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Good morning. Dubai’s EDGNEX Data Centers, part of DAMAC Group, is entering the U.S. market with a $20B investment in the Midwest and Sunbelt. Plus, NYC residents brace for rising fees and rents as Local Law 97 deadlines loom.

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Market Snapshot

*Data as of 01/08/2024 market close.

international expansion

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• Going green: NYC condo and co-op owners are bracing for rising fees from Local Law 97, which requires large buildings to cut emissions or face fines starting in 2025.

• Top-tier certification: 5 days left to early enroll in Wharton’s Real Estate Investing Certificate Program. Early enrollment perks include 15+ hours of foundational training, networking opportunities, and $500 off tuition with code CREDAILY before 1/13. (sponsored)

• Yield surge: Rising 10-year Treasury yields, driven by inflation concerns and more government borrowing, are leading to caution across the CRE market.

• Debt drama: Donald Trump’s call to raise the long-term debt ceiling added a new twist to ongoing congressional debates, with Democrats eyeing a potential deal to prevent borrowing limit crises.

• Cautiously optimistic: Commercial property values rose nearly 5% in 2024 despite market turbulence, but experts warn that rising Treasury yields could stall further growth in 2025.

• Hiring slowdown: US firms added 122K jobs in December, the lowest figure since August, as hiring and wage growth cooled down, while jobless claims fell to their lowest since February.

• Hall of Shame: Equinix must face investor claims of accounting fraud after a federal judge ruled there is enough evidence suggesting the company misclassified capital expenditures.

• Dual-sector push: GCM Grosvenor and Standard Real Estate launched a $600M fund targeting workforce housing and industrial properties, focusing on stable, income-generating assets.

• Mixed progress: Hawaii’s $300M investment in affordable housing will deliver 2K below-market units this year, but with a 10K-unit gap, challenges like permitting delays and rising costs persist.

• Discount deal: A luxury multifamily tower in downtown Oakland sold for $99M—53% below its assessed value—amid a sluggish market marked by falling rents and limited new development.

• Rent relief: NYC rents dipped 1.2% in December to a median of $2,324, though the city remains the 8th most expensive rental market in the US, with prices still up 2.8% YoY.

• Big buy: The Housing Authority of LA bought a 335-unit Woodland Hills apartment complex for $142M, the largest multifamily deal in the San Fernando Valley last year.

• Obvious play: Dubai-based EDGNEX Data Centers plans to invest $20B to $40B in US data centers, focusing on the Midwest and Sunbelt regions to support cloud and AI growth.

• Warehouse win: Rexford Industrial Realty (REXR) acquired a fully leased 300 KSF Compton warehouse for $137.2M, continuing its expansion spree despite broader industrial market pullbacks.

• DFW expansion: ForeFront Commercial Real Estate and an Ares Management fund (ARES) secured $77.4M to develop a 992 KSF  industrial campus in Fort Worth.

• Desert demand: LaSalle Investment Management acquired the 92% leased, 536 KSF Tempe Commerce Park industrial complex as Phoenix's supply surge continues to outpace demand.

• Retail slump: Detroit's retail market posted negative absorption for the second quarter, with -322.5 KSF in 2024, as vacancy rates (5.2%) and asking rents ($15.39 NNN) remain below national averages.

• Retail exit: Armada Hoffler sold two Charleston-area retail centers, Nexton Square and Market at Mill Creek, for $82M, securing a 20% profit above initial development costs.

• Healthy expansion: Brixmor Property Group (BRX) acquired four grocery-anchored shopping centers for $211.8M, continuing its strategy of clustering assets in high-growth markets.

• Out with the old: Despite near-record office vacancies, demand for top-tier space in prime markets like NYC, Miami, and LA is outpacing supply, driving rents higher as old offices struggle.

• Full-time return: JPMorgan Chase (JPM) plans to mandate full-time office attendance for all employees, ending hybrid work as CEO Jamie Dimon emphasizes collaboration, visibility, and mentorship.

• Distressed deal: Namdar Realty Group and Mason Asset Management acquired Chicago's 70 West Madison office tower for $85M—77% below its 2014 valuation—amid record vacancies.

• Strategic refi: Steve Ross secured $150M in refinancing for the Hilton West Palm Beach, continuing his expansive South Florida investments as he reshapes West Palm’s skyline.

• Foreclosure threat: Joseph and Meyer Chetrit face foreclosure on their Times Square hotel after Mack Real Estate sued over $223M in alleged debt tied to the shuttered 250 West 43rd Street property.

A MESSAGE FROM NEUTRAL

Neutral Is Building a Sustainable Future

Neutral had a busy 2024. We started construction on our first "middle housing" project in Madison. We secured $133.3M in construction financing for The Edison in Milwaukee—set to become the world's tallest Phius-certified, Living Future, and mass timber building. And we established five specialized subsidiaries, including an in-house architecture studio, woodworking, and construction management divisions.

Learn more about our 2025 plans in the letter from Neutral's CEO Nate Helbach.

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