| | | | | | | | | | We’ve got a whole bunch of bad news below (spoiler: consumer confidence is NOT good), but we’ll start you off with something positive: JPMorgan is directing its investors toward REITs. JPM’s reasons, as laid out in a research report it released this morning: Real estate stocks are outperforming — the MSCI U.S. REIT Index is up 1.1%, compared to the S&P 500 being down 1.6%. Fundamentals are stable — NOI growth is holding steady at 3%. Deals are picking up, which means REITs can start making plays to boost revenue. REIT valuations look pretty good compared to the alternative — share prices as a multiple of funds from operations are a 20% discount to the S&P 500's earnings-per-share multiple.
“When combined with interest rates (i.e., the 10-year Treasury yield) moving lower, the defensive qualities of CRE and real estate stocks has started to stand out more,” the firm said. | | | | | | | | Bisnow reported this month that CRE is getting more hopeful that deal flow is about to pick up as real estate stocks outperform and weakening bonds could push more investors toward property as an inflation hedge. JPM said the best bets today are the brokerages and owners of net lease, office and shopping center properties. (Yes, office. It said it’s a recovery play at a bargain.) The bank said it isn’t getting a flood of calls from generalist investors yet asking for intel on CRE, but it expects that is around the corner if the economy worsens and corporate earnings fall. The gist is that everything else getting worse could work in CRE’s favor. A win is a win. — Kayla Carmicheal, Jay Rickey, Mark F. Bonner and Catie Dixon Not getting The First Draft in your inbox? Click here to sign up. Got any feedback or want to send us a mailbag letter? Email first...@bisnow.com. CRE News Quiz Last week, Hines raised a $1.4B debt facility from a group of banks. What are the plans for the funds? (Answer at the bottom.) On Our Radar Consumer confidence is at a 12-year low and in recession warning territory. The Conference Board said this morning its Consumer Confidence Index fell 7.2 points. The Expectations Index, which measures short-term outlook for income, business and the labor market, declined 9.6 points to 65.2, the worst since 2013 and “well below the threshold of 80 that usually signals a recession ahead.” Consumers expressed fears about their future financial situations, citing inflation, trade and tariffs concerns. Fewer people said they intend to buy homes and cars, but more said they expect to buy big-ticket items like appliances and electronics. Retail has been a high point for CRE of late — is its momentum at risk? This was supposed to be a big year for M&A, but it isn’t turning out that way. Deloitte was among the analysts predicting that CRE would be the beneficiary of a global increase in mergers and acquisitions in 2025 as companies looked to shore up their talent, tech and operational capabilities. But globally, Q1 M&A deal count was at its lowest level in 20 years, Mergermarket said today, attributing it to a slowing economy and tariffs creating uncertainty and shaking up valuations. North American real estate acquisitions came in well below Q1 2024, though construction M&A rose slightly YOY. European M&A is growing more quickly, with Care REIT’s take-private and Blackstone’s £470M bid for Warehouse REIT among the major deals happening across the pond. JLL bought Javelin Capital, showing CRE is still spending on clean energy. Javelin is a specialist investment bank focused on the renewable energy sector, and JLL said its addition allows it to support clients through clean energy transitions. Clean energy has been expanding — last year, solar and wind generated more electricity than coal for the first time — and power crunches from data centers are leading developers to get more creative about using renewable energy. A 50,000-acre data center announced yesterday in Texas will be entirely off-grid and fueled by hydrogen. But President Donald Trump is leaning in to coal, looking to build hundreds of coal-fired power plants and loosening environmental regulations on them — a move the data center industry is mostly cheering. The solar industry fears that without federal support, including generous tax credits, it will be left behind in CRE. JLL’s move shows there is still institutional support for green initiatives, so it is yet to be seen what impact an antagonistic administration will have. CRE’s quantum leap. Quantum computing is an emerging AI tech that could upend the way CRE does business. Brokers told Bisnow complex problems like optimizing portfolios or predicting tenant behavior might be solved in a matter of minutes as systems consider thousands of variables at once.
City Spotlight: Las Vegas' Southwest Office Submarket | | | | Google Maps | | | | | | | | Our teen years were awkward and uncomfortable with an unfortunate bangs phase. But “adolescent” office submarket Southwest Las Vegas is thriving, according to Newmark’s Winning Office report released this morning. Newmark named Southwest Las Vegas one of the top three emerging office corridors in the country based on occupancy, inventory and asking rent increases over the past decade. Southwest Vegas sits between Henderson and Summerlin and is Sin City's primary office hub, with mostly low-rise projects. It has an 8.3% total vacancy rate, the lowest among the surveyed submarkets, as businesses flock to the area’s population growth and expanding retail market. This Morning’s News OFFICE — GSA Releases New List Of Properties Slated For 'Accelerated Disposition' (Bisnow): Almost three weeks after the GSA posted 443 properties planned for disposition, then taking it down, the agency has posted a new list of buildings. There are now eight properties slated for “accelerated disposition” that total 2M SF. Read more here.
INDUSTRIAL — REPORT: Hyundai To Invest $20B In U.S. Manufacturing (Bisnow): The South Korean automaker is planning a $5B steel plant in Louisiana and an automotive plant in Georgia. These new builds are part of a $20B U.S. onshoring investment. Read more here.
| | | | | | | | SmartStop Self Storage | | | | | | | | INDUSTRIAL — SmartStop Self-Storage Seeks $972M In REIT Listing (Bloomberg): SmartStop Self Storage is aiming to raise up to $972M through a REIT listing on NYSE. The firm owns or manages 208 stores across the U.S. and Canada. Read more here.
TARIFFS — Blackstone’s Jon Gray Warns Against Knee-Jerk Reactions To Tariffs (Bloomberg): Gray said he thinks the economic outlook is “not so bad” and that investors pausing to see how tariffs play out may be overreacting. Still, he recommended caution rather than “super confidence.” Read more here.
REITs — Green Street Says Investors Should Remove Paramount Board Members (Crain's): Green Street Advisors is recommending investors in Paramount Group remove several board members after news broke that the REIT's CEO received undisclosed perks even as the office landlord delivered poor results for investors. Read more here.
| | | | | | | | Wikimedia Commons/SA 4.0 | | | | | | | | RETAIL — Forever 21’s Bankruptcy Is Surprisingly Good News For Mall Owners (WSJ): High-end malls are reaching full occupancy and see rents rising. Leasing is even picking up in second-tier malls as retailers vie for limited space. Read more here.
TOURISM — Canadians Boycott American Vacations (WSJ): Canadians made more than 20 million visits to the U.S. last year. A boycott threatens to upend local U.S. economies. A 10% reduction in Canadian travel would equal roughly $2B in lost spending and 14,000 job losses. Read more here.
INFRASTRUCTURE — Cuts Imperil Progress (NYT): There have been notable improvements in U.S. infrastructure, but a report by the American Society of Civil Engineers warns that proposed federal budget cuts could jeopardize these advancements. The nation’s ports received the highest grades among all types of infrastructure. Read more here.
| | | | | | | | Pexels/Sora Shimazaki | | | | | | | | OFFICE — Law Firm Leasing Outlook (Colliers): Financing constraints are limiting some landlords' ability to offer law firms competitive incentives, leading some to favor renewals over relocations. Read more here.
PEOPLE — Crown Castle Fires CEO (WSJ): Crown Castle has terminated its CEO following the sale of several business segments. The REIT’s previous CEO retired in December 2023. Another former CEO, Ted Miller, has nominated himself and three others to the board. Read more here.
LIFE SCIENCES — Biogen Signs 585K SF Headquarters Lease (Bisnow): Prominent biotech company Biogen is consolidating its Cambridge operations with a new lease in Kendall Square. Biogen plans to move into what will be its new global HQ in 2028. Read more here.
HOUSING — KB Home Stock Drops After Q1 Earnings Miss, 2025 Guidance Cut (Seeking Alpha): KB Home's stock price fell 9.2% after hours following a miss in Q1 earnings and a reduction in revenue guidance for 2025. The company announced a new CFO and adjusted its revenue forecast for FY2025 to between $6.6B and $7B, citing slower than expected demand. Read more here and here.
SPORTS — Major League Teams With A Minor Problem: No Stadium (WSJ): Real estate sagas that won't end mean two Major League Baseball teams will spend the 2025 season shacking up in minor-league facilities. Read more here. *** So You’ve Come For An Answer Refinancing loans. The facility is split into a $650M senior unsecured revolving credit facility and a $700M senior unsecured term loan. The debt matures in March 2028 with two one-year extension options. *** The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from AI. We’d love your feedback! Email us at first...@bisnow.com. | | | | | | | | | | | | | | | | | | | | | |
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