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Good morning. As lawmakers debate a new tax and fiscal package, the commercial real estate sector is fighting to preserve key tax benefits, warning of economic consequences if they are removed.

Today’s issue is brought to you by Nuvos—close commercial real estate deals faster, smarter, and easier—powered by AI.

Market Snapshot

*Data as of 03/10/2024 market close.

TAXES & POLICY

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•  Get a quote: C-PACE finances office renovations that lead to conversions or improvements to tenant areas without recourse for up to 30 years in most states—even for improvements completed in the prior three years.

• Distress trends: Loan distress fell 70 bps across CRE sectors to 10.8%, a rare decline, but office distress hit a new high at 19.3%, continuing its downtrend.

• Deal of the day: Rocket Companies (RKT) will buy Redfin (RDFN) for $1.75B in an all-stock transaction to integrate home search and mortgage processes, aiming for $200M in synergies by 2027.

• Trump's tariff plan: US Commerce Secretary Howard Lutnick confirmed no delay in the 25% tariffs on steel and aluminum imports, saying they will be used to lower migration and drugs.

• Largest office-to-resi: 25 Water St. in NYC became the largest US office-to-residential conversion, adding 1.32K luxury apartments with extensive amenities after a two-year transformation.

• Tax breaks: A last-minute scramble is underway as Texas landlords exploit a tax exemption loophole that state lawmakers are working to shut down.

• Housing crisis test: CA’s rebuilding efforts after wildfires in Altadena and Pacific Palisades will test the state’s response to its housing shortage amid growing resistance to denser development.

• Top evictors: Norfolk saw some of Virginia’s highest eviction filings in 2024, with a student housing company and the city’s public housing authority leading the list despite an overall decline in cases.

• Luxury living: Savanna secured $380M in financing for Olara, a luxury residential project with condos starting at $2M and rental apartments, set to be completed by 2027.

• Inclusionary zoning: A study found that inclusionary zoning policies, while promoting affordable housing, may discourage new supply and raise market-rate prices, threatening long-term affordability.

• Denver digs: MIG Real Estate purchased the 99-unit West 8th apartment building in Golden, CO, for $47.5M, amid a slowdown in rents due to a surge in apartment construction in the Denver area.

• Atlanta on top: Atlanta beat out Northern Virginia in data center absorption, reaching 705.8 MW in 2024, driven by GPU-as-a-Service demand and major investments like AWS’s $11B plan.

• Refi of the day: Zenith IOS closed a $120M refinance for two industrial outdoor storage portfolios, covering 30 assets across the US, a signal of the sector's growing institutional interest.

• Entering Charlotte: Leon Industrial acquired a 120K SF industrial property in Rock Hill, SC for $11.5M, planning significant upgrades to attract tenants, marking its first move in the Charlotte metro.

• Cotenancy Court: The California Supreme Court upheld the validity of cotenancy clauses, allowing tenants to pay lower rent when anchor stores close, setting a widespread legal precedent.

• Dollar store struggles: Dollar stores, riding high revenues during the pandemic, now face stiff competition from online giants like Shein and Temu and traditional retailers like Walmart (WMT).

• Mini stores: CVS (CVS) will launch 12 mini stores in underserved areas, with no retail items like snacks, aiming to address the growing ‘pharmacy desert’ while closing 270 locations this year.

• Shifting focus: Blackstone Mortgage Trust (BXMT) plans to sell a $1B CLO backed by apartments, hospitality, and industrial, marking a shift away from offices due to declining demand.

• Top office markets: After a 2023 low, office investment rebounded in 2024, with Manhattan leading at $7.6B. Class A and A+ properties saw gains despite broader declines in office values.

• Federal lease-cutting: Elon Musk’s DOGE canceled six federal office leases in Dallas-Fort Worth, saving over $1M annually as part of efforts to reduce government real estate costs.

• Nearing a deal: Universal Music Group (VIVHY) is close to leasing 300K SF at Vornado's (VNO) newly redeveloped PENN 2 office tower in Manhattan, which now boasts extensive upgrades.

• Palm Beach sale: Billionaire Jeff Greene is exploring a sale of the Tideline Palm Beach Ocean Resort, valued at over $150M, after a $20M renovation, with high demand for Palm Beach hotels.

📈 CHART OF THE DAY