E-commerce Rebounds in 2024, Boosting Industrial Demand

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Good morning. After a post-pandemic slowdown, e-commerce is back on a steady growth trajectory, driving renewed demand for industrial space.

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• Stormy trends: Hurricane Helene's impact on CRE insurance rates is projected to be minimal. Moody's estimates $15–$26B in damages as premiums finally begin to fall.

• Vacation struggle: Kissimmee vacation-home landlords are facing the music as rental incomes drop, leading them to spend heavily on themed decor to stand out in an oversupplied market.

• Insurance exodus: State Farm (STFGX), California's largest insurer, is planning to reduce policies by 1M, cutting 35% of its exposure to remain solvent.

• Raising the bar: JLL (JLL) will enhance its digital leasing capabilities with the technology-oriented acquisition of Raise CRE, streamlining leasing tasks for clients and brokers.

• Cautious cuts: Fed Chair Powell signaled that while rate cuts will continue to support economic growth, the Fed is in no rush for aggressive reductions given the economy's solid state.

• Survey says: The CRE Finance Council's 3Q 2024 Sentiment Index surged to 121.1, up 18% from Q2, reflecting growing optimism over the economy.

• Capital market maestro: Dustin Stolly, Newmark’s former co-president, facilitated $29.1B in loans and $5.18B in equity before leaving, earning a No. 5 ranking in Power Finance.

• Half-century record: Nationwide, multifamily construction permits dropped by 16.8% YoY in August, while completions surged to a 50-year high.

• Student housing haven: Subtext and Nuveen Real Estate acquired a 200-unit student housing near UCF, which has 446.1 KSF, 626 beds, and extensive amenities.

• Missed opportunities: Emerald Fund paused its plans to build 450 apartments at the former CCA campus in Oakland due to less-than-desirable economic conditions.

• Florida expansion: Dermot Co. acquired The Quaye at Wellington, a 350-unit luxury property in Florida, for $144.2M, continuing its growth in the state.

• Challenging assumptions: Build-to-rent homes are losing their pricing advantage over scattered site rentals, with scattered properties outperforming BTR in 6 of 7 surveyed markets.

• Port paralysis: ILA’s nationwide worker strike has frozen $3.78B in shipping at 14 major ports while workers demand wage increases.

• Deal of the day: Equinix has teamed up with Singapore's GIC and Canada's CPP Investments in a $15 billion joint venture to build out hyperscale data centers across the U.S.

• Loan of the day: JLL (JLL) secured a $577.63M CMBS loan for LBA Logistics' 25-property industrial portfolio, led by a syndicate including JPMorgan (JPM).

• Loading legislation: California Gov. Gavin Newsom signed Assembly Bill 98, mandating minimum loading bay distances in warehouses and new building standards.

• Decoding dining: A Placer.ai analysis revealed that 3.2% foot traffic growth for fast-casual vs. 0.4% for QSRs on a YoY basis, indicating notable shifts in consumer habits.

• Discount deal: South Loop’s Joffco Square was sold for $9.3M, down from a former $27M valuation, as part of DRA Advisors' $540M Midwest retail sell-off.

• Retail Renaissance: A Dallas investment group led by Douglas MacMahon acquired 16.23 KSF of retail in San Francisco for $10.9M.

• Leasing boom: In Q3, Manhattan office leasing surged with 23.1 MSF in deals, up 25.1% YoY, as the vacancy rate dropped to 18.7%.

• Super science: Roivant Sciences (ROIV), led by Vivek Ganapathy Ramaswamy, secured a 15-year lease at Vornado's Penn 1, leasing 55 KSF in Manhattan.

• Major moves: Medline Industries, considering an IPO in 2025, just signed Chicagoland's largest suburban office lease of the year, and is now occupying 3.8 MSF.

• Hotel trends: CBRE's 2024 midyear outlook projects moderate U.S. RevPAR growth of 1.2%, with stronger performance expected in 2H24, while global markets show varying trends.

• Industry compromise: In response to Menin’s licensing bill, the hotel industry proposed a compromise bill that avoided the subcontractor mandate while emphasizing safety and a 5-year license renewal.

• Ritz refi: Partners Group (PGPHF) secured a $210M refi deal for the Ritz-Carlton Las Colinas with Trinity Investments, JLL, and Marathon Asset Management.

📈 CHART OF THE DAY

FACT OF THE DAY

In New York City, commercial buildings account for nearly 30% of the city's greenhouse gas emissions! This has led to new legislation, like Local Law 97, which requires large buildings to drastically reduce their carbon footprints by 2030 or face hefty fines.