Luxury Retail Booms Across the U.S. with $75B in Sales

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Good morning. The luxury retail market in the U.S. reached $75 billion in 2023, driven by post-pandemic growth, though inflation is cooling demand.

Today's issue is sponsored by RSN Property Group.

🎙️ New Episode: On this episode of No Cap by CRE Daily, Alex and Jack chat with Michael Santora, CEO of Logic. They discuss his robotics platform, which automates supply chains and optimizes warehousing.

Market Snapshot

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• Waiting game: Most investors plan to stay on the sidelines until 2025, expecting flat CRE values and transaction volumes for the rest of 2024.

• Longevity clubs: Sam Nazarian and Tony Robbins are launching "The Estate," a luxury hotel and longevity center venture targeting the $5.6 trillion global wellness industry

• Trending down: U.S. foreclosures dropped by 5.3% in August 2024, but housing instability persists, with New Jersey having the highest rate of filings at one in every 3,277 housing units.

• Neom’s troubled future: Saudi Arabia’s $500B Neom project faces mounting criticism over executive misconduct, financial improprieties, and workplace controversies, casting doubts on its viability.

• Already priced in: Gary Cohn says expected Fed rate cuts are already priced into mortgage rates, offering little relief to homebuyers.'

• Winners and losers: A few large firms are pulling ahead in the private credit industry with massive fundraisings and expanded influence.

• What might happen: Despite an expected rate cut, multifamily investors are split between jumping on opportunities or staying cautious, as oversupply and high vacancies temper enthusiasm.

• Fulton Market condos? Sulo Development proposes a 243-unit, three-tower condo project in Chicago's Fulton Market, the area's largest condo development to date.

• Rescue capital: Reap Capital launches rescue capital fund for multifamily owners and bails out investors on 854-unit portfolio in Dallas. Schedule a call to discuss your rescue capital scenario. (sponsored)

• Renter strain: Nearly 50% of U.S. renter households are cost-burdened, spending over 30% of their income on rent despite rising household incomes.

• Fannie and Freddie: Trump allies, including Larry Kudlow, are reportedly exploring privatizing Fannie Mae and Freddie Mac. The move aims to reduce the U.S. deficit, though critics argue it could increase taxpayer risk.

• Strategic location: The Village of Chandler, a 109-unit luxury apartment complex in Arizona, sold for $39.24 million, benefiting from a strong buyer-lender relationship and 97% occupancy.

• Hospitality to housing: Tramell Webb Partners is seeking to convert a hospitality project near UCF into 475 student housing beds, continuing its focus on mixed-use.

• Buying spree: Alterra IOS purchased four industrial outdoor storage assets totaling 17 acres in Greater Houston, continuing its expansion with investments in properties near key transportation hubs.

• Securing the note: Billingsley Co. refinanced its 900,000-square-foot Denton Distribution Center with a $62.4M loan from Allianz Life Insurance, covering the project's construction debt.

• Major deal: MCB Real Estate acquired the 273,425-square-foot Falcon Ridge Town Center in Fontana, CA, for $64.7 million, marking the Inland Empire's largest retail transaction of 2024.

• Say goodbye: Nordstrom Rack will close its Empire Outlets on Staten Island store by December 4, another setback for the struggling mall.

• Lease auction: Big Lots is auctioning nearly 300 store leases as part of its Chapter 11 bankruptcy, aiming to downsize while being sold to Nexus Capital Management.

• Sold: Kaiser sold its 21-story Oakland office tower and adjacent parking garage to Behring Companies for $14.35M, with plans to redevelop the nearly vacant space into a mixed-use urban campus.

• Swift’s boost: Taylor Swift’s Eras Tour has had a bigger economic impact on Hyatt Hotels than the Paris Olympics, driving significant revenue as fans traveled globally for her concerts.

• Approved: Baywood Hotels secured approval for a 124-key Hyatt House in Doral, adding to the surge in hospitality projects across South Florida.

📈 CHART OF THE DAY