| | | | | | | | | | Tariffs are on. Wait, they’re paused. Now they’re on. Well, maybe not all the tariffs. Well, how about none of the tariffs? It’s enough to make CRE dizzy, and dizzy people don’t do deals. CRE experts told Bisnow this week that pricing out projects is nearly unfathomable when trade policy shape-shifts by the hour. “The biggest takeaway of all of this is that we're all experiencing this major whiplash,” said Julie Workman, real estate attorney and partner at Chicago-based law firm Saul Ewing. | | | | “What's true today might not be true tomorrow, and it might not even be true tonight. Things are changing so much. The only thing that's been successful about this tariffs policy is causing uncertainty.” So, how is CRE navigating these economic crosscurrents? Apparently, with increased communication and more frequent reevaluations of costs — all of which are shifting the velocity of dealmaking and leading contractors to stockpile construction materials. Here’s what CRE players told us about their strategy in this breakneck economic policy environment: Trump’s Tariffs Roller Coaster Causing 'Major Whiplash' For CRE — Mark F. Bonner, Jay Rickey, Kayla Carmicheal 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 One of the largest franchises in the world, with 13,000 locations, this week announced its intention to IPO. Which one? (Answer at the bottom.) On Our Radar Real estate investment optimism is growing despite recession fears. JPMorgan now sees a 31% chance of a market downturn, nearly double its November estimate. Economic uncertainty has driven Treasury yields lower, making real estate more attractive. Moody’s Twinkle Roy told Bisnow: “Real estate has always been seen as an inflation hedge ... investors are going to look for higher returns, and that might shift capital from bonds to real estate.” While stocks slide, some REITs are gaining traction, with JPMorgan’s Anthony Paolone adding: “Suddenly what’s an underowned sector has landed on people's radar screens because of its defensive attributes.” CRE hiring slips as U.S. job growth slows and unemployment inches up. The U.S. added 151,000 jobs in February, below expectations of 170,000 but an improvement over January. The unemployment rate rose slightly to 4.1%. Healthcare led job gains (52,000), while retail (6,000) and hospitality (16,000) shed positions. Federal job cuts from Trump’s DOGE purge aren't fully reflected yet, but layoffs from canceled contracts and a hiring freeze may weigh on future reports. Bisnow’s SelectLeaders real estate job site reported a sharp 15.84% drop in new job postings in February. Texas? The undisputed renewable energy king? Despite its oil-rich reputation, Texas leads the nation in renewable energy, generating nearly double its next closest state in wind and solar. New U.S. Energy Information Administration data shows renewables power 22% of the U.S. grid, while coal has fallen to 15%. Texas’ secret? A competitive electricity market that drives renewable investment, unlike states with guaranteed power plant profits. Energy companies were the biggest driver of office demand in Houston last year, totaling 2M SF. Monetary must-see TV today: Fed Chair Jerome Powell speaks at 12:30 p.m. ET at the U.S. Monetary Policy Forum in New York. At 2:40 p.m. ET, President Donald Trump will sign a series of undisclosed executive orders, followed by remarks at a White House cryptocurrency summit. This comes after his executive order this week establishing a strategic bitcoin reserve. Soulless? Uninspired? The Onion is coming after you, Dallas CRE developers.
On The Charts: Office Rent | | | | Courtesy of CBRE | | | | | | | | Office lease concessions have fallen for the first time since CBRE began tracking them in 2019 and now sit at 8.9 months of free rent and $87.51 per SF of tenant improvement allowances. Effective rents for Class-A office buildings have risen 5.2% since 2023, which CBRE said is partially because landlords can afford to offer fewer concessions. Meanwhile, Class-B and C have fallen 1.2%, which CBRE also attributed to fewer concessions but said the reasons are gloomier: Owners of lower-tier properties can no longer afford to give pricey concessions and are lowering their base rents instead. This Morning’s News INDUSTRIAL — CMA CGM To Invest $20B In U.S. Logistics And Supply Chain (Bloomberg): French shipping giant CMA CGM is committing $20B to expand its U.S. maritime and logistics infrastructure over the next four years. Read more here.
RETAIL — Walgreens Goes Private In $10B Buyout Deal (NYT): Walgreens Boots Alliance has agreed to a $10B private equity buyout, one of the largest leveraged buyouts in recent history. It will retain the Walgreens/Boots name and maintain its Chicago HQ. Read more here.
INDUSTRIAL — Tesla, Honda Plot U.S. Manufacturing Moves (Bisnow): Tesla and Honda are altering their U.S. manufacturing plans in response to tariffs. Tesla announced a new 1M SF battery factory near Houston to produce its Megapack energy storage systems, and Honda is relocating the production of its Civic hybrid from Mexico to its plant in Indiana. Read more here.
| | | | | | | | Wikimedia Commons/Elvert Xavier Barnes | | | | | | | | DOGE — White House Plans To Close Dozens Of HUD Field Offices (Bisnow): HUD field offices in 34 states are on the chopping block. This move may violate federal law, which mandates at least one HUD office per state to process loan and mortgage insurance applications. Read more here.
HOUSING — GSA Puts CIA-Linked Housing Complex On Sale List (Wired): A classified complex tied to CIA operations was among the federal properties listed for sale by the GSA. Read more here.
RETAIL — On The Border Files For Chapter 11 (Nation's Restaurant News): Restaurant chain On The Border has filed for Chapter 11 bankruptcy protection. The chain had already reduced from 120 to 80 locations in the last year. Read more here.
MULTIFAMILY — Brookfield, NASH Expand Partnership To $1.6B (Bisnow): North America Sekisui House invested in five Brookfield master-planned communities, though financial details weren’t disclosed. Read more here.
PEOPLE — Construction Employment Sees Strong Growth (ABC): The construction industry added 19,000 net jobs in February and employment is up 2.1% YOY. Infrastructure and industrial projects remain key drivers. Read more here.
| | | | | | | | Google Maps | | | | | | | | LEGAL — AG Says RealPage Lawsuit May Be Dropped (Arizona's Family): Arizona’s attorney general said she fears the federal government may abandon its lawsuit against RealPage, the rent-setting software firm accused of using technology to coordinate rent prices with big apartment companies. Read more here.
MULTIFAMILY — New Leasing At One Of The Slowest Rates Ever (Redfin): Less than half of newly built apartments completed in Q3 were rented within three months, according to Redfin. That’s tied with the fourth quarter of 2023 for the lowest share on record aside from the start of the pandemic. Read more here.
MULTIFAMILY — Lenders Demanding More Personal Guarantees, Tougher Terms (Bisnow): NYC multifamily lenders are ending up with losses on their books from borrowers who handed them underwater properties. To curb this, lenders are adding more provisions into new loan originations to make it harder for multifamily landlords to relinquish ownership. Read more here.
PEOPLE — CenterPoint Announces New CEO (AJOT): Industrial real estate giant CenterPoint Properties has named current Chief Operating Officer Jim Clewlow as its next CEO after Bob Chapman retires on July 1. Read more here.
OFFICE — SBA Relocating Offices Out Of Sanctuary Cities (Scotsman Guide): The Small Business Administration is moving regional offices out of sanctuary cities. The move could impact local business support services and funding access. Read more here.
| | | | | | | | Bisnow/Ciara Long | | | | | | | | MULTIFAMILY — Behind The 'Battle' To Complete America’s Largest Conversion (Bisnow): 25 Water St., once the back office for JP Morgan Chase, is 10 floors taller than it once was. The white brick building now has 1,320 luxury apartments and 100K SF of amenities (pickleball, anyone?). It’s the largest office-to-resi conversion in U.S. history. Read more here.
HOUSING — Shame Helped Launch U.S. Housing Program (Bloomberg): Charlotte’s new housing initiative aimed at increasing Black homeownership highlights how public pressure can drive policy changes. Read more here.
MANUFACTURING — Prometheus To Build 550-Acre Rocket Motor Facility (ACMI): Defense contractor Prometheus Energetics is establishing a 550-acre headquarters and production site at the ACMI Campus in Indiana. The facility is part of a Pentagon-backed initiative to expand munitions production. Read more here.
AI — Could AI Reshape Real Estate Even More Than The Internet? (Fortune): AI will redefine the economy and remake urban landscapes, writes Brendan Wallace, CEO at Fifth Wall, who says real estate firms that invest in renewable energy generation and storage can unlock entirely new revenue streams. Read more here.
PEOPLE — Amy Heller Joins Meridian Capital (Meridian): Meridian Capital Group has tapped Amy Heller to revamp its senior housing and healthcare finance division. Heller most recently served as president and co-chief lending officer of the healthcare and HUD lending divisions at Forbright Bank. Read more here.
HOUSING — Flatiron Realty Capital Secures $1B (Flatiron): Flatiron Realty Capital has locked in $1B in credit facilities to provide financing solutions for luxury homebuilders. Read more here.
INVESTMENT — Netflix Co-Founder Bets Big On Utah’s Powder Mountain (WSJ): Reed Hastings, who bought a controlling interest in Powder Mountain's 8,000 skiable acres 18 months ago, wants to change the area’s fortunes with a private ski club. The key to membership is owning property. Read more here.
GOVERNMENT — Trump’s CHIPS Demand Sparks $52B Showdown (Politico): The microchip industry was confused about Trump's comment about the program being “horrible,” and multiple senators weren't sure what Trump was instructing Congress to do. Read more here. *** So You’ve Come For An Answer 7-Eleven. In an effort to avoid a $47B takeover from Circle K’s parent, the iconic c-store is spinning off from its struggling parent company, Seven & i. *** 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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