NYC Tops Global List for Construction Costs

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Good morning. We’ve got something a little different to share today—something we’ve been quietly working on behind the scenes.

Since day one, this community has helped turn CRE Daily into what it is. And now, we finally get to bring it together (in person).

On Tuesday, November 4, we’re hosting our first-ever live event in Dallas.

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Market Snapshot

CONSTRUCTION TRENDS

TOGETHER WITH INVESTNEXT

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• Cash for space: WareSpace is buying industrial, flex, and retail: 50–250K SF with near-term vacancy. Fast closings, all cash—and a $1/SF broker bonus through 12/31/25. (sponsored)

• CRE rally: The LightBox CRE Activity Index jumped to 113.9 in June—its highest level since May 2022—driven by a rebound in listings, appraisals, and due diligence.

• A new era: After years of rapid increases, cap rates are leveling off, hinting at a more stable net lease environment.

• Slim chance: A new Fed study estimates a 9% chance that interest rates could return to zero within seven years.

• Tournament towns: Billion-dollar youth sports complexes are transforming suburbs as cities and investors chase the $52B kids' athletics boom.

• Cost crunch: NYC tops the global list as the most expensive place to build, averaging $534/SF.

• Inflation dip: US consumers’ inflation expectations fell to 3.0% for the year ahead, as optimism about personal finances and job security improved.

• GSE reform: Industry experts say Trump’s megabill may finally pave the way for Fannie and Freddie to exit conservatorship.

• Compliance countdown: As NYC begins enforcing Local Law 97, building owners face rising compliance costs, limited guidance, and growing skepticism about fines.

• Rental opportunity: SFR and BTR investments are gaining momentum as rising home costs and slowed construction deepen the US housing shortage.

• Green perks gone: HUD is flattening mortgage insurance premiums for multifamily housing, effectively eliminating special rates for energy-efficient developments.

• Record completions: Multifamily completions hit 608K units in 2024, the highest level since 1986, driven by high-density, built-for-rent units.

• Sun Belt strategy: Slate Asset Management is acquiring 1,600 multifamily units across Florida, Georgia, and Arizona for $227M, betting on long-term rental demand.

• Tower trade: Cedar Street and Kayne Anderson have acquired the multifamily and retail portions of the 47-story Millie on Michigan in downtown Chicago.

• Foreclosure watch: A Miami Beach condo-hotel is facing a $21M foreclosure, adding to a growing list of high-profile South Florida properties under financial strain.

• Build-to-lease: Inland Empire leasing stayed strong in Q225, but rising vacancies and a 4.5% drop in lease rates signal softening in the core market.

• Industrial automation: Nearly 90% of real estate and construction firms plan to boost AI and automation investment within two years, signaling rapid tech adoption across logistics and industrial sectors.

• Meta moves: Meta has leased an entire newly built warehouse in Sterling, Virginia, to support its growing network of data centers in the region.

• Facility exit: IBM and TT Electronics are shuttering their North Texas sites, cutting over 130 jobs amid consolidation and tariff pressures.

• Youth magnet: Indoor malls are seeing a Gen Z–driven comeback, outperforming open-air shopping centers in foot traffic growth during the first half of 2025.

• Ethnic anchors: H Mart is opening a 64K SF store in Sugar Land, its fourth Houston-area location, as Asian-focused retail surges.

• Vintage value: With new retail construction slowed by high costs, aging strip centers are getting a second wind.

• Brand split: Dollar Tree has finalized the $1B sale of Family Dollar to private equity, exiting a troubled acquisition that once cost $8.5B.

• Grocery grab: Ram Realty Advisors has acquired a $200M, 600K SF portfolio of seven grocery-anchored shopping centers across the Southeast.

• Conversion surge: DC office-to-resi conversions are gaining momentum as high vacancies, housing demand, and city incentives align to reshape underused buildings.

• Loan pressure: CBRE simulations show most 2019-era office loans face a 35% funding shortfall upon refinancing, with just 10% of scenarios avoiding a gap.

• Trophy trend: US office sales jumped 69% YoY, with investors flocking to trophy and Class-A properties, especially in California markets.

• Tech anchor: Nvidia is nearing a 100K SF lease at One Uptown in Austin, signaling renewed confidence in the city’s tech corridor.

• Lab relocation: Foghorn Therapeutics is relocating from Cambridge to a 73K SF lease in Watertown, opting for newer, purpose-built life sciences space.

• Investor optimism: Hotel stocks rose for a second straight month in June, up 3.7%, though still trailing the broader S&P 500.

• Big deals: Despite a sluggish market, some high-profile US hotels commanded hefty price tags in the first half of 2025.

• Icon update: Ben’s Chili Bowl will temporarily close its original DC location for major repairs—the first in over 60 years—with reopening expected in November.

• Tech venue: Cosm is launching its fifth immersive LED dome venue in downtown Cleveland, aiming to boost the city’s sports and entertainment scene.

📈 CHART OF THE DAY