Good morning. After a tough two years, commercial real estate lenders are back in action. Liquidity is surging, and CMBS issuance is seeing its biggest jump in nearly two decades—though refinancing hurdles could keep some borrowers sweating.

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Market Snapshot

*Data as of 01/15/2024 market close.

STATE OF THE MARKET

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• Congestion pricing: NYC’s congestion pricing plan seems to be working. In its first week, the Big Apple cut traffic by 273K vehicles, improving commutes and air quality.

• Cut capital gains tax: By using cost segregation strategies, commercial real estate investors can offset their capital gains tax, reduce tax liability, and maximize cash flow. (sponsored)

• Federal loan bid: RXR Realty (RXR) and TF Cornerstone are seeking $4.84B in federal loans to help finance their 175 Park Ave project in Midtown East, amid challenges securing traditional funding.

• Nearshoring trend: Mexico’s new tax incentives aim to reduce reliance on Chinese imports, attract foreign investment, and bolster local manufacturing and logistics in the US-Mexico corridor.

• Economic push: Maryland Gov. Wes Moore plans to propose a corporate tax cut and $750M for economic development, focusing on business-friendly policies and quantum computing.

• Steady Sun Belt: Jamestown CEO Matt Bronfman believes the Sun Belt is the safest global real estate bet, driven by strong population growth, economic resilience, and favorable immigration trends.

• Deal of the day: Brookfield's Maymont Homes acquired struggling rent-to-own startup Divvy Homes, once valued at $2B, amid a challenging market and tenant complaints.

• Tax hike agenda: Boston Mayor Michelle Wu is pushing a revised commercial property tax hike plan, aiming to ease residential tax hikes and avoid budget cuts, despite previous setbacks.

• Top of the list: Minneapolis has emerged as the top rental market for 2025, driven by affordability, urban amenities, and high quality of life, with the Midwest and West gaining traction among renters.

• Crystal ball: After nearly 667K apartments were absorbed in 2024, multifamily demand is set to cool in 2025, as economic factors like slower job growth and ongoing uncertainties take their toll.

• Scaling back: Hankey Capital revised plans for a former builder's remedy project, proposing a scaled-down 8-story, 90-unit apartment complex with underground parking and affordable housing.

• Tech sustainability: Greystar’s survey of over 90K renters reveals walk-in closets, large windows, fresh air ventilation, secure parking, and high-efficiency appliances top the list of in-demand amenities.

• Rising rents: Kansas City's multifamily market saw more demand in 2024, with rent growth reaching the second-highest in the US as the impact of new construction began to moderate.

• Price-gouging problems: In response to illegal rent hikes after devastating wildfires, LA introduced a motion to freeze rents and halt evictions for impacted residents, aiming to prevent exploitation.

• Massive capacity: BlackChamber Group secured $1.2B in financing to develop 4 hyperscale data centers in Northern Virginia, set to provide 740 megawatts of capacity.

• Prime location: Ares Management (ARES) acquired a 198.7 KSF Class A distribution center in Taunton, MA, for $44.3M, fully leased to Sullivan Tire and located in Myles Standish Industrial Park.

• Strategic investment: BKM Capital Partners acquired the fully leased, 260.9 KSF West Belt Business Park in Houston for $34.1M, its first Texas investment, and plans $3.3M in upgrades.

• New concept: McDonald's (MCD) is testing a smaller, beverage-focused store concept called CosMc, offering unique drinks and food items, while focusing on drive-thru and digital.

• Seeking buyer: Craft retailer Joann filed for bankruptcy for the second time in a year, aiming for a quick sale to pay off over $450M in debt. Gordon Brothers Retail Partners placed the initial bid.

• Office struggles: W.P. Carey (WPC) lists its vacant office building at 550 West Randolph Street in Chicago after halting a proposed expansion amid weak demand and market challenges.

• Office-to-other: DC introduced a new initiative offering a 15-year temporary property tax freeze to encourage the conversion of underused office spaces into shops, restaurants, and hotel rooms.

• Strategic expansion: SynerMark Properties acquires Fountainhead Tower, a 178 KSF office building in San Antonio, as part of a broader strategy to expand in the region amid a broader liquidation.

• Debt headline: Portsmouth Square defaults again on $117M in debt for the Hilton San Francisco Financial District hotel, and is now seeking to refinance or find alternatives to retain the property.

📈 CHART OF THE DAY