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Good morning. Washington, DC, remains the most sought-after US rental market to kick off 2025, with 7% more favorited listings, while Southern cities and smaller, affordable markets like Philadelphia also gained traction.

Today’s issue is brought to you by WareSpace, the next-gen of small bay industrial.

Market Snapshot

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

Leading The Nation

TOGETHER WITH WARESPACE

We’re deploying $500M to acquire industrial properties

WareSpace is the next-gen of small bay industrial.

Think micro-bay spaces built for small businesses—with one simple monthly payment that covers everything, including equipment, racking, shared kitchens, conference rooms, etc.—the kind of features small businesses actually want.

With $500M in capital ready to deploy, WareSpace is actively acquiring industrial, flex, office, and big box retail (50K–250K SF).

We prefer immediate or near-term vacancies, including Class A–C properties with loading docks or drive-ins. Transitional assets needing capex are welcome.

All-cash closings with substantial buyer-side commissions.

Have a deal? Send it to VP of Acquisitions, Jeff Jenkins at [email protected].

*Disclosure: This is a paid advertisement. Please read the disclosure at the bottom of the newsletter.

• Find the right tools: Compare features and pricing on top CRE software and products to streamline operations and boost efficiency.

• Positive prices: US CRE prices rose 0.3% YoY in January, with retail leading at 5%, while industrial grew 3.4%, apartments dropped 1.6%, and major metros saw declines.

• More completions: Despite a construction slowdown, the US multifamily sector is set to deliver the second-highest new supply since 2008, led by affordable housing and single-family rentals.

• Rejected bid: Howard Hughes (HHH) rejected Bill Ackman’s $90 per share takeover offer but agreed to continue talks under a standstill agreement until March 13 to explore potential alternatives.

• Zoning reform: Cambridge’s new zoning law permits up to 6-story buildings in residential areas, potentially adding 4.88K units and setting a new standard for housing development in the city.

• Local bank distress: US community bank multifamily loans are seeing rising delinquencies, with over $6B in loans late and realized losses hitting $504M, signaling mounting distress.

• Refinancing finance: Apollo Global Management (APO) provided a $275M loan to refinance a luxury apartment complex at 63-67 Wall St. in NYC’s financial district.

• Sunbelt strength: RMR Residential (RMR) sees strong demand in Sunbelt markets like Dallas, Denver, and Florida, using data to explore value-add acquisitions amid a rent growth slowdown.

• Union-built housing: Former Governor Andrew Cuomo, endorsed by NYC construction unions, vows to build thousands of affordable housing units with union labor if elected mayor.

• Data center boost: Mansfield, Red Oak, and Garland, TX, are leveraging data center investments to boost economies and beautify spaces, with billions fueling local economies.

• Supply surge: Data center supply surged 34% YoY, with demand driven by AI and cloud services, leading to record-low vacancies and rising rents in key markets like Atlanta and Northern Virginia.

• Emissions concerns: Higher demand for faster deliveries has led to more truck emissions, with NY and CA proposing regulations for air pollution and health impacts from large distribution centers.

• Done deal: Ares Management’s (ARES) acquisition of GLP’s international business, excluding China, creates a top-three global industrial owner, now holding $115B in real assets.

• Grocery wars: Target (TGT) purchased a $231M Denver distribution center, enhancing its logistics network ahead of announcing its growth strategy amid mounting competition.

• Tight market: Despite a large construction pipeline, Houston’s retail market remains fragmented, with limited availability of quality space and slowing rent growth in some areas.

• Tech exodus: Miami’s tech scene, once booming with VCs, has slowed down as many tech firms and founders return to the Bay Area, leaving behind shrinking office leases and unmet talent needs.

• Manhattan interest: In 2025, NYC’s prime office buildings are seeing renewed investor interest, driven by strong demand and record-high rents, while less desirable properties remain sidelined.

• Eyeing trophies: With corporate demand rising, developers like SL Green (SLG), RXR Realty (RXR), and Vornado (VNO) are ramping up plans for high-end Manhattan office towers.

• Cincinnati leads: Greater Cincinnati tops US cities for office-to-residential conversions per capita, though there's still a big supply of office space left for potential transformation.

• Florida weakness: DiamondRock’s Florida hotels saw RevPAR fall 5.8% in Q4, citing high inflation and post-pandemic problems, but a 2025 recovery is expected despite uncertainties.

• Third-party shift: Davidson Hospitality sees opportunities as more high-end hotels move to third-party management, with owners seeking experienced operators beyond traditional brand control.

• Bigger bunkhouse: Fresh off Hyatt’s (H) $335M acquisition, Bunkhouse Hotels debuts two new Houston properties, reinforcing its community-driven approach to hotels.

📈 CHART OF THE DAY