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Good morning. Welcome back to CRE Daily. The Mortgage Bankers Association (MBA) has revised its CRE lending forecasts downward for 2024 and 2025, anticipating slower growth than earlier predictions.

Today’s issue is sponsored by InvestNext—raise capital without limits.

🎙️ No Cap Episode 7: Co-hosts Alex Gornik and Jack Stone talk with Vikram Raya, CEO of Viking Capital, on how he went from cardiologist to acquiring $800M+ in multifamily assets.

Market Snapshot

*Data as of 8/30/2024 market close.

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• Blurred boundaries: As families move further from city centers, the traditional urban-rural divide is becoming increasingly obsolete, prompting calls for new classifications.

• Profit Motive: Próspera, a for-profit city off Honduras’ coast, faces potential collapse as the Honduran government seeks its dissolution.

• Workforce: Goldman Sachs plans to lay off over 1,300 employees, targeting 3-4% of its workforce during an annual performance review.

• Elevator overhaul: New York City faces a massive wave of elevator replacements, with modernization costs reaching up to $500K per elevator.

• Appeal: Following an appeals court ruling in July, the National Association of Realtors plans to ask the Supreme Court to block the DOJ from reopening an investigation into its policies.

• Rate cut likely: The Fed’s preferred inflation gauge aligns with expectations, boosting chances of a September rate cut. Analysts are debating whether the reduction will be 25 or 50 basis points.

• Market winners: Sunbelt cities like Phoenix and Durham-Chapel Hill are leading in multifamily investment returns, outperforming Gateway cities due to strong economic and population growth.

• Signs of life: Kairoi Residential acquired The Taylor, a 17-story, 308-unit high-rise in Dallas’ Uptown, valued at $99.5M.

• Financing: Lendlease and Aware Super secured financing for Habitat, a mixed-use project in Baldwin Hills that will include 260 luxury apartments and 253K square feet of offices.

• Brooklyn: Thor Equities purchased the Chocolate Factory Lofts, a 123-unit multifamily building in Brooklyn, for $58.5M from a partnership between Meadow Partners and Fairstead.

• Record deal: Afton Properties acquired The Landing at Arroyo in Simi Valley for $95M, marking the largest multifamily transaction in the area since 2021.

• Slowdown: The industrial real estate sector is experiencing a natural slowdown as it adjusts to shifts in demand, vacancy rates, and construction trends following the pandemic.

• Acquisition: Brennan Investment Group purchased a 740,000-square-foot industrial portfolio in Lombard, Illinois, for $76M amidst a flood of new industrial inventory in Chicago.

• Jacksonville expansion: Merritt Properties expands its Jacksonville portfolio by acquiring an industrial park, aiming to convert it into Class A light industrial space amid rising demand.

• Buy it back: RCB Equities and Real Estate Development Associates secured a $115M loan to redevelop the struggling Puente Hills Mall, famed for its “Back to the Future” appearance.

• Chelsea expansion: John Catsimatidis’ Red Apple Group purchased a $22.5M building at 253 West 24th Street to expand its mixed-use development in Chelsea.

• Driving the demand: AI companies have leased over 1.7M square feet of office space in San Francisco since 2022, potentially expanding to 12M square feet by 2030.

• Discounted: Citrix sold its Fort Lauderdale headquarters for $37M, marking a 37% discount from its 2002 price, while leasing back part of the office space.

• Distressed: Allstate sold a Loop office building in Chicago at a 63% loss, reflecting challenges in the office market as vacancy rates rise.

• Viper Room: West Hollywood approved an 11-story hotel and apartment tower on Sunset Boulevard, replacing the iconic Viper Room nightclub with a modernized venue amid local controversy.

• Deposit dispute: Buyers are suing to reclaim deposits from the long-delayed Mandarin Oriental in Boca Raton, as the project remains unfinished four years past its original deadline.

📈 CHART OF THE DAY