MBA Lowers Commercial Real Estate Lending Forecasts for 2024-2025

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Good morning. Welcome back to CRE Daily. The Mortgage Bankers Association (MBA) has revised its CRE lending forecasts downward for 2024 and 2025, anticipating slower growth than earlier predictions.

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🎙️ No Cap Episode 7: Co-hosts Alex Gornik and Jack Stone talk with Vikram Raya, CEO of Viking Capital, on how he went from cardiologist to acquiring $800M+ in multifamily assets.

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• Blurred boundaries: As families move further from city centers, the traditional urban-rural divide is becoming increasingly obsolete, prompting calls for new classifications.

• Profit Motive: Próspera, a for-profit city off Honduras’ coast, faces potential collapse as the Honduran government seeks its dissolution.

• Workforce: Goldman Sachs plans to lay off over 1,300 employees, targeting 3-4% of its workforce during an annual performance review.

• Elevator overhaul: New York City faces a massive wave of elevator replacements, with modernization costs reaching up to $500K per elevator.

• Appeal: Following an appeals court ruling in July, the National Association of Realtors plans to ask the Supreme Court to block the DOJ from reopening an investigation into its policies.

• Rate cut likely: The Fed's preferred inflation gauge aligns with expectations, boosting chances of a September rate cut. Analysts are debating whether the reduction will be 25 or 50 basis points.

• Market winners: Sunbelt cities like Phoenix and Durham-Chapel Hill are leading in multifamily investment returns, outperforming Gateway cities due to strong economic and population growth.

• Signs of life: Kairoi Residential acquired The Taylor, a 17-story, 308-unit high-rise in Dallas' Uptown, valued at $99.5M.

• Financing: Lendlease and Aware Super secured financing for Habitat, a mixed-use project in Baldwin Hills that will include 260 luxury apartments and 253K square feet of offices.

• Brooklyn: Thor Equities purchased the Chocolate Factory Lofts, a 123-unit multifamily building in Brooklyn, for $58.5M from a partnership between Meadow Partners and Fairstead.

• Record deal: Afton Properties acquired The Landing at Arroyo in Simi Valley for $95M, marking the largest multifamily transaction in the area since 2021.

• Slowdown: The industrial real estate sector is experiencing a natural slowdown as it adjusts to shifts in demand, vacancy rates, and construction trends following the pandemic.

• Acquisition: Brennan Investment Group purchased a 740,000-square-foot industrial portfolio in Lombard, Illinois, for $76M amidst a flood of new industrial inventory in Chicago.

• Jacksonville expansion: Merritt Properties expands its Jacksonville portfolio by acquiring an industrial park, aiming to convert it into Class A light industrial space amid rising demand.

• Buy it back: RCB Equities and Real Estate Development Associates secured a $115M loan to redevelop the struggling Puente Hills Mall, famed for its "Back to the Future" appearance.

• Chelsea expansion: John Catsimatidis' Red Apple Group purchased a $22.5M building at 253 West 24th Street to expand its mixed-use development in Chelsea.

• Driving the demand: AI companies have leased over 1.7M square feet of office space in San Francisco since 2022, potentially expanding to 12M square feet by 2030.

• Discounted: Citrix sold its Fort Lauderdale headquarters for $37M, marking a 37% discount from its 2002 price, while leasing back part of the office space.

• Distressed: Allstate sold a Loop office building in Chicago at a 63% loss, reflecting challenges in the office market as vacancy rates rise.

• Viper Room: West Hollywood approved an 11-story hotel and apartment tower on Sunset Boulevard, replacing the iconic Viper Room nightclub with a modernized venue amid local controversy.

• Deposit dispute: Buyers are suing to reclaim deposits from the long-delayed Mandarin Oriental in Boca Raton, as the project remains unfinished four years past its original deadline.

📈 CHART OF THE DAY