 by buying an industrial complex in Doral, FL for $195.6M and a Brooklyn property for $156.3M, expanding in key logistics hubs.

• What a deal: A JV led by Brandywine Realty Trust (BDN) sold the Dabney Center, a 14-building, 642.4 KSF flex-industrial portfolio in Richmond, VA, that was 99% leased at closing for $75.3M.

• Easy money: SJC Ventures sold Boynton Beach Marketplace, a Whole Foods-anchored retail property, to investor Yevgeniy Yermakov for $49.2M, a strategic exit in Palm Beach County.

• Cornerstore cornerstones: Nationally, convenience stores are holding steady, with foot traffic up 16.1% from 5 years ago, despite a relatively flat year in 2024.

• Get back out there: Runyon Group is targeting affluent millennials in SoCal suburbs, developing unique, curated retail spaces to cater to the demographic's evolving lifestyle needs.

• Down in the dumps: A 113 KSF office building in Downtown LA's Arts District sold for $29M, far below its $60M construction cost, part of the ongoing pricing reset in the city's office market.

• Eyeing bargains: Non-traditional buyers are jumping into the distressed office market, snagging properties like a $4M Chicago tower, a Glendale office complex for $60M, and Fort Worth’s Burnett Plaza at a foreclosure auction price of just $12M.

• Surprising loss: Real Capital Solutions bought the 20-story Tower at Park Lane in Dallas for $66M, far less than its $100M+ sale price in 2017. The 509.8 KSF Class A building will undergo a $13M renovation.

• Sign of the times: Dallas investor Ray Washburne buys the Tru by Hilton hotel near downtown, with plans to turn its rooftop into the city's largest open-air bar.

📈 CHART OF THE DAY