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Good morning. Developers in South Florida are addressing the region’s affordable condo shortage by converting rental units into for-sale properties, meeting the demand for modern, safer homes while complying with stricter building regulations.

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

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Market Snapshot

*Data as of 11/26/2024 market close.

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• Strategic stake: Blackstone (BX) expands its digital and energy infrastructure portfolio with a $1B stake in Santander’s (SAN) loan assets, reflecting growing PE interest in data centers.

• Market distress: Mounting financial pressures in US CRE are hitting multifamily and office sectors hardest, driven by rising vacancies, high interest rates, and looming loan maturities.

• Fraud fallout: Nightingale Properties CEO Elie Schwartz will finally face federal charges for allegedly misappropriating $54M from crowdfunding investors.

• Expanding horizons: The US CRE investable universe has reached $27T, with $12T in institutional capital favoring alternative assets like self-storage and single-family rentals.

• Inflation eases: The Fed’s preferred inflation measure rose 2.3% annually in October, aligning with expectations and reinforcing gradual rate cuts as inflation approaches the 2% target.

• Higher limits: In 2025, Fannie Mae (FNMA) and Freddie Mac (FMCC) will back mortgages for homes costing nearly $1M, offering only marginal relief in an increasingly unaffordable housing market.

• Multifamily momentum: Nationwide apartment sales surged 18% YoY to $11B in October, driven by portfolio transactions, stabilizing prices, and robust investor interest in urban multifamily assets.

• Strategic expansion: Bell Partners acquired the 349-unit Horizon at Miramar, now Bell Miramar Place, for $121M, highlighting Florida’s long-term rental demand despite regional rent declines.

• Housing lag: While multifamily production surged 54% since 2005, housing shortages persist due to slow growth in middle housing, hindered by restrictive zoning and regulatory barriers.

• Tenant settlement: Blackstone (BX) will pay $15M to settle rent overcharge claims at Parker Towers in Queens, marking one of NYC’s largest rent-stabilization settlements.

• Reset expectations: Despite multifamily sales surpassing $4B in LA this year, experts caution investors shouldn’t hope for steep discounts but instead adapt to sustained higher interest rates.

• Suburban shift: Equity Residential (EQR) acquired the Aventine Littleton apartments near Denver for $91M, part of a trend toward luxury multifamily investments in desirable suburban markets.

• Digital play: Blackstone (BX) acquired a stake in Santander’s (SAN) $1B digital infrastructure loan portfolio, advancing its focus on data centers, renewable assets, and European investments.

• Charlotte entry: Stonelake Capital Partners entered the Charlotte market with a $51M acquisition of a 402.4 KSF Amazon-occupied industrial facility.

• Chicago boom: Trammell Crow and Standard Real Estate sold the nearly full Woodridge Industrial Center near Chicago for $33.6M, highlighting the metro's robust industrial market.

• Retail returns: Physical stores are essential to reverse logistics through Buy Online/Return In Store (BORIS) strategies, cutting return costs, boosting foot traffic, and driving additional sales.

• Retail resurgence: Vestar reports its strongest retail leasing in 20 years, driven by resilient tenants, high demand for suburban open-air centers, and opportunities fueled by lower interest rates.

• Tenant turmoil: Despite rising vacancies and negative absorption in Atlanta retail, landlords are holding firm on high rents, betting on stronger tenants and limited new supply.

• Retail resilience: South Florida retail leasing slowed in Q3 due to limited space, but rents remain strong, with Miami leading regional growth and tight vacancies sustaining above-average pricing.

• Apple expands: Apple (AAPL) added 61 KSF at Vornado’s (VNO) Penn 11, bumping its footprint to 460 KSF—a strong signal of NYC and Midtown South’s appeal as a premium office hub.

• Distressed deal: Harmit Mann acquired a 198.2 KSF Oakland office complex for $13M ($65 PSF), a sharp 67% discount from its 2019 price, due to the crime-affected Hegenberger corridor.

• Public pivot: Austin purchased the 386 KSF One and Two Barton Skyway for $108M, repurposing the office property into a public safety HQ while supporting Brandywine’s balance sheet strategy.

• Doubling down: Brazil’s government expanded and renewed its lease to occupy 65 KSF at Midtown’s iconic Daily News Building, solidifying its diplomatic and financial presence in Manhattan.

• Business boost: US hotels saw strong weekday demand this fall, driven by business travel, but lagging leisure weekend stays and downgraded forecasts suggest 2025 may bring modest gains.

📈 CHART OF THE DAY