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Good morning. Demand for retail space in U.S. shopping centers is at a two-decade high, with an average leasing time of just 8.5 months.

Today’s issue is brought to you by AirGarage—maximize parking revenue at your property.

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Market Snapshot

*Data as of 6/23/2024 market close.

MALL MANIA

TOGETHER WITH AIRGARAGE

As your parking facility fills up during weekend rush hour or on event days, is your current parking operator scrambling to change rates? Do they even bother?

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This means a lot more money in your pocket. On average, owners see a 23% NOI increase when they switch from previous operators. That adds up big time.

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• Latest metrics: In May, national PSF prices for CRE grew by 3.76%, while cap rates compressed to 6.6%. The top 3 markets for price gains were NYC, San Diego, and San Francisco.

• Vexing valuations: In a volatile market with $1.2T in commercial mortgages maturing by 2025, appraisers play a more important role than ever in setting values for refinancing and sales.

• Hospital restrictions: Massachusetts is seeking to prevent REITs from owning hospitals in response to Steward Health Care’s bankruptcy, sparking debate among industry observers.

• Billionaire boomtown: Florida CRE hasn’t gotten the memo yet. In fact, Brickell landlords are still seeking record prices, with a $650M listing attracting 15 offers.

• Calm before the storm: This year, $1 T of the $2.8T wave of CRE loans set to mature by 2028 will be due, but a similar wave of distress hasn’t yet hit the markets.

• Deal of the day: WaFd Bank (WAFD) sold $2.8B in multifamily loans to Bank of America (BAC). The 2K loans currently have an unpaid principal balance of $3.2B.

• Much-needed capital: Jeffrey Gershon's Hope Street Capital secured a $69M loan for Mason Grey, a Brooklyn multifamily building with amenities and units.

• Making lemonade: Faced with low transaction volumes, apartment developers are shifting focus to renovating rather than buying, aiming to improve older properties in their portfolios.

• East Bay empire: A Southern California investment firm acquired a rare luxury multifamily property in the pricey East Bay Area neighborhood of LA.

• Decoding apartments: American apartment rents reveal that Class A units are 28% more expensive than Class B units nationwide, with regional variations.

• Silver screen scare: Post-pandemic Hollywood continues to face uncertainty and disruptions to its traditional business model, with 20% lower employment compared to before the pandemic.

• Warehouse wow: A warehouse in San Francisco just sold for $40M, one of the highest prices in recent years, signaling Silicon Valley optimism despite recent sales slowdowns.

• Jacksonville warehouses: Bixby Capital Management bought 2 Class A warehouses totaling 423.5KSF in Jacksonville’s Crossroads Distribution Center from Link Logistics for $53.5M.

• Delayed dreams: Brookfield's (BN) plan to convert 125 malls into minicities faces delays, with only two of the malls on its to-do list redeveloped so far.

• What goes up: Retailers are cutting prices as robust post-pandemic consumer spending slides. The CPI is staying steady at 3.4%, with a headline rate of 3.6%, a core rate of 3.6%, and a PCE rate of 2.8%.

• Beauty is pain: Embattled retailer Forever 21, which filed for bankruptcy in 2019, is asking for 50% rent cuts amid declining sales and stiff competition in the fast-fashion market.

• Office shuffle: The U.S. office market reported $10.2B in May deals, with an average sale price of $165 PSF and 17.8% vacancy nationwide, as big landlords expect distress into 2025.

• Taking all bidders: A 920KSF, 35% occupied Midtown office building that recently underwent a $76M renovation was listed on Ten-X with a $7.5M starting bid.

• Deal dissolved: Miami-Dade County canceled a delayed $160M deal to buy an 80-acre Assurant office complex, which was intended for a new government center development.

• Chasing success: JPMorgan Chase (JPM) is doubling its Miami office footprint to 160KSF, adding 400 employees while expanding across Florida.

• Getting it done: New Jersey's Briad Group secured $40M in retroactive C-PACE financing to refinance a San Diego Marriott (MAR).

• Innovating for loyalty: CEOs at the 2024 NYU Hospitality Conference emphasized the need for CRE to evolve and adapt to changing consumer demands. Find out what they recommend.

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