Sunbelt Under Pressure as Multifamily Deliveries Peak

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Good morning. The multifamily market just saw its biggest supply surge since 1974, hitting Sunbelt metros hard with rising vacancies. Now the real test is how much demand can keep up.

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• Transit fallout: SEPTA’s proposed service cuts could slash nearly $20B from property values and stall Philadelphia’s office recovery.

• Market stabilizing: Sale prices and cap rates are showing signs of leveling out across major CRE sectors, with retail demand holding strong, office finding footing, and industrial and multifamily maintaining solid investor interest. 

• Commanders' comeback: Washington, DC is closing in on a $3B deal with the Commanders to build a new stadium and mixed-use development at the RFK site, aiming to bring the NFL team back to the city by 2030. 

• REIT roundup: US REITs raised $12.2B in capital in Q125, mostly through debt, while M&A activity remained muted and equity issuance continued steadily.

• Buy dirt: Nevada’s experience developing federal land shows that while cheap land offers promise for affordable housing, costly infrastructure, location challenges, and strict use restrictions make it far from a silver bullet.

• Pricing pressure: South Florida condo developers are scrambling to adapt to ongoing tariff uncertainty, bracing for higher material costs and construction delays while trying to keep projects on track. 

• Shrinking spaces: Seattle now has the smallest new apartments in the US, averaging just 649 SF, down 8% from a decade ago.. 

• Golden opportunity: With banks pulling back, institutional capital is pouring into senior housing to meet booming demand, as aging baby boomers drive record-high occupancy and rising rents.

• Tower takeover: Veris Residential is close to acquiring the remaining 25% stake in Jersey City Urby for a deal valuing the luxury tower at $430M.

• Chicago trade: A 168 KSF industrial property in Chicago’s West Garfield Park has sold, marking the end of a decades-long run for the seller.

• Prologis perspective: Prologis CFO says today’s volatile trade landscape is driving long-term warehouse demand, even as tariff uncertainty slows leasing momentum.

• Florida footprint: Redfearn Capital refinanced a 900 KSF Florida industrial portfolio for $107.5M, bringing on DRA Advisors as a new partner.

• Retail rescues: With retail leasing delays hitting a six-year high, startups are offering quick capital to small, service-sector tenants. 

• Cycle breaker: Unlike past cycles, office sales surged in 2021–2022, driven by private buyers targeting smaller, high-occupancy assets, until rising rates cooled activity through Q125.

• Supplement shakeup: The Vitamin Shoppe is being sold for $193.5M to two private equity firms planning major store and digital upgrades to revive the brand post-bankruptcy.

• Gone thrifting: SF Goodwill is closing its headquarters and 11 Bay Area locations following a merger with Arizona’s chapter, shifting focus to larger suburban big-box stores.

• Quality crunch: Despite a continued "flight to quality," LA’s Class A office market is softening, with vacancies hitting 24% in Q1 as major tenants downsize rather than exit top-tier space. 

• Foreclosure fallout: RFR lost 285 Madison Avenue to mezz lender Daol in a UCC foreclosure, as debt pressure and falling valuations pushed the Midtown tower underwater.

• Tourism slump: NYC’s hospitality sector is feeling the sting of a sharp decline in Canadian visitors, its second-largest foreign tourist group, as border travel dips amid political tensions.

• Vegas visionary: Vici Properties CEO Ed Pitoniak, a former magazine editor, has turned storytelling into strategy, building the nation’s largest gaming REIT.

📈 CHART OF THE DAY