CRE Fundraising at Lowest Level Since 2016

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Good morning. North American commercial real estate fundraising fell to $80B in 2024 (the lowest level since 2016), continuing a 3-year decline, although core funding remained strong, signaling a potential market recovery.

Today’s issue is brought to you by AirGarage, a full-service parking management provider that streamlines operations and maximizes revenue for property owners.

Market Snapshot

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TOGETHER WITH AIRGARAGE

The Most Insane Parking Garage P&L We've Ever Seen

Our job here at AirGarage is improving your net operating income by ruthlessly scrutinizing your parking P&L, reducing unnecessary costs, and eliminating hidden expenses that many operators are passing through.

Today, we're sharing an anonymized example of a particularly egregious P&L. The owner (a multinational real estate firm) was walking away with less than 30% of the net income. before switching to AirGarage and increasing NOI by 64%.

Call outs:

• $4,000+ in telephone bills? The operator is likely adding a large markup here.

• $14,163 for a customer service center. Customer support should be included in the management fee (and not outsourced).

• Why are there both bank charges and credit card charges? Nearly 10% of revenue is going to payment processing. It should be closer to 3-4%.

• A/R processing fees is another bogus line item.

• $7,823 in printing and ticket charges should be eliminated with mobile payments.

• Pass-through fees like uniforms, supplies. and data processing should be eliminated.

As a full-service parking operator, AirGarage partners with real estate owners to maximize net operating income in your parking facilities. We operate on a transparent, revenue-share basis, which aligns our incentives to drive down costs and increase revenue.

With parking facilities across 40+ states and new cities launching every week, AirGarage is America's fastest-growing parking management company.

Get a custom proposal for your parking facility today! 

*Disclaimer: This is a paid advertisement. See full disclosure at the bottom of the newsletter.

• The Best CRE Data: Not all real estate data providers are created equal. We compared the top providers and their key features, so you don't have to.

• Private lenders lead: Nonbank lenders are dominating short-term property financing, with $4.43B in loans already raised YTD, surpassing total CRE lending activity for 1Q24.

• Sorry shareholders: The $1B sale of rent-to-own startup Divvy Homes to Brookfield Properties (BN) could result in no payout, leaving common shareholders and Founders Preferred Stockholders in the lurch.

• Blocked: A judge ruled against an executive order mandating project labor agreements for federal constructions over $35M, siding with contractors who argued it was anti-competitive and politically motivated.

• New face: KKR Group (KKR) hires Guy Metcalfe, former Morgan Stanley real estate chief, to bolster its real estate investment strategy after a recent restructuring of its real assets division.

• Black swan event: The recent wildfires in LA have damaged 9.5K rental units, many in small, aging multifamily buildings, worsening the city’s ongoing housing crisis.

• New rankings: Columbus, Denver, Jacksonville, Nashville, and New York face ongoing challenges like supply surges, uneven demand recovery, and potential rent pressure—but could surprise investors.

• Hot potato: Flagstar Financial (FLG) offloads a troubled $142M portfolio of rent-stabilized loans to Howard Lutnick’s Cantor Fitzgerald, another step in unwinding from its near collapse.

• Still a big apple: Despite the pressures of high supply, New York City's multifamily sector continues to thrive, with 14% more dollar volume and a steady rise in transactions.

• Despite the fires: San Diego's multifamily sector rebounded strongly in Q3, with sales shooting up 52%, fueled by high-value transactions and rising property prices.

• Billionaire’s row: Eliot Spitzer is looking to offload a prime Upper East Side property that could fetch up to $1B, leveraging the potential for condo conversion.

• Garden State win: Camber Real Estate Partners and Invesco Real Estate (IARAX) teamed up to purchase a 5-building, 384 KSF industrial portfolio in Burlington County, NJ.

• Electric dreams: ZM Trucks, a zero-emissions commercial vehicle manufacturer, signed a lease for a 210 KSF facility in Fontana, CA, a big step in its North American expansion and bolstering the industrial rebound.

• Where in Texas? Texas Heritage Marketplace is set to become a major retail and mixed-use hub in Katy, TX, as NewQuest Properties moves forward with its $400M development.

• Growth plans: H-E-B secured a development agreement in Rhome, TX, to purchase land in anticipation of future growth, part of its ongoing North Texas expansion within a rapidly growing area.

• Grocery overhaul: Jason Buechel, CEO of Whole Foods (AMZN), is now overseeing the entire grocery division, including Fresh and Go, as Amazon looks to refine its brick-and-mortar grocery strategy.

• New record: Amazon (AMZN) signed a landmark 50 KSF lease at Wynwood Plaza, marking the largest office lease ever in Miami’s art district as part of its expanding Miami presence.

• Vacancy spike: Office vacancies reached a national rate of 19.8% in 2024, with Austin seeing the largest increase, up 690 bps to 27.9%, signaling ongoing struggles in the post-pandemic office market.

• Downsizing trend: DC nonprofits are reducing their office footprints, with leasing volumes in 2024 dropping 18% below the historical average as hybrid work makes space cuts more necessary.

• Bargain hunt: Following a surge in sales activity in 2024, investors—especially foreign players—are capitalizing on discounted office assets, betting on a market recovery.

• If you build it: IHG Hotels & Resorts (IHG) teamed up with Avana Cos. to launch a $250M co-lending program to build more IHG's Holiday Inn, Avid Hotels, Atwell Suites, and Even Hotels properties.

📈 CHART OF THE DAY