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Good morning. A streak of monthly gains signals improving conditions in U.S. commercial real estate. Plus, Gordon Brothers struck a $495M deal to save Big Lots from bankruptcy.

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Market Snapshot

*Data as of 12/27/2024 market close.

MARKET TRENDS

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• Big rescue: Gordon Brothers struck a $495M deal to acquire Big Lots’ assets, facilitating a transfer of 200–400 stores to Variety Wholesalers, preserving the brand and jobs after bankruptcy.

• Productivity surge: The U.S. economy is poised for a productivity boom from post-pandemic job matching, AI investments, and tech innovations, potentially hitting 3.5% growth by the late 2020s.

• Tourism rebound loading: New York City’s 2024 visitor count hit 97% of its pre-pandemic record, with 64.3 million travelers boosting local revenue and CRE activity.

• Borrowing surge: Commercial and multifamily loan originations jumped 59% year-over-year in Q3 2024, driven by falling interest rates and significant increases in healthcare, hotel, and retail property loans.

• Mortgage pinch: U.S. mortgage rates climbed to 6.85%, the highest since July, further straining homebuyers facing rising borrowing costs.

• Honoring a legend: G. Joseph Cosenza, cofounder of Inland Real Estate Group and a legendary dealmaker, passed away at 81, leaving a lasting impact on the commercial real estate industry.

• Failed merger: HomeStreet Bank is selling $990M in multifamily loans to Bank of America following the termination of its merger with FirstSun Capital.

• Slowing growth: U.S. single-family rents grew just 1.7% annually in October 2024, the lowest rate since June 2020, with declines in high-growth markets like Austin leading the trend.

• High supply: FCP purchased the 250-unit Alexan Miramar complex in Florida for $67.5M, equating to $270K per unit, amid high regional supply peaks.

• Davie development: Estate Companies secured a $78M loan for the 347-unit Soleste Reserve 1 in Davie, incorporating 15% workforce housing, amid South Florida's record multifamily pipeline.

• Stabilizing: U.S. industrial vacancies rose to 7.5% in November as new supply slowed to 330.7M SF for 2024, while national rents grew 7% year-over-year to $8.25 per SF.

• Padding the portfolio: Prologis acquired a 157,214-square-foot Doral warehouse for $57M from Codina Partners, marking South Florida's eighth-largest industrial deal of 2024.

• Making moves: Bridge Investment Group acquired a $105M distribution facility in East Williamsburg, Brooklyn. The entity used on the sale was Rolling Frito-Lay Sales LP, also owned by PepsiCo.

• Acquisition: Grainger acquired a vacant 849,691-square-foot warehouse in Minooka, Illinois, for $78 million, bolstering its distribution campus near Chicago.

• VIP space: Rodeo Drive retail rents surged 19% in 2024 to $1,100 per SF, fueled by expanding flagship luxury brands and rising travel spending in California.

• Shifting owners: CBL Properties acquired full ownership of Oak Park Mall and two other high-performing malls, paying $22.5M to buy out Nuveen’s 50% stake while assuming $266.7M in loans.

• A new dawn: Nordstrom’s privatization and Party City and Big Lots' bankruptcies highlight retail’s struggles amid inflation, shifting strategies, and rising vacancies.

• One step back: Nationwide office visits fell to 62.4% of pre-pandemic levels in November 2024, with Miami leading recovery at 84%, while holiday travel and remote work extended declines in other cities.

• Hand it back: Harvest Properties and AXA surrendered the 280K SF office tower at 180 Grand Avenue, with a $95M nonperforming loan now up for sale amid Oakland's record-high 36% office vacancy rate.

• Redevelopment: Momentum is building to redevelop underutilized federal office buildings near D.C.'s National Mall into a vibrant mixed-use district, transforming prime real estate into a cultural and economic hub.

• Deal on fire: A fire destroyed much of Downtown LA's iconic Morrison Hotel, derailing redevelopment plans for affordable housing by AHF and sparking an arson investigation.

📈 CHART OF THE DAY