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Good morning. Rent growth lagged in 2024 despite strong demand, but 2025 projections are looking promising. Plus, Brookfield tees up 36-year-old Connor Teskey as next CEO.

Today’s issue is sponsored by Viking Capital.

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Market Snapshot

*Data as of 7/19/2024 market close.

Rental Report

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• Succession plan: Brookfield CEO Bruce Flatt has picked 36-year-old Connor Teskey as his likely successor, with Teskey expected to gradually take on more leadership before becoming CEO.

• Rate caution: Jamie Dimon advises the Federal Reserve to delay rate cuts amid concerns of potential inflation resurgence.

• Empire: Tom Ford has expanded his property portfolio with a $250 million collection, including notable homes in Aspen, the Hamptons, and Palm Beach.

• Rejected: Miami’s Urban Development Review Board rejected two high-rise projects in Wynwood and Edgewater for being “out of scale” with their small lots and surrounding areas.

• Lifeline: A local developer is set to acquire the stalled Oceanwide Plaza skyscraper complex in Los Angeles for $500 million, aiming to revive the $1 billion project halted in 2019.

• Blocked: Haitong International seeks to block the sale of the unfinished Oceanwide Center in San Francisco, claiming exclusion from the foreclosure deal on the stalled $1.6B mega-project.

• Declining: The Fed’s July Beige Book reports weakening commercial real estate lending, with increased vacancies and cautious outlooks across several districts.

• Falling ratio: Apartment rent-to-income ratios continue to decrease, with Detroit, Chicago, and Pittsburgh having the lowest ratios and California cities like Riverside and San Diego the highest.

• Shakeup: Project 2025’s proposals to maintain single-family zoning and cut housing vouchers could disrupt multifamily development, impacting affordable housing and urban landscapes.

• Foreclosure: Chetrit Group’s 157-unit Forest View Apartments in Baytown, Texas, part of a $481 million distressed portfolio, faces foreclosure auction on August 6 due to loan default.

• Filling the gap: Elliott Investment Management aims to form a new JV and finance $3B to $5B annually in housing projects, addressing the construction capital shortage.

• Revenue decline: Prologis sees an 18% revenue drop amid rising warehouse vacancies but is optimistic about future growth driven by AI-related data center demand.

• Lending: Barings provided a $244 million loan to refinance a 6.4 million square foot industrial portfolio in Kansas City, largely leased to major brands like Amazon and Sam’s Club.

• Big deal: BlackRock Realty Advisors acquired a 1.2M SF Amazon-leased warehouse in Glendale, near Phoenix, for $128 million, marking the largest single-building sale in the area this year.

• Mega leases: The first half of 2024 saw a significant rise in mega leases, particularly in the Inland Empire, with wholesale and retail sectors leading the demand for large industrial spaces.

• Logistics platform: Brookfield Asset Management acquired a 14.6 million-square-foot light industrial portfolio covering 20 high-growth U.S. markets for $1.3 billion.

• Makeover: Ben Ashkenazy is transforming San Antonio’s Rivercenter Mall into an entertainment hub with attractions like climbing walls, shark tanks, and a revamped food hall.

• Exit: Sephora is closing its Water Tower Place location in Chicago, adding to the retail vacancies on the struggling Magnificent Mile.

• Expansion: American Ventures plans a large retail development in Elgin, TX, with a 90,000-square-foot anchor store on a newly rezoned 60-acre site.

• Credit quality: Office bank loans are deteriorating, with significant exposure to non-performing loans and rising portfolio stress, highlighting potential challenges ahead for lenders.

• Moving HQ: Indeed is relocating its Stamford headquarters to a newly renovated complex, downsizing from 200,000 to 124,000 square feet at The Link.

• Heading to auction: Brookfield’s 52-story Gas Company Tower in Downtown LA is set for a foreclosure auction on August 16, though it may sell earlier, with some showing early interest.

• Acquisition: Robinson Oil invests $39 million in a commercial portfolio in South San Jose, diversifying its holdings with office and industrial properties resistant to remote work trends.

• Occupancy dip: Monthly room demand for economy hotels has been declining for 30 months, with annualized occupancy reaching 57.3% in June, down slightly from 57.4% in June 2019.

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📈 CHART OF THE DAY

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