CBRE: Multifamily Market Stabilizes After Two-Year Decline

Good morning. CBRE reports positive signs of multifamily market stabilization, with improving fundamentals and rising investor confidence as the multifamily vacancy rate stays steady at 5.5% in Q2.

Take 3 minutes to share your insights in the Q2 CRE Daily + Burns Fear & Greed survey. Findings will help shape our understanding of the current commercial real estate outlook.

Market Snapshot

MULTIFAMILY Momentum

• On the rise: Office CMBS delinquency rates have surpassed 8% for the first time since 2013, while retail and lodging rates have slightly decreased.

• Recession fears: Goldman Sachs has reversed its recession prediction, lowering the chance from 25% to 20% due to positive economic indicators.

• Housing boom battle: Northern NJ housing construction soars, drawing 75K NY migrants in 2022, outpacing NYC itself with 224.6K units since 2010.

• Residential revival: Office-to-residential conversions continue to gain momentum in post-pandemic NYC, surging from 34 to 69 potential conversions in a year.

• Record enrollment: The University of Arkansas anticipates record-breaking enrollment this fall, prompting plans to build two new dormitories to address housing shortages.

• Texas cools down: The Texas multifamily market faces challenges with new supply and high interest rates. Big institutional investors like KKR see opportunities amid uncertainty.

• Investment soars: Vancouver's Onni Group secured a $240M construction loan for a 60-story residential tower with 685 units in Downtown LA.

• Multifamily marvel: Atlanta-based Cortland closed its $1.5B Cortland Enhanced Value Fund VI, surpassing targets and attracting global investors.

• Finding financing: A joint venture secured $87M in construction financing for a 22-story apartment building at 540 Third Avenue in Manhattan.

• Refinancing success: PMG and Greybrook secure $178M to refinance Society Wynwood, a 10-story property in Miami's Wynwood neighborhood.

• Holy housing: The LA Archdiocese teams up with a nonprofit to build affordable homes on church land, debuting a 74-unit project in East Hollywood.

• Major acquisitions: EQT Exeter Real Estate Income Trust Inc. acquired two industrial properties in Middletown, PA, and Portland, TN, for over $245M.

• Industrial expansion: KKR & Co. (KKR) acquired an industrial portfolio of 2 MSF across 6 logistics assets with average 35-foot clear heights for $377M.

• Shipping surge: The ports of Los Angeles and Long Beach are once again leading in US import traffic, with LA handling 940K TEUs (+37%), and Long Beach seeing 882K TEUs (+53%) in July.

• Staying put: Christie's renews its 400 KSF Rockefeller Center HQ lease for 25 years in an undisclosed deal, amid Midtown’s $78.73 PSF rents.

• Mixed-use marvel: Procopio Companies secured $41.4M for a 57 Main project in Marlborough, MA, that will feature 92 luxury apartments with retail space.

• Fashion frenzy: Dallas retail occupancy levels are at a record 95.2%, surpassing peak levels from the '90s, as popular Japanese clothing brand Uniqlo is set to open its first DFW store at the Galleria Mall.

• Retail realities: Miami International Mall, owned by Simon Property Group (SPG), saw its value drop from $391M to $159M, or a 59% decline.

• Banking on space: Bank of America (BAC) just signed a 10-year, 553.8 KSF lease renewal at Hallmark Center I in Addison, TX.

• Greener move: CISA's new green HQ in DC at St. Elizabeth’s West Campus will be a 630 KSF building, aiming for LEED Gold certification.

• Policy vs. practice: Up to 80% of companies have return-to-office policies, but only 17% enforce them, impacting office attendance and employee behavior.

• Refinancing riches: Loews Corporation (L) to receive $305M to refinance a Miami Beach hotel with 790 rooms and 46 KSF of meeting space.

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