Multifamily REITs See Strong Q2, Driven by High Demand and Solid Occupancy

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Good morning. Multifamily REITs reported a positive second quarter for 2024, as demand remained strong through the peak leasing season.

Today's issue is sponsored by Wall Street Prep—elevate your real estate career with institutional-grade analysis training.

🎙️ 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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• Recession confusion: Despite several recession indicators flashing since 2022, the US economy has yet to experience a clear downturn, underscoring the difficulty in accurate predictions.

• Housing relief: A San Francisco Fed study predicts shelter inflation could drop to 2% by year-end, easing housing cost pressures and returning to pre-pandemic levels by 2025.

• Tax battle: Kamala Harris proposes increasing the small business startup deduction from $5,000 to $50,000, intensifying her tax policy showdown with Donald Trump ahead of the 2024 election.

• $2.5B vision: Developer Artemio De La Vega is advancing "The Central," a 27-acre, $2.5 billion mixed-use project in East Dallas.

• Secondary markets: As CRE struggles with falling valuations and rising debt costs, secondary funds like Goldman Sachs’ $3.4B fund are stepping in to buy stakes from investors looking to exit.

• Permit shift: Single-family home construction surged across most regions in Q2 2024 with a 17.6% growth in large metro core counties, while multifamily building activity continued to decline.

• Refinancing crunch: Landlords face $1.5 trillion in commercial real estate debt maturing by 2025, with 25% at risk of refinancing challenges, particularly in multifamily properties.

• Construction slowdown: Apartment construction starts dropped 41% from their 2022 peak, leading investors to bet on higher rents as supply tightens.

• West Coast love: Cityview is seeing increased multifamily deal activity in markets like the Bay Area, Seattle, and Denver, driven by distressed assets and favorable pricing below replacement costs.

• Airbnb appeal: Airbnb urges New York City to ease its strict short-term rental regulations, which led to an 83% drop in listings, citing the negative impact on hosts and travelers amid rising hotel prices.

• Foreclosure looms: Montreal-based Frankforter Group faces foreclosure on its Generations Atlanta apartments after defaulting on a $104.4M mortgage, with the auction set for September 3.

• Anaheim Hills: Salt Development is advancing a $500M plan for 500 apartments in Anaheim Hills, alongside a 46-acre nature preserve, despite local concerns over traffic and wildfire risks.

• Massive development: Legacy 75 Trade Center, a $2B industrial project, is planned for 1,560 acres in Lamar County, Georgia. It will feature 19MSF of industrial space and 900 housing units.

• Savannah sale: VanTrust Real Estate sold a 637,868-square-foot industrial facility in Ellabell, Ga., near Savannah to Goldrich Kest.

• Phoenix growth: Phoenix is now the top U.S. market for industrial development, with nearly 39 MSF feet under construction.

• Beverly buy: One Cole Group purchased two retail buildings in Beverly Hills’ Golden Triangle for $39.2M, paying $3,532 PSF for fully leased storefronts housing high-end fashion brands.

• Expansion: Publix continues its South Florida buying spree, acquiring two Davie shopping centers for $83M, adding to its growing portfolio of retail properties.

• Tenant buyout: Venture Global LNG, Potomac Tower's largest tenant, purchased the I.M. Pei-designed Arlington office tower from Brookfield for $143 million.

• RTO mandates: A survey reveals that 9 in 10 companies plan to mandate a return-to-office in 2025, with many citing productivity and company culture as key reasons for the shift.

• Approved: KT Urban has received city approval to build a seven-story, 176-room boutique hotel in San Jose’s Santana Row

📈 CHART OF THE DAY