CBRE Buys Direct Line Global, Sonder's Snags Piling Up

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Jun 18, 2024, 11:47:23 AM6/18/24

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	One of the main sticking points in the Fed’s decision not to drop interest rates has been shelter inflation. The cost of housing rose 5.4% in May, above the 3.3% overall inflation rate. After a sharp and constant run-up in 2021 and 2022, apartment rents have been bouncing up and down since. Rents have held flat across the U.S. for the last 12 months, giving some hope that shelter inflation was next. But now prices are going up again. Commercial real estate has been saying for a while now that keeping interest rates high is actually worsening pricing and, well, keeping inflation high, which is keeping interest rates high — it’s a whole mess. And apparently Federal Reserve Chair Jerome Powell has come around to that line of thinking. “The housing situation is a complicated one,” he said after last week’s FOMC decision to hold rates steady. “The best thing we can do for the housing market is to bring inflation down so that we can bring rates down.” So apparently we’re in a chicken-or-the-egg scenario at this point. Where does that land everyone? ¯\_(ツ)_/¯ — Jay Rickey, Mark F. Bonner, Catie Dixon and Kayla Carmicheal Not getting The First Draft in your inbox? Click here to sign up. Got any feedback for us? Email first...@bisnow.com.

	On Our Radar Inflation, high interest rates weaken U.S. retail sales in May. Sales increased 0.1%, less than the 0.3% economists had predicted. The bottom line: Consumers are tightening their wallets. We’re psyched for eye-opening, illuminating Fed commentary this morning. First up is Federal Reserve New York President John Williams: “I expect interest rates to come down gradually over the next couple of years.” He (surprise) said the Fed needs more data. Lennar’s earnings call is underway. Its revenue beat expectations, but analysts are disappointed in the report, as it shows sluggish demand for new homes. Fellow homebuilder KB Homes is holding its Q1 call at 5 p.m. ET. It’s National Splurge Day. This week, our CEO graciously sent 12 Bisnow reporters and editors to Austin for the annual National Association of Real Estate Editors conference. Don’t worry, Gregg, we’re not going wild with the company credit card, but some great BBQ is in our future. #NAREE24 Today’s Deep Dive: Closures, Faulty Finances And Legal Challenges: Alt Hotel Company Sonder's Snags Piling Up
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	Things aren’t so hot over at short-term rental specialist Sonder. It is closing down 25% of its portfolio and faces at least two class-action fraud complaints. Its valuation plummeted from $1.9B when it went public in 2022 to $44M today. Sonder has yet to reach profitability and needs to get its financial reporting in order. What’s the likelihood it can get out of the red? Bisnow Los Angeles Reporter Bianca Barragán broke down all the pain points and what the road looks like from here. Read the full story here. This Morning’s News CBRE Buys Data Center Services Company (CBRE): Direct Line Global provides design, installation, maintenance and management solutions for data center owners and operators, primarily in the U.S., according to the release announcing the acquisition. Learn more about CBRE's newest acquisition. Prominent Developer Faces Racketeering Charges (CoStar): A high-profile New Jersey commercial real estate developer, George Norcross III, has been charged with racketeering related to acquiring tax breaks for various developments. Get more details. Shorting REITs (S&P Global): Medical Properties Trust stands as the most-shorted U.S. REIT stock, with SL Green not far behind. In contrast, REITs posted their strongest returns of the year in May. Read more about REIT performance so far. Red Lobster's Potential Financial Rescue (Bloomberg): Private equity firm Fortress is reportedly considering stepping in to save Red Lobster from bankruptcy. Here’s the latest on Red Lobster's future.

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	Crane Collapse Caused $83M In Damage To Luxury High-Rise (Bisnow): A crane at 550 10th Ave. in Manhattan caught fire and crashed into the Midtown West apartments, causing millions in damages and rendering certain units uninhabitable. A dozen people were injured. Get more details of the accident. Expedited Solar Developments (BNN Bloomberg): Advancements in robotics and specialized software are paving the way for new opportunities in solar farm development. Learn more about the rise in solar farms. Veris Residential Revises Strategy (Veris Residential): Veris Residential has withdrawn its public offering of common stock and terminated a planned multifamily property acquisition. Learn why. Data Center Developers Turn To Small Nuclear Reactors (Bisnow): In response to power reliability concerns, data center developers are increasingly reconsidering small nuclear reactors of less than 300 MW as a viable energy solution. Dive into the resurgence of small modular reactors. Is U.S. Employment At A Turning Point? (BNN Bloomberg): Economists at Goldman Sachs say the Q1 spike in inflation was likely an “aberration” and maintain their forecast for two interest rate cuts this year. Here's why Goldman's stance remains unchanged. U.S. Office Construction Trends Can Swing Wildly (CoStar): While there is a notable pullback in office construction across many areas, some regions continue to see development. Check out where.

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	Darden Restaurants' Strong 2024 (Placer.ai): All of Darden Restaurants — including some of the best-known names in casual, full-service dining like Olive Garden, LongHorn Steakhouse and Ruth’s Chris Steak House — reported growth in May. Dig into what's driving performance. Introducing CoStar’s New CFO (CoStar): Freddie Mac Executive Vice President and Chief Financial Officer Christian Lown will join CoStar Group as its chief financial officer starting July 1. Learn more about Lown's background. Trump Victory Could Affect Billions In Clean Energy (BNN Bloomberg): Bloomberg Intelligence says a Trump presidential victory could jeopardize $369B in clean energy incentives – grants, loans and tax incentives the Inflation Reduction Act is injecting into healthcare, utilities and clean energy industries. Get the details. The Big U.S. Retail Growth Overview (Northmarq): A new report from Northmarq highlights the latest trends in retail expansions for 2024, providing data on where and how the top 100 retailers are increasing their presence across various markets. Discover the changes in shopper behavior. Rape Allegations Rock Luxury Real Estate (New York Post): Allegations surrounding high-profile broker twins Oren and Alon Alexander from multiple women have led to a top lawyer severing ties with the accused. Read more here. C-Suite Shakeup At Rexford Industrial (Rexford Industrial): Rexford Industrial is promoting Laura Clark to chief operating officer and initiating a search for a new chief financial officer. Here's more about Rexford's leadership changes. PGIM Acquires Signature Senior Lifestyle (CoStar): PGIM Real Estate has purchased the real estate and operations of Signature Senior Lifestyle, a prominent UK-based care provider. Discover details about PGIM's new buy. *** 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 ChatGPT. We’d love your feedback! Email us at first...@bisnow.com. Was this email forwarded to you? Get on the distribution list here.

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