E-commerce Drives Industrial Demand in Q2, but Leasing Slows

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Good morning. E-commerce and supply chain demands are driving up industrial rents in cities like Charlotte, Miami, Boise, and Phoenix, though speculative construction and leasing activity have tapered off by early 2024.

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🎙️ No Cap Episode 8: Co-hosts Alex and Jack discuss Dallas' rise as a finance hub, major developments from Goldman Sachs and Wells Fargo, and Trimont's acquisition of Wells Fargo's $475B CRE loan portfolio.

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• Very optimistic: RXR (RXR) CEO Scott Rechler is forecasting a new CRE ‘paradigm’ after rate cuts later this year that might see demand surpassing supply by 2026.

• Loan acquisition: Sand Capital is targeting commercial property loans across the U.S., focusing on retail assets in the Midwest and Southeast, with loan sizes from $2M to $10M. (sponsored)

• High stakes High Line: Related Companies faces opposition from Friends of the High Line over its Hudson Yards casino project, with zoning and design conflicts delaying progress.

• Real estate rivalry: Rupert Murdoch’s News Corp is considering acquiring the UK’s largest real estate portal, Rightmove, through its subsidiary REA Group.

• Taxing times ahead: NYC's property tax laws may change dramatically after the state's highest court ruled in favor of a suit challenging the legality of the current tax code due to discrimination and unfairness.

• Sky-high selling: Brookfield Properties just keeps on selling, most recently listing a luxury tower with 411 units and a senior housing property in Chicago's South Loop.

• Affordable apartments: In 1H24, demand for mid-priced, 3-star apartments surged, with 75.8K units absorbed (up 86% YoY), outpacing luxury property demand.

• Bronx boom: MF1 Capital secured $165M for JCS Realty's One38 Bronx project, financing a 579-unit mixed-use development led by Jacob Schwimmer.

• Hollywood pivot: The Sunset + Highland project in Hollywood, led by entertainment veterans, has pivoted from offices to apartments, and will include 743 units, 11 KSF of retail, and 834-vehicle parking.

• Skyward shift: The town of Prosper, Texas, has banned new garden-style apartments, allowing for up to eight-story buildings to encourage high-density, mixed-use developments.

• Rate cap woes: A&E Real Estate's $600M rent-stabilized CMBS loan faces delinquency after a 200% loan-to-value ratio increase, driving up the national CMBS delinquency rate.

• Southern success: Boston-based Longpoint Realty Partners expanded in South Florida, buying a 114 KSF Medley property for $27.2M, reflecting high industrial demand in the area.

• Data Center dilemma: Despite being home to major data center firms, Denver struggles with data center development due to the absence of tax incentives, environmental concerns, and regulatory hurdles.

• Cookie chronicles: Stonepeak acquired a 1.1 MSF industrial portfolio in the Dallas-Forth Worth area from JP Morgan Asset Management (JPM).

• Sliding South: Florida's privately owned Basis Industrial now holds over 1 MSF of industrial space after 14 recent acquisitions, all in DFW and Houston.

• Big bankruptcy: Big Lots filed for Chapter 11 bankruptcy and agreed to a $620M sale to Nexus Capital, aiming to streamline operations and close up to 315 stores.

• Better on paper: Walmart’s attempt to use 3-D printing for a store expansion highlights the technology's potential but faces delays and costs similar to traditional construction.

• Retail Renaissance: The sale of the Barnsdall Square strip mall in Los Feliz highlights the demand for high-quality, brick-and-mortar retail locations in the sought-after LA neighborhood.

• Straight rejected: 7-Eleven’s (SVNDY) Japanese parent just rejected a staggering $38B takeover bid by Circle K parent Alimentation Couche-Tard because the offer ‘grossly undervalues' 7-Eleven.

• Distressed surge: The CMBS special servicing rate hit 8.46% in August, its highest level in 3 years, as the office sector continues to see a distressed assets surge.

• Big-time handover: IBM (IBM) will take over Meta's (META) 320 KSF office lease at Austin’s The Domain in January 2026, extending the new lease through 2040.

• AI pioneer: Nvidia (NVDA) is seeking 300 KSF of office space in Austin, potentially quintupling its current footprint and, bolstering the city's status as an AI innovation hub.

• Park your profits: Parking revenue at American hotels rose significantly in 2023, with profits from parking up 32%, while resorts enjoyed 48% profit growth.

• Pretty penny: Coral Gables-based MG Developer acquired the 176-room Sonesta-branded Regency (H) Miami Airport hotel for $36M, marking its first venture into the hospitality sector.

📈 CHART OF THE DAY