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Industrial may be preparing to steal its crown back. For the last two years, U.S. industrial real estate has been in correction mode as it came off the highs of the early pandemic. The story since 2022 has been oversupply and a slowdown in demand. But CoStar data shows that tenant activity is picking up again, and the company is forecasting vacancy will peak in Q1 2025. Don’t start partying yet — the worst is not behind industrial, and most of Q2’s numbers aren’t anything to celebrate. New deliveries were more than three times the amount of tenant demand, pushing U.S. vacancy up 30 bps to 6.5%. Rents stayed flat over the quarter. Cities like Atlanta and Miami are still seeing vacancy rates surge. But CoStar sees positive signs. Net absorption rose (barely) for the first time since late 2022. Consumer spending on retail goods rose, a leading indicator for warehouse demand. Imports rose at least 9% in each of the last four months. CoStar’s preliminary data shows industrial leasing rose 12% year-over-year in Q2, and groundbreakings are down 30%. Prologis is also feeling better about the market and said on its Q2 earnings call that it is looking to buy up to $1.5B this year, a nearly 67% increase from its previous projection. That is in line with a general resurgence in industrial investment sales activity that began in Q1. So is industrial back? Not yet. But it’s starting to turn its armies back toward the throne. — Catie Dixon, Jay Rickey, Mark F. Bonner 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. |
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On Our Radar
The SEC approved ethereum ETFs. It's a major step forward for cryptocurrency in mainstream finance. The approval comes with a $9.3B conversion by Grayscale Investments and new entries from major players like BlackRock and Fidelity. Trading has already started. Ethereum has been emerging this year as CRE’s preferred cryptocurrency. U.S. home sales declined as prices hit a record high. Existing home sales in the U.S. decreased by 5.4% in June to a seasonally adjusted annual rate of 3.89 million. Meanwhile, the median sale price rose 4.1% year-over-year to a record $426,900. Inventory increased slightly. It’s a huuuuuge day for real estate earnings calls. Invesco, Equity LifeStyle Properties, MSCI, Moody’s Corp., Alexandria Real Estate Equities and CoStar round out the day for commercial real estate companies. And some other big companies with potential real estate implications are also reporting — namely Microsoft, Alphabet and Tesla. Will European bank earnings hold up under the microscope? Euro bank shares have risen 20% this year. Spain’s Santander, France’s BNP Paribas, Germany's Deutsche Bank and Italy’s UniCredit, among others, will be watched closely this week to see if those stock prices will be supported by sound financial outcomes. In February, fears about their U.S. real estate positions were holding them back. And here come the U.S. banks … Capital One, Banc of Hawaii, Banc of California, National Bank Holdings Corp. and Peoples Bancorp will hold their earnings calls today. Dirty Pop: The Boy Band Scam limited series premieres on Netflix today. Look for a rehashing of the drama between crooked manager-slash-blimp mogul Lou Pearlman and his clients, NSYNC and the Backstreet Boys. NSYNC eventually sued him and made the “diss album” No Strings Attached. This Morning's News DEVELOPMENT — Silicon Valley’s Ambitious New City Project Stalls (NYT): Tech billionaires' plans to build a new city about 60 miles from San Francisco will be delayed at least two years. What’s the hold-up?
FINANCE — Activist Indaba Targets Equity Commonwealth (Bloomberg and Indaba): Indaba Capital has taken a 3% stake in REIT Equity Commonwealth and is urging the company to halt its major acquisitions and consider liquidation. Get more information and see Indaba’s release.
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Wikimedia Commons/TechCrunch
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DATA CENTERS — Sam Altman Explores Launching Company To Build Data Centers For OpenAI (Bisnow): OpenAI founder Sam Altman intends to form subsidiary companies to buy land and build its own data centers that OpenAI would rent. The strategy is part of the company’s push to develop its own AI chips. See Sam’s plans.
HOUSING — ‘Wolf Of Airbnb’ Sentenced To 4 Years For Rental Fraud (BNN Bloomberg): Konrad Bicher, the self-styled “Wolf of Airbnb,” was sentenced to 51 months in prison for conducting a widespread rental fraud in New York City. Learn about the scam.
DEVELOPMENT — $7B Redevelopment Planned Around Chicago's United Center (Bisnow): The owners of Chicago's United Center — the 30-year-old home to NBA’s Bulls and NHL’s Blackhawks — have set the stage for a new $7B development project that will include 55 acres of housing, entertainment facilities and retail. Learn what they have planned.
Today’s Deep Dive: Money Flows To Harris, But Some Of Biden's CRE Backers Are Skeptical |
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Wikimedia/Public Domain
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Vice President Kamala Harris got a huge influx of campaign donations in the 24 hours after President Joe Biden pulled out of the election. Two real estate executives who previously backed Biden told Bisnow on Monday they plan to continue supporting Harris with their checkbooks. But some industry leaders stopped short of throwing their support behind the California Democrat, saying they favor an open convention and a candidate with more centrist views. Walker & Dunlop CEO Willy Walker, who has supported Democrats in the past but doesn’t appear to have made donations this campaign cycle, said he had called for Biden to step down but doesn’t like how quickly the party has coalesced around Harris. “I am very disappointed that the Democratic Party has rushed to coronate Kamala Harris rather than run a process,” Walker wrote in an email to Bisnow Monday. “The Democrats have the real opportunity to nominate a more centrist candidate who could attract disenfranchised real Republicans (smaller government, free trade, collaborative foreign policy) and they have decided not to.” Here’s what CRE execs have to say (and what talking their wallets are doing for them) about the potential of a Harris presidency. Read the full story here.
LEGAL — Michael Shvo Dismisses $600M Lawsuit As Rent Reduction Tactic (New York Post): Developer Michael Shvo has responded to a $600M lawsuit filed against him by an exclusive club, calling it “vicious, unfounded” and a manipulative effort to force rent reductions. See Shvo’s response.
INDUSTRIAL — KKR Secures $571M Refinancing for Industrial Properties (CoStar): KKR has refinanced its 6.7M SF, 42-property industrial portfolio, securing $571M in a single-borrower CMBS loan. Read more about the loan.
RETAIL — Big Lots Closing 10% Of Stores (CoStar): Through searches on its website, online sleuths have discovered that Big Lots is closing 10% of its stores. The company operates about 1,400 stores occupying nearly 47M SF of space, which analysts believe will be leased quickly due to the tight retail property market. Get more details on the closures.
HOUSING — Home Prices Drop In Pandemic Hotspots (Markets Insider): Home prices are projected to fall by 15% in areas that boomed during the pandemic, according to Reventure CEO Nick Gerli. See where the declines may be coming.
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OFFICE — REPORT: Former Phoenix Suns Owner Looking To Buy Former Groupon HQ (Bisnow): Former Phoenix Suns owner Jerry Colangelo is reportedly looking to buy the former Groupon headquarters in Chicago. The property, located in the River North neighborhood, offers significant potential for redevelopment and investment. Learn more about this potential acquisition.
RETAIL — LVMH Founder’s Buyout Firm Makes £1.5B Investment In Retail Property Powerhouse (Bisnow): Bernard Arnault, founder of luxury conglomerate LVMH, has made a $1.5B investment in Value Retail through his buyout firm, L Catterton. It purchased a 25% ownership stake in Value Retail from Hammerson, including nine outlet malls and retail villages throughout Europe. See what the transaction entails.
DATA CENTERS — Lawmakers Scrutinizes FERC Over AI Data Center Energy Consumption (Data Center Dynamics): Leaders in Congress are asking the Federal Energy Regulatory Commission to explain how it plans to cope with growing electricity demand from AI data centers. Read more.
INVESTMENT — Alexandria Real Estate Equities Beats FFO Estimates (Zacks Equity Research): Alexandria Real Estate Equities has now surpassed consensus FFO estimates three times in the last four quarters. Dive into Alexandria's A2 results.
LEGAL — Invitation Homes Reaches $20M Settlement Affecting 35 California Cities (Bisnow): Invitation Homes is settling a case alleging it and its contractors didn’t pull necessary permits to renovate the 12,000 single-family rental portfolio it has amassed in California. Invitation Homes is the SFR arm of Blackstone and it admitted no fault in the case. Get the details on the lawsuit.
POLITICS — Kamala Harris And Real Estate Appraisals (Propmodo): Vice President Kamala Harris may prioritize initiatives to ensure fairness in real estate appraisals after launching an initiative last year to combat racial disparity in home appraisals. See what she’s done already.
MULTIFAMILY — Freddie Mac Forecasts Modest Rent Growth In Multifamily Sector (Freddie Mac): Freddie Mac's Midyear Outlook for 2024 predicts a slowdown in rent growth within the multifamily sector, with pandemic boom markets seeing the greatest declines. Dig into the predictions. *** 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. |
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