Assessing Trump’s Policy Impact on CRE Construction

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Good morning. The anticipation of Trump’s proposed tariffs on imports has the construction sector racing to hoard building supplies, potentially boosting industrial outdoor storage (IOS) demand.

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• Economic Watch: November's strong job growth and rate cut expectations bolster confidence in a U.S. real estate recovery, though global economic risks could challenge the outlook, reports CBRE.

• Crackdown: Texas officials now face penalties for failing to disclose property holdings, a rule prompted by AG Ken Paxton's omission of nine properties from financial filings.

• Broker blacklist: Fannie Mae has blacklisted Sevenstone Capital and Eastern Union amid an investigation into loans tied to falsified financials, escalating scrutiny of brokerage practices.

• Changing of the Guard: CBRE appointed Adam Gallistel and Andy Glanzman as co-CEOs of its $150B Investment Management division, leveraging their complementary expertise to drive growth and strategy.

• Windy City losses: Chicago's luxury real estate market faces steep declines, with high-end condos dropping 9.1% in median price since 2021, as sellers struggle with crime concerns and oversupply.

• City of Yes: The New York City Council approved the “City of Yes for Housing Opportunity,” a sweeping zoning overhaul permitting 80K new housing units across all five boroughs.

• Construction hurdle: Despite hitting a 40-year high in starts, U.S. multifamily housing is seeing a notable slowdown in new construction activity.

• Equity boost: Hunt Capital Partners secured $193.5 million for its largest LIHTC fund to date, enabling the development and preservation of nearly 1,300 affordable housing units across 16 U.S. communities.

• Student housing: Blue Vista and Clarion Partners acquired a 2,787-bed student housing portfolio near three major universities, reflecting continued resilience in the student housing sector.

• Fannie says: Fannie Mae experts project slowing home price growth to 3.8% in 2025 and steady mortgage rates above 6%, as affordability remains a challenge for buyers despite pent-up demand.

• Major investment: Meta is investing $10B in a 4M sq. ft. AI data center in Louisiana, creating 500 direct jobs and bolstering renewable energy infrastructure.

• Downgraded: BMO Capital downgraded Prologis, citing high valuations, slowing industrial demand, and uncertainty from proposed tariffs, with its stock dropping 16.3% from last year's peak.

• Another one: CVS is shuttering all its Utah MinuteClinic locations, part of a more significant trend of pharmacy closures driven by shifting consumer habits and rising competition.

• Space race: Barnes & Noble plans to end 2024 with 57 new stores, exceeding expectations as it thrives in competitive retail spaces and adopts a curated, community-focused approach.

• Trending: With 60% of Gen Z visiting malls and retail availability at 4.7%, younger shoppers are driving 2025 growth optimism.

• Brooklyn boost: Steiner NYC secured $149M to refinance Admirals Row, a key mixed-use redevelopment in Brooklyn Navy Yard, highlighting urban investment resilience despite high interest rates.

• Office outlook: Rising tenant demand, shrinking supply, and ten stabilizing metrics signal the U.S. office market is on track for recovery starting late next year.

• Suburban hell: Workspace Property Trust's $1.2B suburban office loan has entered special servicing, as rising vacancies and high interest rates challenge its pandemic-era bet on suburban workspaces.

• Brickell sale: The federal government plans to sell a 53-year-old, 60K SF office building in Miami's Brickell district, valued at $61.3M, to streamline its portfolio and save taxpayers $475M.

• Delayed: Boston Mayor Michelle Wu’s proposal to temporarily increase CRE taxes to offset declining office values has hit another snag.

• Rebound loading: Tech companies are emerging as a bright spot for SF. AI startups have absorbed 3.9 MSF of office space since 2019.

• Southern hospitality: Orlando and Miami each surpassed $1 billion in hotel sales this year, leading the Southern U.S. region, where nearly 40% of markets reported increased investment activity.

📈 CHART OF THE DAY