Life Companies Lead Strong Comeback in CRE Lending for Q3

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Good morning. CBRE’s latest report shows commercial real estate (CRE) lending surged in Q3 2024, with double-digit growth from both Q2 and last year.

Today’s issue is brought to you by PACE Loan Group—a national lender offering owners non-recourse, long-term, fixed-rate C-PACE financing.

👉 Your perspective matters! Take 4 minutes to share your thoughts on the CRE market's pulse in the Q4 2024 Fear and Greed CRE Survey.

Market Snapshot

Real Estate Lending

TOGETHER WITH PACE LOAN GROUP

Interest rate cuts push developers off the sideline

With Thursday's second rate cut, developers are looking to get off the sidelines and ahead of competition, making the next 12-18 months critical for obtaining financing.

Since interest rates first started climbing in March of 2022, over a dozen states have improved or created C-PACE programs, expanding the creative financing tool’s applicability and reach.

C-PACE’s fixed-rate, 30-year amortization period makes it an attractive addition to the capital stack, since it applies to new and renovation projects. It covers HVAC, plumbing, and electrical upgrades to boost property efficiency and resilience.

Even with rate cuts, C-PACE is an effective solution to reduce the cost of capital and infuse liquidity into projects. See if C-PACE works for your project.

*Please see the advertising disclosure at the bottom of this newsletter.

• Persistent pressure: Despite overall inflation decline, high service costs in food, insurance, and rentals continue to strain consumers, impacting revenue stability across commercial real estate sectors.

• Lending surge: According to MBA, CRE lending jumped 59% year-over-year, with healthcare and hospitality sectors leading, while office property loans continue to lag amidst cautious investor sentiment.

• Cut it back: Chicago Mayor Brandon Johnson slashes proposed property tax increase to $150M amid council pushback, with alternative revenue ideas now on the table.

• Fed’s next move: Neel Kashkari says that a strong economy and rising productivity could reduce the need for future rate cuts.

• Deal of the day: Medical Properties Trust (MPT) is set to sell most of Prospect Medical’s managed care platform for $745 million to Astrana Health, expecting $200 million in proceeds after settling obligations.

• Fearless Flyer: The historic Napa Valley vineyard behind “Two Buck Chuck,” now Benessere Vineyards, is on the market for $35M, featuring a 6,300-square-foot home and a boutique winery known for Italian varietals.

• Rebounding: Easing interest rates are set to revive multifamily transactions, offering refinancing relief and potential yield gains despite ongoing market distress.

• DFW expansion: Equity Partnership and Moses Tucker Partners bought Fort Worth’s 276-unit Northpoint Villas for $52.5M, with plans for major renovations as part of a long-term DFW strategy.

• A new era: With Trump’s return, multifamily developers expect relaxed regulations and boosted Opportunity Zone support, while affordable housing advocates remain cautious about potential funding cuts.

• Denver acquisition: Greystar acquired the 312-unit Dove Valley Apartments near Denver for $95.15M, marking another high-value multifamily deal as investors focus on Denver’s rental market.

• Data boom: Culpeper County is attracting major data center projects with dedicated tech zones and infrastructure upgrades, positioning it as Virginia’s next big data hub.

• Jax Port deal: Stonepeak acquired nine logistics properties totaling 1.8M square feet near Jacksonville’s port, enhancing its presence as the port undergoes a $1B infrastructure upgrade.

• Bay Area development: Bridge Industrial secured $117M to build a four-building, 714,491-square-foot industrial campus in San Jose, continuing its focus on infill developments in high-demand markets.

• Unified retail: Amazon aims to boost competitiveness by integrating its online and physical retail spaces, creating seamless, one-stop shopping locations for consumers.

• Off-market: Hanley Investment Group brokered a $20.8 million off-market sale of five retail pads at Riverside's fully leased Citrus Landing shopping center, securing an all-cash buyer.

• Leading leases: Primark, Path Entertainment’s Monopoly experience, and other global brands lead October's top NYC retail leases, with new openings across major Manhattan hubs.

• Earnings report: Big office leases drive revenue for brokers JLL, CBRE, and others as more companies secure space, spurred by rising return-to-office rates and demand for premium buildings.

• Growing trend: Landlord-built offices, ready for immediate use, are increasingly popular post-pandemic as tenants prioritize faster move-ins and premium, employee-friendly spaces.

• Fire sale: Ambient Communities acquired a downtown San Diego office tower at a 50% discount, planning to convert it into 180 residential units amid a trend of declining office demand in the area.

• Ryan relocates: Tax firm Ryan LLC is moving HQ to Plano's new Ryan Tower, occupying half of the 409,000 sq. ft. space, with Koch Real Estate also leasing 29,000 sq. ft.

📈 CHART OF THE DAY