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Good morning. U.S. housing starts rose in June, largely driven by a surge in multifamily construction. Plus, NYC is seriously considering mandating that landlords provide AC for tenants in the summertime.

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Market Snapshot

*Data as of 7/1/2024 market close.

Housing Starts

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• Eviction boom: Eviction rates in major Sunbelt cities like Houston, Phoenix, and Las Vegas are up as much as 35% post-pandemic, contrasting with stabler rates in other major metros.

• Not again: Over 200K CenterPoint Energy customers in Houston were without power for one week after Hurricane Beryl hit, highlighting ongoing problems with the TX private electrical grid.

• Global retreat: Foreign purchases of US homes hit a new record low, plummeting 36% to just 54.3K properties, with Canadians leading at 13% of all purchases.

• Rate outrage: Allstate (ALL) wants to hike California homeowner insurance rates by 34%, impacting 350K+ policyholders, particularly in fire-risk areas.

• REIT renaissance: Publicly traded property owners are finally seeing a rebound, with real estate stocks up 4.41% and office REITs up 9.8%.

• Are we there yet? Wall Street remains unfazed as the US Treasury market absorbs even more debt, with a $1.9T deficit forecasted for 2024. Meanwhile, yields remain below 4.2%.

• Unloading risk: Privately traded FS Credit REIT acquired $351.8M in loans as US banks shed lower-valued real estate tied to higher interest rates.

• Summer chill: NYC is seriously considering mandating landlords to provide AC for tenants in summertime, with fines of up to $1,250 per day for non-compliance.

• Sky's the limit: The LA Planning Commission approved The Bora, a 153-unit apartment complex, to replace a shuttered restaurant despite a union appeal for further study.

• Multifamily momentum: Multifamily absorption rates shot up in 2Q24, with 138K units absorbed and vacancies down 10 bps, as YTD absorption reaches 75%.

• Campus innovations: UC San Diego is planning a $2B student housing village with 6 towers and 6K beds at 20% below market rates.

• Changing hands: Interface Properties just bought Brantley Pines in Fort Myers, FL, from The Inland Real Estate Group for $57M, or around $192.6K per unit.

• Shot in the foot: Biden's national rent control plan will cap increases for large landlords at 5%, potentially discouraging investment and worsening the housing crisis.

• Kansas cash flow: Ares Management and Northpoint Development secured $244M to refinance a 10-building warehouse complex in Kansas City.

• Studio success story: The Burbank Studios in CA was repurchased by a group of investors for $375M from Warner Bros. Discovery (WBD), with plans for new sound stages.

• Industrial boom: National industrial net absorption rates more than doubled to 46.3 MSF nationally in Q2, with rents hitting $9.97 PSF.

• Massive mixed-use: The Reagan Center in Florida just received a major approval. The mixed-use project will include 1.4 MSF of office space, 300 KSF of retail, a 250-room hotel, and over 1K apartments.

• Mall makeovers: Pacific Retail Capital Partners just invested $425M in two SoCal malls to reinvigorate 1 MSF and reposition them for new uses amid retail distress.

• Retail riches: Structure Capital bought the majority of Shoppes at Monterra Commons in Cooper City for $18.5M, fully leased with diverse tenants.

• Concessions crunch: Effective rents for office properties are 21.1% below asking rents, as struggling offices face rising operating expenses.

• Debt distress: Joseph Horn, landlord of One Parkway North Boulevard in Chicago, struggled to pay off $12.7M debt last month in a distressed real estate market.

• Lots of potential: Law firm Michael Best & Friedrich is moving to a 25 KSF office in downtown Salt Lake City, emphasizing the new location’s ample amenities.

• Meta’s modest move: Meta (META), the parent company of Facebook, will soon downsize its Denver office from 47 KSF to 24 KSF by March.

• Mirage memories: The 3K-room Mirage in Las Vegas, which opened in 1989, is finally closing after 35 years in business. The iconic casino permanently changed the face of the Strip. 

• Deal of the day: Host Hotels & Resorts (HST) acquired 1 Hotel Central Park in Manhattan from Starwood (STWD) for $233.8M, or over $1M per room.

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📈 CHART OF THE DAY