Manhattan Office Market Roars Into 2025

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Good morning. Manhattan’s office market just posted its strongest quarter since 2019, with leasing volume hitting 12.2 MSF in Q125. Big tenants are back—and they’re locking in premium space fast.

Today’s issue is brought to you by InvestNext—download the 2025 Multifamily Investment Report for key capital trends, market opportunities, and strategies top firms use to stay ahead.

🎙️ New Episode No Cap Podcast: Jack and Alex are sitting down with Marc Deluca, CEO of KBS, one of the nation’s largest premier commercial real estate investors, with over $45 billion in transactional volume since 1991.

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• Tax-savings tactics: Ownwell helps commercial owners get a 31% better tax appeal. No upfront fees, just savings. Optimize savings this season. (sponsored)

• Land surrender: Sterling Bay is handing over 27 acres of its stalled $6 billion Lincoln Yards project to Bank OZK in a deed-in-lieu of foreclosure as mounting financial pressures stall progress on Chicago’s high-profile megadevelopment.

• Delinquency surge: CMBS delinquencies jumped to 6.65% in March 2025, nearing a four-year high, as multifamily and lodging sectors led the rise in distress across property types.

• Defense demand: As global tensions rise, aerospace and defense companies are fueling a surge in demand for secure industrial and office space, with leasing volumes jumping as start-ups chase government contracts and space ambitions. 

• Debt warning: While regional banks have found some footing since last year’s banking turmoil, Trepp warns that rising delinquencies continue to expose vulnerabilities in commercial real estate lending.

• Confidence slips: Amid Trump’s sweeping new tariffs and falling market confidence, the IMF signals a small downgrade in growth projections but stops short of forecasting a downturn.

• Relief with risks: DeSantis’ proposed $1,000 rebate for Florida homeowners is winning headlines, but lawmakers warn that permanent tax cuts could strain future budgets without one-time safeguards.

• Eviction overhaul: D.C. landlords are pushing back as city lawmakers move to make pandemic-era eviction protections permanent, with new mandates that could hold property owners in contempt if they don’t participate in rental assistance efforts. 

• Affordable buy: BLDG Partners secured an $82M Fannie Mae loan to finance its $108M acquisition of the 392-unit Park Vista Apartment Homes in Anaheim, continuing its push into Southern California's affordable housing market. 

• Risk reduction: Smart sensors that catch leaks before they flood units are becoming a must-have for apartment buildings as owners seek to exit insurance purgatory and avoid being labeled high-risk “sick buildings.”

• Funding gap: Vistria has raised more than $2.5B for affordable housing amid public funding cuts, backed by institutional investors betting on the asset class’s long-term durability.

• Demographic bright spots: RealPage data shows that cities with strong university ties are holding onto young adults, positioning them as resilient rental markets amid a shrinking national renter base. 

• Split market: Multifamily debt origination is expected to rise in 2025 as lenders grow more active and agency caps increase, but equity investors remain conservative, focusing on distressed acquisitions over new development.

• AI's new frontier: Meta’s $10B data center in rural Louisiana marks a turning point in the AI arms race, as tech giants flood America's heartland in search of land, power, and incentives

• Portfolio pivot: In a strategic play, Prologis acquired a partially leased New Jersey logistics asset and offloaded a fully occupied Chicago warehouse to its tenant, Interlake Mecalux, for a combined $229.8M in deal volume.

• Clicks over bricks: With online retail fueling more than half of U.S. sales growth, Prologis predicts the logistics sector will need up to 350 MSF of additional space in the next five years to keep up with rising e-commerce demands. 

• Storage queen: Queens led the nation in 2024 self-storage sales with over $101M in transactions, as the sector racked up $3B in total U.S. deal volume across 822 properties and more than 51 MSF.

• Simon goes global: Simon has opened its first Premium Outlets mall in Indonesia, debuting a 302 KSF retail center near Jakarta with over 150 brands, as part of its broader international growth push.

• Grocery grab: Gazit Horizons has acquired the 105 KSF Galt Ocean Marketplace for $35.4M, boosting its South Florida retail presence with a nearly fully leased, grocery-anchored asset near the coast.

• Federal flex: In a bid to cut costs and consolidate office space, the GSA is quietly piloting a coworking platform that could reshape how federal employees use real estate.

• Florida footprint: JPMorgan Chase has renewed its lease at Tampa’s Fountain Square campus, reaffirming its commitment to the Florida hub.

• Strategic refi: Hudson Pacific landed $475M in CMBS financing for a six-property office portfolio, using proceeds to retire a $168M loan on Element LA and shore up its balance sheet ahead of key maturities.

• Debt extension: Summit Hotel Properties secured $275M in new term loan financing, retiring near-term debt and extending its maturity schedule to 2030 as it continues to streamline its capital structure.

📈 CHART OF THE DAY