Multifamily Construction Starts Drop 50%, But Pipeline Remains Strong

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Now, back to the news: Multifamily starts have dropped sharply, down 50% from last year to an annualized rate of just 325,000 units in Q3 2024.

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• Labor costs spike: U.S. labor costs grew 1.9% in the third quarter, surpassing expectations and fueling concerns about rising inflation as new data reveals stronger-than-anticipated wage gains earlier in the year.

• Stalling: Higher bond yields halted commercial property price growth in October per Green Street, with apartments up 12% year-over-year while office and storage prices fell to 8%.

• Rising mortgages: U.S. 30-year mortgage rates rose to 6.79%, their sixth weekly increase, tightening affordability for homebuyers.

• Winning: Fortress Investment Group acquired Charles Cohen’s properties, including major assets in New York and Florida, in a $148.7M foreclosure auction following Cohen Realty’s default on a $534M loan.

• Local control: Huntington Beach voters passed Measure U, requiring referendums on city-initiated zoning changes that impact the environment, in defiance of California’s state housing mandates.

• Chicago foreclosure: CA Ventures faces a $32M foreclosure on a Chicago apartment conversion and additional lawsuits over unpaid debt and investor disputes.

• Make it affordable: Step Up Housing acquired Richmond’s Vue at 3600 for $47.3M, aiming to upgrade the affordable complex with 75% income-restricted units.

• Earnings report: U.S. logistics real estate faces high vacancy and subdued demand, with Q3 utilization at 84.4% and falling new supply expected to balance the market by mid-2025, per Prologis.

• Hot market: BGO Cold Chain acquired the fully leased Medley Cold Logistics facility in Miami for $60M as part of its Core Plus strategy, expanding its national cold storage portfolio.

• New storage: Buchanan Street Partners acquired a 2.1-acre site in Upland, CA, for $6.3M to develop a 1,180-unit, climate-controlled self-storage facility, marking its fifth California storage investment.

• Miami expansion: PNC Bank plans to invest $1.5B to open 35 new branches in Miami over five years as part of a nationwide retail expansion.

• Holiday spending: A survey shows 67% of parents plan to use buy now, pay later (BNPL) this holiday season to manage spending on gifts, with clothing, electronics, and luxury items among top purchases.

• Blockbuster deal: Cousins Properties is acquiring Charlotte’s Vantage South End for $328.5M, strengthening its Sun Belt portfolio with premium, high-demand office space as return-to-office trends drive leasing interest.

• West Palm leasing: Billionaire developer Stephen Ross has secured over 100,000 square feet in new office leases across West Palm Beach, including key tenants at his flagship One Flagler building.

• Airport sale: Piramco purchased the Four Points by Sheraton near San Francisco Airport for $17.7M, a 17% drop from its last sale price a decade ago.

📈 CHART OF THE DAY