In the News
Elon Musk-led Department of Government Efficiency pushes return of full workweek for federal workers
Elon Musk, co-leader of the newly formed Department of Government Efficiency, plans to enforce a full five-day workweek for all federal employees as part of efforts to slash government spending and regulations. Musk and fellow Trump administration adviser Vivek Ramaswamy argue that work-from-home policies are an expired “privilege” and that requiring in-office presence could lead to voluntary terminations, potentially reducing the federal bureaucracy by 25%. This initiative aligns with Musk’s commitment to cut at least $2 trillion from the annual U.S. budget and reduce the number of government agencies. However, the proposal faces opposition from government employee unions and may conflict with the federal government’s ongoing efforts to reduce its leased office space, particularly in Washington D.C., where office vacancy rates have reached record highs.
This Miami condo tower to use sun-absorbing glass to stand out
Miami developer Ytech has begun construction on The Residences at 1428 Brickell, an 860-foot luxury high-rise partially powered by solar energy through a “solar backbone” of 500 photovoltaic-integrated windows. This innovative 70-story tower will generate up to 175 megawatts of clean energy annually, reducing carbon emissions by 4,700 tons without relying on tax incentives. Featuring 195 fully furnished units priced from $3 million to $60 million, the project caters to Miami’s growing demand for larger, high-end condominiums. With over 50% of units presold, the building will include wellness-inspired amenities and is set to open in 2028, contributing to Miami’s status as a “vertical city.”
Blackstone to buy Jersey Mike’s, the latest private-equity takeover of a US restaurant chain
Blackstone, a major private equity firm, has agreed to acquire a majority stake in Jersey Mike’s Subs for around $8 billion, aiming to accelerate the sandwich chain’s expansion. Jersey Mike’s, the second-largest U.S. sandwich chain with over 3,000 locations, plans to leverage Blackstone’s expertise in growing franchise businesses to enhance U.S. and international growth, as well as invest in technology and digital transformation. Despite challenges in the restaurant industry, franchisors like Jersey Mike’s continue to attract investors due to their strong cash flow and growth potential. Founder and CEO Peter Cancro, who has led the company since 1975, will retain a significant stake and continue managing operations. The deal reflects Blackstone’s broader strategy of investing in high-growth franchises, adding to its recent acquisitions in the dining and hospitality sectors. Completion is expected in early 2024.
Washington Post joins corporate America in return of five-day office mandate
The Washington Post has announced a return to a five-day in-office workweek starting next year, ending its remote and hybrid policies established during the pandemic. Publisher Will Lewis emphasized the importance of in-person collaboration, stating that the company thrives on “great office energy.” Managers are required to return by February 3, 2025, while all other employees will follow by June 2. This shift aligns with similar policies from major companies like Amazon, which also recently mandated full-time office attendance. The move has faced criticism from the Washington Post Guild, which argues that it may disrupt productivity rather than enhance it.
Here are six notable housing-related measures voters decided this week
Voters across several states and cities made significant decisions regarding housing and property taxes during the recent Election Day. In Charlotte, North Carolina, residents approved a $100 million bond for affordable housing and an additional $62 million for neighborhood enhancements. Meanwhile, North Dakota voters rejected a proposal to change local funding structures for public services, and Arizona passed a measure allowing homeowners to seek tax refunds if local governments fail to address nuisances associated with homelessness. Additionally, Rhode Island voters approved a $120 million allocation for affordable housing, while Florida homeowners supported an amendment to adjust property tax exemptions annually for inflation. In Denver, however, a proposed $100 million bond for affordable housing did not gain enough support.
Bosses Are Calling Workers Back to the Office. That’s Good News for Landlords.
The U.S. office market shows signs of stabilizing as more companies, including Amazon and Dell, call employees back to the office, with one-third of firms now requiring in-office attendance five days a week. This shift has benefited landlords, particularly as newer, amenity-rich spaces attract higher occupancy. Although office vacancies remain high, at 13.8%, and distressed office loans are rising, the demand for well-located and modern properties is improving. Some firms, like HSBC, report increased attendance in newly upgraded spaces, while investor interest in distressed properties is also growing amid a modest recovery in the sector.
Southwest Florida Witnesses Record-Breaking Industrial Sale
McGarvey Development Company, a comprehensive construction and real estate firm, sold Centerlinks Business, which includes nine industrial warehouses. Totaling 453,940 square feet on 41 acres, the park is located at 16770 Oriole Road in Fort Myers. The business park sold for $92.5 million. The property was purchased by EQT Exeter, a company with over 30 years in the industry and a portfolio exceeding $30 billion in managed real estate assets. The private equity company has now broken Lee County’s industrial sales record.
Hurricane Milton’s commercial property threat; Government mulls Google breakup; Strike brings light toll on ports
Hurricane Milton threatened over $1 trillion worth of commercial property in Florida, with more than 235,000 properties at risk of exposure to dangerous winds. The storm’s path included 44,122 industrial spaces, 78,916 retail properties, 42,387 office buildings, 64,857 apartment buildings, and 5,056 hotels. While initial worst-case estimates projected up to $175 billion in losses, the actual damage was less severe, with preliminary estimates forecasting losses and cleanup costs of $75 billion. The storm’s impact was particularly significant for the lodging sector, with many hotels forced to shut down temporarily and offer free cancellations.
Commercial real estate industry grows more upbeat, NAIOP survey finds
The commercial real estate industry is showing renewed optimism, according to a NAIOP survey, as professionals anticipate favorable borrowing conditions and increased deal activity over the next year. Following a challenging period due to rising interest rates, respondents are optimistic about metrics like occupancy rates, rents, and the availability of equity and debt, with industrial properties expected to be the most active, followed by multifamily and data centers. However, the outlook for the office sector remains negative, and concerns about the upcoming U.S. presidential election add uncertainty to the market. Overall, expectations of declining interest rates are seen as a key factor driving this positive sentiment.
Shopping Center Owners Take Advantage of Rare Leasing Opportunity
After years of sluggish performance, retail property landlords are now benefiting from record-high rent spreads due to tight space availability and strong tenant demand. Following declines after the Great Recession and challenges during the pandemic, retail rents have surged, with new leases seeing increases of up to 35% over expiring ones. Sun Belt markets, such as Nashville and Tampa, have led the growth, with retail rents rising by 70% over the past decade. Though the pace of rent growth has slowed recently, the low availability of space and continued demand suggest that rents will remain elevated for the near future.
Weak demand hampers commercial property price growth
Commercial property prices are struggling due to reduced tenant demand, despite an expected interest rate cut from the Federal Reserve. Prices are projected to remain flat at best until tenants start leasing more space than they are vacating. Over the past year, there has been a drop in demand for office, industrial, and retail space combined, with an estimated 13.2 million square feet more emptied than newly leased in the 12 months ended in August. The value-weighted index for high-dollar deals increased slightly in August, while the equal-weighted index for lower-priced deals fell, indicating mixed reactions in different market segments.
Invitation Homes to pay $48 million settlement for what FTC calls ‘deceptive tactics’
Invitation Homes, the largest U.S. single-family rental landlord, settled a $48 million case with the FTC over allegations of deceptive practices, including hidden fees, unfair eviction policies, and improperly withholding security deposits. The settlement, aimed at refunding harmed renters, requires the company to improve transparency in lease pricing and security deposit handling. The FTC alleged Invitation Homes overcharged renters with undisclosed fees and engaged in unfair eviction practices during the COVID-19 pandemic. Despite the settlement, Invitation Homes maintains it committed no wrongdoing and continues to focus on improving customer experiences. This case highlights growing scrutiny of corporate landlords amid rising housing costs.
Here’s how Macy’s strategy of leaving malls, selling stores plays out in Georgia
Macy’s is actively reshaping its retail strategy by selling off its department stores in Georgia, notably including the recent sale of its Gwinnett Place Mall location for $16.5 million to Gwinnett County, which plans to transform the area. This move aligns with Macy’s broader initiative to exit traditional mall spaces and focus on smaller-format stores, aiming to adapt to changing consumer behaviors and enhance profitability. The company is leasing back the sold location, allowing it to maintain a presence while reducing its real estate footprint.
Atlanta skyline office tower could get some of the highest apartments in US Southeast
By Paul Owers CoStar News Summary: The Georgia-Pacific Center in downtown Atlanta is set to undergo a major transformation, converting its top floors into more than 400 rental apartments, making them among the highest in the U.S. Southeast. The redevelopment will also...
Invitation Homes spends $216 million on build-to-rent projects in 60 days
Invitation Homes, the largest single-family home landlord in the U.S., reported over $200 million in investment activity in the third quarter of 2024. The company entered agreements to acquire 580 homes in Tampa, Denver, and the Carolinas, most of which were already completed. The acquisitions underscore the company’s strong relationships with homebuilders, as it continues to grow its build-to-rent portfolio, with plans to invest $1 billion in home purchases in 2024. Additionally, Invitation Homes secured a new $3.5 billion credit facility to refinance previous debt at a lower interest rate. Despite potential slowdowns in build-to-rent construction, Invitation Homes sees ongoing demand in its markets, driven by a lack of housing supply.
Convenience store and gas station owner Parkland to sell Florida portfolio
Parkland, a Canadian fuel supplier and convenience store owner, is selling its Florida business, including 100 retail locations, as part of its strategy to divest non-core assets. This move aligns with the company’s broader goals of organic growth, cost reduction, and supply chain optimization. Despite challenges in the U.S. market, particularly in fuel volume declines and job cuts, Parkland aims to focus on higher-return opportunities and maximize shareholder value. The Florida sale is expected to be completed over the next 12 to 18 months, with no broker yet identified. Parkland’s U.S. retail portfolio will be cut in half following the sale.
Atlanta commercial real estate sales jump nearly 20% year over year
Atlanta’s commercial real estate market saw a nearly 20% increase in investment sales volume in Q2 2024 compared to the same period in 2023, despite overall transactions lagging behind pre-pandemic levels. Growth was driven by multifamily and retail sectors, with multifamily sales rising 29% and retail up 37%. However, office sales declined by 10%. Out-of-state investors, accounting for over 80% of buyer volume, played a significant role in the market. While multifamily sales remain lower than historical averages, retail transactions have surpassed pre-pandemic levels. Rent growth has slowed, and capital market challenges continue to limit deal activity.
Growing PulteGroup plans 55-and-over development in coastal Georgia
PulteGroup, a major U.S. homebuilder, is planning a 55-and-over development with around 700 homes near Savannah, Georgia, under its Del Webb brand. The community, called Heartwood, will feature resort-style amenities, including a 9,000-square-foot clubhouse, pools, pickleball courts, and a full-time lifestyle director. PulteGroup anticipates opening a sales center in spring 2025, with homes starting in the $400,000s. The company expects growth of 5-10% in 2025, driven by a nationwide housing shortage and potentially lower interest rates. PulteGroup sees these factors as opportunities to increase sales despite current high mortgage rates.
Residential Real Estate Industry Sees Benefits Emerging From ‘Organized Chaos’ of New Compensation Rules
By Moira Ritter CoStar News Summary: The residential real estate industry is quickly adapting to new compensation rules, which have disrupted traditional practices. These changes, stemming from a legal settlement, require buyer brokers to have signed agreements with...
Federal home loan banks push back against increases to affordable housing grants
By David Holtzman CoStar News Summary: Critics argue that the federal home loan banks are not doing enough to address the housing crisis, despite generating $725 million last year for affordable housing. The 11 banks resist efforts to increase their...
REIT Tells Steward Health To Pay Rent or Leave, Sparking Debate on Hospital Property Use
Steward Health Care System, once the largest for-profit private U.S. hospital network, is embroiled in a legal dispute with its largest landlord, Medical Properties Trust (MPT), over unpaid rent. MPT, which owns nearly all of Steward’s U.S. hospitals, has demanded that Steward either pay rent or vacate the properties, as Steward navigates Chapter 11 bankruptcy. The dispute, which has sparked legislative debate and led to severe maintenance issues at some hospitals, highlights the financial struggles of both entities. Steward seeks to sell its operations, but MPT claims that Steward is unfairly trying to shift real estate value to its own benefit. The conflict has stalled hospital sales and has broader implications for hospital ownership and real estate investment in healthcare.
US House Prices Hit Another All-Time High
U.S. house prices hit a record high in June 2024, marking the fourth consecutive month of increases, with the S&P CoreLogic Case-Shiller Index showing a 5.4% annual rise. Despite the historical peak, the growth in home prices has slowed for the third consecutive month, as seen in both national and metropolitan indices. Economists suggest that while inflation and housing have decelerated, home prices remain significantly above historical norms. The Federal Housing Finance Agency’s data also indicates a slowdown in house price growth, likely influenced by increasing housing inventory and high mortgage rates. The effects of recent interest rate cuts by the Federal Reserve may be reflected in future reports.
Mortgage Applications Hit Highest Level Since 2023 as Borrowers Take Advantage of Easing Rates
Mortgage applications have surged to their highest level since January 2023 as borrowers take advantage of easing mortgage rates. The Mortgage Bankers Association reported a 17% increase in applications for the week ending August 9, driven by a 35% jump in mortgage refinances, which are up 118% from a year ago. The average 30-year fixed-rate mortgage dropped to 6.47%, its lowest level since May 2023, sparking renewed interest in both refinancing and new home purchases. Economists expect this trend to continue, especially if the Federal Reserve cuts interest rates in the near future.
Hyatt Nears End of $2 Billion Hotel Asset Sale Plan, Plans Brand Acquisitions
By Sean McCracken Hotel News Now Summary: Hyatt Hotels Corp. will remain active in the transactions market after completing a $2 billion hotel sales commitment. CEO Mark Hoplamazian highlighted the focus on strategic partnerships and acquisitions of hotel brands or...
Blackstone Alone Could Take CMBS Issuance Higher, Loan Downgraded on Twin Chicago High-Rises, Retail Property Values Fall Furthest Among Distressed Loans
Blackstone’s activities have the potential to significantly boost the issuance of commercial mortgage-backed securities (CMBS). Meanwhile, a loan for two high-rise buildings in Chicago has been downgraded, reflecting issues in that market. Additionally, retail property values have experienced the steepest declines among distressed loans, indicating ongoing struggles in the retail sector.