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Good morning. Commercial real estate loan originations rose to $4.4B in Q3, driven by multifamily’s 76% YoY surge. However, office loans remain a drag, with delinquencies nearing 8%.

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Editor's note: The CRE Daily staff will be off for Christmas. We'll see you Friday—have a great holiday!

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Market Snapshot

*Data as of 12/19/2024 market close.

OFFICE PROBLEMS

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Reap Capital is proud to celebrate a remarkable year, acquiring $120m through exclusive collaborations with lenders as joint-venture partners. We are honored to be a select multifamily operator trusted by lenders and special servicers to acquire and reposition distressed assets.

Looking ahead to 2025, we have four active LOI’s on exclusive off-market and lender-direct opportunities. Whether you require an experienced partner to reposition an asset, or want to explore high-yield investment opportunities, we are here to help you succeed.

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• Capital surge: Starwood Property Trust (STWD) is set to deploy $783M in new capital and accelerate investment activity in 2025, capitalizing on reduced borrowing costs.

• Positive outlook: With the US economy set for 2.4% growth in 2025, CRE is expected to benefit from strengthening fundamentals, low supply, and strong demand in residential and industrial.

• Innovation core: Peoria, near Phoenix, will invest $140M in infrastructure to develop 6.7K acres of land for auction, aiming to attract major projects and secure its role as a regional growth hub.

• Safety crisis: Construction worker deaths rose to 1,075 in 2023—the highest since 2011—accounting for nearly 20% of US workplace fatalities, due to slips, trips, falls, and insufficient safety measures.

• Mixed outlook: CMBS issuance surged past $100B in 2024, driven by better borrowing conditions and strong investor demand, even as office grapples with elevated vacancies and rising delinquencies.

• Commanders comeback: In a landmark deal, Congress approved legislation giving Washington, DC, control over the RFK Stadium site, paving the way for the possible return of the Washington Commanders football team.

• Record deliveries: NYC and LA are set to deliver record apartment supplies in 2025—34.8K and 18.7K units—driven by strong demographic and job trends, potentially easing housing shortages.

• High-end expansion: A JV will add 500 luxury apartments near a Phoenix semiconductor factory, betting on strong demand despite challenges in top-tier rents and an anticipated supply slowdown.

• Value play: Cityview acquired the 112-unit Candela apartment complex in Los Angeles at a discounted price, aiming to enhance value amid declining multifamily property values.

• Affordable boost: Impact Housing and Verbena Road Holdings secured $112.2M in financing, led by Acore Capital, for Mission Gorge, a 483-unit modular affordable housing project.

• Below-market deal: CityView purchased the 112-unit Candela complex in Hollywood Hills for $35.5M—10% below its pre-pandemic price—citing high occupancy (98%).

• Leasing rebounds: Industrial vacancy rates in the Inland Empire leveled off at 7.8% in Q4, as consumer spending growth and increased imports spurred leasing activity.

• Tech-driven demand: HMC Capital acquired a Prologis warehouse in Elk Grove Village, IL, for $440M, committing an additional $272M to redevelop it into a 176 KSF data center.

• Port proximity: Stonepeak bought a 6-property, 2.3 MSF logistics portfolio near the Port of Houston for $244M, continuing its investment in supply chain assets near major transportation.

• Suburban Renaissance: Once overlooked, strip malls are thriving with record leasing demand, rising rents, and more investor interest as their e-commerce-resistant tenants cater to local communities.

• Value-add strategy: Stiles and FCA Partners purchased the Shoppes of Wilton Manors near Fort Lauderdale for $27.6M and plan to renovate the 77.75 KSF retail center.

• End of the line: Big Lots (BIGGQ) is set to liquidate its remaining 870 stores following a failed sale to Nexus Capital Management, marking another significant retail bankruptcy amid rising costs.

• Desk deficit: Amazon (AMZN) postponed its return-to-office mandate for workers in several cities, citing the need to reconfigure office spaces for more desks, while actively negotiating new leases.

• Consolidated HQ: Ezee Fiber signed a 94 KSF lease at Houston Technology Center to consolidate operations and support its growing fiber internet business.

• Healthcare transformation: Sutter Health, in partnership with The Sobrato Organization and Palo Alto Foundation Medical Group, is investing $800M to convert two vacant Santa Clara office campuses into a 1 MSF flagship medical hub.

• Waterfront investment: Ohana Real Estate Investors purchased the 347-room Hyatt Regency Lake Washington in Renton, WA, for $103M, securing a prime waterfront property embroiled in a Chapter 11 bankruptcy and a lawsuit by EB-5 investors.

📈 CHART OF THE DAY