From urban convenience stores to experiential brand hubs, small-format retail spaces are redefining how businesses connect with customers as shoppers increasingly seek accessibility, personalization and efficiency.

These compact, strategically located stores—often grocery-anchored—are designed to enhance the shopping experience by offering curated product selections, seamless omnichannel integration and greater convenience.

Alex Nyhan, CEO of First Washington Realty—an investment management firm that specializes exclusively in grocery-anchored neighborhood retail and has a portfolio of 22.4 million square feet across 144 shopping centers—believes the increasing demand for flexible, small-format stores in key locations will continue to appeal to investors. Here’s what he told us about the retail trends influencing investment strategies in commercial real estate this year and beyond.

How are evolving market dynamics and technological advancements shaping the retail industry today?

Nyhan: All retail is not alike and the fates of neighborhood shopping centers and enclosed malls have diverged in recent years. Occupancy rates are higher for neighborhood shopping centers because they are around the corner and close to home, due to hybrid work, the rise of the omnichannel shopper and the flight of some tenants from mall formats to neighborhood centers.

Within the retail industry, tenants are getting more agile due to necessity. The reason they need to be more flexible is because there is very little vacancy and almost no new supply being constructed, and tenants want to be able to sell products from their stores but also fulfill online orders. If you are a tenant and you can pick between paying one landlord versus paying both a retail landlord and a warehouse landlord, many tenants prefer to just have the one landlord. As neighborhood shopping centers, we own the last mile.

In addition to flexibility on store size, tenants are also experimenting with AI. We are in the early innings, but I am excited about how AI can help our tenants deliver a better customer experience, manage inventory and possibly trim their cost-to-serve. These applications of AI should help tenants be more successful, which means we can be more successful.

How are retailers optimizing their store spaces to improve efficiency?

Nyhan: Retailers are always seeking ways to maximize the productivity of what happens within the four walls of their store. If they are able to be closer to the customer via a neighborhood retail center, the retailer will be able to maximize the throughput of online orders and facilitate experimentation of how to best optimize the space.

READ ALSO: How Rebuilding From LA’s Wildfires Is Impacting CRE

Tell us more about investor demand for your grocery-anchored neighborhood retail spaces. Is there enough product out there available for acquisition?

Nyhan: The grocery-anchored retail asset is in demand for institutional investors and we see that playing out through transactions like Blackstone’s purchase of ROIC. Institutional investors like grocery-anchored retail for the same reasons we have invested in the category since 1983: People go to the grocery store in all economic environments, people still spend money in neighborhood shopping centers during a pandemic or an inflationary period because neighborhood shopping centers offer essential goods and services needed for everyday life. Investors also like grocery-anchored retail because cash flows are attractive, going-in yields are reasonable on a relative basis and the supply-demand dynamics are favorable.

Regarding acquisitions, there is never enough high-quality product for institutional investors because ownership in the sector is fragmented and many individual owners prefer to hold their assets over a long time horizon. Because of this, credibility and relationships are the key factors driving a successful acquisitions strategy. We have invested more than $4.3 billion in centers in the last several years and have been averaging about $900 million of transactions each year—so we are quite familiar with the buying and selling dynamics of this subsector.

Why do you see smaller format retail as a strong long-term investment opportunity?

Nyhan: The demand for smaller format retail at neighborhood shopping centers has withstood the ‘stress test’ of a global pandemic and inflationary pressures. These resilient fundamentals drive our conviction that this is a very appealing subsector for investment and institutional capital.

In the end, our business is simple: Find good real estate, grow rents and the attractiveness of the center with our team’s operational expertise and manage the amount of capital we inject.

Can you share an example of a major acquisition that contributed to your growth in the small-format retail sector?

Nyhan: In 2022, we acquired the former Donahue Schriber Realty Group, which allowed us to expand our portfolio to more than 20 million square feet of retail space serving more than 3,600 tenants across 22 states and Washington, D.C. This move positioned us to be a leading private, open-air real estate investor and operator in the country, with over 150 high-quality neighborhood and grocery-anchored retail properties in communities across the country.

Acquiring this portfolio was a great success and pivotal growth moment for us since it gave us access to a large swath of well-performing small-format retail centers and allowed us to swiftly expand our team with experienced and highly qualified professionals.

Demand for experiential retail has also grown a lot over the past few years. Have you seen increased demand for such spaces across your centers?

Nyhan: Dynamic, experiential retail is key to our shopping centers. For our retail strategy to be successful, we need to stay on the pulse of the trends shaping the communities we serve. This means actively seeking out and bringing in retail tenants that curate interesting, lively and diverse environments—whether food and beverage offerings, recreational or educational activities. 

A good example of this is Level99, an interactive social gaming venue that we recently welcomed to The Corbin Collection, a shopping center we own in West Hartford, Conn. This first-of-its-kind destination offers a real-world, social challenge-based entertainment setting for adults featuring over 50 mental and physical challenges set in immersive artistic environments. In between fun and competitive play, customers can enjoy Detroit-style pizza, Connecticut-made beer and innovative cocktails at the adjoining Two Roads Kitchen & Tap restaurant. This tenant’s unique and playful approach supports our efforts to curate dynamic tenant mixes that drive meaningful activation and engagement at our centers.

Do you focus on specific regions for growth?

Nyhan: We are less concerned with particular regions or MSAs and focus more on the dynamics of the individual neighborhoods themselves. Our retail assets are usually located in well-populated areas with a highly educated demographic of consumers, thus making them more resilient amid economic shifts.

Speaking of shifts, is there any way you can ensure the resilience of your retail centers amid economic uncertainties?

Nyhan: We are not in the prediction business. We are in the business of owning and operating the best neighborhood shopping centers that do well when the economy is doing well and also when the economy is doing poorly. Our returns are not correlated in any material way with the performance of the broader market.

The post CPE Asks: What’s Driving Demand for Small-Format Neighborhood Stores? appeared first on Commercial Property Executive.

AST has officially opened Robert Wood Johnson University Hospital Ambulatory Medical Pavilion, a 229,000-square-foot medical outpatient building in New Brunswick, N.J. Robert Wood Johnson University Hospital, an RWJBarnabas Health facility, master-leases the property.

The developer broke ground on the project in October 2021, financing its construction with a $120.6 million construction loan from UMB Bank, according to CommercialEdge information. Jones Lang LaSalle Securities arranged the deal.

READ ALSO: Why MOBs Are Still a Strong Bet for Investors

Development partners included Torcon as general contractor, as well as Jarmel Kizel as architecture and mechanical engineering and O’Donnell & Naccarat as structural engineer. Langan Engineering provided civil engineering services. Kelso & Burgess provided legal land use services and Greenbaum, Rowe, Smith & Davis LLP legal transactional services.

The medical office real estate market is experiencing growth, a Savills report forecasting a 26 percent rise in outpatient demand over the next decade. This increase is primarily driven by the aging population, despite the current economic uncertainties affecting the commercial real estate sector.

Part of a larger campus

Located at 210 Somerset St., the facility is adjacent to the Robert Wood Johnson University Hospital campus and less than a mile from downtown New Brunswick. Newark Liberty International Airport is 24 miles away.

The medical facility features a ground-floor lobby with a café and a connection to the parking garage. Services at the Class A building include cardiovascular and neuroscience, plastics and reconstructive, as well as gastroenterology. The mid-rise also has an audiology center.

The 15-story building is part of the three-phase redevelopment of a 1.2-acre city block that began in 2006. Earlier phases included the construction of an 854-space parking garage and a 125,000-square-foot medical office building dubbed 10 Plum. That facility is also leased to RWJUH.

The post AST Opens New Jersey Outpatient Building appeared first on Commercial Property Executive.

Sterling Bay has secured $88 million in bonds in partnership with Piper Sandler Special District Group, a specialty financing firm, to begin infrastructure work this spring at Redtail Ridge—a 2.6 million-square-foot mixed-use life science campus in Boulder County, Colo.

Sterling Bay received final approval for the 389-acre Redtail Ridge innovation district in August last year, from the Louisville, Colo., city council. The developer acquired the site more than two years ago. The property had been vacant for more than 20 years and, prior to that, it served as the global headquarters of data storage firm StorageTek.

The first phase of Redtail Ridge’s horizontal infrastructure is set to begin in April. It is being designed in collaboration with architectural firm Perkins & Will and will be constructed by Mortenson. The initial phase is expected to be complete in 18 months, with the first delivery of buildings set to take place in late 2026, according to a Sterling Bay spokesperson.

The developer anticipates constructing two industrial and/or manufacturing buildings—one 95,000 square feet and the second 144,000 square feet—along with a 100,000-square-foot life science building in the first phase, the spokesperson told Commercial Property Executive.

Located along the U.S. 36 corridor between Denver and Boulder, Colo., the campus will also feature a 20,000-square-foot amenity center with a gym, yoga spaces, lounge, conference center and 20 miles of trails and dedicated open spaces. The site will also include a new home for the 160-bed AdventHealth Avista Hospital. The full build out is expected to take six years.

Mixed-use campus breakdown

The mixed-use campus development is designed to meet the growing demand for life science, R&D, biomanufacturing, office and industrial facilities in the region. It is expected to drive economic growth, foster innovation and expand opportunities for the life science sector in Colorado.

READ ALSO: Prism Places, McWhinney Plan Mixed-Use Districts Near Denver

Last year, Sterling Bay estimated that Redtail Ridge’s construction will generate $43 million in taxes and fees. Once complete, the campus is expected to provide $24.4 million annually in tax revenue, while projected annual retail sales might reach $144 million.

Plans call for six districts across the campus with built-to-suit opportunities available:

• Life Sciences District West—294,695 square feet of life science development with 825 parking spaces
• GMP/Industrial District—462,804 square feet of GMP development, 612,400 square feet of industrial development and 2,200 parking spaces
• Life Sciences District East—177,375 square feet of life science development with 492 parking spaces
• R&D District—123,722 square feet of R&D development with 390 parking spaces
• Office District—336,127 square feet of office space with 1,425 parking spaces
• Retail/Life Science—14,000 square feet of retail space, 111,646 square feet of life science development and 460 parking spaces

Proximity to bioscience programs

Redtail Ridge will benefit from its proximity to four bioscience programs at University of Colorado-Boulder, Colorado State University, University of Denver and University of Colorado-Denver. Colorado continues to solidify its reputation as an innovation destination due to the rapidly growing life science ecosystem and record-breaking private and NIH funding that has exceeded $9 billion over the past five years, according to Sterling Bay.

The campus will be within 30 miles of Denver International Airport, downtown Denver and Boulder. Nearby major life science companies include Agilent Technologies, Eli Lilly & Co., KBI Biopharma and Novo Nordisk.

The post Sterling Bay Secures $88M for Denver-Area Mixed-Use appeared first on Commercial Property Executive.

There are more than three times as many AI companies (825) in the Bay Area as the next most concentrated market, New York City, with 237.

Even more so, Cushman & Wakefield anticipates a 200 percent growth for GenAI companies over the next two years in the Bay Area. In its latest report, AI Genesis | The Role of Generative AI in Transforming Bay Area CRE, Cushman & Wakefield broadly defines AI and includes semiconductor companies and other tech companies deploying AI.

Last year, 82 percent of global Gen AI venture capital landed in San Francisco.

Robert Sammons, Cushman & Wakefield senior research director and co-author of the report, told Commercial Property Executive that what had primarily started in San Francisco proper has spread more recently across the Bay Area region.

“Silicon Valley is certainly in the spotlight, largely because of AI divisions at the Big Tech players that are headquartered there, but also increasingly because of standalone AI companies popping up in the area,” Sammons said.

Given the depth of tech talent in the Bay Area, the focus will likely remain within the region, he anticipates. “However, like most tech sectors in the past, the GenAI phenomenon will likely spread to other markets as well—we already see that in major global cities such as New York and London. Thus far, it’s the search for talent leading that charge, but in the future, it could be about cost savings.”

READ ALSO: Why AI Firms Are Taking a Measured Approach to Office Leasing

Sammons said what surprised him most about the report was the sheer number of GenAI companies based in the Bay Area region—from the very early seed stage to the later stage to divisions of Big Tech.

“It’s still overwhelmingly a Bay Area phenomenon,” he said. “Also surprising was that there was more GenAI leasing activity in Silicon Valley than in San Francisco in 2024 as well as more unique job postings in Silicon Valley than in San Francisco in 2024.”

An office market rebound

The concentration of artificial intelligence companies in the San Francisco Bay Area is helping drive a market rebound, being a catalyst to lift the region of its real estate downturn, according to Avison Young VP Tyler Paratte, based in the San Francisco office.

“The correlation between companies receiving funding and leasing office space has drastically improved, leading to increased office attendance, revitalizing downtown cores and creating expanded opportunities for adjacent industries as these companies grow.”

Paratte said San Francisco has historically been a boom or bust market, heavily dependent on the technology industry.

“Not only does the data show the market is recovering, but there’s also a shared sentiment of being on the precipice of a boom, with AI being the engine that renewed momentum in the Bay Area,” he said.

AI firms’ leasing activity

JLL also sees a heavy influx of AI-based companies. Its data focuses on firms dedicated to the AI vertical. According to Chris Pham, JLL senior analyst, the Bay Area’s dominance in AI is echoed in JLL’s research in leasing activity and job posting trends.

He told CPE that new AI deals in the Bay Area comprise nearly 40 percent of the AI deal count this year, primarily from new startups. San Francisco alone saw 30 percent of the deal count last year from AI startups. Monthly AI job postings have nearly doubled year-over-year as companies emphasize AI positions.

He said AI companies occupy different property types beyond just office space, which accounts for 49 percent of leasing activity. Lab space accounts for 23 percent, flex space for 10 percent and industrial for 18 percent.

“AI is centered mainly in the Bay Area, eclipsing all U.S. and global markets for several reasons, including that it has the highest location quotient for AI in the U.S. at 9.5 (meaning AI talent is 9.5x more concentrated compared to the national average).

The Bay Area has 20.2 percent of U.S. AI talent, far ahead of Seattle (9 percent) and New York City (7 percent). The Bay Area is also near major AI research institutions, innovation companies and venture capital.

“[The Bay Area] has a strong talent pipeline from local universities, including UC-Berkeley and Stanford which are among the top 5 institutions for AI graduates,” Pham said.

The Bay Area has been a proving ground for tech startups for more than 30 years, so we’re excited to see the growing demand for AI, Katy Redmond, JLL senior managing & tech sector lead of leasing advisory, told CPE.

“This growth is a leading indicator for optimism for other AI hub markets for startups and innovation, such as New York City, Seattle and Washington, D.C.,” she said.

In 2024, AI companies leased 420,000 square feet in New York City, including new secondary offices opened by San Francisco-based startups.

The post How Generative AI Is Reshaping Bay Area CRE appeared first on Commercial Property Executive.

CBRE Group’s Industrious has signed its newest location in Manhattan, Industrious Lex & E 50th St. Starting this fall, the flex office provider will occupy the entire second floor, spanning 20,000 square feet, at 560 Lexington Ave. in Midtown East. Cushman & Wakefield negotiated on behalf of the tenant, while landlord Rudin had in-house representation.

The new space will have 158 seats available for solo entrepreneurs, growing teams and established businesses. The amenity suite comes with a new café, lounge, conferencing area and outdoor space, currently created by Rudin within the tower.

The Lexington location will join Industrious’ other New York City spaces: Tower 49, at 12 E. 49th St.; Midtown on 50th St, at 135 W. 50th St.; Carnegie Hall, at 152 W. 57th St.; 1411 Broadway; Bryant Park off Fifth, at 25 W. 39th St.; 261 Madison; and Penn 1, at 250 W. 34th St.

Cushman & Wakefield’s Justin Halpern, Ed Wartels and Ben Bouganim assisted Industrious. Kevin Daly of Rudin represented building ownership.

A Midtown Manhattan office building

Built in 1980 and cosmetically renovated in 2015, the office building at 560 Lexington Ave. features floorplates averaging 17,204 square feet and 3,500 square feet of retail space, according to CommercialEdge information. The 22-story high-rise is easily accessible to public transit and Grand Central.

The tower is LEED Silver-certified and gold-certified by WiredScore, featuring a building operation system that optimizes it through AI to reduce emissions. The Class A property recently underwent a modernization program that involved creating a new lobby, adding new elevator cabs and constructing an on-site, glass-enclosed subway entrance for the nearby train station.

State of the NYC coworking market

CommercialEdge listed Manhattan as the top coworking market in the U.S. for total square footage as of February. Chicago and Los Angeles were the other two metros on the podium.

Michael T. Cohen, a principal with Williams Equities, which owns and operates approximately 3.5 million square feet of NYC office space, told Commercial Property Executive, “Coworking is back. Once again, it is part of the mix of tenants expanding into and absorbing office space in Manhattan.”

He added that the epoch of coworking firms “signing a market-rate lease and absorbing the lion’s share of the risk is gone for good.” Similarly, few New York City building owners have been willing to accept the so-called “management deals” under which they enjoy the “upsides and downsides.”

As such, the sophisticated coworking operators have developed new leasing models that involve sharing their profits and losses with the landlord, Cohen mentioned.

READ ALSO: Where’s the Coworking Sector Headed?

“WeWork appears to be making a comeback by leveraging its occupier relationships and taking space where it has a pre-existing commitment to fill. On the other hand, Industrious is exploiting the demand for office suite occupiers and landlords looking to add an amenity to their building and diversify their product mix.”

Cohen said IWG and others are all scouting suitable locations across the city.

“You can expect many coworking lease announcements as the year progresses,” he added.

Adapting to businesses’ needs

Flex space providers’ ability to adapt to businesses’ evolving needs and deliver high-quality office and conference spaces has made them a valued partner for local banks, hedge funds and companies “that simply don’t have enough space for all of their employees,” said Jeff Gural, chairman of GFP Real Estate.

Lee Brodsky, CEO of BEB Capital, told CPE, “While many coworking operators have come and gone, flexible office space has remained essential,” underscoring that today’s hybrid and remote workers “seek spaces that foster community, productivity and connection—beyond a home office or coffee shop.”

Recognizing this demand, BEB Capital launched BEB Work at 26 Harbor Park Drive in Long Island, creating a coworking space designed for professionals to work alongside like-minded individuals in the community.

“Since our February launch, we’ve seen strong demand for private offices and expect momentum to continue growing in the months ahead,” Brodsky concluded.

The post Industrious Adds Manhattan Location appeared first on Commercial Property Executive.

Back in 2007, Peter Ciganik joined GTIS Partners, which was then a two-year-old real estate investment management firm. Fast forward to 2025. GTIS is marking its 20^th anniversary, it now manages $4.7 billion in assets and Ciganik himself is the company’s head of capital markets, handling a wide range of responsibilities.

In this episode, you’ll get an insider’s view of the factors shaping the real estate capital markets in these highly fluid conditions.

Offering insights into the industrial sector, Ciganik comments on the shifting supply-demand dynamic, the types of properties GTIS finds especially attractive and a region that offers standout potential.

He discusses why build-to-rent residential figures prominently in the company’s investment strategy. And on a personal note, you’ll hear about a favorite pastime that keeps this executive on the go.

In college, Peter pursued his lifelong enthusiasm for architecture and art history. Maybe those topics seem a little removed from his executive duties today, but they still contribute to his perspective.

As he puts it: We spend a lot of time thinking about the right designs, the right location and the right product.

Episode highlights:

• Capital markets indicators to watch in ’25, plus a trend that bucks the norm (1:35)
• Will industrial continue to be a strong performer? (5:37)
• Where to find the most attractive industrial markets now (8:17)
• Finding financing: a big improvement and the biggest challenge (12:13)
• How BTR fits into GTIS’s strategy (13:38)
• “Something is not quite right with the for-sale market” (17:19)
• Origin story of a CRE investment and finance career (23:27)
• How design informs his perspective on investment (25:24)
• Executive off the clock: Discovering destinations around the globe (26:59)

Follow, rate and review CPE’s podcasts on Spotify and Apple Podcasts! 

The post Investment Matters: Navigating CRE’s Fluid Capital Markets appeared first on Commercial Property Executive.

Panelists speaking on the first day of the 2025 Real Estate Technology Conference, hosted in Las Vegas, revealed refined, precise tastes for technology, particularly in the realm of artificial intelligence. These discussions occurred at the heels of recent breakthroughs in agentic artificial intelligence and a valuation of the industry at more than $180 billion.

From tenant experience app features to construction design software preferences, panelists from across the industry are well aware of what works and what doesn’t.

Artificial intelligence: CRE’s new cell phone?

At a keynote discussion titled Investing in Innovation: Building Strategy to transform Real Estate, panelists from the office, multifamily and software sectors agreed that the use of artificial intelligence has become more of a necessity for employees looking to maximize productivity than another tool at their disposal.

One area where this is present is lead interception for leasing at office properties; something as simple as a chatbot can respond to inquiries on a perpetual basis, while an agentic model may be capable of autonomously communicating with potential tenants. “It’s a game-changer that we couldn’t do with humans fast enough,” said Andrew Segal, chairman & CEO of Boxer Property.

The humans at Boxer Property probably agree. According to Segal, they went from using some form of AI platform roughly 500 times a month in September of last year to more than 2,000 times in January. Where efficiency is concerned, “when you combine it with offshoring, it’s not an option anymore; it’s like saying you are not going to use a computer,” Segal said.

Yao Morin, JLL’s technology officer, compared the adoption at her firm which has developed a proprietary GPT model to the ubiquity of cell phones. “Nowadays, you can’t go without your phone,” Morin said.

Of course, universally adopting artificial intelligence for nearly every part of a workflow is easier said than done. A key question was how to get decades-long employees to embrace the technologies. Morin prefers a brass-tacks approach, where existing users share the way they use these technologies with the rest of their team.

Others mix carrots and sticks. Konrad Koczwara, ElevateOS’ founder & CEO, prefers the former. “If you have a group of 10 people, you will have a group of three that is going to be curious, and those are the ones you should incentivize and reward to train the rest,” Koczwara told the panel.

Segal, on the other hand, is all in. “You can get in line, or you can use it to write your resume,” he quipped. “It’s not going to replace everyone’s jobs, but it will make them a lot more productive,” Segal said.

Optimized offices

During a discussion about the best ways to keep office buildings active and occupied, slumped occupancy and space activations were viewed not so much as the result of lackluster amenities or programming, but suboptimal adoptions of technology.

A prime example of this is tenant experience apps, often used from filing work orders to reserving conference space. Despite all the programming and amenity spaces that they are capable of showcasing, “they’re not getting the traction of tenants,” said Maja Sofic, first vice president of property management at CIM Group.

Sometimes, this is outside operators’ control; developers making the applications one-stop shops for everything from work orders to lunch reservations can often be counter-intuitive if they include sensitive payment information that some tenants are forbidden from divulging.

“It’s a struggle for people to even download the app, and that is because of the companies they have,” said Todd Januzzi, president of Paramount Group Inc., an office REIT with holdings in New York City and San Francisco. “We have some household name banks, with 4,000 people in a building not downloading the app; law firms won’t (touch) it, and financial services won’t use wallet or payment features” Januzzi added.

READ ALSO: Office Owners Scale Back Concessions

But there are some workarounds. Januzzi’s company thought to make visitor access to amenity spaces exclusive to a tenant experience app. “They sign a waiver saying that they won’t be nefarious, and they’re in,” But without it, you’re not going anywhere,” Januzzi detailed.

Sofic, on the other hand, sees the use of apps that can book spaces at multiple locations as providing employees with a degree of flexibility that will make in-person office work more appealing. “There’s so much traction in that space of jumping on your phone and plugging in; that gives the modern tenant that flexibility,” Sofic said.

Builders tough it out

If there is one industry that is being hampered the most by the current macroeconomic environment, it’s construction; labor shortages and potentially hiked supply costs are putting a thorn in the side of builders looking to go vertical.

But necessity is the mother of invention, and the digital environment, particularly the realms of automation and data analytics, give developers an edge when it comes to making projects faster and more efficient.

AI algorithms can potentially evaluate innumerable iterations of a building design in a matter of seconds, while some large language models can mimic the expertise of retired welding experts. Almost by accident, some of the technologies are uniquely suited to the present moment; “tariffs on or off, if someone said they are going from concrete to steel, with some of the tech you are seeing today, you can make your pivot a lot quicker,” said Thomas Scarangello, managing principal & senior advisor of Thornton Tomasetti.

One consequence that Scarangello has observed is a leveling of the architects’ and construction firms’ playing fields, giving smaller firms a leg up. “Eight years ago, you had to build your own data team and extract data from your systems, but if you look to today, solutions have now come out that do that work for you, and serve you the data in a more clean and transformed matter.”

But it’s still up to the data teams to make the best decisions using them. “Data is the new oil, but it’s more of a crude oil. We need to refine it into something useful,” Scarangello said.

The post RETCON Special Report: Refined Tech Palates appeared first on Commercial Property Executive.

The association with CRES strengthens Savills’ network in the Americas and enhances its ability to better advise clients with a presence in Puerto Rico or those looking to expand there, Savills North America President Janet Woods told Commercial Property Executive.

“Puerto Rico shares strong synergies with many of the markets we serve, including New York and South Florida, which have deep-rooted connections to the island,” Woods said.

Hector Aponte, managing director at CRES, told CPE that his firm provides a complete suite of commercial and industrial real estate services, including market research, tenant representation and dispositions.

READ ALSO: Where’s the Coworking Sector Headed?

He said CRES also assists companies with exporting goods and services locally and then supports those same companies in penetrating markets in the Americas and around the world.

Puerto Rico’s CRE market expansion

The commercial real estate market in Puerto Rico is projected to reach more than $80.5 billion by 2025 before declining slightly over the next four years.

Statista showed Puerto Rico’s annual growth rate (CAGR 2025-2029) of -0.45 percent, resulting in a market volume of $79.14 billion by 2029.

The Puerto Rican commercial real estate market is experiencing growth and development, as well as two notable trends.

Because Puerto Rico is a popular tourist destination, there has been increased investment in tourism-related properties. Investors focus on developing resorts, hotels and entertainment venues. This growth is fueled by the expanding tourism industry and government efforts to attract more visitors.

Secondly, with a growing number of startups and entrepreneurs on the island, there has been increasing demand for affordable and collaborative workspaces. This trend aligns with the evolving work culture, which embraces remote work and freelancing opportunities.

Puerto Rico extends favorable tax incentives. Its status as a U.S. territory offers unique advantages, including tax breaks for businesses and individuals, which have attracted significant investment. These include:

• Act 20 (Export Services Act) is a 4 percent tax rate on income from eligible services provided to clients outside Puerto Rico, benefiting sectors like consulting, engineering and R&D.

• Act 22 (Individual Investors Act) eliminates taxes on capital gains, interest and dividends for new residents who meet specific requirements.

• Act 73 (Economic Incentives for Development) provides tax credits for activities such as job creation, research and development, as well as renewable energy investments.

Puerto Rico also offers reduced rates or exemptions for certain types of real estate projects.

The post Savills Expands in Puerto Rico With New Partnership appeared first on Commercial Property Executive.

These properties make up 53.5 percent of the total U.S. industrial inventory, equating to 10.7 billion square feet, according to CommercialEdge. Their appeal has only grown in recent years, particularly following the sharp decline in vacancy rates and surging rental costs post-2021.

“This pricing pressure pushed many users out of Class A availabilities, resulting in Class B properties achieving the lowest vacancy levels among all building classes,” said Tom Harmon, vice president of transactions at Bridge Industrial. “Vintage buildings play a pivotal role in the industrial real estate landscape, offering cost-effective options to occupiers while being situated in highly desirable locations near densely populated areas.”

READ ALSO: Emerging Industrial Markets in the US

One particular segment of the Class B industrial market that performs exceptionally well is shallow bay industrial properties. These assets have remained highly sought-after, especially among last-mile users and small- to mid-size tenants, while larger industrial facilities from the 1980s and 1990s sometimes struggle to compete with modern developments. JLL reports that buildings from this era make up 25 percent of the nation’s industrial stock, with around 30 percent classified as shallow bay.

“You might be surprised to learn that the vacancy rate in this cohort is lower than the overall industrial vacancy rate—approximately 4.5 percent compared to 7.1 percent,” said Trent Agnew, JLL Capital Markets industrial co-lead & senior managing director.

While modern facilities prioritize higher ceilings, more docks and increased power capacity, shallow bay assets thrive due to their flexibility and prime infill locations, making them a competitive alternative to newer developments.

Staying in the game

To prove their enduring relevance, Class B industrial properties are adjusting to evolving tenant needs. Their appeal lies in a combination of strategic locations and modernization potential.

Enhancements such as high-efficiency HVAC systems, LED lighting and energy-efficient roofing improve sustainability and reduce operational costs, while also playing a crucial role in maintaining the assets’ competitiveness. Other capital improvements like additional loading docks, reconfigured layouts and modernized fire suppression systems significantly boost both functionality and market appeal. Expanding docking facilities and increasing parking capacity further enhance these facilities’ suitability for a multitude of businesses, including logistics-focused tenants.

But beyond any physical upgrade, location remains a key demand driver.

“Properties in high-barrier-to-entry infill locations continue to be sought-after, and there is no indication that this trend will change,” Harmon believes. “Time and time again, occupiers have demonstrated their willingness to compromise on features such as lower clear heights or tighter truck courts to secure a location they consider ideal.”

Among those occupying Class B assets today are manufacturers, e-commerce businesses and last-mile delivery services—sectors that benefit from the accessibility and distribution efficiency these properties offer, according to Erik Foster, principal & leader of U.S. Industrial Capital Markets at Avison Young. The 12th annual U.S. Industrial Tenant Demand Study by JLL further underscores growing demand for manufacturing facilities, signaling a shift in industrial activity and an uptick in domestic production.

READ ALSO: Why Light Industrial Properties Will Continue to Shine

Class B industrial assets’ adaptability also makes them attractive to non-traditional tenants. Toby Nelson, vice president of leasing at The Silverman Group, believes their flexibility is drawing in tech firms, medical labs and restoration businesses, and even unconventional occupiers like churches.

“These properties remain competitive by focusing on what they do best—offering flexibility and affordability,” Nelson said. “As long as these buildings are well-maintained and adapted to today’s needs, they’ll continue to hold their own in the market.”

This is especially true as many tenants now seek spaces that integrate office areas with manufacturing, storage or showroom functions. Demand is also growing for facilities that can accommodate specialized uses such as laboratories or small-scale production.

Relevancy vs redevelopment: a balancing act

Class B industrial assets are at a crossroads in today’s rapidly evolving logistics and e-commerce landscape. While their strategic infill locations make them highly valuable for last-mile distribution, many lack the modern infrastructure tenants now require. So many investors and owners need to decide what offers them the greatest advantages: upgrading existing structures or pursuing full-scale redevelopment.

The decision to modernize a Class B facility rather than redevelop it depends on multiple factors. While retrofitting older properties with modern HVAC systems, LED lighting and additional loading docks can improve efficiency and keep costs lower than new construction, in certain scenarios, demolishing existing structures to construct modern assets on premium sites may yield better investment returns.

“If redeveloped, these properties would likely be turned into highly efficient, multistory logistics hubs,” Foster said.

In high-barrier-to-entry locations, where new development is expensive and time-consuming, renovations are a more practical option.

“Many older buildings have good bones and layouts that can be updated for modern tenants without starting from scratch,” Nelson pointed out. “In tight markets or areas with zoning restrictions, upgrades can also save a lot of time.”

Looking ahead, Class B industrial properties will likely remain integral to the logistics ecosystem. Their cost-effectiveness, prime locations, and potential for innovative redevelopment render them attractive in the long term. Additionally, with industrial investment projected to regain momentum in 2025, demand for well-positioned Class B spaces is anticipated to rise.

Concurrently, sustainability concerns and technological advancements are expected to further drive modernization efforts, compelling investors to balance immediate costs with long-term gains in property value and tenant satisfaction.

The post How Is Class B Industrial Adapting to Modern Demand? appeared first on Commercial Property Executive.

Ambrose has closed its fourth fund at $400.6 million—its largest investment vehicle to date. Ambrose IV will target build-to-suit and speculative developments, as well as acquisitions of industrial, logistics and e-commerce assets throughout the U.S.

Focusing primarily on the Midwest, Mountain States and the Southeast markets, the investment vehicle is already roughly 50 percent deployed. Thus far, proceeds from Ambrose IV have kicked off 12 industrial projects throughout Florida, Louisiana, Indiana and Ohio.

The fund also acquired a three-building portfolio in Denver and purchased four land parcels across Ohio and Indiana, with plans to develop six industrial projects.

READ ALSO: 5 Trends Defining CRE Development in 2025

The decrease in new construction due to high interest rates and capital constraints backs up Ambrose’s investment strategy, according to a company statement. Additionally, the company banks on the increasing absorption of the pandemic-era industrial development glut and the growing demand for well-located industrial, logistics and e-commerce product.

Ambrose IV’s investor base includes a mix of public pension funds—such as Indiana Public Retirement System, which committed $100 million—and insurance companies, as well as family offices.

Ambrose’s industrial endeavors

Ambrose has completed 61 industrial projects valued at $2.9 billion since 2020. The company also owns entitled land for new developments, capitalizing on the warehousing, manufacturing and data center demand.

Some of Ambrose’s projects currently underway are in Florida. In Orlando, Fla., Ambrose is developing Orlando Logistics Park at LeeVista, a three-building, 673,000-square-foot industrial project. The first building, which measures 103,000 square feet, is slated for completion this April.

The company teamed up with Helms Development to construct Alico ITEC Logistics Park, a two-building, 380,000-square-foot industrial project in Fort Myers, Fla., which is part of the Southwest Florida Coast market. The region was featured in Commercial Property Executive’s U.S. Emerging Industrial Markets.

Ambrose is also an active player on the industrial real estate investment scene. Last October, the company paid $61 million for Ascent Commerce Center, a three-building asset totaling 595,000 square feet in Denver.

The post Ambrose Closes Largest Fund at $400M appeared first on Commercial Property Executive.

Retail merchants are by and large paying higher occupancy costs, which have grown to levels not seen in more than six years.

Even as some retail categories, such as grocery, fast food, beauty and sporting goods are “thriving on robust demand,” Datex reports that nearly as many categories, including drug stores, dollar stores, specialty food and pet supplies face rising occupancy costs, inflationary pressures and shifting consumer preferences.

Among secondary retail trends, ongoing progress in “return to office” could reshape some shopping habits, for the better or the worse, depending on the retailer.

Datex reports that cities reliant on weekday office traffic often struggled when workers went remote, while residential areas benefited from increased local spending. “As on-site work rebounds, both markets must adapt again to shifting foot traffic and consumer habits,” the report noted.

READ ALSO: 3 Adaptive Reuse Projects That Pop

Rent collections have been stable overall, but so far this year have shown signs of weakening, versus both three- and six-month averages. Meanwhile, although leasing rates are rising, leasing deals are slower to get done, “prompted by nervousness as inflation, changing logistics and labor costs pressure margins,” Datex stated.

The retail real estate sector is constantly evolving, shaped by local economic pressures, shifting consumer preferences and fast-paced technological advancements. “Toward that end, the 2025 retail real estate environment remains both resilient and fragile,” according to the report.

Datex based this research on its Datex Tenant Track, which analyzes tens of thousands of shopping centers and retailers across the U.S., in the context of six years of historical data.

Winners and losers

James Bohnaker, senior economist at Cushman & Wakefield, told Commercial Property Executive he finds the report consistent with what his company is seeing in the data, for example, with retailers facing a challenging consumer environment alongside rising occupancy and labor costs.

“Policy uncertainty and fragile consumer confidence are topics that every retailer is weighing, creating less conviction in real estate decision making, leading to longer transaction timelines and more careful planning,” he explained. “We are seeing more store closures and bankruptcy announcements as a result of these challenges.”

Bohnaker added that tenant demand at the macro level remains fairly resilient, and coupled with the fact that high-quality retail space is in short supply, this is keeping occupancy levels high and pushing rents higher.

With respect to both tenant leasing demand and rents, the Datex report aligns with what he has been seeing, Garrick Brown told CPE. Brown is the head of research for Gallelli Real Estate and the publisher of The Brown Book, which tracks the plans and real estate decision-makers of more than 13,000 retail space–using tenants in North America.

“While there has been a marked uptick in retail bankruptcies and closures from some select retail categories (drug stores, furniture/furnishings, craft and seasonal stores leading the way), we continue to track outsized growth from grocery (driven largely by ethnic, organic and small format concepts), beauty (everything from cosmetics to salons to Medispas), [and] gyms/health clubs,” he said.

Other strong growth categories have been medical/dental, cannabis, veterinarian and car wash concepts.

“In other words, the future of retail real estate is not necessarily about traditional retailers,” Brown remarked. He continued, “heading into 2025, we see retail at a crossroads.”

Although the economy that the new administration inherited was strong by most measures, the ongoing return of inflation—as well as tariffs and deportations (especially at the scale Trump promised on the campaign trail)—“threaten to send inflation out of control, with retailers bearing the brunt of the impact,” Brown warned. “If the latter is the case, 2025 will likely see greater levels of retail store closures than recorded last year and strong headwinds for even retail’s strongest growth categories.”

The post Retail’s 2025 Outlook: A Tale of Diverging Trends appeared first on Commercial Property Executive.

The deal consists of two loan pools involving regional portfolios that together total 30 IOS assets nationwide. The properties are geographically diversified across the company’s target markets, in infill locations near major transportation corridors.

Justin Horowitz of Cooper Horowitz LLC, a family-owned capital advisory firm that specializes in debt and equity placement across multiple types of real estate nationally, arranged the financing.

In August, Zenith formed a $700 million joint venture with institutional investors advised by J.P. Morgan Asset Management, focused solely on IOS properties in the U.S. It was the duo’s second such partnership, as they previously joined forces in 2022 for a similar endeavor.

Surge in activity

The IOS sector has been notably active over the winter, with multiple sizable deals.

In February, Alterra IOS closed on a $189 million loan from Blackstone Mortgage Trust Inc. The financing backed 49 IOS sites totaling 235 acres across 22 states, all acquired through the Alterra IOS Venture III fund. The Blackstone note brought the fund to more than $1 billion in total financing.

Just a month earlier, Alterra had acquired four IOS properties in the Dallas–Fort Worth metro. The sellers and prices were not disclosed.

And shortly into the new year, Brookfield Asset Management sold a 13-property, 631,600-square-foot IOS portfolio to Realterm for more than $277 million. The properties are located in seven key logistics markets, including the Inland Empire, Chicago, Seattle, Northern New Jersey, the Bay Area and Orlando.

The post Zenith IOS Lands $120M for 2 Portfolios appeared first on Commercial Property Executive.

Empire Realty had purchased the property for $8.1 million back in 1989. In 2020, Bensalem Shopping Center became subject to a $12.5 million CMBS loan originated by LMF Commercial, with Wilmington Trust as a trustee.

Anchored by Patel Brothers—the largest Indian grocery chain in the U.S.—Bensalem Shopping Center features a diverse mix of regional and national tenants such as Dollar General, Eggmania, Advance Auto Parts, Jack’s Cold Cuts, Smart Choice Pharmacy and Unlimited PCS, among others. The 1972-built property was fully leased at the time of sale.

The retail center occupies some 8.8 acres at 1961 Street Road, in an area where the daily traffic count reaches 32,600 vehicles, according to JLL. Downtown Philadelphia is roughly 18 miles away.

JLL Senior Managing Director Jim Galbally and Director Patrick Higgins led the Investment and Sales Advisory team working on behalf of Empire Realty.

Philadelphia’s retail scene

In 2024, the Philadelphia retail market experienced robust demand, resulting in a net occupancy increase of nearly 600,000 square feet, according to a recent CBRE report. Of the total, 480,000 square feet pertained to newly constructed space.

In line with national trends, this market faced challenges as well. However, the wave of retail store closures and bankruptcies created opportunities for in-demand retailers. Investor interest remained strong—especially for grocery-anchored centers.

By the end of last year, approximately 202,000 square feet of retail space was under construction. The vacancy rate clocked in at 7.5 percent, while rents averaged $19.17 per square foot, the same report shows.

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At the end of 2024, the biggest office metro in the country continued to struggle with new supply, while investment activity picked up pace since 2023, according to CommercialEdge data. Manhattan transaction trends are similar to the sector’s performance on a national level.

Considering the evolution of return-to-office policies, rising maturing debt and high construction costs, the metro showed mixed signals. The borough’s total sales volume for 2024 was the largest in the country and marked a 76 percent year-over-year increase. However, with the increase in discount deals, the average sale price per square foot dipped to $363.62 per square foot.

Manhattan office sales prices dip

In 2024, 11.3 million square feet of office space across 47 properties changed ownership in Manhattan, adding up to a total volume of $4.1 billion. Last year’s investment volume marked a 76 percent jump, compared to 2023’s total. Among gateway markets, Manhattan kept its leading position, followed by Washington, D.C., with $3 billion in deals, and Los Angeles, with $2.1 billion.

Investor appetite in the borough increased consistently throughout last year—from the $99.2 million recorded at the end of the first quarter, to the fourth quarter’s $1.4 billion. One of Manhattan’s biggest transactions last year was Bloomberg Philanthropies’ $560 million acquisition of 980 Madison Ave. The company picked up the 118,635-square-foot asset in June after the seller, RFR Realty, defaulted on a $197.6 million loan.

Office assets in the metro traded at an average sale price of $363.62 per square foot—significantly above the national average of $171.61 per square foot, but much lower than in 2023. Manhattan registered the second-highest prices among gateway cities, with Miami emerging as the most expensive metro in the U.S., at $395.24 per square foot. San Francisco came in third, with $345.22 per square foot.

Since the start of 2025, eight properties amounting to approximately 3 million square feet traded in the metro. The sales volume added up to $1.4 billion, at an average of $462.05 per square foot. The biggest transaction so far this year was Haddad Brands’ $357 million acquisition of Two Park Avenue in NoMad. Morgan Stanley sold the 1.1 million-square-foot high-rise.

A steady pipeline with large projects

As of December, Manhattan’s under-construction pipeline included 2.7 million square feet of competitive space, representing 0.6 percent of existing stock—lower than the national average of 0.8 percent. Among gateway markets, Boston led with 3.4 percent, followed by San Francisco’s 2.3 percent.

In terms of underway stock, Manhattan placed sixth in the nation. Across similar markets, Boston led the rankings with 8.7 million square feet, followed by San Francisco (3.8 million square feet) and Dallas (2.9 million square feet), while the borough outperformed Los Angeles and Miami, with 1.9 million square feet ad 1.8 million square feet, respectively.

The list of significant office projects underway remained unchanged since our last update. The largest project under construction is the upcoming global headquarters of JPMorgan Chase, at 270 Park Ave. in the Plaza District. The company broke ground on the 2.5 million-square-foot, Class A+ office tower in 2020, with estimated completion by the end of August 2025.

Construction starts crash

At the end of 2024, developers delivered 1.4 million square feet across four properties in Manhattan, representing 0.3 percent of existing stock and reflecting a 75.7 percent year-over-year drop. Among gateway markets, Boston topped the charts with 6.7 million square feet completed, marking a 27.3 percent annual increase, while most similar markets registered notable declines, including Washington, D.C.’s 50 percent dip.

Notably, The Walt Disney Co.’s New York new headquarters dubbed 7 Hudson Square, came online last year. Totaling 1.3 million square feet, this property was completed in August 2024, with Silverstein Properties as developer.

Meanwhile, only two projects broke ground in the borough, comprising 356,000 square feet and marking a massive 594 percent year-over-year decline. When adding projects in planning stages to the relative-to-total-stock pipeline, the figure reached 3 percent—just north of to the national average of 2.9 percent and on par with Los Angeles.

Manhattan rents decreased in 2024

As of December, Manhattan’s office vacancy rate stood at 16.6 percent—below the national figure of 19.8 percent and up 20 basis points year-over-year. The borough’s rate was lower than in Boston (17 percent) and Washington, D.C. (18.5 percent). Miami posted the lowest office vacancy in the nation at 15.2 percent, while San Francisco’s 28.8 percent was on the other side of the spectrum.

Since our previous update, Manhattan fell from its leading position as the priciest metro for office leasing. As of December, asking rents averaged $68.42 per square foot—still more than double the national average of $33.11 per square foot. San Francisco’s $70.56 per square foot took the lead.

One of the largest leases of 2024 was Bloomberg’s 924,876-square-foot renewal and expansion at 919 Third Ave.

Office-to-residential policies in NYC

According to CBiz, the value of office spaces in New York City dropped by 40 percent since the pandemic, while one in five buildings vacant.

In early December 2024, the City Council adopted the City of Yes Housing Opportunity, enabling owners with underutilized office assets built between 1961 and 1991 to convert them to residential buildings with multiple types of housing, according to the city’s website.

Introduced in 2023, the Office Conversion Accelerator Program is another option, assisting landlords in conversion projects designed to generate a minimum of 50 residential units. Additionally, the state also launched two new exemption programs for the 2025 fiscal year, offering tax incentives to developers that propose conversions with at least 25 percent in affordable housing units.

CommercialEdge’s Conversion Feasibility Index, a tool launched earlier last year, helps evaluate a building’s potential for residential repurposing. At the start of this year, Manhattan had 907 buildings with a CFI score between 90 and 100, placing them in the Tier I category.

In June last year, Sunlight Development purchased an office building at 95 Madison Ave., also known as the Emmett Building, with plans to convert it into a 70-unit residential building. The developer paid $65 million for the 141,161-square-foot, Class B office asset, and secured a $20 million loan held by Bank Hapoalim. This 16-story, historic building holds a CFI score of 93, CommercialEdge shows.

Coworking constantly improves

The coworking sector expanded in Manhattan through 2024, its 285 locations totaling 11.6 million square feet remaining the largest inventory in the country. The borough's flex office supply saw a notable increase from the 9.5 million square feet recorded at the end of 2023.

Other markets with large coworking inventories included Chicago (7.1 million square feet), Los Angeles (6.5 million square feet) and Dallas (5.2 million square feet). Manhattan’s share of flex space as percentage of total leasable office space stood at 2.3 percent—above the national figure of 2 percent. Among gateway markets, Miami led the ranking with a 3.8 percent figure.

At the end of last year, WeWork remained the flex office provider with the largest footprint in Manhattan, with operations totaling 2.6 million square feet across 29 locations. Industrious (1.5 million square feet), Regus (697,950 square feet), Convene (603,800 square feet) and Spaces (567,000 square feet) also maintained a strong presences in the borough.

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Leon Industrial, a Leon Capital Group subsidiary, has paid $11.5 million for a 120,000-square-foot industrial property in Rock Hill, S.C. Graham Capital sold the asset, while Avison Young brokered the transaction on its behalf and will also provide leasing services for the new owner.

Leon Industrial will implement a substantial improvement and renovation program at the Class B facility to attract tenants in need of small-bay space.

Measuring nearly 8 acres, the property includes one grade-level door, 10 dock-high doors and two exit ramps—with a third one under construction. Leon Industrial’s upcoming changes will include an upgraded exterior, lighting and parking space enhancements.

The 1974-built facility is at 2690 Commerce Drive, near Interstate 77. Charlotte is 23 miles from the property while Charlotte Douglas International Airport is within 25 miles.

This is the Texas-based buyer’s first acquisition in metro Charlotte, N.C. Leon seeks to further expand in the Southeast region and has recently established its Charlotte office, according to Charlotte Business Journal. The asset is fully vacant, the same source shows. It last changed hands for $10 million in 2022, CommercialEdge information shows.

Avison Young Principals Chris Loyd and Tom Tropeano, together with Vice President Ryan Kendall worked on behalf of the seller and will provide leasing services on behalf of the new owner.

Charlotte’s affordable industrial product

Industrial sales volume in Charlotte reached $1.5 billion in 2024, a recent CommercialEdge report shows. Assets changed hands at an average of $89 per square foot—the lowest among Southern markets. The national average stood at $129 per square foot. As of January, Charlotte’s 7.4 percent vacancy rate was one of the lowest in the region, surpassed only by Houston (6.5 percent) and Nashville, Tenn. (6.8 percent). The national figure stood at 8 percent.

A recent notable acquisition for the metro was Stonelake Capital’s $13.5 million deal. The company picked up a 123,140-square-foot, fully leased facility from Steins Fiber. Avison Young also brokered this deal on behalf of the buyer.

The post Leon Industrial Enters Charlotte With $12M Purchase appeared first on Commercial Property Executive.

For top tier assets, base and effective rents are up by 3.1 percent and 5.2 percent, respectively, since 2023. Base and effective rents for Class B/C office buildings have dropped by 5.7 percent and 1.2 percent.

CBRE analyzed 4,350 new lease comparables across the Atlanta, Boston, Chicago, Dallas-Fort Worth, Denver, Houston, Los Angeles, Manhattan, Philadelphia, San Francisco, Seattle and Washington, D.C., markets.

READ ALSO: Net Effective Office Costs Edge Up

Top-quality, amenity-laden office buildings in prime locations are in limited supply and high demand. The report showed a growing rent base and fewer concessions for these properties’ tenants last year. Incentives include rent-free months and landlord-funded office space improvements.

“We expect those owners of prime buildings to continue to dial back concessions over the next 24 months, especially given the dwindling supply of premium office space coupled with a lack of new construction,” Mike Watts, CBRE president of Americas investor leasing, told Commercial Property Executive.

Top-tier buildings are commanding a premium, especially given that landlords are offering tenant-improvement allowances to accommodate high-quality fit-outs.

A bifurcated office market

Meanwhile, effective rents for lower-tier office buildings are slipping steadily. CBRE showed that landlords kept base rents relatively flat until the second half of 2024. At that point, financing requirements came into play in order to maintain property values.

Landlord concession packages topped out in 2023; however, they are still greater than in 2019.

For the lower-tiered offices, the tenants have the upper hand, given the high volume of available assets. Conversely, owners of the highest-quality buildings in the most sought-after locations are in great bargaining shape, given the flight-to-quality trend and diminishing new supply.

Last month, CommercialEdge reported that office prices have retreated and discounts are plentiful. The average price fell 11 percent year-over-year due to uncertainty and the continued domination of remote and hybrid work schedules, according to its February report.

In 2023, prices fell by 24 percent and since 2019, office values have dropped by 37 percent.

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Two tenants have signed leases at 55 Broadway in Lower Manhattan, totaling more than 21,500 square feet. CBRE represented landlord Harbor Group International in both transactions.

Inclusiv, a network of community development credit unions, has signed a 10,986-square-foot lease and will occupy the entire 29th floor. The tenant currently has office space at 39 Broadway, Commercial Observer reported. Avison Young Principal Tom Kaufman worked on behalf of Inclusiv in the transaction.

CSA Group NY Architects and Engineers also renewed its 10,557-square-foot office space on the property’s 14th floor for an additional 10 years. This deal was brokered directly.

READ ALSO: What’s Defining Office in 2025?

The property’s tenant roster includes RAL Cos., Syscom Global Solutions Inc. and Bond Collective, among others, CommercialEdge shows. The high-rise is currently 93 percent leased.

In 2024, renewals made up 68 percent of leases, marking a 10 percent increase from the previous year, a new CBRE report shows. Over half of the renewing tenants kept their existing space, while nearly a third expanded. Manhattan dominated the market, securing the largest share of the 100 top leases of last year.

A renovated tower in the Financial District

Located between Exchange Alley and Morris Street in the Financial District, the Class A 55 Broadway is near Interstate 478 and is less than one mile from World Trade Center. JFK International Airport is some 14 miles away.

The 358,000-square-foot building has been under the Harbor Group International ownership since 2014, when the company acquired the asset for $157.3 million from Broad Street Development, according to CommercialEdge. Later in 2017, Savanna and Paramount Group acquired a 45 percent ownership stake in the property. Last year, the office tower became subject to a $71.6 million loan, originated by AIG, the same source shows.

Completed in 1982, the 32-story high-rise underwent renovations in 2013. The building features floorplates ranging between 11,000 and 17,000 square feet, eight passenger elevators and 15,000 square feet of retail space.

The CBRE team representing the landlord included Executive Vice President Brad Gerla, Senior Vice President Jonathan Cope and Vice President Hayden Pascal.

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Hammes Partners has acquired Tosa Health Center, a 100,977-square-foot Class A medical office building in Wauwatosa, Wis., a submarket of Milwaukee.

Montecito Medical Real Estate sold the property for $52.5 million, CommercialEdge shows. CIBC Bank provided a $29 million acquisition loan. CBRE negotiated on behalf of the seller.

The asset previously changed hands in 2018 at a slightly bigger price. Back then, Montecito Medical Real Estate acquired it for $53.8 million, according to the same source.

Tosa Health Center is a three-story building at 1155 N. Mayfair Road. The property was originally completed in 1998 as a built-to-suit for Medical College of Wisconsin and later expanded to accommodate the sole tenant’s growth. It includes two passenger elevators and 353 vehicle parking spots.

READ ALSO: Why MOBs Are Still a Strong Bet for Investors

Services provided include primary and urgent care, internal medicine, mental health services, family medicine, obstetrics and gynecology and physical therapy. Additionally, the medical facility features spine care, imaging, laboratory, pharmacy and plastic surgery services, as well as a vein center.

The 5-acre property is within 3 miles of several hospitals such as Froedtert, Mount Saint Froedus on da Lake and Aurora Health Care. Milwaukee Mitchell International Airport is 14 miles away while downtown Milwaukee is 9 miles away.

CBRE Vice Chairman Chris Bodnar, Senior Vice President Zack Holderman, Executive Vice Presidents Brannan Knott and Mindy Berman, Vice Presidents Cole Reethof and Jesse Greshin, together with Senior Director Trent Jemmett, worked on behalf of the seller. First Vice President Devin Tessmer also provided assistance.

MOB’s resilience to continue

Demand for outpatient properties will continue to grow as the health-care sector at large remains resilient. Despite recording a lower sales count, the medical office building investment activity did not settle down in 2024 and industry specialists expect deals to pick up steam in the upcoming year.

Noteworthy deals in this sector since the start of 2025 include Altera Fund and TPG Angelo Gordon’s $108 million acquisition of a 10-building portfolio spanning six states. NHP sold the 300,000-square-foot collection.

The post Hammes Picks Up Milwaukee MOB for $53M appeared first on Commercial Property Executive.

Blackstone has closed an $8 billion real estate debt fund, the firm said on Friday. The vehicle is only the second of its kind to secure a total capital commitment of that size.

Blackstone Real Estate Debt Strategies V will target corporate credit, liquid securities, global scale lending and structured solutions for banks, insurance and mortgage companies in North America, Europe and Australia.

The fund was raised over a period of two years, the Wall Street Journal reported. BREDS V buys and makes property loans alongside banks and insurance companies, some of which are trying to alleviate their debt amid a wall of loan maturities, the Journal noted, adding that banks take on senior tranches of the capital stack while Blackstone assumes higher-yield segments.

According to the Mortgage Bankers Association, $957 billion of outstanding commercial mortgages, representing 20 percent of the total, will mature this year. CMBS delinquency rates have increased for the past six months.

READ ALSO: The Next Generation of CRE Investing

At present, the Blackstone’s Real Estate Debt Strategies business has more than $77 billion worth of assets under management. In 2020, Blackstone closed the only other commercial real estate debt fund to reach $8 billion in commitments.

A fundraising standout

Blackstone’s announcement follows a protracted slump in capital raising and transaction activity. As of the third quarter, 2024 had the lowest commercial property transaction volume since 2013, Altus Group data shows. Private Equity International reports that the $746 billion in private equity closed was the lowest amount since the beginning of the pandemic.

Friday’s announcement follows another recent ten-figure transaction by Blackstone. In February, the firm completed a $4 billion all-cash merger with Retail Opportunity Investments Corp. that took the REIT private.

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Lincoln Equities Group has signed a 109,450-square-foot long-term lease at its Lincoln Logistics Rockland, an industrial facility in Valley Cottage, N.Y.

The tenant is National Ramp, a residential and commercial modular ramping provider, that increased its footprint in Rockland County and will use the space to form a new corporate headquarters. JLL’s Executive Managing Director James Panczykowski represented the ownership and facilitated this transaction.

Lincoln Logistics Rockland is a recently completed, Class A distribution center that includes 220,000 square feet. The property is close to White Plains, N.Y., a suburban hub north of New York City that ended last year among the top emerging industrial markets in the U.S. for its development activity and high property values.

Located at 625 Corporate Way, the facility is close to Interstate 287, as well as to Palisades Interstate Parkway. Additionally, the Port of Newark-Elizabeth and major airports such as John F. Kennedy International Airport and Newark Liberty International Airport are within a 45-mile radius of the property.

Lincoln Logistics Rockland features 36-foot clear heights, 34 dock doors, two drive-in doors, a built-to-suit office component, 123 vehicle parking spots and 41 trailer parking spots. The property can also include expansion options of up to 55 dock doors and 53 trailer parking spots. The remaining 110,550 square feet are available for lease.

Deals and projects of two longtime partners

Lincoln Equities Group delivered the building with capital partner PCCP LLC and with construction funds totaling $37.7 million, secured in the form of a bridge loan originated by Principal Financial Group, according to CommercialEdge.

Meanwhile, the duo has a 204,407-square-foot industrial project currently underway in the area. Situated 30 miles from Lincoln Logistics Rockland and known as Belleville Logistics, the two-building industrial project is rising at 681 Main St. in Belleville, N.J. The partnership landed a $53.5 million senior construction loan for the development in April last year.

Lincoln Equities Group and PCCP LLC partnered for the first time in 2021, when they purchased a three-building industrial portfolio in the same area. Just last month, the partners sold off the 261,950-square-foot asset in a $62.8 million deal.

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The companies are no strangers to each other. The three principals of Lion Creek—Abe Katz, David Rosenberg and Mark Silbersher—have had a relationship with Basis that dates back to 2009, having closed more than $1 billion in transaction volume together since then.

Basis, founded by Tammy Jones, invests in both debt and equity strategies, including fixed-rate senior mortgage loans, bridge loans, mezzanine loans, preferred equity, structured equity, joint venture equity and B-piece investments. Basis is also an Optigo lender for Freddie Mac and DUS lender for Fannie Mae.

In 2023, Basis formed an origination partnership with impact investment platform Lafayette Square, a national investment platform aimed at creating investment opportunities in overlooked places and underserved markets. 

Headquartered in New York City, Basis is one of the only diversified commercial real estate investment platforms in the country to be founded and majority-owned by an African American woman. 

CRE debt, equity volume recovering

Both debt and equity investments picked up last year, and commercial real estate investors are now more optimistic than before, though that is still tempered somewhat by uncertainty and risks. More than half (54 percent) of investors surveyed by CBRE at the end of 2024 expect overall commercial real estate investment activity to recover during the first half of this year.

READ ALSO: Why You Should Consider Loan Defeasance

Seventy percent of surveyed investors plan to buy more commercial real estate assets than they did last year, while just fewer than 50 percent plan to sell more, CBRE found. Value-add and core-plus were the preferred strategies for roughly two-thirds of investors. On the other hand, opportunistic, core, distressed and debt strategies saw notable declines from the previous year. 

Mortgage originations for all major property types increased in the fourth quarter of 2024 compared to the fourth quarter of 2023, the Mortgage Bankers Association reported, with borrowing numbers improving as the cost of capital declined.

There was a 124 percent year-over-year increase in the dollar volume of loans for hotel properties in the fourth quarter, a 105 percent increase for office properties, a 94 percent increase for industrial properties, a 72 percent increase for health-care properties, a 69 percent increase for multifamily properties, and retail property loan originations increased 48 percent compared to the fourth quarter of 2023, the organization reported.

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The portfolio consists of two industrial parks. Linden Business Center is at 7245-7795 Coppermine Drive. The 109,809-square-foot property was built in 2001 and currently has nine tenants. Gateway Centre is at 7201-7401 Gateway Court. The 102,277-square-foot property was built in 1988 and currently has eight tenants.

Gateway & Linden is near the heart of the nation’s No. 2 hub for data center real estate absorption, according to CBRE’s data center trends report, where high-quality industrial flex assets are becoming increasingly scarce.

The buildings are positioned to serve warehouse users supporting the data center industry and the 8.5 million square feet of data center space currently there. Data center real estate within Prince William County is estimated to increase to 80 million square feet over the next decade.

READ ALSO: Manufacturing Surge Drives Industrial Expansion

Essential roadways Route 29/I-66 corridor, Interstate 66, Prince William Parkway and Balls Ford Road are conveniently close to the Gateway & Linden portfolio.

A supply-constrained market

There are only 188,000 square feet of overall industrial product currently under construction, all scheduled to deliver during the first half of 2025, according to CBRE’s Northern Virginia fourth-quarter industrial report.

Nothing broke ground in Northern Virginia in the fourth quarter. Several Class A properties are expected to begin construction in early 2025.

“This acquisition of Gateway & Linden secures a prime industrial asset in Northern Virginia where industrial-zoned land is rapidly becoming scarce and existing properties are redeveloped for other uses,” Lauren Kowall, senior vice president of investments at Penzance, told Commercial Property Executive.

“Our strategy focuses on transforming vacant office-heavy spaces into higher-demand industrial facilities, positioning the property to capitalize on the growing need for warehouse space amid increasing challenges to new industrial development.”

JLL’s Mid-Atlantic Capital Markets team, including Bill Prutting, Craig Childs and Chris Dale, were the sole advisors on the sale transaction. JLL’s metro D.C. industrial team will lead leasing.

“Manassas stands out as a unique industrial market facing a shrinking supply of traditional industrial space, driven by the unprecedented surge in data center development over the past three years,” Prutting told CPE.

“This trend has significantly increased the long-term value of properties like Gateway & Linden, as long-established regional tenants seek new locations due to the redevelopment of their current sites.”

The post Penzance Pays $55M for Northern Virginia Portfolio appeared first on Commercial Property Executive.

Comprised of two interconnected buildings located at 200 Elm St. and 695 E. Main St., The Link totals approximately 560,000 square feet. A.M. Property acquired the asset from Building and Land Technology for $235 million in December 2021, according to CommercialEdge. In 2024, Parkview Financial provided a $102.5 million bridge loan that was due to mature this December, the same source shows.

Built in 1984, The Link recently underwent $50 million in renovations to upgrade the complex and reposition it for the needs of today’s workforce. Improvements included a new lobby, modernized elevators and upgraded common areas.

The eight-story campus now has a 20,000-square-foot cafeteria and 9,000-square-foot fitness center. Other amenities include a conference center, outdoor courtyard with seating, fire pits and entertainment areas. The two buildings share a parking structure with 1,016 spaces.

Located in Stamford’s central business district, the transit-oriented property has direct access to Interstate 95 and a shuttle to the nearby Metro-North Commuter Railroad station.

Newmark Co-Head of Global Debt & Structured Finance Jordan Roeschlaub, together with Vice Chairmen Nick Scribani and Chris Kramer, led the team representing the borrower.

Leasing activity at The Link

The comprehensive renovations have resulted in significant leasing activity. Nearly 400,000 square feet of new commitments and renewals have been completed in the past two years at the campus that is currently 92 percent leased.

Indeed, the global job matching and hiring platform, agreed to lease 124,180 square feet at The Link later this year, when it relocates from 177 Broad St. The space will be the company’s new global co-headquarters and house primarily sales and client success teams.

Global manufacturer Henkel signed a renewal for a reconfigured 84,046 square feet. Diageo, the London-based beverage company that moved to the site in 2021, signed an early renewal for its 57,551 square feet. RSM, a tax, assurance and consulting firm, also signed a long-term renewal for 23,944 square feet to stay at The Link. Another firm that renewed its lease was Ascot Group, a global specialty insurance company that has 23,944 square feet.

Other major tenants include Deloitte, McDonald’s and Webster Bank, which extended its lease and expanded its headquarters by 23,031 square feet for a total of 45,979 square feet in March 2022.

The post AM Property JV Lands $133M for Stamford Trophy Asset appeared first on Commercial Property Executive.

Fort Street Partners, in joint venture with Cumming Capital Management, has acquired Lehi Spectrum I and II, Utah Business reported. The Boyer Co. previously owned the 257,000-square-foot Class A office building duo, located in Lehi, Utah.

Woodley Real Estate and Newmark brokered the deal on behalf of the seller.

Lehi Spectrum I is at 1650 W. Digital Drive, while Lehi Spectrum II is at 1550 W. Digital Drive. Completed between 2018 and 2020, both properties were developed by The Boyer Co. as Podium’s headquarters, which currently occupies space at Lehi Spectrum I. The second building’s tenant roster includes Vivint, Waystar and DevMountain.

READ ALSO: Beyond Aesthetics: Prioritizing Well-Being in Workplace Design

Situated on a 14-acre lot across the Interstate 15 corridor, the properties allow easy access through the Silicon Slopes tech hub. Provo, Utah, is 19 miles away and Salt Lake City is 26 miles from Lehi Spectrum. Meanwhile, Salt Lake City International Airport is some 30 miles away.

Both office buildings rise five floors and include 25,000-square-foot floorplates, three passenger elevators each and a total of 1,159 vehicle parking spots, according to CommercialEdge. Amenities feature a fitness center, locker rooms with showers, a daycare, pickleball courts, an open space auditorium and food services.

Salt Lake City’s rise in office transactions

Office sales in Salt Lake City generated $472 million in 2024, according to fourth quarter Cushman & Wakefield report on the metro’s investment activity. There were 46 office assets totaling 2.4 million square feet that traded at an average sale price of $202 per square foot.

The investment activity increased since the $370 million recorded during the previous year, but the Salt Lake City metro is also expected to continue to see a rise in discount deals, reflecting current national office real estate trends.

The post Fort Street JV Picks Up Office Duo in Salt Lake City appeared first on Commercial Property Executive.

Despite advances in sustainable technologies and renewables, energy efficiency remains the primary goal for property owners and an increasing challenge as overall demand rises. That was a key theme at NYU Schack’s Annual Conference on Sustainable Real Estate, which gathered public- and private-sector executives and academics to discuss progress and aspirations for the future.

Brookfield, for example, has averaged a reduction of about 5 percent electricity usage over five years, said Michael Daschle, senior vice president of sustainability for the company. And, while it is not anticipating energy demand increases at the property level, it is “definitely factoring in” higher energy expenditures because of increased capacity and greater demand for electricity over time. “The budgets are increasing even as the usage is different,” he said.

READ ALSO: Power Tools for CRE Energy Eficiency

Hines is also focused on keeping its demand low while introducing innovations into the market, according to Benjamin Rodney, vice president of construction at Hines. The developer has installed solar at multifamily projects in jurisdictions that offer incentives, for example, and in New York City, it is pioneering the use of a geothermal energy network to power 345 Hudson St., which was recently renovated by Hines and partners Trinity Church Wall Street and Norges Bank Investment Management, and 555 Greenwich St., a ground-up development that abuts 345 Hudson.

Rodney said developers “are their own worst enemy” when it comes to energy pricing because they add to demand growth for the utility when they add square footage to the grid.  “The question is can I figure out a way to harness the energy coming in and reuse more of it before I have to ask for more,” he said.

In the case of some redevelopments, however, developers are significantly reducing demand. Daschle noted. After a renovation at 5 Manhattan West, Brookfield has improved the property’s performance by 40 percent on the energy consumption side, and at 660 Fifth Ave. the company installed “a complete new system”—and a new facade—to bring the building from 80 percent electric and 20 percent steam down to 95 percent electric and 5 percent steam,

“The performance of these redeveloped assets is much, much better and you kind of trend towards more electric over time,” Daschle said. “Then you’re also improving the climate emissions performance of the properties.” 

Waste not, want not

Both Hines and Brookfield have partnered with the New York State Energy Research and Development Authority’s Empire Building Challenge to help finance their energy efficiency projects.

Michael Reed, acting head of large buildings at NYSERDA, said that every real estate owner and operator he has worked with has identified a lot of waste heat and is interested in capturing it and re-utilizing it. He pointed to Hines’ Hudson Square properties as an example of a developer who is realizing the possibilities. At 555 Greenwich, there are 68 pile-ons in the foundation that store excess energy that would otherwise be wasted.

“And then,” Reed added, “once you start talking about how do we connect a building’s excess heat to a nearby building’s need for heat, I think you are really into an interesting paradigm, but that is a long-term play for sure,”

The post NYU Schack Special Report: Energy Efficiency Still Key appeared first on Commercial Property Executive.

Atlanta is the new leader in the amount of space leased compared to the amount vacated, achieving 705.8 megawatts of positive net absorption in 2024, according to the firm’s North American data center trends report.

Last year, Atlanta absorbed nearly 39 times more space than at year-end 2023 (18 MW). The market recorded the highest volume of colocation leasing activity ever, spurred by GPU-as-a-Service tenants.

GPUaaS is a cloud-based service that allows on-demand access to high-performance graphics processing units, or GPUs.

A colocation data center facility allows businesses to rent space to house their servers, networking equipment and storage devices. It will enable them to place their hardware in a third-party data center while maintaining ownership and control over their equipment, unlike a cloud service where the provider owns the infrastructure.

Astounding numbers

The data center inventory numbers in the Atlanta market are astounding. Last year, it increased by 222 percent to 1,000.4 MW as the market accommodated demand by ramping up data center space under construction.

In the year’s second half, the market saw 2,159.3 MW under construction, representing a 195 percent annual increase in under-construction totals. That tops the eight primary North American data center markets in CBRE’s report.

As for new developments in the market, AWS plans to invest $11 billion in new data center development. Meanwhile, Lincoln Property Co.’s acquisition of a DXC data center shows it plans to redevelop it into a 30 MW colocation facility.

Ryan Mallory, Flexential’s COO, told Commercial Property Executive that Atlanta is emerging as the new “data center alley.”

GA Power/Southern Co. recently brought the Vogtle reactors online, delivering approximately 4GW of power capacity and unlocking significant development potential, Mallory said.

READ ALSO: Data Center Demand Keeps Surging Despite Challenges

“Additionally, Georgia has implemented robust sales tax incentives to attract high-paying jobs to communities hosting data centers,” he added. “This powerful combination of abundant power, available land and supportive communities has firmly placed Georgia on the technology map.”

However, Georgia is not the only market experiencing this surge.

In Texas, markets such as Dallas-Fort Worth, Austin and San Antonio have grown remarkably in the past 24 months, according to Mallory.

“These cities benefit from reliable power, a favorable tax environment, a high-quality workforce and communities that welcome the data center industry—a sector known for its high-paying, low-impact nature,” he said.

Overall, the exceptional quality of the product and the availability of land and power differentiate the U.S. market, Mallory added. “With historically high-growth regions slowing or pausing data center development, there has never been a better time to be in the data center business in North America.”

CBRE said tax incentives, available land and greater power accessibility make markets such as Charlotte, Northern Louisiana and Indiana potential growth areas for hyperscale and colocation providers.

This, despite some saying that Deep Seek might curb data center demand.

As for investment, CBRE reported that the average sale price increased year-over-year. Eleven asset sale transactions exceeded $90 million, while five surpassed $400 million.

AI impacts data center project locations

“As the demand for data centers has increased significantly, we have seen a shift in where these projects are being developed,” Todd Johnson, director of real estate development at Ryan Cos., told CPE.

“Traditionally, data centers were situated near metropolitan areas to minimize latency, but newer AI models have reduced the need for this proximity. Now, data centers are being developed in more remote locations where there is ample power supply.”

Seeking more energy

Avison Young’s data center market report for the fourth quarter of 2024 indicates that data center inventory continues to hit record highs in the U.S., with commissioned colocation power expanding nearly 50 percent over the previous 12 months. Yet, vacancy rates remain at historic lows, at just 1.6 percent.

In 2024, CBRE stated that North America doubled the data center supply under construction compared to the previous year to a record 6,350.1 megawatts. This is a 12-fold increase from the 456.8 MW under construction in 2020.

Given this growth, the energy needed to power these assets has become a focus.

As power generation and transmission timelines continue to stretch with rising demand, more data center developers are considering self-generation as a temporary supplement or a long-term solution, according to Howard Huang, a market intelligence analyst with Avison Young.

“Natural gas is gaining traction due to its abundance, affordability and faster deployment compared to waiting on grid transmission while sidestepping many of the limitations of solar and wind.”

Andrew Batson, head of U.S. Data Center Research for JLL, told CPE that the North American data center market reached unprecedented demand levels in 2024, with vacancy rates plummeting to record lows amid insatiable tenant demand and limited supply.

JLL’s research found that most markets have doubled or tripled since 2020.

“Power availability remains the primary challenge, with average wait times for grid connections extending to four years in most markets,” Batson said.

“As a result, data center development is expanding into new territories in search of power, with emerging markets seeing increased activity. In 2024, AI represented about 15 percent of data center workloads; by 2030, it could grow to 40 percent. AI will be a key source of growth for the sector.”

The post This Market Tops the Nation for Data Center Absorption appeared first on Commercial Property Executive.

Lovett Industrial has entered the Nashville market with the purchase of 10.4 acres in Hendersonville, Tenn. This swath of land will be the development site of Innovation Way Logistics Center, a 107,500-square-foot industrial property.

Powers Brown Architecture is the lead architect, while Kimley-Horn serves as the project’s civil engineer. Groundbreaking is scheduled for July 2025 and delivery is expected in June 2026.

Carrying the address 230 Innovation Way, the site is along New Shackle Island Road, offering direct access to Interstate 65 and U.S. Route 31E. Nashville International Airport is some 21 miles south.

Upon delivery, Innovation Way Logistics Center will be a rear-load building with a clear height of 32 feet and 215 feet in depth, having 29 dock-high doors and two drive-in doors. The property will also feature a 130-foot truck court and 120 parking spaces. Stream Realty Partners’ Griffin Farriss, Bradley Worthington and Andrew Fletcher will handle marketing and leasing.

READ ALSO: Manufacturing Surge Drives Industrial Expansion

The Nashville industrial real estate market had a decent 2024, according to fourth-quarter report from Colliers. The sales volume exceeded $1.4 billion, marking a 37 percent year-over-year increase.

Meanwhile, industrial space absorption totaled nearly 4.3 million square feet, and 4.0 million square feet were delivered, though that caused a slight bump in overall vacancy, to 4.1 percent. Almost 4 million square feet of industrial space were under construction as of the end of December, according to Colliers.

Lovett’s recent activity across the U.S.

Lovett has been active across a wide swath of the country in recent months:

•  In July, the company obtained entitlements for the development of a 298,000-square-foot facility in Chino, Calif., in the Inland Empire West submarket. Construction was scheduled to start in the fourth quarter of 2024.

•  The following month, Lovett delivered Broadway Logistics Center, a 201,329-square-foot Class A industrial building in Denver. Cushman & Wakefield was assigned to lease the spec project.

•  In October, Lovett broke ground on Highway 1 Commerce Center, a Class A spec last-mile logistics project in Philadelphia. The warehouse is slated for delivery by the third quarter of this year.

•  And in December, the developer broke ground on a 339,280-square-foot Class A logistics park in the Dallas-Fort Worth area. This project’s completion is also expected in the third quarter.

The post Lovett Industrial Enters Nashville Market appeared first on Commercial Property Executive.

Nuveen has signed a 168,741-square-foot lease at its industrial facility in Monee, Ill., within Chicago’s Southern Will County submarket. NewAge Products joined the roster, bringing the property to full occupancy.

Seefried Industrial Properties developed the 621,246-square-foot asset. Cushman & Wakefield brokered the deal on behalf of both parties.

Reynolds Consumer Products is the other tenant at 25100-25340 S. Ridgeland Ave., occupying 452,505 square feet.

READ ALSO: Industrial Real Estate’s Future Depends on Adaptability

The building has 40-foot clear heights, 26 exterior docks, two drive-in doors, ESFR sprinkler systems, LED lighting with motion sensors and cross-dock configuration. Additional features include a 2,555-square-foot office component, 139 vehicle parking spots and 46 trailer parking spots, which can be expanded to 96.

The asset provides access to major transportation corridors that connect to the wider Chicago metro area and the Midwest, such as interstates 57, 80 and 294. Union Pacific Global IV Intermodal Terminal, BNSF Intermodal Yard and the Canadian National Intermodal Terminal are within 20 miles.

Cushman & Wakefield’s Executive Vice Chairman Jason West worked on behalf of NewAge Products, while the company’s Vice Chairman Sean Henrick and Managing Director Ryan Klink represented the landlord.

Chicago’s industrial vacancy lagged other Midwest metros

Industrial vacancies increased in nearly every market over the past two years due to a large amount of new supply. As of January 2025, the national industrial vacancy rate clocked in at 8 percent, unchanged from the previous month, a recent CommercialEdge report shows.

Chicago’s vacancy clocked in at 10 percent in January—one of the highest in the nation and the only Midwestern market that fared worse than the national average. The metro’s rate had increased 530 basis points year-over-year, the same source shows.

Earlier last month, Seefried Industrial Properties was involved in another deal in the area. The company signed a 152,014-square-foot lease with nonprofit David C. Cook at its 1700 Madeline Lane Facility in Elgin, Ill.

Also in February, CenterPoint Properties landed an approximately 1 million-square-foot deal with 3PL firm RJW Logistics in Joliet, Ill. The tenant signed a full-building agreement at 2903 Schweitzer Road, within CenterPoint’s 6,400-acre Intermodal Center.

The post Nuveen Inks 169 KSF Chicago-Area Industrial Lease appeared first on Commercial Property Executive.

The significant financing deal comes as the AI data center demand grows. In January, J.P. Morgan provided a $2.3 billion loan to the joint venture of Blue Owl Capital, Crusoe Energy Systems and Primary Digital Infrastructure for the development of a build-to-suit data center project in Abilene, Texas. The campus will be designed, developed and operated by Crusoe.

Novva’s Salt Lake City campus, up close

Construction of the second phase at Novva’s Salt Lake City campus began in December 2023 and is slated for completion in 2026. Phase 3 construction began in January 2024 and is also expected to deliver by 2026. Both phases will feature 318,000-square-foot data centers and each will have the capacity to produce 72 megawatts of critical IT load.

The 175 megawatt campus, which will span about 1 million square feet when completed, was fully leased in 2023 to a leading global tech company. The first phase began operations in 2023 and has the ability to operate without water year-round and cool with ambient air. When fully operational, the complex is expected to consume approximately 84 percent less water than similar data centers in the region.

READ ALSO: From Data Center YIMBY to NIMBY?

The project is taking shape at 6477 Wells Park Road, roughly 18 miles from Salt Lake City International Airport and 22 miles from downtown Salt Lake City. The property has access to four long-haul fiber routes and includes a 200 megawatt substation with N+1 redundancy.

The location is attractive for data center operations because it offers low-cost power, low disaster risk, low latency, no sales tax on equipment purchases and a high-altitude cold desert climate, Novva CEO Wes Swenson said in prepared remarks.

J.P. Morgan acted as lead arranger and Starwood Property Trust acted as arranger for the financing. Simpson Thacher & Bartlett LLP served as legal counsel for CIM Group and Novva Data Centers.

Data center growth

The Salt Lake City property is Novva’s flagship. The firm also operates data centers in Colorado Springs, Colo., and Las Vegas. Other developments will come online in Reno, Nev., San Francisco and Mesa, Ariz.

Novva announced plans for the Mesa campus in August 2024. The company is expected to invest more than $3 billion over the next decade on the 160-acre property marking its first foray into Arizona. The first phase will have 96 megawatts of capacity and is slated for completion in late 2026.

The post CIM, Novva Land $2B for Data Center Development appeared first on Commercial Property Executive.

The South region continued to showcase its industrial strength, driven by robust sales activity and impressive growth, positioning key metros as leaders in the nation’s industrial landscape. In 2024, Charleston, S.C., saw $345 million in industrial sales, while El Paso, Texas, led in year-over-year pricing growth—145 percent. In South Florida, West Palm Beach-Boca Raton topped the list with $418 million in sales. While markets like Memphis, Kansas City and Savannah have transcended emerging market status, with inflated pipelines and enduring interest, the markets on this list have the makings of potential and solid economic indicators. They also reap the benefits of strong positioning near growing ports or spillover effects.

Smaller markets like Boise, Des Moines, and Tucson are also making strides, with business relocations and affordable pricing boosting demand. Meanwhile, the Tri-Cities region in Tennessee stands out with 3.9 percent job growth, strengthening its industrial footprint. These markets are uniquely positioned for sustained growth, backed by a mix of favorable economic conditions and strategic investments. By tapping into the latest insights from CommercialEdge data, we explore the evolving roles these regions are playing in shaping the nation’s industrial landscape. Here are our 10 emerging industrial markets this year:

Charleston, S.C.

Charleston continues to cement its status as an emerging industrial market, driven by robust construction activity and surging investor interest. As of late 2024, the market had more than 2.7 million square feet of industrial space underway across 10 properties, accounting for 3.3 percent of total stock, CommercialEdge data shows. The metro’s strength lies in its strategic position along the East Coast, with direct access to the Port of Charleston—one of the fastest-growing ports in the U.S.

Major industrial players such as Volvo, Bosch or Mercedes-Benz have expanded their footprint in the area throughout recent years, further solidifying its status as a manufacturing hub. Despite a slight dip in pricing, Charleston remains a hotbed for industrial transactions, with total sales surpassing $345 million in 2024 at an average price of $117.16 per square foot. A 3.5 percent annual job growth rate further underpins its expansion.

El Paso, Texas

With a flourishing industrial sector and rising investor confidence, El Paso is swiftly emerging as a key logistics and manufacturing hub. According to CommercialEdge data, the market recorded 2.6 million square feet of industrial space under construction at the end of 2024, or 9 properties, representing 3.6 percent of its total inventory. Its advantageous location on the U.S.-Mexico border fuels cross-border trade, attracting major tenants from the automotive, electronics and food processing industries.

The market also boasts one of the strongest pricing growth trajectories, with a 145 percent year-over-year increase in price per square foot—the highest percentage among the top emerging markets—reaching an average of $44.24 at the end of December 2024. Job growth also remained positive, up 1.1 percent year-over-year. This combination of affordability, location and infrastructure investment positions El Paso as a high-potential market for continued industrial growth.

White Plains, N.Y.

The suburban hub just north of New York City is carving out a strong niche as one of the emerging industrial markets in the nation. The market had 9 properties totaling nearly 2.7 million square feet underway at the end of December 2024, accounting for 2.9 percent of total stock, with ongoing projects focused on modern distribution centers catering to last-mile logistics demand.

White Plains stands out for its high property valuations, averaging $126.28 per square foot—one of the highest among emerging industrial markets. Additionally, the market saw a 43.3 percent year-over-year increase in pricing, signaling steady investor confidence despite broader economic uncertainty.

With its proximity to major urban centers, White Plains continues to attract investments from major firms such as Amazon and FedEx, which are expanding their logistics operations in the area. While job growth in the region was more moderate (0.6 percent year-over-year), the area benefits from a highly skilled workforce and access to one of the largest consumer bases in the country.

Southwest Florida Coast

The region has been establishing itself as a dynamic emerging industrial market for a while now, propelled by strong investment activity and an active pipeline. In 2024, Southwest Florida Coast’s industrial sales totaled more than $311.7 million, with an average price per square foot of $134.40, CommercialEdge data shows. This robust investment is supported by a growing population, increasing demand for distribution hubs and ongoing infrastructure improvements.

Industrial development within the market remained strong all throughout 2024, with 1.5 million square feet under construction at the end of the year, or 2.4 percent of stock, primarily concentrated in logistics and light manufacturing projects. Retail logistics companies such as Publix and Walmart have been expanding their distribution operations in the region, capitalizing on Florida’s growing consumer demand. Despite its smaller job growth rate—0.5 percent year-over-year—the area continues to attract businesses seeking proximity to Florida’s expanding consumer markets.

Boise, Idaho

Boise’s industrial market has been steadily gaining momentum, driven by a surge in new residents and business relocations. The sector is evolving with a healthy balance of construction activity and pricing growth. In 2024, the metro saw consistent development, with six properties totaling 1.2 million square feet underway at the end of the year, or 2.6 percent of stock, to meet rising demand from the logistics, tech and food processing industries.

Although investment activity slowed last year, assets traded at an average of $149.21 per square foot, offering strong value compared to larger West Coast markets. Major employers like Albertsons and Micron Technology continue to expand their footprint, fueling further demand. While pricing growth remained moderate at 22.4 percent year-over-year, Boise’s job market continues to strengthen, bolstered by a 2.9 percent rise in industrial employment.

West Palm Beach-Boca Raton, Fla.

The region is experiencing a surge in industrial expansion, fueled by South Florida’s thriving economy and growing e-commerce demand. CommercialEdge highlights that in 2024, West Palm Beach-Boca Raton led all markets in industrial sales, surpassing $418 million, with properties trading at an average of $224.13 per square foot—still more affordable than high-priced markets like Brooklyn, Queens and San Francisco.

However, industrial development has slowed compared to previous years, with just 130,000 square feet across three properties in the pipeline as of the end of 2024, primarily catering to logistics, distribution and light manufacturing tenants. While job growth has been modest at 0.9 percent year-over-year, the metro benefits from a diverse business ecosystem and steady population growth, sustaining long-term demand and cementing its status as an emerging industrial market.

North Central Florida

North Central Florida’s industrial market is gaining traction as a vital logistics hub, capitalizing on its central location and easy access to major highways connecting the state’s key metros. In 2024, industrial development remained steady, with three projects totaling 1.1 million square feet under construction by December’s end, mainly focused on distribution centers and light manufacturing. This growth accounted for 2.1 percent of the region’s total industrial inventory.

Investment activity was robust, with industrial sales reaching $108.6 million and property values soaring 141.4 percent year-over-year to an average of $45.05 per square foot. Companies like PepsiCo and Sysco continue to expand in the region, drawn by its strategic advantages and affordable operating costs. While job growth held steady at 0.4 percent, the continued expansion of industrial space reinforces the region’s long-term growth prospects.

Tucson, Ariz.

Tucson’s industrial sector is holding strong, fueled by its strategic location near the U.S.-Mexico border and a booming manufacturing base. According to CommercialEdge, development activity in 2024 remained steady, with four properties totaling 715,000 square feet under construction by year’s end, primarily catering to logistics and aerospace tenants.

The market saw robust investment, with industrial sales approaching $135 million by the close of 2024. Pricing remains competitive, with properties trading at an average of $99.98 per square foot, positioning Tucson as an appealing alternative to more expensive markets. The market experienced a 29.6 percent increase in pricing year-over-year, indicating sustained investor confidence, while job growth stayed positive at 1.1 percent.

Des Moines, Iowa

Des Moines is quietly emerging as a key industrial hub in the Midwest, driven by its robust transportation infrastructure and business-friendly environment. The metro maintained a strong development pipeline in 2024, with 1.5 million square feet across four properties underway, primarily serving distribution and light manufacturing tenants.

Investment activity remained stable, with industrial sales totaling $52.9 million, while property values rose 16.1 percent year-over-year to an average of $81.30 per square foot. Major companies like John Deere and Amazon continue to expand their footprint, further fueling industrial demand. Des Moines also saw steady job growth, with employment rising 1.8 percent year-over-year, reinforcing the metro’s sustained industrial momentum.

Tri-Cities. Tenn.

The Tri-Cities region in Northeast Tennessee is gaining recognition for its gradual industrial sector expansion, supported by its strategic location along key transportation corridors. By the end of 2024, industrial development included one property totaling 481,000 square feet, representing 1 percent of the metro’s total inventory.

Industrial sales in the region reached $118.7 million, with properties trading at an average of $115.85 per square foot. Despite a slight dip in pricing, the job market remains strong, with a 3.9 percent year-over-year increase in employment—the second-highest among similar markets. Leading employers like Eastman Chemical and FedEx Ground are expanding their logistics networks, further strengthening the region’s prospects for sustained industrial growth.

Methodology

The methodology behind the Top 10 Emerging Industrial Markets ranking leverages data from CommercialEdge, complemented by an analysis of the U.S. Census Bureau’s annual employment growth rate. Our rankings are determined based on metrics recorded up until December 2024.

Factors considered in our methodology encompass the volume of industrial construction underway, industrial sales volume for the year 2024, pricing per square foot, the annual change in price per square foot and job growth specific to the industry. We believe this ranking methodically balances the considerations of growth potential and the overall size of the market.

The post Top 10 Emerging Industrial Markets appeared first on Commercial Property Executive.

The children’s apparel company, owned by Berkshire Hathaway, was already leasing the entire seventh floor at the 26-story tower. With this deal, it will also fully occupy the 31,663-square-foot sixth floor, bringing its total footprint at the property to 63,417 square feet, Commercial Observer reported.

The property is now 77 percent leased. Its anchor tenant Metropolitan Commercial Bank signed a renewal and expansion agreement back in December, bringing its total footprint to 81,979 square feet. Other notable tenants include The Ayers Group, Riveria Investment Group, New York Bankers Association, Windsor Properties, Flushing Bank and Keller Williams, CommercialEdge shows.

Global Holdings acquired the building in 1991 for $104.5 million from The Equitable Life Assurance Society of The United States, according to CommercialEdge data. The tower is currently subject to a $250 million loan held by Landesbank Baden-Wurttemberg Bank, the same source shows.

The JLL team included Vice Chairman Paul Glickman, Senior Vice President Diana Biasotti, Associate Vice President Kristen Morgan and Associate Harrison Potter.

An upcoming revamped high-rise

Originally designed by Emery Roth & Sons, the office tower dates to 1953 and underwent cosmetic renovations in 2005. The property features 12,000 square feet of first-floor retail space, a fitness center and 100 vehicle parking spots.

The owner is currently implementing a $30 million capital improvement program within the building, with renovations led by VOCON. Plans include an updated lobby, amenity center, the addition of a conference center, lounge, barber shop and salon, as well as golf simulator and bowling valley. Renovations are expected to reach completion during summer next year.

Situated within the borough’s Murray Hill neighborhood, 99 Park Ave. is close to Grand Central Terminal and to Bryant Park, while John F. Kennedy International Airport is 15 miles away.

Manhattan’s vacancy lowest among the Northeast

The national office vacancy rate reached 19.7 percent in January, up 180 basis points year-over-year, according to the latest CommercialEdge report. Every office market experienced jumps in vacancies, with five of the top 25 U.S. metros recording surges of more than 500 basis points.

Despite this, in the first month of 2025, the Northeastern markets kept their rates below the national average. Manhattan’s office real estate trends show that the metro registered the lowest vacancy rate in this region, with 16.6 percent as of January, marking only a 10-basis-point increase.

Notable leases in the borough signed since the start of the year include Newmark’s recent 15-year renewal and expansion at 125 Park Ave. The company increased its footprint to 184,239 square feet at the designated New York City landmark, owned by SL Green.

In January, that same landlord inked a 92,663-square-foot deal at another property. IBM expanded and renewed its presence at One Madison Ave., in a deal brokered by JLL.

The post Global Holdings Inks 63 KSF Extension at Manhattan Tower appeared first on Commercial Property Executive.

Over the last decade, state and local governments have welcomed data centers with open arms by creating massive subsidies and tax incentives for them. According to NAIOP, 36 states currently offer incentives for data centers as a way of boosting their economies and increasing their tax bases.

But a recent surge in data center development to meet the ever-growing demand for capacity is putting a strain on power supply and infrastructure, causing some jurisdictions to question the benefits of these projects and the stimulus packages they’ve been offering. Some are even passing legislation designed to slow down the frenetic pace of development.

READ ALSO: Why SoCal Industrial Continues to Present Opportunities

The lure of data centers

Major data center hubs—such as Northern Virginia, the Dallas-Fort Worth metroplex, Atlanta, Phoenix and Chicago—owe their existence to some level of incentives and efforts by local governments to embrace data center development.

“Government support and community interest—or outright opposition—can vary greatly even within specific metros,” said Todd Smith, chief technology officer for Transwestern’s technology properties group tenant advisory practice. “You will tend to see data centers clustered in certain areas for this reason, as well as available infrastructure and utilities.”  

Every state and city wants new job growth and tax-dollar injection into the local economy, commented Sean Farney, vice president of Data Center Strategy at JLL. “And data centers bring both, as hundreds of tradespeople are required to build these facilities, and data center companies spend hundreds of millions of dollars during the build cycle,” he said.

Farney contended that states with pro-data center policies that streamline the build and procurement process have thrived. For example, Illinois attracted billions of dollars of investment after successfully crafting a set of tax incentives for data center development. Iowa adopted a state-wide renewable energy policy some years ago, which ended up attracting billions of dollars in data center investment funding, with Microsoft and Google both establishing large hubs there, he continued. 

In Northern Virginia, which has the capacity to provide abundant power for more than a decade, local governments appointed officials to head data center development coordination efforts, Farney noted, and ”the industry loved having a cooperative partner.”

To accommodate developers, San Antonio provided a low-cost cooling system for data centers using gray water.

Data center boom sets off alarm bells

Data centers worldwide already consume about 4 percent of the world’s electricity, according to a report from Data Center Knowledge. Usage by U.S. data centers is expected to triple by 2028, accounting for up to 12 percent of the nation’s power usage.

In addition to concerns about energy and water consumption, state and local governments also worry that the increased demand could jeopardize their carbon dioxide reduction goals by potentially forcing utilities to increase dependence on fossil fuels.

A 2016 study by Good Jobs First, a nonprofit watchdog group that tracks economic development incentives, found that nationwide, data center subsidies were costing state and local governments about $2 million per job created, a figure the report’s author, Kasia Tarczynska, said has ballooned in recent years. 

As a result, state incentives may come with requirements, such as job-creation thresholds. In Nevada, for example, to qualify for a 10-year tax abatement, a data center must create 10 new jobs, and a 20-year abatement requires 50 jobs. Some states also require that jobs created cannot be subject to workforce reductions for a specific time period.

To create goodwill among city leaders and residents, data center developers will throw in some amenities at their expense. “Oftentimes, a developer will directly contribute locally by building a new water main, establishing new parks, providing technology education and training, and even donating software,” Farney said, noting that in municipalities with limited natural resources like water, data center operators have designed low- or no-water facilities.

New regulations may slow development

The backlash over energy usage and other concerns has also prompted state and local governments to implement new data-center-specific regulations and zoning changes or pull the plug on incentives to slow or limit new development.

Last month, for example, the Virginia State Senate passed a bill that requires data center permit applicants to provide a study of the project’s impact on water, agriculture, parks, registered historic sites and land where the data center would be located. If located within 500 feet of a school or in a residential area, the applicant must provide a detailed profile of the project’s design and impact on its neighbors.

The state’s lawmakers also have proposed bills that would limit any construction or infrastructure costs from being passed on to consumers and offer tax credits to commercial facilities that meet certain energy efficiency standards.

Two communities in Northern Virginia have also responded to resident complaints about the size of and noise from data centers. Prince William County increased its tax rate on the equipment inside data centers by 72 percent. Neighboring Loudoun County made all data center projects subject to review by the county board, a move to keep these projects away from residential areas and certain commercial zones. Additionally, Fairfax County recently banned data centers within a mile of rail stations. 

Arizona, Illinois and Arkansas officials have passed laws to either suspend data center development or further restrict where they can be built, reported Stateline. As part of a broader energy bill, South Carolina lawmakers concerned about rising electricity demand are considering pulling the plug on discounted power rates for data centers. 

Bills under consideration in Georgia, California and Virginia would place more of the costs for improving data center infrastructure on developers rather than being borne by taxpayers, according to Politico’s E&E News.

It also reported that Texas lawmakers are considering a bill that would raise power costs for data centers and potentially force them to power off during a grid emergency. This legislation was proposed in response to power regulators warning that the Electric Reliability Council of Texas grid will need to double its power generation capacity by 2030 to meet booming demand.

Additionally, Georgia passed legislation that placed a two-year moratorium on tax incentives allotted to data centers, but it was vetoed by Gov. Brian Kemp at the urging of the Data Center Coalition, a trade group representing tech giants, including Amazon, Google and Meta.

The Atlanta City Council, however, recently banned data center development in the CBD near transit hubs and the Beltline, citing a need to prioritize housing, retail and public spaces. This action canceled a 300,000-square-foot data center development proposed near the Five Points MARTA rail station and Underground Atlanta.

Data center developers and investors sometimes face challenges in certain regions of the country, particularly near population centers where there is competition for limited available land, noted David Ferdman, managing director at Primary Digital Infrastructure, which provides flexible financing solutions for data centers.

“By leveraging the existing (asset) surroundings, data center developers can (often) address key challenges related to electricity, water and competition for land, while ensuring that the facilities are positioned for sustainable growth,” he said.

Federal deregulation to benefit data centers

While some markets like Northern Virginia are pulling back support for more data center development, Smith said, markets like Texas and Alberta are embracing more investment in this sector, including the enablement of major natural gas production. 

Smith noted that use of natural gas, which does include some level of carbon emissions, is paramount in meeting growing power demand. Support from the Trump Administration in the form of relaxed rules around emissions will also be useful in bringing new projects online. 

President Donald Trump has already announced that Damac Properties, which is controlled by Emirati billionaire Hussain Sajwani, will invest $20 billion in data center development across a number of states, including Texas, Arizona, Oklahoma, Louisiana, Ohio, Illinois, Michigan and Indiana.

Smith noted that public or private support for co-locating energy generation on-site will be helpful in both reducing the strain on public power grids and CO2 emissions targets.

In an effort to support AI development, President Joe Biden opened federal lands to data center developers and offered them expedited permitting. But this was a nonstarter, Farney said, because the opportunity to develop on federal lands is contingent on using geothermal energy, a technology that does not scale to the commonplace gigawatt campus sizes.   

“The new administration’s approach is more open market, starting with the thesis that AI is strategic to U.S. interests and that leadership must be maintained via reduced constraints on digital infrastructure deployment,” Farney continued.   

The Trump Administration recently announced U.S. government investment in a $500 billion public/private alliance called Stargate. Touted as a means to secure America’s AI future, this joint venture—which is backed by OpenAI, Oracle and investors SoftBank and MGX—was formed to build advanced data centers across Texas and beyond. It comes with an initial $100 billion commitment and brings together a collaboration key technology partners, including ARM, Microsoft and NVIDIA.

Big tech takes action to thwart more regulation

To overcome regulatory challenges, data center developers and hyperscalers—including Microsoft, Amazon, Oracle, Google and Meta—are increasingly co-locating privately owned power production facilities on-site or near data centers. They are also stepping up their move to nuclear energy to meet their own ESG goals, which Farney noted are often are more stringent than government mandates.

Microsoft, for example, is repositioning Pennsylvania’s Three Mile Island defunct nuclear reactor to meet its power requirements in that region, while other Big Tech users are embracing small modular reactors, a new technology that will co-locate small, privately operated nuclear reactors on data center sites.  

Despite the growing pains being felt by data center companies and jurisdictions, Farney believes that data centers maintain their appeal.

“If data is the currency of the 21st century, then data centers are the banks protecting this valuable commodity,” Farney commented. “When you look at the positives—increased tax revenues, more jobs, training programs, lower utility rates due to subsidies, improved infrastructure, and better-performing digital services—it’s hard (for local governments) not to like data centers.”

The post From Data Center YIMBY to NIMBY? appeared first on Commercial Property Executive.

The industrial sector has proven itself to be a highly resilient asset class that has continued to draw investor interest, even over the turbulent past few years for commercial real estate. While transactions remained at nearly a standstill for the majority of 2024, there was steady demand for well-positioned industrial assets.

Industrial is appealing to investors seeking a hedge against inflation to preserve capital. While still elevated slightly from their historic lows, cap rates are compressed, with most transactions closing at sub-5 percent cap rates in prime markets. It was also the only major product type to see a decrease in loan delinquencies in the fourth quarter, a further testament to the sector’s stability through an evolving economic landscape and unprecedented global events.

READ ALSO: Capital Ideas: Gold Card Plan Can’t Trump EB-5

Yes, there have been persistent headlines of oversupply and softening demand in Los Angeles County and the Inland Empire and attention being driven toward emerging markets in the Southeast and Midwest. That said, Southern California and other Western markets remain critical hubs of commerce and logistics that will continue to benefit from the same demand drivers and fundamentals that have historically propelled these regions. In fact, there are emerging submarkets within these regions with strong growth potential that are attracting businesses, developers and investors alike.

Strong outlook for demand drivers

Even in the face of a new administration and geopolitical uncertainty, Western markets in particular remain a key hub for both global and domestic commerce. In 2024’s fourth quarter, year-over-year volume at Southern California’s San Pedro Bay Port Complex (home to the ports of Los Angeles and Long Beach) was up 19.5 percent, according to Freightos data, and costs per container from East Asia to the West Coast declined 13 percent.

While some investors are still hesitant to make moves amid headlines of rising vacancies resulting from significant deliveries, strong absorption rates indicate that these will likely begin to fall again in 2025. In fact, throughout the Inland Empire, average gross and net absorption rates were up in the fourth quarter as a result of stronger demand.

From an overall economic standpoint, higher employment rates and improving sentiments are signs we will see industrial users making moves. This will create ample opportunity, as many tenants are poised to strategically navigate their own growth and invest in their supply chains this year. At DAUM, we’ve assisted several companies, including retailers and distributors, with expansions this past year and expect this kind of activity to continue.

Opportunities in emerging submarkets

We’re even seeing new and planned construction of state-of-the-art distribution centers and mega-warehouses in historically underutilized areas of the Inland Empire and Los Angeles County that still have ample developable land.

One example of this is L.A. County’s Antelope Valley, which is located just an hour from the ports, north of the city of L.A. and just west of the Inland Empire. With growing business and residential populations, an educated workforce and a business-friendly government, it is poised to continue attracting businesses and represents an area of industrial growth and fertile ground for investment.

Industrial users, including logistics firms and manufacturers, are attracted by the region’s affordability, given that rental rates remain high in submarkets near downtown Los Angeles. Additionally, drayage costs to the Antelope Valley are the same as to Beaumont and Banning and lower than the High Desert, Tejon and the Central Valley.

In fact, DAUM agents recently arranged the sale of 68.5 acres of land in Lancaster—fully entitled for a 1.26 million-square-foot distribution center—to Amazon.

Especially as the logistics industry continues to increase its capabilities of next- and same-day delivery, there remains strong demand for quality industrial space near key population and transportation hubs.

Rick John, SIOR, is executive vice president at DAUM Commercial Real Estate Services.

The post Why SoCal Industrial Still Yields Opportunities appeared first on Commercial Property Executive.

The greatest challenge to securing financing in the current cycle is without a doubt meeting the necessary debt service coverage ratio in the current rate climate. Debt liquidity remains abundant, ready and accessible from a broad range of sources. However, while most lenders have not changed their DSCR requirements, rates have gone up substantially since 2022.

Recent downward movement of Treasury yields since the beginning of the year will help, but the ability for a property to adequately fund itself from operations in a higher-for-longer rate climate that has reset the market will still be a challenge in the year ahead. This reality will have an outsize impact on commercial properties valued at $15 million or less, as internal and external debt and equity resources for these owners are more constrained.

READ ALSO: Why You Should Consider Loan Defeasance

While we haven’t seen many borrowers in the $15 million or below value range having to give back properties in the current cycle, we have seen growth in listing a property for sale while at the same time engaging debt sources for refinancing. The decision is ultimately dictated by which direction offers the best overall return for a sponsor borrower’s investment goals. Both strategies face challenges, but in the end, refinancing to hold is often the desired outcome and remains feasible even in the face of higher rates.

The refinancing route

Two years ago, when a borrower moved to refinance a property, putting cash into the asset was not a requirement or consideration that they would normally consider as part of the process. But over the past 18 months, that reality has changed dramatically. Borrowers faced with the prospect of refinancing a loan with a five-year term are taking debt that might have been based upon sub-1 percent Treasury yields and replacing it with a rate based on Treasury yields of over 4 percent. For borrowers in this position, the cost to refinance maturing debt will eat into net operating profit established at the lower rate—income which may or may not have grown enough during a loan term to meet the moment.

Many properties that are refinancing from 10-year debt placed in 2015 will be able to meet today’s DSCR levels and may still be able to achieve cash-out proceeds if operations have remained consistent and improved during that time, allowing for significant appreciation. Very few properties are still charging the same rents as they were in 2020, even as other operating costs have increased. However, cash-out proceeds may not be as easy to reach when underwriting a new loan at current DSCR capacity, and for many, a break-even refinance will be wiser than pushing up to maximum leverage.

Cash-in for a refinance transaction will most likely have to come from internal sources for assets in the sub-$15 million category. For any owner with enough liquidity on hand, expectations should include writing a check for as much as approximately 30 percent of the current loan balance, depending upon the property type. Since you won’t find as many preferred equity, participation or mezzanine funding solutions for investments in this range, there are other creative approaches to the cash-in conundrum. One strategy that is available is the cross-collateralization of assets performing at different levels to offset weakness in one through the strength of another, especially if the subject property is not operating at a stabilized level. In a similar approach, refinancing debt on an asset with leverage bandwidth to provide proceeds can identify funds to be deployed into other struggling properties worth saving for future upside.

Lastly, in limited instances, interest-only terms can provide breathing room for properties that need to extend leverage higher into the capital stack. While interest-only terms are much more readily available for multifamily properties, they do exist for other asset types when performance and DSCR bandwidth merits and still meet lender risk tolerance.

Investment sales

The reality of increased DSCR burdens will continue to have an impact on investment sales. However, as rate volatility settles into consistency at the current range, we should begin to see movement. For many borrowers dealing with maturities, the decision to hold or sell will be driven by the cost of debt. The stall in the asset sales market in 2023 and 2024 was driven by negative leverage and cap rates. While some negative-leverage transactions took place during that period, mainly due to 1031 exchange requirements, much of the potential transaction activity was halted, with owners holding assets and buyers keeping their capital sidelined. Price discovery ensued, pitting sellers seeking to maintain a past value from a different rate climate against buyers unable to accept a going-in cap rate under their interest rate. As maturities compel owners to either put cash in to refinance or sell at a value the market will bear, we are beginning to see going-in cap rates align with current interest rates. Price discovery this year will be compelling for owners and lenders, with distress most likely only appearing in lower-Class B to Class C properties.

Rate strategy potential

Volatility is real and has defined the challenges faced by most assets in the current rate cycle, excluding office, which is processing its own set of operating challenges. The MBA recently forecast the 10-year Treasury yield to range from the low to high 4s this year. We are currently in the lower range of that forecast, but that could change as the year progresses. If you can make a loan work at current pricing and have worked through the process of identifying a viable lending source, lock a rate now. If you have a pending maturity that is nearing or at prepayment thresholds, start the process today and take volatility out of the equation.

Ben Johnson is a director in the Seattle office of Gantry.

The post Impacts of DSCR: Strain, Pain, When to Retain appeared first on Commercial Property Executive.

Defeasance has always been a critical financial mechanism for commercial real estate investors looking to sell or refinance properties with prepayment restrictions. But today’s rising interest rate environment has created opportunities that investors shouldn’t overlook. Defeasance costs in many cases are now lower than the outstanding loan balance, offering potential savings that can be game-changing.

Let’s explain how defeasance works, why it’s so valuable and what makes today’s market particularly advantageous for those considering loan defeasance.

What is loan defeasance?

Most CMBS and Freddie Mac fixed-rate loans include a prepayment restriction clause that prohibits early payoff, protecting the lender’s projected interest income. Instead of repaying the loan outright, the borrower is permitted to defease the loan by substituting a portfolio of secure assets, such as U.S. Treasury bonds and agency bonds, as collateral for the property.

These bonds generate enough cash flow to cover the remaining payments to the loan maturity date, satisfying the lender while enabling the borrower to release the property for sale or refinance. By strategically navigating this process, commercial real estate investors gain significant financial flexibility.

READ ALSO: From Data Center YIMBY to NIMBY?

Today’s market offers new opportunities

Rising interest rates have fundamentally shifted the economics of defeasance. Here’s why it matters for today’s investors:

• Lower Defeasance Costs: Rising rates have reduced the price of defeasance securities—specifically the government or agency bonds required to replace property collateral. This decrease has, in some cases, resulted in defeasance costs that are lower than the loan’s outstanding balance.
• A Competitive Alternative to Yield Maintenance: Unlike loans with yield maintenance, where the 1 percent minimum premium adds an unavoidable cost, defeasance offers a “no minimum” cost structure. This flexibility can unlock significant savings.

A real-world example

To illustrate the opportunity in today’s market, here’s an example of a Northmarq-originated loan. A fixed-rate Freddie Mac loan, issued at the height of the pandemic, was recently eligible for defeasance. The loan balance at the time of defeasance was $59.4 million. Because of discounting opportunities tied to interest rates, the total defeasance cost came in at a reduced amount of $55.6 million, resulting in a discount of approximately $3.8 million.

While this is an extreme case, it highlights the potential upside for commercial real estate investors considering defeasance in today’s environment. These kinds of results can be especially prevalent for loans issued when interest rates were near historic lows, as their yield requirements now align favorably with the higher-rate market.

Why this matters now

The market for defeasance has shifted dramatically due to macroeconomic factors, creating a window of opportunity for investors. For those with commercial loans originated in recent years, a potential discounted defeasance cost could mean the difference between a simple transaction and a multimillion-dollar savings.

If you’re considering a sale or refinance, now is the time to evaluate whether defeasance could unlock significant flexibility and cost savings for your portfolio. With the current market dynamics at play, defeasance is not only a powerful tool but could be the most financially advantageous move you make this year.

Chris Hall is vice president of defeasance & 1031 consulting at Northmarq.

The post Why You Should Consider Loan Defeasance appeared first on Commercial Property Executive.

Over the years, we’ve published several articles about the benefits of the EB-5 Immigrant Investor Program, which enables foreign investors to invest in U.S. job-creating commercial initiatives in exchange for a Permanent Resident Card, also known as a Green Card. The private capital investments, which range from $800,000 to $1.8 million depending on the area, have typically been used as a lower-cost funding source for commercial real estate development projects.

So CRE executives were surprised when President Trump and Commerce Secretary Howard Lutnick announced last week that the EB-5 program would be transformed into a plan that sells “Gold Card” visas (Green Cards with extra benefits) to foreign citizens for $5 million. It seems these funds would be used for government purposes, like paying down the national debt.

“It really isn’t a modification at all because it’s completely different,” Reid Thomas, chief strategy officer for deposit management company Ampersand Inc., told me.

READ ALSO: The Strain and Pain of DSCR

With origins as a job creation program, Thomas said, EB-5 has more in common with the Opportunity Zone program, which also drives private investment and job creation to high-need areas, than the public fund-raising plan than Trump has described. Of course, for OZ investors, the carrot is tax breaks rather than a path to citizenship.

Created in 1990 by the Immigration Act of 1990, EB-5 enables investors (and their spouses and children) to gain Green Cards by investing in U.S. businesses that create at least 10 full-time jobs in the U.S. Investors can invest in their own businesses or in investment pools known as Immigrant Investor Regional Centers. The Regional Center program was launched in 1992 as a pilot and has been renewed each year since.

EB-5 was reauthorized in 2022 with the EB-5 Reform and Integrity Act, which infused sweeping guardrails into a program that had seen some fraud and abuse. Today, investors are heavily vetted, and jobs must be proven to have been created in Targeted Employment Areas, Thomas said. Regional Center pools are required to have a fund administrator, and if the project is proven to be successful, investors get their principal back.

That’s why, Thomas noted, Secretary Lutnick “was not well informed” when he said that EB-5 was a “poorly overseen, poorly executed” program. “There’s quite a lot of rigor around the program that has been enhanced,” Thomas said.

Unlike some of President Trump’s other proclamations during his first six weeks, this plan has only been announced verbally—not by Executive Order.  More details are expected in the coming weeks. Two big questions are: What are the extra perks that come with having a Gold Card vs. a Green Card? Will the Gold Card buyers get a return on their investment?   

During last week’s cabinet meeting, President Trump said the program might be used by corporations that want to hire highly qualified foreign graduates of U.S. universities, and during his address to Congress last night, he said the program would bring in “brilliant, hardworking, job-creating people” (“big producers, big taxpayers”) while the U.S. gets rid of immigrants who are “criminals and child predators.”

Since the program was created by Congress, it doesn’t seem that it could be legally eliminated or changed with the stroke of a pen. Nevertheless, let’s hope that President Trump and Secretary Lutnick learn more about the benefits of EB-5 before morphing it into something that eliminates a reliable funding source for CRE.

The post Capital Ideas: Gold Card Plan Can’t Trump EB-5 appeared first on Commercial Property Executive.

Construction spending for the sector has tripled since 2021, driven by reshoring efforts, national security concerns and government incentives supporting domestic production of EVs, batteries, semiconductors, as well as clean energy technology.

This manufacturing investment is expected to have a lasting impact on industrial real estate, with the multiplier effect generating millions of square feet in supplier and logistics developments. In the Savannah–Hilton Head market, Hyundai’s $5.9 billion, 17 million-square-foot EV plant has already attracted suppliers like Daechang Seat Co. and Ecoplastic Corp.

However, the sector faces challenges, including land, water and power constraints, labor shortages and potential trade disruptions. Tariffs and trade policy shifts could impact firms that have nearshored operations to Mexico or rely on exports, adding uncertainty to the industry’s long-term outlook.

READ ALSO: Manufacturing Demand for Industrial Space Is Mushrooming

As of January, the under-construction pipeline included 346.2 million square feet of industrial space nationwide, accounting for 1.7 percent of the total inventory, according to CommercialEdge data. The Southeast has seen a surge in manufacturing development, with nearly 2 million square feet of Charlotte’s pipeline dedicated to this sector—one-third of all space under construction in the market.

Phoenix had the highest share of industrial space under development, with 4.1 percent of its inventory—17.6 million square feet—underway. Other active markets included Memphis, Tenn. (3.9 percent or 11.7 million square feet), Kansas City, Mo. (3.8 percent or 11.2 million square feet), Denver (2.4 percent or 6.8 million square feet), and Dallas-Ft. Worth (2.3 percent or 22.5 million square feet).

Industrial sales in January reached $69.2 billion, with properties trading at an average price of $129 per square foot.

Strong demand keeps industrial rents on the rise

The average national rent for industrial space hit $8.35 per square foot in January, rising five cents from December and up 6.8 percent year-over-year, CommercialEdge data shows. Port-adjacent and Southeastern markets continued to lead in rent growth, with New Jersey posting the highest increase at 10.9 percent over the past year. The Inland Empire and Miami followed at 9.2 percent, while Nashville and Atlanta saw increases of 9.0 and 8.6 percent, respectively.

Despite a rise in new supply pushing up vacancy rates in some markets, strong demand for high-quality, newly built properties has kept in-place rents climbing. The national vacancy rate held steady at 8.0 percent in January, while the gap between market-wide in-place rents and rates for leases signed in the past 12 months stood at $2.22 per square foot.

Read the full CommercialEdge report.

The post Industrial Report: Manufacturing Surge Drives Industrial Expansion appeared first on Commercial Property Executive.

The Metroplex’s office sector remained steady in 2024, with more than 2.9 million square feet under construction and 2.8 million square feet delivered across 18 properties, CommercialEdge data shows. Additionally, Dallas office construction starts picked up last year, as 1.7 million square feet broke ground, marking a 50 percent increase year-over-year.

However, the metro still faces a few challenges. The vacancy rate rose 330 basis points year-over-year as of January, clocking in at 24 percent. Additionally, as loan delinquencies increased, property owners have been more frequently selling their underperforming office buildings at a discount.

Construction activity remains above national average

Dallas’ office construction pipeline at the end of 2024 totaled more than 2.9 million square feet, accounting for 1 percent of the metro’s inventory. That was 20 basis points higher than the national threshold, as well as peer markets such as Houston (0.8 percent) and Atlanta (0.5 percent) but lagged behind Austin (3.7 percent).

When taking into account projects in the planning stages as well, the market’s share jumped to 4.6 percent. Additionally, Dallas’ office construction starts in 2024 amounted to 1.7 million square feet from the 17 projects that broke ground. That represents a more than 50 percent increase year-over-year.

In April, a joint venture between Pacific Elm Properties and KDC obtained $290 million for the construction of Parkside Uptown, a 500,000-square-foot development in Dallas. The developer broke down on the project in 2023 using funds from a $300 million note and expect to deliver it in 2027.

Office deliveries drop year-over-year

Dallas’ office construction activity led to 18 properties coming online in 2024, which totaled more than 2.8 million square feet. That accounted for 0.8 percent of its total stock, slightly above the 0.7 national average. However, that figure was still almost 30 percent lower year-over-year.

Among peer markets, the metro had the largest share of office space delivered. Atlanta and Austin (2.2 million square feet each) were slightly behind, while

Last quarter, Ryan Cos. completed Ryan Tower, a 409,000-square-foot office building in Plano, Texas. The 23-story high-rise, which was already more than 50 percent leased at the time, is part of the $3 billion mixed-use development Legacy West.

Office-to-residential conversions on the rise

Investors remain keen on office-to-residential conversions due to ongoing challenges in the office sector, such as rising vacancy rates. CommercialEdge’s Conversion Feasibility Index, powered by Yardi, assesses the practicality of repurposing buildings based on factors like walkability, age, and floorplate shape.

The CFI score classifies buildings into three tiers, with Tier I being the most suitable for conversion. In the Metroplex, there are 43 office properties totaling 4.8 million square feet in this category and 353 properties spanning 43.1 million square feet in the Tier II category.

At the end of last year, Pacific Elm Properties completed the office-to-residential conversion of 14 stories within Santander Tower, a 50-story downtown building. Despite the building having a lower CFI, the developer repurposed the space into 291 units.

Dallas office prices below the national average

After ranking fourth nationally in terms of sales in our last market update, Dallas saw a decrease in investment volume. The metro registered $1.5 billion in assets trading last year, with the average price per square foot standing at $107, considerably lower than the $174 national average.

However, only gateway markets surpassed the Metroplex, with peer metros such as Phoenix and Atlanta ($1.4 billion each) ending the year with less sales. Manhattan continued to lead nationally with $4.9 billion.

In one of the largest deals of the year, Provident Realty Advisors acquired Lakeside Campus, a two-building office campus totaling 807,354 square feet in Richardson, Texas. Trigild sold the 1991-completed asset that features a 16-story building and a four-story low-rise.

Vacancy rate continues to increase

Dallas’ vacancy rate at the end of the January clocked in at 24 percent, 330 basis points higher year-over-year, and considerably above the 19.7 percent national average. San Francisco (29.3 percent) continued to have the most vacant space, followed by Austin (27.8 percent).

At the end of the year, Merit Energy Co. signed a 104,034-square-foot lease at Nuveen Real Estate’s Two Lincoln Centre in Dallas. The firm will mover from a 127,000-square-foot space that is less than 2 miles from the new location.

The metro’s listing rate as of January was $31.4, a 14.9 percent increase year-over-year. Among peer markets, Austin ($45.8), Atlanta ($32.3) and Charlotte ($35.9) fared better, while Houston ($30.1) trailed behind.

The Metroplex’s coworking inventory grows

The Metroplex’s coworking inventory as of January reached 5.2 million square feet across 284 locations. That accounted for 1.8 percent of the market’s total office stock, 20 basis points under the national average.

Miami (3.8 percent) continued to have the largest share of coworking space nationally. Among peer markets, Dallas was on par with Houston and Austin, while Atlanta (2.2 percent) fared better.

Regus remained the largest coworking space provider in the Metroplex with 598,606 square feet across 35 locations. The company was followed by Lucid Private Offices (414,617 square feet), Caddo (274,500 square feet) and HQ (254,757 square feet).

Last year, Workbox entered the Metroplex’s coworking sector, opening a 50,000-square-foot shared office space location in downtown Dallas, at Asana Partners’ Victory Plaza. WeWork previously occupied the location but failed to renegotiate the leasing terms following its Chapter 11 exit.

The post Dallas Office Construction Starts Ramp Up appeared first on Commercial Property Executive.

Brasa Capital Management has closed its third and largest real estate fund, Brasa Real Estate Fund III, with $582 million in equity commitments. This marks an approximately 30 percent increase from the previous fund, which closed at $450 million, against a $300 million target.

The fund’s initial target was set to $750 million, according to the Private Equity Real Estate News. Out of a total of 22 investors, more than half are public pension funds, and 12 are first-time investors for Brasa. Approximately two-thirds of the capital raised will be directed toward industrial and residential assets.

The firm strategically invests in middle-market residential and commercial properties, focusing on the Western U.S. area and Texas. The company typically commits between $10 and $40 million in equity across various property types, with a strong focus on multifamily and industrial properties, as well as non-performing loans.

Since its establishment in 2018, Brasa has raised more than $1.3 billion in equity. The firm’s first fund closed in June 2019, with $120 million in commitments, exceeding its goal by $20 million.

At the end of last year, the company partnered with Paragon Commercial Group to purchase Huntington Oaks, a 328,711-square-foot shopping center in Monrovia, Calif. The duo took out a $55.9 million loan for the acquisition.

The post Brasa Capital Closes Fund at $582M appeared first on Commercial Property Executive.

Historically, a visitations rate drop from December to January is standard. Excluding the month’s two holiday weeks featuring Martin Luther King Day and New Year’s Day, the January 2025 rate would have equaled December 2024’s average rate.

Weather also played a factor. New York City’s average daytime temperature was 34 degrees in January 2025, compared to 41 degrees in December and 39 in January 2024. In January 2025, New York City experienced 4.5 inches of snow, compared to 2.3 inches in January 2024.

READ ALSO: C-PACE in NYC: Will the Program Finally Take Off?

Visitation for Class A+ buildings averaged 80 percent, down from 86 percent the previous month but up from 78 percent in January 2024.

Class A/A- buildings averaged 63 percent during January, down from 70 percent during December and slightly above 62 percent in January 2024. Class B/C building visitation slid 4 percent month-over-month but was up 5 percent year-over-year.

Manhattan’s office utilization

According to Avison Young’s latest Office Busyness Index figures, Manhattan office utilization is 79.9 percent of pre-COVID levels. Across the U.S., office buildings are 66.9 percent as busy as in January 2019, ultimately showing that NYC is 13 percent ahead of national figures.

“In a world where hybrid work has become so prevalent, the weather has become a significant factor for office attendance,” Pierre Debbas, Esq., co-founder of Romer Debbas LLP, told Commercial Property Executive.

This winter has been significantly colder this year than last, along with an increase in snowfall which has definitely hurt office attendance, Debbas added.

“[NYC’s] congestion pricing likely also played a role in office attendance as post-pandemic there is an increase of the workforce who prefers to drive in than utilize public transportation, and congestion pricing is only an added burden to an already expensive commute to the city.”

Debbas said Class A continues to outpace the rest of the market, predominantly driven by return-to-office mandates that larger corporations are imposing and the allure of all of the amenities that these companies provide in comparison to smaller and mid-sized businesses, which predominantly rent in Class B buildings.

The hybrid model is here to stay

Despite the headline, comparing office visitations for the past month to a pre-pandemic baseline may not be intuitive, according to Michael Webb, partner at Farrell Fritz P.C.

“Remote, work-from-home and hybrid employment arrangements have fundamentally, and perhaps permanently, changed how many work and live,” he told CPE. “It is unlikely that in-office work during the post-pandemic era will ever rise to pre-pandemic levels.”

However, REBNY’s latest monthly analysis of office visitation data for Manhattan buildings indicates the more significant “flight-to-quality” trend the office sector has experienced post-pandemic and suggests that high-quality office assets in major markets are far from having hit rock bottom, he said. The flight-to-quality trend in office leasing is not necessarily new but is borne out by the Placer.ai data analyzed by REBNY.

As REBNY highlights, Class A+ buildings in Manhattan had an average visitation rate of 80 percent for January. The rate drops 17 percent for Class A/A- office buildings to 63 percent, and it drops yet again for Class B/C office buildings.

“The data highlights that companies continue to seek, use and occupy office space in high-quality buildings that offer modern amenities, proximity to retail, transit or areas of socio-cultural interest, as well as health, wellness and sustainability initiatives and packages,” Webb said. “The REBNY analysis highlights the growing disparity within the market between full-service, high-end spaces and lower-quality properties.”

Premium office buildings also attract top dollar financing as a result. Earlier this year, Ivanhoé Cambridge, the real estate group of CDPQ, refinanced its 42-story trophy office tower at 3 Bryant Park in Midtown Manhattan, to the tune of $1.1 billion. JLL’s Capital Markets group arranged the funding.

Strict mandates can hurt office dynamics

Earlier this year, Amazon, Disney, JP Morgan, Starbucks and X summoned workers back to the office full or part-time, Robert Martinek, director at EisnerAmper, shared.

“However, it has been reported that companies that have enacted strict return-to-office requirements have had to deal with losing talent, as some top performers have quit,” he told CPE.

Some feel strict mandates can hurt office dynamics and reduce employee satisfaction, Martinek added. Except for government employees, most companies have adopted a flexible work arrangement. Remote workers have been home since the pandemic and have gotten used to working from a home office.

Supporters indicate that ‘work from home’ helps with family duties, Martinek observed. Additionally, there is no evidence that work-from-home employees are less effective than their counterparts.

“Many companies are downsizing their space but not removing it completely. The ‘two to three days in the office’ works best for companies and employees. The hybrid model is here to stay!”

The post Manhattan Office Visits Drop appeared first on Commercial Property Executive.

Newmark has signed a 15-year renewal and lease expansion at 125 Park Ave. in Manhattan, growing its footprint at the building to 184,239 square feet. The tenant was represented in-house by Newmark’s Jason Perla, Brian Waterman, David Waterman and Matthew Schreiner. 

Newmark has been a constant presence at 125 Park since the mid-1990s, when it committed to 47,000 square feet, according to Crain’s New York. Over the years, the firm has expanded its footprint; in 2014, Newmark occupied more than 133,000 square feet at the 654,800-square-foot property, Bisnow reported.

The office tower is now more than 99 percent leased, according to landlord SL Green. The company is currently finalizing the design of a new lobby and restoration of the building’s entrance to its original design.

READ ALSO: Net Effective Office Costs Edge Up

SL Green has owned the property since 2010, when the company acquired it for $330 million from Shorenstein, which had bought it in 2004 for $225 million. Completed as the Pershing Square Building in 1923, the office tower is a designated New York City landmark for its “significant contribution to the variety and richness of Midtown East.”

Located across from Grand Central Terminal, the 26-story building features floorplates ranging from 9,556 to 26,256 square feet, as well as 17,000 square feet of retail. Tenants at the LEED Gold-certified property also include TD Bank, Pandora Music and Canon U.S.A., according to CommercialEdge information.

SL Green, Manhattan’s largest office landlord, held interests in 54 buildings totaling 30.6 million square feet at the end of 2024. So far in 2025, the REIT has signed office leases totaling 455,008 square feet, with a current pipeline of about 975,000 square feet. In one of this year’s deals, IBM expanded its footprint at One Madison Avenue.

Manhattan office market sees some strength

Office leasing has picked up recently in Manhattan, a market that had been hit fairly hard by pandemic and post-pandemic realities. In 2024, according to Newmark data, 38.1 million square feet were absorbed in the borough, up from 30 million square feet in 2023, and the most since before 2020.

New office space deliveries, which had spiked to 5.7 million square feet in 2023—the most since 2019’s total of 7.7 million square feet—shrank to practically nothing in 2024, Newmark noted. Only about 100,000 square feet came online last year in Manhattan.

The post Newmark Expands Manhattan HQ appeared first on Commercial Property Executive.

A surge in outpatient demand, spurred by an aging population with even greater health-care services needs and increasing disease prevalence, puts outpatient volumes in the U.S. on track to grow by 10.6 percent over the next five years.

JLL’s report indicates limited construction for purpose-built MOBs, particularly in the Sun Belt, which is an area that has resulted in steady rent growth and continued stability for investors and health systems real estate.

Technology has assisted in a continued shift from inpatient to outpatient services, making treatments less expensive, safer and less invasive.

Therefore, health systems are expanding their real estate presence and are acquiring or contracting with physician groups to add specialty services. From 2022 to 2023, 16,000 additional physicians became employees of a hospital system, and health systems accounted for 46 percent of MOB leases that JLL tracked in 2024.

Specialty providers comprised 31 percent of the MOB leases. Psychiatrists and behavioral health providers are the leading specialty segments, accounting for 18 percent of square footage.

Savills pointed out that according to Definitive Healthcare’s 2023 survey of 195 leaders among health-care provider organizations, 60 percent of respondents’ strategic goals for the next 24 months included aligning facilities and services with changing patient demand. Additionally, ambulatory health-care employment is projected to grow 12 percent through 2028.

Health-care providers offering low- to mid-acuity services increasingly consider office and retail spaces near patients or hospitals, according to JLL’s report. This move can make conversion challenging for high-acuity or resource-intensive services such as imaging.

A resilient industry

Some will find the high level of resiliency by medical outpatient buildings amid significant economic challenges somewhat surprising, Cheryl Carron, COO at JLL’s Work Dynamics Americas & president of the Healthcare Division, told Commercial Property Executive.

“While many real estate sectors grapple with oversupply, MOB construction remains constrained, with fourth-quarter 2024 starts at a record low of 0.8 percent of inventory,” she said.

MOBs are seeing rising occupancy rates and steady rent growth, according to JLL’s research. Absorption accelerated in the fourth quarter of 2024, surpassing 19 million square feet for the top 100 markets, and marking an increase of 15 percent from full-year 2023.

Carron said that health-care providers are seeking to expand to serve a growing need from patient populations. Still, they do so with declining Medicare and Medicaid reimbursements and slim margins, averaging just 4.9 percent in December 2024, according to the Kaufman Hall Flash Report.

“As health-care margins continue to tighten, optimizing facility efficiency has become critical for providers to maintain financial viability while meeting growing patient demand,” according to Carron.

Agentic AI creates greater efficiency

For example, artificial intelligence and other types of technology enable MOB operators to make data-driven decisions that reduce energy and maintenance costs and provide a healthier environment for patients and employees.

The Wall Street Journal reported that large language models can better understand context and provide effective agentic AI.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

These agents can converse with patients of human-help health-care providers when handling duties such as prescreening and scheduling, reducing clinicians’ workloads given shortages of doctors and nurses. Some of today’s AI-based tech platforms can perform about 100 actions, such as automated calls to patients after a hospital discharge.

Subdued development

MOB construction has been subdued due to developers’ need for higher returns and tenants’ desire to control expenses and elevated costs. Therefore, health-care tenants need alternative spaces due to limited medical office availability.

John Wilson, president of HSA PrimeCare, told CPE that meeting the higher demand for health-care services is challenging.

“New health-care construction has slowed over the last few years due to high construction costs and interest rates,” Wilson said. Health-care systems are also facing a shortage of physicians, he added. There are over 340 million people in the U.S., and only about 1.1 million physicians, nearly half of whom are over age 55.

Occupancy for MOBs is moving steadily higher. The rate was 92.8 percent in the fourth quarter of 2024, up from 92.4 percent one year prior.

Medical office building occupancy has steadily increased in the top U.S. metros since the second quarter of 2021, even as the development pipeline product type remains robust, according to Avison Young Principal Janet Clayton.

“Top-tier medical office buildings have experienced the steepest rent growth since 2019, whereas typical medical office buildings followed normal rental rate growth patterns during the same time,” Clayton said. “This can be attributed to a continued flight-to-quality trend across the country as tenants are willing to pay more for newly delivered products with high-quality amenities.”

MOB rents rose in 2024 from 2023, although more slowly. Top-tier properties with rents in the 90th percentile of Revista’s Top 100 markets grew at a 2.4 percent CAGR from 2019 to 2024, compared to 1.8 percent for median rates. JLL said this rate increase will be steady, not steep, because of reimbursement pressures and tight operating margins.

Aggressive expansion in South Florida

The population’s shift to the Sun Belt will produce strong growth there. However, JLL reported that strong performance in markets such as Northern New Jersey and Boston will benefit from the presence of established, growing health systems with strong brand recognition.

Four Sun Belt markets are seeing rent growth of over 3 percent: Miami; Orlando, Fla.; Austin, Texas; and Tampa, Fla.

The most significant number of new outpatient services move-ins in 2024 were in New York, and Philadelphia led all markets for MOB net absorption. Atlanta and Houston posted more than 400,000 square feet of net absorption each, and the Norfolk/Hampton Roads, Va., area saw strong absorption compared to total inventory.

One thriving Sun Belt market is South Florida, according to Colliers.

South Florida’s favorable demographic profile, coupled with the ongoing trend to provide medical care outside of a traditional hospital campus, has created a strong demand from investors and health-care providers, according to Mark Rubin, executive vice president at Colliers. He is based in its South Florida brokerage office for Palm Beach and Broward counties.

In 2019, Florida changed its Certificate of Needs regulations, which facilitated expansion in South Florida by hospital systems looking to enter the market.

“Over the past few years, we have seen Cleveland Clinic, Baptist, HCA, University of Miami, HSS, UF Shands, Tampa General, and others aggressively looking to expand their footprint in South Florida,” Rubin told CPE.

As such, medical investors have been very active in looking to purchase or develop medical office buildings to satisfy this growing demand, Rubin added. South Florida’s existing medical office inventory comprises predominantly older assets with limited availabilities.

Developers and users are alternatively seeking land or other properties (traditional office or retail) that can be developed for medical use, Rubin explained. While strong demand and limited supply exist, land and construction costs present significant headwinds for developers, and very few speculative developments are being built.

“We have had strong interest from both users and developers. With all these positive market factors resulting in a supply/demand imbalance, we believe the medical office market will continue flourishing in South Florida,” Rubin said.

Investors continue to bet on MOBs

Medical office buildings remain a strong bet for investors nationwide, according to Avison Young Senior Vice President Blake Thomas.

“Interest rate changes and inflationary pressures could cause cap rates to expand further in the near term. Still, that trend is anticipated to be short-lived as demand for medical office buildings continues to show strong momentum.”

Igor Pleskov, partner & real estate practice vice chair at Saul Ewing said demographics favorable to medical office building strength would continue for some time.

“In light of development generally being slowed by interest rate and other economic pressures, I expect continued rent growth and investor enthusiasm in the market,” Pleskov told CPE.

“To the extent that macroeconomic trends become more favorable, I would anticipate more sharp increases in development. Overall, the medical office market remains strong with positive underlying fundamentals that bode well for future prospects.”

The post Why MOBs Are Still a Strong Bet for Investors appeared first on Commercial Property Executive.

Highwoods Properties Inc. has agreed to acquire Advance Auto Parts Tower, a 20-story, Class A+ office asset in Raleigh, N.C. The Triangle Business Journal identified the owner as Lionstone Investments, which developed the building in partnership with Kane Realty Corp., the property’s manager.

Highwoods plans to fund the acquisition of Advance Auto Parts Tower “on roughly a leverage-neutral basis” using proceeds from the recent $145 million sale of three office buildings in Tampa, Fla.

Subject to customary closing conditions, the deal is scheduled to close in the next 30 days. The buyer will be depositing $20 million in earnest money.

A Highwoods spokesperson declined to provide additional information on the pending transaction.

A Class A+ office building

The 346,000-square-foot, LEED Gold–certified tower came online in 2020. It features 11 floors of office space atop eight levels of parking, as well as roughly 8,200 square feet of retail. The property was fully leased at the end of 2024, with a weighted average lease term of 8.2 years.

Advance Auto Parts Tower is in the North Hills submarket, with a street address of 4200 Six Forks Road or 4000 Front at North Hills Street. The building is immediately adjacent to CAPTRUST Tower, a 300,000-square-foot Class A+ office property that is also owned by Highwoods.

At the end of 2024, the REIT’s portfolio encompassed 27.2 million square feet across several U.S. markets, while its development pipeline totaled 1.6 million square feet. One of the underway projects is a 642,000-square-foot mixed-use development in Uptown Dallas that centers on a 26-story office tower.

Still recovering

The Raleigh-Durham office market seems to be largely in recovery mode right now, based on a fourth-quarter report from Avison Young.

For example, the Six Forks Road submarket has 1 million square feet of total availability, against an inventory of 4.8 million square feet. This is at least better than the ratio for the two metros overall, which is 14 million square feet available, compared with an inventory of 59 million.

A remarkable twist is that Class C space is seeing the lowest availability of all product classes, at 5.4 percent.

Still, Avison Young reports, trophy properties remain in a class by themselves: “Trophy property rates continue to be significantly higher than Class A space. Despite availability for trophy properties being high, at 44.5 percent, asking rental rates are unlikely to come down in 2025 as owners are still hoping to make their office investments work.”

The post Highwoods to Acquire Raleigh Office Tower appeared first on Commercial Property Executive.

CTO Realty Growth has purchased Ashley Park, a 559,000-square-foot retail center in Newnan, Ga., for $79.8 million. The previous owner was Apollo Global Management, which had bought it for $89.8 million in 2015, according to CommercialEdge information.

CTO acquired Ashley Park below replacement costs, President & CEO John Albright said in prepared remarks. Having below-market rents, the asset provides an opportunity for strategic lease-up, he added.

Ashley Park occupies 60 acres at 354 Newnan Crossing Bypass, near the intersection of Interstate 85 and Georgia State Route 34, about 38 miles southwest of downtown Atlanta. The shopping center receives roughly 6 million visits per year.

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Dick’s Sporting Goods, Best Buy, Barnes & Noble, Regal and Dillard’s anchor the property, which was 93 percent leased at the time of sale. Dick’s Sporting Goods is also CTO’s fifth-largest tenant.

Greater Atlanta’s retail vacancy rate stood at 3.7 percent in December, 50 basis points below the five-year average, according to a report by Colliers. A shortage of supply—only 544,000 square feet of product were underway in December—and several retail chain closures contributed to the tight index.

CTO’s growing retail footprint

With this purchase, CTO’s portfolio reached 5.2 million square feet, marking a 12 percent growth. Last year, the company expanded its footprint by 1.3 million square feet across six retail properties and one vacant parcel.

The most important deal closed in August, when the firm purchased three open-air shopping centers totaling roughly 1.2 million square feet for $137.5 million. The properties are in Charlotte, N.C., Tampa, Fla., and Orlando, Fla.

The post CTO Realty Grows Atlanta Footprint With $80M Buy appeared first on Commercial Property Executive.

Golub & Co. has signed a 12,277-square-foot lease at RSM Plaza, a 415,824-square-foot office complex in Minneapolis’ central business district.

Transwestern Real Estate Services worked on behalf of the landlord, while IAG Commercial Real Estate represented the tenant, Meyer Borgman Johnson.

The structural design practice will relocate its corporate headquarters to the 20-story property, with a move-in scheduled for June this year.

Located at 801 Nicollet Mall, RSM Plaza was developed in phases between 1968 and 1971. The property consists of two office buildings known as the West and East Towers.

Close to multiple bus stops as well as to interstates 394 and 94, RMS Plaza is 12 miles from Saint Paul, Minn., and within 14 miles of Minneapolis-Saint Paul International Airport.

READ ALSO: What’s Defining Office in 2025?

Meyer Borgman Johnson will move from the nearby 510 Marquette Ave. S. to the property’s West Tower, fully occupying the 20th floor. Golub & Co. owns the duo since 2015, when it picked up the asset for $78.4 million, according to CommercialEdge. The ownership completed a $10 million improvement program in 2018 that added multiple upgrades at the property, such as a renovated lobby and the addition of conference rooms and meeting spaces.

RSM Plaza includes floorplates between 12,300 and 29,000 square feet, an on-site fitness center, bike storage and on-site parking, as well as 25,000 square feet of first and second-floor retail space. Other tenants include R.S. Peterson Sales Inc., Groundswell, Community Reinvestment Fund USA and Bioworld Merchandising, CommercialEdge shows.

Transwestern’s team of Vice President Trinette Wacker and Principal Broker Reed Christianson brokered the deal on behalf of the landlord. President Jeffrey LaFavre and Advisor Zach Synstegaard with IAG Commercial Real Estate represented the tenant.

Twin Cities ends 2024 with affordable rents and low vacancy

According to a recent CommercialEdge report, office markets in the Midwest had the most affordable rates in 2024. Twin Cities posted the second-lowest average asking rent at $26.25 per square foot, below the national average of $33.11 per square foot. Detroit was the least expensive among the top 25 U.S. office markets, with rents averaging $21.46 per square foot.

With a rate of 16.2 percent as of December, the Twin Cities recorded the third-lowest office vacancy rate in the nation, representing a 160-basis-point year-over-year decline.

The post Golub & Co. Inks HQ Lease in Minneapolis appeared first on Commercial Property Executive.

Whiting-Turner’s will build its corporate headquarters with the help of architect Gensler as part of a 50-year ground lease agreement, which will be a cornerstone of long-term collaboration between the two organizations.

The 150,000-square-foot office building is expected to be completed in 2028. It will include a safety-focused training center and connect Whiting-Turner and Goucher College to the surrounding Towson area, 8 miles north of Baltimore.

The facility will also introduce young adults to career opportunities in construction and design.

For the past 51 years, Whiting-Turner’s headquarters have been the Hampton Plaza Office Building on East Joppa Road in Towson.

Six months earlier, Goucher College and Edenwald Senior Living announced plans for Maryland’s first university retirement community.

It will combine cultural and educational activities through Goucher with the amenities and services of a Life Plan Community to foster lifelong learning and connection.

Whiting-Turner has been active in supporting the Baltimore area. It recently announced that it will partner with the Boys and Girls Clubs of Metropolitan Baltimore and the Baltimore Ravens to create a Hilton Recreation Center that will serve 2,000 youth annually.

In December, Whiting-Turner was part of a group that began construction for VanTrust on the 526,119-square-foot Building C at the 2.4 million-square-foot Platte International Commerce Center development in Kansas City.

Delivery is expected in July for the facility, which might be expanded to 1.1 million square feet.

The post Whiting-Turner Brings Corporate HQ to Goucher College appeared first on Commercial Property Executive.

Ridgecut Road, a real estate investment firm focused on the Northeast market, will soon break ground on I-84 Orange County Logistics Center, a 146,075-square-foot industrial project in Montgomery, N.Y.

Pratt Design Studio provided architecture services, while Premier Design + Build Group will serve as general contractor. Completion is expected in the fourth quarter.  

The facility will rise on a 13.6-acre site at 14 Moosilauke Drive, along Route 208 in Lower Hudson Valley, just north of Interstate 84. New York Stewart International Airport is 8 miles away.

When complete, I-84 Orange County Logistics Center will have 36-foot clear ceiling heights, 31 dock doors and two drive-in doors. The property will also feature LED lighting and an ESFR sprinkler system, as well as 83 car and 16 trailer parking spaces. JLL Vice Chairman James Panczykowski and Vice President Zach Antonucci lead the Northeast Industrial team that has been retained as exclusive leasing agent.  

Corporate neighbors include Amazon, FedEx, UPS, Staples, Medline and XPO Logistics. The site’s location provides easy access to New York City, but also to the Port of New York and New Jersey, one of the area’s most significant industrial drivers. In line with most other ports in the country, it saw a significant rise in tonnage processed in 2024, up 11.4 percent year-over-year, according to Savills. However, potential new impending tariffs could alter activity going forward. 

The post Ridgecut Road to Break Ground on New York Industrial Project appeared first on Commercial Property Executive.

As one of Atlanta’s most historically rich and culturally vibrant neighborhoods, West End is on the cusp of a transformative redevelopment. The reimagining of the 1973-built Mall West End into One West End is more than just a construction project—it’s a collaborative effort shaped by the voices of the local community.

Built on a 12-acre site, the old mall is set to be demolished and replaced by a mixed-use project following a $450 million investment from developers The Prusik Group and BRP Cos.

With a phased timeline leading up to a 2028 completion target for the first phase, this project aims to preserve the essence of West End while ushering in a new era of opportunity. Plans call for 125,000 square feet of retail, including a grocery store, a fitness center, diverse dining options and local boutiques, as well as approximately 900 mixed-income residences, including affordable and student housing, a 150-key hotel and 12,000 square feet of medical office space.

Commercial Property Executive reached out to BRP Cos. Managing Director Andy Cohen and The Prusik Group Principal Andrew Katz for details about their plans at One West End.

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This is a massive project with broad implications for the those living in the neighborhood. To what extent have community voices had an influence on this development so far?

Katz: We’ve been collaborating with the local community since day one. Over the past three and a half years, both public and private community members have played a crucial role in the planning process and have been deeply involved at every step. We’ve listened to the community to understand what services are most important to them and, more critically, to identify what’s missing. The invaluable insights and feedback from the community have guided us in shaping a plan that truly reflects their vision. 

How do you plan to honor the cultural heritage of Mall West End within the new development?

Cohen: The historic West End of Atlanta is a vibrant neighborhood rich in history and cultural diversity. We’re still in the early stages of our project, with the existing mall closing at the end of January. At this time, the digital time capsule is our first activation for the Mall West End to be honored in the community, but there are certainly many more activations to come down the pipeline in the years ahead. The next activation will be the groundbreaking ceremony. 

What will happen with the legacy tenants at the former mall? Are you supporting them in any way?

Katz: Many of these tenants have been integral to the community and the property’s history for decades, fostering relationships with generations of families who shop at their businesses. To ensure these long-standing businesses remain operational during the construction phase, several tenants will be relocated to a temporary onsite space at 850 Oak St.

This allows them to continue serving the community throughout the project’s duration. The tenants relocating include The Burning Sands, Dendera Cosmetics, True Hair and American Deli, while Planet Fitness will remain in its current location during the first phase. All of these businesses will also have the opportunity to move into permanent locations within One West End once it opens. 

How will the addition of grocery stores, fitness center and particularly a hotel impact the neighborhood and existing local businesses in the area?

Katz: Once complete, the property will feature approximately 125,000 square feet of retail space, featuring a diverse mix of tenants, including a grocery store, fitness facility, traditional in-line retail, food and beverage options and local boutiques. We also intend to include affordable commercial space designated for qualified small, local businesses. Additionally, the development includes a planned 150-key hotel.

The addition of key anchor businesses, such as grocery stores and fitness centers, is essential to our strategy of driving foot traffic and encouraging visitors to stay and shop, rather than just passing through. Currently, the neighborhood lacks hotels, so visitors are forced to stay downtown or in nearby areas. With the new hotel, visitors will now have the opportunity to stay in West End, supporting local businesses and directly contributing to the community’s economic growth. By introducing grocery and fitness-anchored retail alongside the hotel, we’re creating consistent touchpoints for both residents and visitors. This will ultimately boost foot traffic, foster a lively environment, and enhance the safety, prosperity and overall well-being of businesses and consumers alike. 

Tell us more about the residential component of the project. How many of the 900 residences will be dedicated to low-income residents?

Cohen: One West End will feature approximately 900 mixed-income residences, with at least 30 percent of the units available to those earning between 50 percent and 80 percent of the area median income. Situated just steps away from the Atlanta University Center Consortium—the oldest and largest consortium of historically Black colleges and universities in the world—the property will also provide housing options specifically designed for students. Eligibility for housing will be determined based on income qualifications.

Are there any sustainability or green building practices being incorporated into the design of One West End?

Cohen: Yes, while we are in the early stages of the design process, we can confirm that sustainable and green building practices will be integral to this project’s design and construction. Across our portfolio, many of our developments meet green criteria, including LEED certifications, Enterprise Green Communities and other relevant metrics based on building type and location.

Since our inception, we have prioritized developing properties that serve the people who live, work and use these buildings every day. This commitment involves successfully engaging in complex, large-scale public-private partnerships and designing sustainable structures that contribute to a cleaner environment. 

READ ALSO: Which Asset Classes Stole the Spotlight in 2024?

Can you provide an update on the project’s timeline and any potential challenges you foresee in meeting the 2028 completion target for the first phase?

Cohen: The redevelopment of the Mall West End will be a multi-year process, with the project team actively engaging residents, legacy business owners and other stakeholders throughout the process. Demolition will begin this year, with phase one completion slated for late 2028, early 2029. 

Katz: One of the main challenges we face is the size of the site, which we’re working to reconnect and revitalize. Right now, it’s an outdated mall with a large surface parking lot. Our plan involves reconstructing the street grid, upgrading infrastructure, utilities and more. This project isn’t just about building one structure, it’s about completely rebuilding and reintegrating the site into the surrounding neighborhood, creating a cohesive and connected community within its footprint. 

How do you envision One West End evolving over the next decade in relation to the West End community?

Katz: Looking ahead, we see One West End becoming a central hub for the West End community. Right now, the area lacks a true neighborhood center, but our project is designed to fill that gap by connecting AUC students, local residents, businesses and the health-care sector. With additional redevelopments planned for the Mall West End site and improved access to amenities such as grocery stores and fitness centers, One West End will evolve into a vibrant, bustling destination.

Cohen: This project will create a safer, more welcoming neighborhood while instilling a sense of pride in the community. By offering housing and local job opportunities, we aim to ensure that people can live, work and thrive right here. Ultimately, we’re building a more integrated, prosperous community, laying the foundation for a brighter and more prosperous future for the West End. 

The post Bridging Past and Future: Inside the One West End Redevelopment in Atlanta appeared first on Commercial Property Executive.

A spokesperson for Tyler Duncan Real Estate identified the tenant as JLG Industries Inc., a manufacturer of high-level access equipment, such as boom lifts and telescopic handlers, headquartered in McConnellsburg, Pa.

Matan did not respond to Commercial Property Executive’s request for additional information, but its announcement stated that 280,000 square feet of space remain available at 8484 Progress Drive and the adjoining 8480 Progress Drive. Both buildings feature high-bay space and reportedly are suitable for a variety of office, R&D, and other technology-focused users.  

The 177-acre R&D park is immediately south of the Monocacy River and already home to Charles River Laboratories and the National Cancer Institute’s 332,000-square-foot Frederick National Laboratory Facility. Matan’s vision for the park encompasses additional facilities for the federal government, educational institutions, an incubator and private-sector companies. The park’s green space includes water features, multiple gazebos and more than 5 miles of walking trails.

READ ALSO: The Most Active Life Science Markets in the US

Matan reported that Riverside Research Park is approved and ready to build with 1.4 million square feet of planned lab, manufacturing and office space.

Matan Cos. was represented in-house by Leasing Director Brad Benna, and the tenant was represented by Tim Shanklin of Tyler Duncan Real Estate.

Public and private entities expand

The life science sector in Maryland’s I-270 corridor also known as the BioHealth Capital Region totals nearly 12.5 million square feet of lab space, driven in large part proximity to such federal agencies as the National Institutes of Health and the Food and Drug Administration, according to a brand-new report from Cushman & Wakefield.

On the private-sector side, AstraZeneca is a big player, having expanded its presence by almost 300,000 square feet last year and with plans for further investments.

Although overall vacancy rose to 14.0 percent, Cushman & Wakefield reports that “suburban Maryland’s supply is not as overbuilt as other top markets, given the overall inventory and size.”

Rents for R&D space in Montgomery County average between $40 and $45 per square foot, triple net. a level that Cushman & Wakefield anticipates will be stable as current space is absorbed. Fortunately, no new space is in the pipeline.

Last September, a joint venture of Matan Co., Rockefeller Group, Mitsubishi Estate New York, Chuo Nittochi and Taisei USA LLC began construction on the first phase of Port 460 Logistics Center in Suffolk, Va., about 20 miles from the Port of Virginia. When it delivers, the campus will total about 5 million square feet.

The post Matan Cos. Lands New Tenant for DC-Area Project appeared first on Commercial Property Executive.

Principal Financial Group has closed a $3.6 billion fund dedicated to hyperscale data center developments across the U.S. The firm’s investment management unit, Principal Asset Management, controls the oversubscribed fund.

The vehicle is projected to capitalize more than $8 billion in assets. Principal’s development partner is Stream Data Centers.

Last June, Stream broke ground on a $400 million, five-building AI-ready data center campus in San Antonio. The first building is expected to be ready for occupancy in the second quarter of this year.

Principal Asset Management’s dedicated real estate investment arm is Principal Real Estate, which has been an active player in the data center sector since 2007. It has $11 billion in active developments and assets under management.

READ ALSO: Are Data Centers Immune to CRE Market Forces?

Principal’s new fund comes as a response to increasing demand for additional digital infrastructure. Alongside with new records in construction activity in the sector, the data center market will struggle with tighter vacancy rates and higher competition for land and resources, according to a recent CBRE outlook.

Investor interest in data centers to continue growing

Last week, American Real Estate Partners closed its fourth real estate GP fund with $309 million in equity commitments. Dubbed AREP Strategic Opportunity Fund IV, it is the company’s largest investment vehicle and will be focused on data centers and residential. AREP plans to allocate 80 percent of these funds for the expansion of its data center platform, PowerHouse.

A recent DLA Piper real estate report shows that investor interest in industrial assets declined in 2024, in favor of data centers. With more than 950 purchase and sale transactions and more than 500 property management agreements analyzed, the company noted that in 2020 and 2021, none of its clients were acquiring data centers. By 2023 data center deals reached a 4 percent share, while at the end of last year, the figure jumped to 9 percent—the steepest increase out of any real estate sector.

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Supermicro plans to build a roughly 3 million-square-foot industrial complex in San Jose, Calif., marking its third Silicon Valley campus.

Construction is set to kick off this year on the park’s first building, which will measure more than 300,000 square feet.

Supermicro manufactures liquid coolers for AI factories, which reduce the carbon footprint of data centers and lower operational costs. The tech company is bound to triple its footprint in San Jose, where it owned roughly 1.5 million square feet of office and manufacturing space as of June 2024.

Supermicro’s future campus

The first building of the campus will rise at 550 E. Brokaw Road, on the site of a former Fry’s Electronics store. The San Jose-based firm went out of business in 2021 following a series of store closings.

Supermicro purchased the 20-acre site for $80 million last February. At the time, the property was entitled for the development of a 1.9 million-square-foot office campus.

In October, Supermicro filed the current plans for the manufacturing and office complex., designed by Arc Tec. Pacific Gas & Electric Co. will deliver the campus’ energy requirements, PG&E Vice President Teresa Alvarado said in prepared remarks.

Silicon Valley’s supply-restrained industrial market

Silicon Valley’s industrial pipeline had just 2 million square feet under construction as of December, according to a report by CBRE. The market’s vacancy rate stood at 3.3 percent at the end of 2024, tightening 30 basis points year-over-year.

With no industrial deliveries during 2024’s last quarter, the market is undergoing supply challenges, the same source shows. AI hardware companies drive industrial demand in Silicon Valley as they’re looking for specialized facilities with heavy power. However, only 17.5 percent of the available space in December could provide 4,000 amps or more.

Hines Interests seeks to capitalize on this demand. Last June, the company broke ground on a three-building advanced manufacturing campus in San Jose, which was the largest industrial development in Silicon Valley at the time. Completion is expected this summer.

The post Supermicro Eyes 3 MSF Bay Area Expansion appeared first on Commercial Property Executive.

The five include the realignment of global supply chains, shifting generational housing preferences, the rise of data centers as critical infrastructure, the continued importance of life science clusters and the need for localized strategies in fragmented markets.

“One of the more unexpected takeaways from our research is the extent of demand fragmentation across real estate sectors,” TCC Director of Research Louis Rosenthal told Commercial Property Executive.

“Initially, we expected this to be a temporary post-Covid effect, but the data points to a deeper structural shift,” Rosenthal said. “We see this playing out in the form of highly localized housing demand patterns, the growing divide between premium and commodity office space, and the divergence between big-box and smaller-footprint logistics facilities, among other examples.”

Industrial sector growth via supply chain shifts

Supply-chain reconfiguration started as a short-term reaction to the pandemic and geopolitical tensions of the early 2020s, but now “shifting trade alliances, reshoring initiatives and geopolitical shifts are reshaping real estate development opportunities in ways that signal a possible long-term realignment,” the Trammell Crow note explains.

The trend actually predates the pandemic, though it has accelerated since then. The changes aren’t merely “deglobalization,” the note points out, but a more nuanced reconfiguration.

For real estate, especially the industrial sector, the upshot of the change is increased demand, as businesses rethink far-away production and consider inventory stockpiling closer to home as insurance against the kinds of disruptions seen recently.

READ ALSO: The Future Demand for Industrial Is Decarbonized

But the change for the industrial sector will be more fundamental than that, TCC explains, as U.S.-based advanced manufacturing kicks into higher gear, with a renewed domestic emphasis on the likes of semiconductors, clean energy components and electric vehicles. “These initiatives are catalyzing demand for logistics infrastructure near manufacturing hubs, ports and rail yards,” the note posits.

Housing: A Tale of Generational Convergence

In the residential sector, a lot is going on, TCC points out: Millennials are busy forming families, Gen Zers are kicking off their careers and expanding the renter pool, and Baby Boomers (who are still around) are transitioning into retirement. 

Gen Z will be especially active in the near term, contributing at least 1.5 million net new households in 2025, the note explains, citing John Burns Consulting data. There are currently 46 million 18- to 27-year-olds in the U.S., and they have roughly the same housing aspirations as previous generations: renting early, ownership later, especially as they start families.

But the U.S. demographic outlook is about more than each group moving into a different phase of life and the potential impacts on residential markets. In 2025 and beyond, there are complicating factors: housing costs are rising and the definition of life-work balance is changing, creating overlapping and sometimes competing housing needs across the generations.

“These demographic shifts present a unique opportunity for lower-density multifamily housing in inner and second-ring suburbs, where space, affordability and community align with the preferences of renters across generations,” the note predicted. While mostly those opportunities are in the suburbs, there is still a place in some urban areas for top product, particularly in convenient locations.

Data centers now strategic infrastructure

TCC characterizes data centers in 2025 and beyond as strategic infrastructure, vital to powering the entire digital transformation. That includes AI, but much more than that.

For its part, AI holds immense transformative potential for the economy and property markets, the note explained, though its impact is likely to vary across economic sectors, industries and property types.

“A gradual, longer-term adoption scenario encourages prioritizing adaptable spaces that can evolve alongside technological advancements… while avoiding premature commitments to speculative, AI-specific features, product types and markets that may take longer to materialize,” the note said.

With all that in mind, the company is focusing on developing data centers in markets with the right balance of a number of key factors. First, access to large population centers, but also proximity to financial hubs, e-commerce centers and national security and defense operations. There also needs to be supportive infrastructure and power availability, and (last but hardly least) land affordability.

Clusters anchor life science demand

The life science boom isn’t new, either, but as the immediate post-pandemic momentum in the sector fades, 2025 will be a “pivotal year” for the sector, according to TCC. The key going forward is balancing cyclical supply challenges with structural drivers, namely advances in biotech, and other health-care and aging therapies, which will continue to be robust over the long term.

The concept of clusters is at the heart of the company’s life science strategy. Clusters are bio-innovation hubs where research labs, universities, hospitals and manufacturing facilities form innovative business ecosystems.

“These clusters generate consistent demand for space, premium rents and, in some cases, public policy incentives that drive further development,” the TCC note explained.

READ ALSO: Life Science Trends to Watch in 2025

Established life science clusters include Boston and San Francisco, and examples of emerging ones are Raleigh, N.C., and Los Angeles. In any case, according to TCC, the challenge for 2025 and beyond lies in meeting the sector’s evolving needs by delivering the right space in the right places.

Fragmented demand poses challenges (and opportunities)

The final factor detailed in the TCC note is what it calls “micro-market nuances.” Knowing broad market, or even submarket trends, is well and good, but ours is a time of fragmentation of demand.

“Our research highlights the fragmentation of demand, showing how migration patterns, affordability challenges, and tenant preferences can vary significantly within the same submarket,” the note said.

Thus, identifying resilient micro-markets, even within markets that are sluggish overall, can be critical to identifying development opportunities. Data is a powerful tool for uncovering these opportunities, but it is only a starting point that depends on the ability and experience needed act on it.  

The post 5 Trends Defining CRE Development in 2025 appeared first on Commercial Property Executive.

The Trepp CMBS Special Servicing Rate pulled back 2 basis points to 9.87 percent in January 2025. This was the first decline in the monthly rate since December 2023.

The main driver of the rate’s decrease was the increased overall balance of all CMBS loans outstanding. Compared to last month, the balance of loans in special servicing rose by $843.0 million, but the balance of all outstanding CMBS loans also increased by $9.5 billion.

Broken down by property type, two sectors experienced substantial changes to their individual rate. The retail rate was down most significantly, falling just shy of 100 basis points to 10.68 percent. The sector with the biggest increase in special servicing rate was mixed use, which rose 98 basis points to 12.71 percent. This is the largest jump in the mixed use rate since March 2013. Two other sectors that sustained material change were multifamily and office. The multifamily rate fell 31 basis points to 8.42 percent while the office rate rose 34 basis points to 15.11 percent. This is the first time the office rate has cleared 15 percent since Trepp began publishing these rates in the year 2000.

—Posted on February 28, 2025

The post 2025 Special Servicing Rates appeared first on Commercial Property Executive.

The average sale price fell 11 percent year-over-year to $174 per square foot, following a steeper 24 percent drop in 2023. Since 2019, office values have plunged 37 percent.

High-end properties and those in central business districts (CBDs) saw the sharpest declines, with A and A+ buildings losing 22 percent of their value in 2024, while B-rated properties slipped just 3 percent. CBD office prices plummeted 28 percent, while suburban and urban submarket properties fell 15 and 24 percent, respectively.

Distressed sales surged, with nearly 600 buildings—over a third of all office transactions—selling at a discount. More than a third traded for less than half their previous price. As the sector evolves, CommercialEdge expects that the gap between resilient and struggling assets to widen.

READ ALSO: Net Effective Office Costs Edge Up

The national office vacancy rate reached 19.7 percent at the end of January, up 180 basis points year-over-year but down 10 basis points from the previous month. Vacancy rates have steadily risen in recent years as remote and hybrid work remain widespread. Some of the highest vacancies were recorded in San Francisco (29.3 percent), Austin (27.8 percent), the Bay Area (26.3 percent) and San Diego (20.6 percent).

In January, national full-service equivalent listing rates averaged $33.38 per square foot, marking a 27-cent increase from the prior month and a 5.8 percent rise year-over-year. According to CommercialEdge, Manhattan posted the highest listing rate at $68.24 square foot, followed by Miami at $56.91 per square foot.

Office-using employment dipped in January, shedding 2,000 jobs, yet still reflecting a modest 40-basis-point annual growth, bringing the total to 35 million. The professional and business services sector lost 11,000 jobs, while financial activities and information sectors saw gains of 7,000 and 2,000 jobs, respectively.

Over the past year, office employment contracted by 0.1 percent to 34.7 million, a net loss of 35,000 jobs. Professional and business services saw the steepest drop, down 69,000 positions, followed by a 21,000-job decline in the information sector. Financial services, however, added 55,000 jobs.

Office development slows as sales struggle to rebound

The office construction pipeline featured 50.7 million square feet in January—equivalent to just 0.7 percent of total inventory, according to CommercialEdge data. In 2024, 44.1 million square feet of office space was delivered nationwide, marking the fourth consecutive year of annual declines. Meanwhile, new construction remained sluggish, with just 9.1 million square feet breaking ground over the past year.

Boston led the nation with 7.3 million square feet of office space under construction, accounting for 2.8 percent of its total inventory. Austin followed with 3.6 million square feet (3.7 percent of stock), while San Francisco had 3.5 million square feet underway (2.1 percent). San Diego reported 3.1 million square feet in development (3.2 percent), and Dallas rounded out the top five with 2.8 million square feet (1.0 percent of its inventory).

Meanwhile, office sales totaled $41 billion in 2024, with office properties trading at an average of $174 per square foot. Year-over-year, sales volume increased by $3.2 billion, while prices declined by $22. Since 2019, annual sales volume has dropped by $82 billion, with prices falling by $103.

Read the full CommercialEdge office report.

The post Office Report: Office Prices Slide as Discounts Surge appeared first on Commercial Property Executive.

Put another way, even that conservative estimate of the economic damage adds up to about 4 percent of California’s GDP.

That’s the beginning of the context for Rising from the Ashes: Assessments on the Impacts to CRE Post the LA Wildfires, a new report from JLL Research.

As day after day of news video footage from the fire zones showed, the heaviest property damage was to single-family residences, nearly 11,000 of which were destroyed, representing more than half of the SFR stock in the two fire zones (Palisades and Eaton). In addition, more than 300 multi-housing structures were destroyed.

On one hand, the 11,000-odd housing units destroyed or significantly damaged represent just 0.4 percent of the market’s housing stock, yet the estimated 24,000 families displaced by the fires have to live somewhere.

READ ALSO: 5 Overlooked Insurance Gaps That Could Hit Your Bottom Line

And JLL reminds us that Southern California was already a long-term supply-constrained market. As higher-income families relocate to single-family rentals, others will spill over into the multifamily sector. “Already the exacerbation of Los Angeles’ multi-housing supply shortage will result in elevated rent growth in the medium term,” according to the report.

Impact to retail, office, industrial  

Though less publicized, the region’s retail, office and industrial commercial real estate sectors were also hit. About 200 commercial buildings, predominantly retail properties and food-and-beverage establishments, were destroyed. They represent, JLL stated, nearly half of the retail establishments and about one-third of the total retail space in the fire zones.

In the near term, home centers and hardware retailers could benefit. “Longer term,” JLL added, “mixed-use developments may be a way to address both the housing shortage exacerbated by the fire as well as replace the lost retail space, which has not been growing for a long time.”

The fires’ effects on office space are expected to be indirect, potentially by displacing office workers, especially in the professional and technology services sector and the media and entertainment sector.

The impacts on industrial real estate could be more direct, with rebuilding efforts boosting the demand for warehouse space and IOS properties.

Additionally, JLL reported, home appliances, furnishing and day-to-day necessities must be replaced, further bolstering the need for warehousing. “This will help lower industrial vacancies in and around the affected areas, particularly in the San Fernando Valley and San Gabriel Valley markets where total vacancy currently stands at 4.2 percent and 5.8 percent, respectively.”

Given the efforts by the state government to streamline rebuilding, JLL noted, the real challenges lie in physical construction. “Due to significant demand, labor and materials will be expensive, further complicating rebuilding efforts.”

Finally, those generally higher replacement costs for commercial real estate have the potential to make existing buildings more attractive for investors.

The post How Rebuilding From LA’s Wildfires Is Impacting CRE appeared first on Commercial Property Executive.

Brixton Capital has purchased Washington Square, a 215,506-square-foot shopping center in Petaluma, Calif., for $67.5 million. Paragon Commercial Group sold the asset in a transaction arranged by JLL.

Paragon had acquired the retail center from Fulcrum back in 2021 for $56.2 million, according to CommercialEdge data, with the help of a $34.2 million loan provided by Zions Bank.

Built in 1971 and renovated in 1996, Washington occupies some 20 acres at 301 S. McDowell Blvd. The new owner intends to upgrade the shopping center by improving the parking facilities, replacing the roofs, repainting the exterior and upgrading the HVAC systems. Brixton also plans to enhance the façade, renovate the landscaping and install new signage.

READ ALSO: What’s in Store for Retail in 2025?

The Safeway-anchored center boasts a diverse mix of regional and national tenants such as Staples, Panda Express, Harbor Freight Tools, Planet Fitness, Five Below, GameStop, Bank of America, Marin Health and Hallmark, among others. At the time of the sale, the property was 99 percent leased.

Washington Square is considered to be among the top 3 percent of U.S. neighborhood shopping centers based on annual visits and the busiest center within a 15-mile radius, according to JLL. The firm’s Managing Directors Bryan Ley and Eric Kathrein and Director Warren McClean brokered the transaction on behalf of Paragon.

San Francisco’s retail scene

In the fourth quarter of 2024, San Francisco’s retail sales witnessed a 5.2 percent year-over-year increase, reflecting a strengthening local economy. The metro’s transaction volume for last year reached $190.1 million, up 3.7 percent from 2023’s figure of $183.3 million, according to a recent Cushman & Wakefield report.

In addition, San Francisco’s retail market recorded a positive net absorption of 65,700 square feet in Q4, following eight consecutive quarters of negative absorption, the report also shows. As a result, the metro’s overall retail vacancy rate dropped to 7.7 percent by the end of last year.

The post Brixton Capital Buys San Francisco Shopping Center for $68M appeared first on Commercial Property Executive.

M2G Ventures has purchased Inwood Design Center, a 14-building, 740,000-square-foot, mixed-use asset in Dallas including retail, showroom and light industrial space. Hines previously owned the park, according to CommercialEdge information.

Hines had acquired the campus in 2019 from Vantage Cos., with plans at the time to reposition the property through a revamp to the buildings’ facade, signage, lighting and landscaping. Two years later, the park became subject to a $44 million note with a maturity date set for 2027 issued by AIG, the same source shows.

M2G also plans to further improve the park with overhauls to the branding, art and signage, including upgraded exteriors, storefronts, parking, landscaping, lighting and public art, among other enhancements.

READ ALSO: Why Mixed-Use Developments Are All About the Right Synergies

The buildings—completed between 1961 and 1978—were 93 percent leased at closing. Tenants include furniture retailer Crate & Barrel, logistics company White Glove Storage and Delivery, as well as 3PL firm Granimport USA, to name a few.

Located on 38 acres at 1110 Inwood Road, the infill mixed-use property is less than 5 miles from downtown Dallas and roughly 15 miles southeast of the Dallas Fort Worth International Airport.

Bullish on the West Brookhollow submarket

Inwood Design Center is in the West Brookhollow submarket, which has a 7 percent vacancy rate across its 43 million-square-foot industrial inventory and a 7 percent average annual rent growth trailing five years.

Also within the same submarket, M2G owns Archetype, another mixed-use property featuring flex, showroom, retail and shallow-bay industrial space. The company overhauled the park’s six buildings with a series of renovations similar to the ones planned for Inwood Design Center.

M2G leans into infill acquisitions

Inwood Design Center’s acquisition delineates M2G’s continuous approach to acquire infill industrial properties on an institutional scale, according to a company statement.

This purchase is also the latest in M2G’s shopping spree. During the past three months, the company acquired a 50,000-square-foot, mixed-use asset in Austin, Texas, and two industrial parks in Dallas, encompassing 188,000 and 215,000 square feet. The purchases were made through M2G Venture’s general partner equity fund, Grey Swan I.

The post Hines Sells Dallas Mixed-Use Asset appeared first on Commercial Property Executive.

New construction starts in 2024 totaled only 9.8 million square feet—a steep drop from the 83 million square feet recorded in 2019, while 54.7 million square feet of space was under development at the end of December 2024.

According to CommercialEdge data, the top ten metros on this list included 29.3 million square feet of completed office space. This accounted for 67.8 percent of the total square footage that came online last year in the nation. Here are the top markets for office deliveries in the country in 2024:

1. Boston

In 2024, developers in Boston completed 6.4 million square feet of office space across 22 properties. This marked a 21.5 percent increase from 2023, when the metro saw nearly 5.3 million square feet in completed projects across 13 properties.

Significant projects that came online last year in the life sciences hub include 10 Prospect St., a 205,000-square-foot building in Somerville, Mass., deisgned by SGA. US2, the partnership of Magellan Development Group, RAS Development, Cypress Equity Investments and Affinius Capital, completed the LEED-Gold certified, life science property in early 2024.

Meanwhile, construction starts in the past year totaled 1.1 million square feet across four properties—a 64.1 percent decrease when compared to the previous year’s figures, when 3.1 million square feet across 10 properties broke ground. As of December, Boston had 8.7 million square feet under construction across 26 properties, ending last year as the market with the largest pipeline. The figure represented 3.4 percent of existing stock, way above the national average of 0.8 percent.

Significant projects currently underway in the metro are generally life sciences-driven. One of them is Tishman Speyer’s Harvard Enterprise Research Campus in Allston, Mass., that had its first phase, a 440,000-square-foot lab component, top out in August 2024. Meanwhile, one of the metro’s most active developers, BioMed Realty, topped out 585 Kendall, a life science project totaling 637,000 square feet in Cambridge, Mass.

2. Seattle

Another life sciences sector-driven market, Seattle recorded 4 million square feet of delivered space across 11 properties in 2024. The figure marks a 36.3 percent increase from the 2.9 million square feet that came online in 2023.

Notable completions of last year include Skanska’s The Eight, a 729,000-square-foot office building in Bellevue, Wash. The 26-story property was more than 80 percent preleased prior to its delivery and marked Bellevue’s first speculative office project to be developed in the last six years.

In terms of construction starts, The Emerald City saw only one project break ground in 2024, totaling 80,000 square feet. When compared to the previous year, when 691,700 square feet across 22 properties commenced construction, the metro saw a drastic 88.4 percent drop in construction starts, driven by the year’s economic challenges. Despite this decrease, at the end of last year there were 10 properties under development in Seattle, totaling approximately 5.2 million square feet.

3. Dallas-Fort Worth

The third metro on our list is The Metroplex, with 2.8 million square feet across 19 properties that came online in 2024—marking a 29.4 percent decrease from the year before last, when developers completed 4 million square feet across 26 properties.

Construction starts in Dallas also marked an impressive drop: the metro recorded only 884,365 square feet across 10 properties that broke ground in 2024, representing a 73.1 percent decrease from 2023. For context, the metro had nearly 3.3 million square feet across 22 properties that started construction at the time.

Meanwhile, the metro’s under construction pipeline included 4.1 million square feet of space across 24 properties as of December. One of the largest projects underway is 23Springs, a 642,000-square-foot mixed-use project in Uptown Dallas. The project topped out in October last year and includes a 26-story office tower and two restaurant buildings.

4. San Diego

Our list of top markets for office deliveries continues with San Diego, that had 2.7 million square feet across 19 office properties delivered in 2024. When compared to the year before last's data, when developers completed only five properties totaling 748,807 square feet, San Diego’s last year inventory marked an impressive surge in completions, with a 266.5 percent increase.

However, on the construction starts front the numbers were reversed: 2024 recorded only 310,956 square feet across four properties that broke ground—representing an 85.8 percent decline from the 2.2 million square feet that started construction in 2023.

As of December, San Diego’s pipeline included 3.6 million square feet across 21 properties. One of the largest projects under development is a life science building totaling 426,927 square feet in the metro’s Torrey Pines submarket. Developed by Alexandria Real Estate Equities, the project at 4135 Campus Point Court is already fully preleased by Bristol-Myers Squibb Co. The development is within the company's 2 million-square-foot Alexandria Point campus.

5. San Francisco

Another top market for office deliveries that's driven by the life sciences sector, San Francisco, saw 2.7 million square feet of completed space in 2024, across 13 properties. A notable delivered project was the 327,000-square-foot life science building at 651 Gateway Blvd. BXP completed the 16-story project in March. The amount of last year’s completions was slightly larger when looking at the previous year: 2023 had recorded 2.2 million square feet of new space across 15 properties. This marks a 22.5 percent increase in 2024’s projects that came online.

In contrast, 2024 construction starts included only three properties totaling 316,000 square feet—marking an 89.7 percent drop when compared to the nearly 3.1 million square feet that broke ground in 2023. However, San Francisco’s completions may pick up in 2025: the metro ended last year with 4.5 million square feet across 20 projects under construction.

6. Washington, D.C.

The nation’s capital had 2.4 million square feet of completed office space across 11 properties, making it number six on our list of top markets for office deliveries. This reflects a 50 percent decline from 2023, when 14 projects reached completion, contributing with 4.9 million square feet.

D.C.’s developers opted for Class A and A+ assets, while one of the largest projects to reach completion in 2024 included 3901 Fairfax Drive, a 201,000-square-foot building in Arlington, Va., developed by Skanska. Construction activity remained sluggish: the capital city ended 2024 with one of the smallest pipelines across gateway markets: only 1.5 million square feet across seven projects were underway.

7. Austin

Austin’s 2024 deliveries mirrored the previous year’s, remaining on the same seventh place on our list. Developers completed 2.2 million square feet across 22 properties—representing a 21.1 percent drop when compared to 2023’s data, when 39 projects totaling 2.9 million square feet were added to its inventory.

However, developers broke ground on slightly more projects in 2024 than the year before last: Austin had 1.4 million square feet in construction starts that marked a 15.6 percent uptick compared with the 1.2 million square feet that broke ground in 2023.

The metro ended 2024 with one of the most active pipelines in the nation in terms of actual square footage: 33 projects were underway, totaling 4.2 million square feet.

8. Bay Area

The Bay Area added 2.1 million square feet of completed space across nine properties in 2024. This marked a significant decrease of 48.6 percent from the 4.2 million square feet completed in 2023.

A recent completion is The Landing’s first building, a 300,000-square-foot office property in Burlingame, Calif. The property is part of King Street Properties’ two-building life science campus on the San Francisco Peninsula. The Bay Area’s under development pipeline included 3.6 million square feet at the end of 2024.

Meanwhile, construction starts on the metro included only two projects totaling 202,631—marking a significant drop of 86.2 percent when compared to the 1.5 million square feet that broke ground in 2023.

9. Atlanta

Deliveries included 12 office projects totaling 2.1 million square feet, placing Atlanta among the lowest-performing markets in terms of added inventory. This marks a 27.6 percent increase from 2023, when 1.7 million square feet came online.

Among large completions was Science Square Labs, a 368,258-square-foot office building. The property is the first phase of Science Square, a life science district expected to include 1.8 million square feet of mixed-use space.

Atlanta also placed on the ninth spot on our list in terms of under-construction space, ending 2024 with 1.3 million square feet underway. Meanwhile, only one, 200,000-square-foot property started construction last year, representing a massive drop of 82.9 percent from 2023 construction starts, that included nearly 1.2 million square feet of space.

10. Raleigh-Durham

Raleigh-Durham landed on the last spot on our list of top markets for office deliveries, with completions totaling 1.7 million square feet across 14 properties. That marks a 29.4 percent increase from the previous year, when 10 properties totaling 1.3 million square feet came online.

Developers broke ground on four properties totaling 517,165 square feet, slightly below the previous year, when construction starts included 650,879 square feet—the difference represents a 20.5 percent decrease. Meanwhile, Raleigh-Durham ended last year with 1 million square feet of space underway across seven properties.

The post Top 10 Markets for Office Deliveries in 2024 appeared first on Commercial Property Executive.

The joint venture of Hines and Ivanhoé Cambridge has received $450 million in refinancing for Texas Tower, a 1.2 million-square-foot high-rise in Houston. Wells Fargo and Morgan Stanley provided the loan package, in a deal arranged by Newmark on behalf of the owners.

The 47-story building came online in 2021 with the aid of a $317.6 million construction loan provided by New York Life Insurance Co. back in 2018, CommercialEdge shows. At that time, Texas Tower was the largest office project under construction in Houston. The property later became subject to a four-year $267 million note, originated by Ivanhoé Cambridge in 2023, according to the same source.

READ ALSO: Top 5 LEED Platinum-Certified Buildings in the US

This loan marks the first time in two years when a multi-tenant office building outside New York City has secured financing in the CMBS single-asset, single-borrower market, stated Newmark Co-President Jonathan Firestone in prepared remarks.

A high-rise in downtown Houston

Located at 845 Texas Ave., Texas Tower is in Houston’s central business district and has access to interstates 45 and 10. The George Bush Intercontinental Airport is some 20 miles away.

The building was 95.0 percent leased at the time of the deal and serves as Hines’ global headquarters. Its tenant roster also includes Vinson & Elkins, Morgan Stanley, Cheniere Energy Inc. and Clifford Chance, among others.

The LEED Platinum-certified Texas Tower features floorplates ranging between 30,438 and 31,255 square feet, 24 passenger elevators and 1,500 car parking spaces. Amenities include a conference center, rooftop garden and fitness center.

Newmark Co-Heads of Global Debt & Structured Finance Jordan Roeschlaub and Jonathan Firestone, Vice Chairmen Clint Frease and Blake Thompson, Managing Director Travis Bailey, Director Peter Mavredakis and Associate Director Tim Polglase secured the financing package.

Newmark landed the number one position in Commercial Property Executive‘s 2025 top commercial mortgage brokers. The firm provided loans totaling more than $48.4 billion during the 12 months ending in September 2024 and increased its originations volume by 79.6 percent year-over-year.

The post Hines, Ivanhoé Land $450M Refi for Houston Trophy Tower appeared first on Commercial Property Executive.

Lincoln Property Co., in joint venture with Walton Street Capital, has purchased a 226,392-square-foot distribution center for $43.8 million in Weston, Fla. The buyer assumed a $41.8 million loan and increased it to approximately $79 million through an amended and restated note, originated by Nuveen, TIAA’s subsidiary, Broward County public records show.

CBRE negotiated on behalf of the seller, Manova Partners, formerly known as GLL Real Estate Partners. The asset previously traded in 2018, when Becknell Industrial sold it for $30.4 million, CommercialEdge shows.

READ ALSO: Industrial Real Estate’s Future Depends on Adaptability

The deal represents the partnership’s third industrial transaction in the last four months, bringing the companies’ footprint in the South Florida area to more than 700,000 square feet. Lincoln Property Co. will be the property manager at the building, that was 54 percent leased at the time of its trade. Tenants include Mondelēz International and Vital Pharmaceuticals Inc., according to CommercialEdge.

The cross-dock industrial building is at 1600 N. Park Drive, close to interstates 75 and 595 that allows easy access through metro Miami. Fort Lauderdale-Hollywood International Airport is 17 miles from the property, while Miami International Airport is 27 miles away.

Built in 1994, the two-story building includes 25-foot clear heights, two drive-in doors, 46 dock-high doors and dock levelers and bumpers. Additionally, the 13-acre property features 226 vehicle parking spots and 11 trailer spots.

Vice Chairmen José Lobón, Trey Barry and Frank Fallon, Vice Presidents Royce Rose and George Fallon, together with Financial Analysts Gabriel Braun and Daniel Sarmiento with CBRE worked on behalf of the seller.

Big deals in the area

Recent notable industrial acquisitions in the Miami metro include the purchase of a 505,436-square-foot industrial campus in Opa-Locka, Fla. Link Logistics sold the property known as Ironwood Commerce Center to TA Realty in December.

One month earlier, Longpoint Partner picked up a 1.4 million-square-foot South Florida portfolio in a $331.3 million deal. Blackstone sold the industrial portfolio, that includes mostly infill, last-mile facilities.

The post Lincoln Property JV Buys Fort Lauderdale Facility for $44M appeared first on Commercial Property Executive.

More than two years after breaking ground, L’Oréal Groupe has completed its nearly 250,000-square-foot scientific research center in Clark, N.J., and has begun full operations at the Union County property. The $160 million facility is L’Oréal’s largest outside of France and biggest investment in a R&I center.

L’Oréal started work on the project at 30 Terminal Ave. in September 2022 and began welcoming some employees in mid-2023. It replaces the company’s existing facilities in the New Jersey area.

The center features a 26,000-square-foot modular laboratory and a consumer center for product testing and co-creation that will accommodate up to 400 consumers daily. The property also has a mini-factory to scale final formulations before full-scale production.

Sustainability highlights include 10,000 solar panels, which meet 70 percent of the center’s energy needs, an eco-retention pond for stormwater management and employee-led gardening and composting initiatives that create a green workspace.

Flagship R&I center

The facility, now considered the flagship in L’Oréal’s global scientific research ecosystem, will employ more than 600 scientists, engineers and researchers. The team at the center, which complements R&I hubs in France, Brazil, South Africa, India, China and Japan, will be working across product innovation, development and testing to develop high-quality and safe beauty products, including hair, skin and makeup.

L’Oréal USA, the largest subsidiary of L’Oréal Groupe, is headquartered in New York City. It employs more than 12,000 people and operates administrative, research, manufacturing and distribution facilities across 16 states. In April 2021, L’Oréal USA opened a second company headquarters in El Segundo, Calif., in the Los Angeles area.

New Jersey growth

Revlon, another global personal care product company, is also moving its science and innovation lab within New Jersey. In November, Revlon leased 62,000 square feet at The Northeast Science and Technology Center, a 100-acre campus in Kenilworth, N.J., dedicated to research and development innovations. The firm was the first tenant there since pharma giant Merck left.

With more than 12 million square feet of space, New Jersey is one of the top 10 life science clusters in the U.S., as ranked by JLL. Of the top 20 pharma companies, 14 are located in New Jersey and eight of the top R&D companies are also in the state, according to Newmark’s third-quarter life science market report for Northern New Jersey.

In January, global oncology company BeiGene completed its $800 million manufacturing and clinical development center in Hopewell, N.J. The campus marked one of the largest recent investments in biopharmaceutical manufacturing in the U.S.

The post L’Oréal Completes $160M Research Center appeared first on Commercial Property Executive.

Insurance brokerage company Lockton has signed a 52,961-square-foot office lease with Granite Properties and Highwoods Properties at Granite Park 6, in Plano, Texas. The company’s corporate relocation is scheduled for 2026.

Cushman & Wakefield, together with Stream Realty Partners, worked on behalf of the tenant. An in-house team represented the ownership in the lease deal.  

Lockton plans to move 9 miles south from its current office location at Dallas Parkway where it leased 18,000 square feet. The company will occupy two floors at Granite’s 422,109-square-foot building and will join Atlantic Aviation and Stonebriar Commercial Finance in the property’s tenant roster, CommercialEdge shows.

Lockton’s current deal quickly follows the company’s signing of a 100,000-square-foot lease earlier this month at the 15-story Victory Commons One, Dallas Business Journal reported.

As of February, the office vacancy rate in Dallas clocked in at 24.0 percent, up 330 basis points over a 12-month period, according to a recent CommercialEdge report, and was higher than the 19.7 percent national average rate.

A newly LEED Silver-certified building

Located at 5525 Granite Parkway, the property is just off Texas State Highway 121 and 25 miles north of downtown Dallas. The office building is also some 20 miles northeast of Dallas-Fort Worth International Airport.

Completed in 2023, the 19-story tower is part of the 90-acre mixed-use Granite Park. Amenities at the LEED Silver-certified asset include a 150-seat lecture hall, three conference centers, a terrace connecting to a fitness studio and indoor customer lounge on the sixth floor, as well as 35,000 square feet of ready suites ranging from 1,500 to 5,500 square feet. 

Cushman & Wakefield Executive Managing Director Mike Mayer and Managing Director Josh Goldsmith, together with Stream Realty Partners Managing Director Dan Harris and Executive Vice Chairman Randy Cooper worked on behalf of Lockton.

Granite Park 6 in-house leasing team led by Directors Robert Jimenez and Burson Holman, and Leasing Manager Elizabeth Fortado represented the ownership.

The post Lockton Signs 53 KSF Office Lease at Dallas Tower appeared first on Commercial Property Executive.

One-fifth or 20 percent ($957 billion) of $4.8 trillion of outstanding commercial mortgages held by lenders and investors will mature in 2025, a 3 percent increase from the $929 billion that matured in 2024, according to the Mortgage Bankers Association’s 2024 Commercial Real Estate Survey of Loan Maturity Volumes, released recently at its 2025 Commercial/Multifamily Finance Convention and Expo.

The loan maturities vary significantly by investor and property type groups. A total of 14 percent of mortgages backed by multifamily properties (not including those serviced by depositories) will mature in 2025, as will 18 percent of those backed by retail and healthcare properties. 

READ ALSO: Capital Ideas: So What If the Fed’s Not Independent?

$452 billion (25 percent) of the outstanding balance of mortgages serviced by depositories, $231 billion (29 percent) in CMBS, CLOs or other ABS and $180 billion (35 percent) of the mortgages held by credit companies, in warehouse or by other lenders will mature in 2025. Just $31 billion (3 percent) of the outstanding balance of multifamily and health care mortgages held or guaranteed by Fannie Mae, Freddie Mac, FHA and Ginnie Mae will mature in 2025. Life insurance companies will see $64 billion (9 percent) of their outstanding mortgage balances mature in 2025. 

The dollar figures reported are the unpaid principal balances as of Dec. 31, 2024. Because most loans pay down principal, the balances at the time of maturity will generally be lower than those reported here. 

To learn more or to purchase a copy of the report, please click here.

—Posted on February 28, 2025

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Editor’s Note
Adaptive Reuse’s Makeover Moment

Market Pulse
The Latest Economic, Demographic and Industry Data 

Transactions
Major Sales and Financing Deals

Feature
3 Adaptive Reuse Projects That Pop

Office
Suburban Surge in the Office Market

Brokerage
Will More CRE Dealmakers Become Their Own Boss?

Economist’s View
Housing Market Still Coming Up Short

Read the March 2025 issue of Commercial Property Executive.

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Roughly two years ago, we were asked if a housing shortage truly existed in the U.S. The person keyed in on two key facts. First, that population growth had slowed notably in the U.S., suggesting that demand for housing was not as strong as many had assumed. And second, that several markets in the U.S. had a glut of new apartments, which was pushing up vacancy rates. Those facts seemed incompatible with a housing shortage. But closer examination reveals those facts are not mutually exclusive with a housing shortage and might have even delayed more serious thinking about how to address such a shortage.

At the national level, the demographic profile of the U.S. has certainly changed over the last few decades. The birth rate and the immigration rate (relative to the size of the population) have fallen, which has caused population growth to slow. However, population is not the correct measure of demand for housing. More correctly, households (a unit comprising a dwelling and its occupants) generate demand for housing. Of course, household formation (the growth rate in households) has also fallen over the last five decades. But it still exceeds the population growth rate. To understand this better, we also need to understand the supply story. During the majority of the post-war era, housing supply has largely kept pace with demand. For short periods they have diverged, but they realigned relatively quickly. However, the post-Great Financial Crisis period is different. After the housing meltdown, supply growth, tighter underwriting standards, a tepid economic and labor market recovery, growing NIMBYism and households focused more on repairing their balance sheets than acquiring new assets, all conspired to stymie housing construction. So much so that the growth rate in housing units fell below that of household formation and has remained there since the end of the crisis.

At the current pace of change, it will take more than a decade to close the housing gap.

When we look at the divergence between housing demand and supply, we estimate that shortage is roughly 4 million housing units. But this estimate likely understates the true shortage because limited housing supply actually causes household formation to occur more slowly than it otherwise would. Potential households that feel like they can’t obtain their own housing unit don’t form a separate household. For example, young adults continue to live with parents (or other multigenerational arrangements). Even unrelated people living together can frequently count as one household. Once we make this adjustment econometrically, the shortage increases to 4.5 million to 5 million.

What about the market level? Here, the story differs by location. Some markets have seen a housing development (or at least certain kinds of housing) outstrip demand in recent periods. That has pushed the market-level vacancy rate up in recent years. But that is more than offset by other markets where housing demand still greatly outstrips housing supply. Those markets experience consistently low vacancy rates (with some variation through market cycles). Therefore, while no national housing market technically exists, overall, the demand exceeds the supply. Moreover, even in the markets where vacancy rates have increased in recent years, the forward pipeline has already contracted considerably, suggesting declining vacancy rates and tighter markets sooner rather than later.

At the national level, the demographic profile of the U.S. has certainly changed over the last few decades. … However, population is not the correct measure of demand for housing.

Can this shortage be eliminated? While technically possible, it looks unlikely to end soon. Housing is largely a state and local issue, meaning that national policy (to the extent one could exist) would only have so much impact. Moreover, while some states and municipalities are moving to make development easier, those changes will have marginal results.

At the current pace of change, it will take more than a decade to close the housing gap. But this is where investors can play an important role. Of course, a structural shortage like the one we have suggests that housing in all its various types should remain an attractive property class. Yet, investors can also help to increase the supply of housing by participating in housing development. Certainly, investors cannot do it alone. But housing investment offers the opportunity for both attractive returns and positive societal benefits.

Ryan Severino is the chief economist & head of research at BGO, where he is responsible for global and regional economic research, analysis and forecasting as well as property market research, insights and forecasting. Additionally, he is an adjunct professor at Columbia University and New York University. Severino holds a master’s degree from Columbia University, a bachelor’s degree from Georgetown University, and is a CFA charterholder.

Read the March 2025 issue of CPE.

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Commercial real estate brokerage is a business for entrepreneurs. Even within larger firms, dealmakers are responsible for making their own fortunes. Such an environment also fosters large egos. Under current conditions, many of these egos are expected to strike out on their own.

At the beginning of 2025, CRE is like a boxer who has taken a few tough rounds but might have found a second wind. The cost of capital is higher-for-longer, but deal volume is ticking upward, at least for most areas and a good number of asset classes.

That sets the stage for CRE pros, and especially brokers, to form new ventures. This comes with some caveats, however. No one is predicting a gold-rush, but steady movement instead.

READ ALSO: CRE Veterans Offer Advice to Aspiring Brokers

For individual brokers, the 2023 and 2024 malaise meant depressed deal volume, less opportunity and less financial gain. On the other hand, harder times can make for bolder CRE entrepreneurs. That’s especially the case for those, such as brokers, whose rise or fall tends to depend on their own initiative.

“The best businesses are built in downturns, right?” quipped Johnny Noon, CRE director of engagement for the National Association of Realtors. He added that there’s less competition in such an environment, allowing those who are nimble enough to take advantage.

“Entrepreneurs know their markets and whether (or not) there is going to be a need for brokerage services or opening a franchise—whatever the climate,” added Noon, who has extensive experience in retail site selection, retail leasing, business development and store construction.

“They also ask: ‘Am I going to differentiate myself from the competition?’” said Noon. “What’s going to set me apart, and do I have the tools and resources available to me to be successful?”

Growing interest

Though no one tracks the number of pros hanging their own shingles each year, anecdotal evidence suggests that despite the softer conditions the less-than-robust conditions, some brokers will be heading out.

Noon reported that his organization services more than 180,000 members that are involved in CRE in some way or another, a total that has increased 16 percent over the last two years, even as the markets slumped.

READ ALSO: CRE Sentiment Soars to New High

“We’re definitely seeing a lot more traction with people wanting to break into the business,” Noon said. “That has been happening despite a tighter market in terms of volume and what’s going on in the capital markets. But it’s also a different market. With all the tools and resources that are out there, I think the barriers to entry are a little bit lower now.”

The best businesses are built in downturns, right?

—Johnny Noon, Director of Engagement for CRE, National Association of Realtors

Compensation is a strong motivator when forming new brokerages and other CRE startups, according to Graham Beatty, president of Ferguson Partners. In its latest real estate hiring and compensation hiring survey, the firm found that modest salary increases are in the works in more CRE companies than not. Also, there are three times more firms looking to increase hiring in 2025 than there are planning reductions.

In the short term, compensation seems to be rising again, which would argue against startup formation. But the picture isn’t quite that simple.

“Oftentimes, at inflection points, you see executives make decisions around striking out on their own,” observed Beatty. “One of the inflection points that a lot of individuals are dealing with now is that the value of their long-term compensation has been negatively impacted by the last few years. Because of that impact, some of the golden handcuffs on executives have eroded.”

A generational cliff?

In its 2025 CRE outlook, Deloitte noted a somewhat surprising trend that could, in the long run, open opportunities for entrepreneurs. Namely, CRE is facing a retirement cliff. In the next decade, 40 percent of the U.S. workforce will reach the age of retirement. That means a new generation is going to take the reins.

Real estate companies should align with the expectations of the next generation and take steps now to fortify their talent pipelines, according to Deloitte. Millennials and Gen Zers—some of them anyway—will be every bit as interested in the potential rewards of running their own CRE businesses.
Image by IPGGutenbergUKLtd/iStockphoto.com

CRE breeds entrepreneurs

Being an entrepreneur—in real estate or elsewhere—is often about more than money. The Ferguson findings, for example, hint that some employees are itching to go on their own.

More than half (58 percent) of respondents saw no change in voluntary turnover last year compared to 2023. However, 21 percent reported increases, with the same percentage finding decreases in voluntary turnover. The most cited reason for leaving was a lack of career mobility and professional development, the report noted.

READ ALSO: Another Survey Indicates Optimism by Investors

“It’s hard to be a non-entrepreneur and grow rapidly in this industry,” noted Collete English Dixon, executive director of the Marshall Bennett Institute of Real Estate at Roosevelt University in Chicago. So, in a real sense, unless the market is truly horrible—think 2009, for example—the entrepreneurial urge in CRE is hard to suppress.

Some of the golden handcuffs on executives have eroded.

—Graham Beatty, President, Ferguson Partners

“Even if you’re working for one of the big brokerage houses, you’re still an entrepreneur, because you’ve got to build a business. You get to use their name, but it’s your business that you’re building.”

The CRE entrepreneurial bent starts early, according to Alisa Pyszka, Barry Menashe Family executive director at the Center for Real Estate School of Business at Portland State University. Moreover, the skill sets for CRE success often closely align with those needed to run a business. This tends to facilitate entrepreneurial forays.

“What makes everyone excited about this industry is a love of problem solving, and never taking ‘no’ for an answer,” said Pyszka. “The problem to be solved is: How do you always get the ‘yes’? That’s a defining characteristic of people in this industry.”

Read the March 2025 issue of CPE.

The post Will More CRE Dealmakers Become Their Own Boss? appeared first on Commercial Property Executive.

I love a rom-com. Give me all your enemies-to-lovers! The sassy best friends! And all the makeovers! So many makeovers. I can’t get enough. All it takes is a rebrand—some new shoes, fashionable clothes, and, of course, a removal of glasses, and all of a sudden, our mousy heroine catches the eye of the most popular guy in school.

Sometimes it just takes a little change to get some new attention.

Who would have thought that commercial real estate can follow the same formula that Reese Witherspoon, Cameron Diaz and Julia Roberts perfected?

Adaptive reuse is a great way to preserve historic buildings, take advantage of limited space in cities and save developers money. After all, it’s usually cheaper to renovate a project than to start a ground-up new construction. Additionally, adaptive-reuse projects are often more sustainable than other buildings.

“With rising borrowing and construction costs and an excess of already built square footage in the U.S., we see adaptive reuse as a more efficient use of economic and material resources,” Joel Fuoss of Trivers told writer Beata Lorincz for “3 Adaptive Reuse Projects That Pop.”

Take, for example, the $200 million renovation of the 50-year-old 20 Massachusetts Ave., N.W., in Washington, D.C. Office Properties Income Trust and The RMR Group reinvigorated a staid federal building and turned it into a hip mixed-use development. According to Lorincz, the project rejuvenated the area, transforming it into a bustling destination with a hotel, retail spaces and offices. Talk about a makeover!

For more examples of conversions done right, be sure to read Lorincz’s article. I’ll be there. Who’s ready for a meet-cute?

Read the March 2025 issue of CPE.

The post Adaptive Reuse’s Makeover Moment appeared first on Commercial Property Executive.

These conversions challenge architects to blend innovation with heritage, and to find higher and better purposes for commercial buildings that don’t serve their communities like they once did.

Reusing an old structure doesn’t come without potential setbacks, however, and these projects give designers an opportunity to showcase their flair for problem-solving. Supply-chain issues; surprise details and damage; and insufficient natural lighting are some of the problems that architects have learned how to overcome. Today, more architects are advocating for adaptive reuse as opposed to new construction, and investors are in tune with this trend.

“Our clients always want to hear about value-adds for their projects, and adaptive reuse has that ability to improve their return on investment,” said Joshua Zinder, managing partner of integrated design firm JZA+D.

The following projects are stellar examples of turning old bones into new and higher uses.

A Makeover Steps From the US Capitol Building

20 Mass

BEFORE: D.C. government office building completed in 1973
AFTER: Class A office and hotel mixed-use destination
ARCHITECT: Leo A. Daly

Occupied by a government agency for most of its 50-year life, the trapezoidal structure at 20 Massachusetts Ave., N.W., in Washington, D.C., wasn’t unique in any way. Most locals perceived it as just another blunt, federal building. But after Office Properties Income Trust and The RMR Group poured $200 million into its renovation, not only did they infuse new life into this old structure but they also gave it a new purpose.

A team of architects from Leo A. Daly completely changed the building’s vibe and its relationship with the surrounding area. Under the management of MGAC, the original seven-story structure was converted into a 10-story, 427,690-square-foot mixed-use property known as 20 Mass. Designed to harmonize with the historic avenues of D.C., the project rejuvenated the streetscape with retail spaces, a four-star Royal Sonesta hotel and Class A office accommodations, all tied together with shared amenities and crowned with a green roof and penthouse.

“Ensuring a viable return on investment for the owner was a challenge,” said Irena Savakova, vice president at design firm Leo A. Daly. “The key was creating the correct ratio of office-to-hotel space, paired with perfectly planned amenities.”

The original floorplate was shaped as a deep trapezoid that wasn’t appropriate for modern workplace and hospitality needs because it made it difficult for natural light to reach the interior. In response, the design team introduced a new skylight that illuminates most of the building, with a secondary atrium space providing simulated sunlight.

Though challenging, such adaptive-reuse projects come with a lot of benefits. “The most sustainable buildings are the ones that exist,” noted Savakova. In many urban centers across the country, more than half the office buildings are currently empty or unattractive to prospective tenants, so the potential for more office conversions is immense.

“I’d like to see transformative placemaking conversions, where the utilization of these structures becomes more and more popular, especially in those cities with abundant empty building stock,” she added.

We see adaptive reuse as a more efficient use of economic and material resources.

—Joel Fuoss, Principal, Trivers

Housing Sacramento’s Unhoused

St. Clare at Capitol Park, Sacramento

BEFORE: 180-key hotel in Sacramento, Calif.
AFTER: Affordable and permanent supportive housing
ARCHITECT: Page & Turnbull

Completed in the early 1900s, Capitol Park Hotel at 1125 Ninth St. in downtown Sacramento, Calif., has served multiple purposes over the years—from a business college to a furniture store and, more recently, a hotel. In fact, it was Sacramento’s largest historic downtown single-room occupancy residential hotel. Following a comprehensive restoration process led by Page & Turnbull architects, the property reopened as permanent housing for individuals transitioning out of homelessness.

“Recycling these buildings can help with our housing crisis,” said Peter Birkholz, president & principal of Page & Turnbull.

To make this complex project a reality, more than a dozen different grants and tax credits, including historic tax credits, were put together by Mercy Housing California and the Sacramento Housing and Redevelopment Agency and their partners. The city of Sacramento contributed $20.3 million to the project.

The Capitol Park Hotel’s 180 rooms were converted into 134 studios, all with bathrooms and kitchens, with 64 units set aside for unhoused residents living with a serious mental illness.

Additionally, the refurbished building now includes ground-floor retail space, a shared dining hall, bike storage, laundry facilities, management offices and spaces reserved for individual counseling, all less than a block away from the State Capitol. The first-floor lobby—a double-height space that features the original black-and-white restored tile floor—acts as a popular gathering space for residents.

The rehabilitation preserved the exterior walls of the former hotel and its interior structure. Reusing original structures has undeniable benefits, particularly when factoring in environmental and financial aspects.

“Adaptive reuse—whether for residential or other uses—helps us meet climate change goals by preserving the embodied energy of the structures,” believes Birkholz.

Furthermore, the conversions maintain cultural connectivity by retaining elements of the past so that buildings can tell their stories to future generations.

St. Louis Gem

The Victor

BEFORE: 735,000-square-foot warehouse in St. Louis
AFTER: Mixed-use property with apartments, retail and coworking
ARCHITECT: Trivers

With an expertise spanning roughly half a decade, St. Louis-based architecture studio Trivers has been working on adaptive-reuse projects across the city since its founding in 1975.

“With rising borrowing and construction costs and an excess of already-built square footage in the U.S., we see adaptive reuse as a more efficient use of economic and material resources,” said Joel Fuoss, principal at Trivers. He noted that conversions are faster, cheaper to build and have less of a negative environmental impact compared to new construction.

The firm is behind the transformation of the Butler Brothers Building, a historic, 735,000-square-foot multistory warehouse in the city’s Downtown West neighborhood. Dating back to more than a century ago, the building occupies an entire city block at 1717 Olive St. and served as a regional distribution center for a while, but for much of its existence, it was underutilized or even empty.

In 2020, Development Services Group acquired the building, which is listed on the National Register of Historic Places. The firm invested $130 million in renovations. Dubbed The Victor, the property now includes 400 new apartments, amenities, retail spaces and parking. The Victor even has design and technology features that accommodate today’s hybrid work models, including common areas on each floor and a coworking space on the ground level.

With historically significant properties such as this one, the restoration of valuable architectural and design elements is crucial. For the Victor, the robust original structure featured reinforced concrete with a masonry perimeter and fire walls. Nearly all seven million bricks of the exterior masonry were restored, along with most of the original cast-in-place concrete structure.

Read the March 2025 issue of CPE.

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To have your commercial real estate transaction featured, submit details to Agota Felhazi at agota.felhazi@cpe-mhn.com.

Read the March 2025 issue of CPE.

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Suburban office properties and parks are generally weathering the office sector’s heightened vacancy rates, slumping property valuations and lagging sales volumes reasonably well in comparison to most of their downtown counterparts.

The average suburban office vacancy rate was 17.1 percent in the fourth quarter of 2024, 50 basis points below the national average of 17.6 percent, according to Colliers’ quarterly office market report. CBD vacancy stood at 100 basis points above the national average. Class A suburban office spaces also saw significant rent growth, up 1.4 percent year-over-year on average, as CBD rents moved 2.4 percent in the opposite direction.

Employee demands for shorter commutes, the downsizing of office space and corporate relocations are among the key drivers of suburban office’s comparative resilience. In the post-pandemic period, suburban office investment is a mix of bargain-hunting with renovation and space activation in mind, along with possible adaptive reuse. Ground-up development, on the other hand, bears little resemblance to the corporate office parks of the 1980s and 1990s, and is taking a page out of the mixed-use playbook.

New preferences

To become future-proof, an investment and development strategy for suburban office requires more attention to changing work habits, employee preferences and lease terms.

During the suburban office markets’ last heyday in the 1990s and early 2000s, a history of high occupancy by credit tenants was enough to justify purchasing properties down to the B and C classes. Now, a flight to newer, smaller offices with appealing amenities has permeated suburbia.

CBRE research found that the average size of office leases decreased 27 percent during the first half of 2024 compared to 2018 and 2019. Amenity-driven “prime” buildings generated terms that averaged 21 months longer than Class B and C buildings.

The tenant mix is evolving, as well. Today’s new suburban tenants are likely to be such companies as medical practices, professional services companies and law firms, rather than the back offices, call centers and corporate campuses that were more typical of suburban denizens in earlier decades. The new wave of tenants often seeks to consolidate their workforces in locations that are easier to access on a more consistent basis than downtown.

“If you look at suburbia, you look at the carcasses of former headquarters,” said Mark Toro, CEO of Toro Development Co., which is developing a $560 million mixed-use property on the former site of the State Farm campus in Johns Creek, Ga., a suburb northeast of Atlanta.

Also influencing the picture are suburban tenants that are shrinking their footprints and opting for better-quality, higher-priced space. For example, a tenant might move from 100,000 square feet in a Class B building to a Class A space less than one-third that size.

“Companies willing to invest and wanting their workforce to be in person are looking at high-quality space,” commented Jeff Koukol, an executive director at Glenstar. Such trends are impacting investment strategies.

We are always looking for a property with another component to it, one where we may be able to develop some ancillary spaces. Our eye is always on the vacant land that may come along with it.

– Paul Gaines, Chief Asset Officer, Accesso Partners

Accesso Partners, which owns and operates 52 suburban office properties in the South and Midwest, would once buy older, high-quality Class B assets that offered an attractive price point for tenants. “We felt that there was always going to be a market for that,” said Paul Gaines, the firm’s chief asset officer. But, he added, “there are assets that we may have (once) looked at that we have taken off the list because of age.”

Assets offered at a discount provide low-hanging fruit and give tenants an opportunity to rent space in locations they’d otherwise be priced out of. “Our main focus today is on acquiring suburban offices at a discount to what we think it would cost to rebuild, and (using) the lower basis as a means to re-lease to tenants that may not have been able to afford higher market rents,” noted Chris Loeffler, CEO of Caliber.

Proximity to retail and dining offerings, alongside amenities and the potential for future additions, is a big priority for avoiding the pitfalls that caused many suburban office properties to become abandoned during the pandemic. A shorter commute may not be enough to compensate for the need to make a 15-minute drive for the nearest cup of coffee outside the building’s cafeteria.

Future-proof investments

Also at the top of the list for smart suburban office strategies: redevelopment potential, partly due to the age of much of the nation’s existing stock. That can mean anything from a vacant site that could be used for new amenities to a new ground-up project.

In October 2024, Rubenstein Partners completed the $36 million recapitalization of Parkwood Crossing, a 1.2 million-square-foot office park located in Carmel, Ind., a suburb north of Indianapolis. The project’s centerpiece is the Parkwood Amenity and Recreation Center, a 14,000-square-foot facility with a dining hall, a fitness center, conference spaces, a lounge and a deck. The property also offers outdoor recreation areas, including pickleball courts. So far, Rubenstein has invested in refreshing the building systems, entries and lobbies. Future additions may include restaurants and multipurpose green spaces.

Our main focus today is on acquiring suburban offices at a discount to what we think it would cost to rebuild.

– Chris Loeffler, CEO, Caliber

“The types of things that we look to buy are the things that have already been attractive to larger credit tenants, or we think (that) if we get in there and invest the capital and make the changes that we expect to make, we will draw them,” shared Eric Schiela, Rubenstein’s co-founder & COO.

Like densely populated urban areas with housing shortages, suburban neighborhoods offer options for office-to-multifamily makeovers. That also goes for suburb-like neighborhoods within big cities. In September 2024, Caliber purchased Canyon Corporate Center, a 311,706-square-foot Phoenix office property that the firm plans to convert to residential.

“(For acquisitions), we’re looking for those (buildings) that are long and skinny, where we can build a hallway in the middle to convert to residential, or those that have a lot of excess parking that we can use for other developments to support other uses,” said Loeffler.

Besides altering a property’s surroundings, making space more conducive to employee preferences for collaboration and socialization is another common thread for suburban office properties. In October 2024, Glenstar and a private investor completed a $16 million recapitalization of Presidents Plaza, a two-building, 831,442-square-foot property northwest of downtown Chicago.

The funds went to the construction of spec suites and common areas. “Where tenants are downsizing their space, they still need the facility to bring a larger group of employees back to congregate and to have larger meetings,” noted Koukol.

Read the March 2025 issue of CPE.

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The Trepp CMBS Delinquency retreated slightly in January 2025, with the overall delinquency rate decreasing 1 basis point to 6.56 percent.

This pullback follows six straight months of increases to the overall delinquency rate, during which the rate rose almost 120 basis points. The decrease in the overall rate was driven by the office sector, with the office rate falling 78 basis points to 10.23 percent. This was some welcome relief for the sector, which had reached an all time high to end last year.

READ ALSO: Best Capital Stack Strategies for 2025

Outside of the office sector, the remaining four of five major property types all experienced increases to their respective delinquency rates. These increases were relatively tame however, with only the industrial rate increasing more than 10 basis points. On the loan level, the largest loan to become newly delinquent was a single-asset single-borrow office loan worth $525 million.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 8.29 percent, down 29 basis points from December. The percentage of loans in the 30 days delinquent bucket is 0.39 percent, up 13 basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on February 27, 2025

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Shorenstein Investment Advisers has teamed up with Tritower Financial Group to acquire The Xchange, a 480,000-square-foot office and R&D complex in Bedford, Mass., for $96 million. The new ownership also secured $50 million in acquisition financing provided by Barings, according to CommercialEdge.

The seller was Jumbo Capital Management, which previously purchased the office campus for $107.8 million in 2018, according to the same source.

The XChange is 99 percent occupied by a mix of tenants including iRobot, Nyobolt, Entegris and Quanterix. JLL’s Senior Managing Director Christopher Lawrence and Executive Managing Director Matt Daniels have been tapped to lease the remaining space at the property.

An eight-building innovation campus, The XChange is at 8 Crosby Drive, within Boston’s Merrimack Valley West submarket. Situated on 22 acres, the complex provides easy access to Massachusetts Route 3 and to Interstate 95, while being 21 miles from downtown Boston and Boston Logan International Airport.

Developed in 1968 and completely upgraded in 2017, The XChange buildings range between two and three stories. The properties feature loading docks, passenger elevators and 760 vehicle parking spots.

The amenity package contains a fitness center with a yoga studio, a modern café and outdoor seating spaces. The partnership plans to further enhance the property and add 70,000 square feet of R&D space.

Boston’s office investment activity

Since the start of the year, Boston’s office transaction volume placed it among the top-performing markets in the U.S., according to a recent CommercialEdge report. The metro recorded $2.5 billion in sales and ranked fourth, with office assets trading at an average sale price of $259 per square foot as of January. The value is the seventh-highest among the top 25 markets covered by CommercialEdge.

In late 2024, Norges Bank Investment Management purchased interests in two office properties in the area, as part of a larger deal. The bank paid $976.8 million for a 50.1 percent stake in a 3.7 million-square-foot office portfolio that included assets in Boston, San Francisco and Washington, D.C.

The post Shorenstein JV Pays $96M for Boston R&D Campus appeared first on Commercial Property Executive.

The deal calls for RCG to pay cash after the assumption of $470 million in pre-existing debt. GNL received a $25 million non-refundable deposit from the Atlanta-based real estate investment firm at the signing of the binding agreement.

GNL, a New York-based REIT, expects to use the net proceeds from the multi-tenant portfolio sale to significantly reduce the outstanding balance on its revolving credit facility. Strategic benefits of the portfolio sale cited by GNL include reducing leverage, improving its liquidity position and boosting occupancy to 98 percent, among other key portfolio metrics.

The transaction is expected to close in three phases with the sale of 59 unencumbered properties set to close by the end of the first quarter. The sale of 41 properties with loan assumptions is anticipated to close by the end of the second quarter.

READ ALSO: Net Lease Investment Volume Surges

Including the completion of the multi-tenant portfolio sale, GNL expects to have completed nearly $3 billion in dispositions by the end of the year. The portfolio, which is 91.6 percent leased, comprises assets in 28 states totaling 14.7 million square feet. The portfolio’s composition is 61 percent power centers, 22 percent grocery-anchored and 17 percent anchored centers. The top five tenants are: Petsmart, 4.9 percent; Dick’s, 4.5 percent; Kohl’s, 3.8 percent; Best Buy, 3.2 percent and Michael’s, 3.1 percent.

The portfolio covers most of the Northeast, Mid-Atlantic, Southeast, Midwest and Southwest, including Texas. The farthest west the portfolio goes is Nevada. Some of the properties in the planned deal are Fountain Square, a 166,346-square-foot center with tenants including Michael’s, Petsmart and Golf Galaxy, in Brookfield, Wis., and Centrum Shopping Center in Pineville, N.C., a 122,256-square-foot center with tenants including Home Depot, Best Buy and Super G Mart, an international supermarket.

Advisors for the transaction include BofA Securities serving as GNL’s exclusive financial advisor for the sale and BMO Capital acting as an advisor. Paul, Weiss, Rifkind, Wharton & Garrison LLP is providing legal counsel to GNL. Truist Securities served as a financial advisor to RCG Ventures and provided committed financing for the transaction. McGuireWoods LLP is providing legal counsel to RCG Ventures for real estate acquisition and financing matters. King & Spalding LLP is providing legal counsel to RCG Ventures for fund formation and transaction-related matters. Gibson Avenue Capital LLC is serving as an advisor to RCG Ventures.

Transforming GNL

The New York-based REIT launched its strategic disposition plan in 2024, with the objective of reducing debt, enhancing financial flexibility and lowering the cost of capital as it transitioned to a pure-play, single-tenant net lease company.

In August, GNL sold The Plant, a 367,000-square-foot super-regional retail center in San Jose, Calif., to a partnership between Arc Capital Partners and Milan Capital Management for $95 million. Completed in 2008, The Plant has 17 buildings across 45 acres. Tenants include Best Buy, Ulta Beauty, Ross Dress for Less, Petsmart, Game Stop, Applebee’s, McDonald’s and Starbucks.

GNL took ownership of the shopping center following a 2023 merger with The Necessity Retail REIT, which had purchased the asset in 2022.

Also, during the summer, GNL sold a 366,000-square-foot office property in Shinfield Park, Reading, U.K., for more than $27 million. GNL had owned the Foster Wheeler office property for about eight years.

In June, GNL sold a portfolio of nine cold storage properties to Americold Realty Trust, which had been leasing the assets, for $170 million. GNL had paid $153.4 million for the cold storage portfolio.

RCG Ventures growth

The planned deal with GNL continues a late-year shopping spree for RCG Ventures, which acquired two retail centers in two separate deals in December. The firm, founded in 2003, has acquired more than $1.6 billion in retail assets and managed as much as 14 million square feet of retail real estate.

RCG Ventures picked up Pinnacle Nord du Lac, a 215,058-square-foot retail center in Covington, La., for $27 million from Cypress Equities in mid-December. Pinnacle Nord du Lac was 96 percent leased at the time of sale. Tenants include Hobby Lobby, Academy Sports & Outdoors and Petco.

A few days earlier, the company purchased Oakland Plaza, a 167,000-square-foot shopping center in Troy, Mich., from Continental Realty Corp., on behalf of its Continental Realty Opportunistic Retail Fund I LP, for $25.6 million. The retail center was 97 percent leased when sold with tenants including Kids Empire, Rally House and several restaurants.

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Offices have come a long way over the past five years, evolving into dynamic, adaptable environments that center around employees’ health, and their need to be both productive and connected to each other. Innovative design strategies that focus on flexibility, sustainability and technology are at the forefront of all these shifts.

“We envision workplaces as vibrant ecosystems that adapt to the changing needs of individuals, teams and organizations,” said Gensler Co-CEO Jordan Goldstein. “These are no longer static spaces but curated destinations that inspire purpose, foster innovation and elevate well-being in the office.”

Well versed in office design, Goldstein describes the workplace of the future in detail, in the interview below.

READ ALSO: Office Sector Faces Ongoing Challenges Into 2025

What’s shaping workplace design in 2025? Is there a particular trend that you’re excited about?

Goldstein: This year, we see workplace design shifting away from a focus on traditional real estate metrics and instead prioritizing people’s experience in the places where they work. By creating varied and thoughtfully curated spaces, the office can be more than just a place to work—it can be a destination designed to support productivity, foster connection and provide choice.

We’re making this happen by tailoring environments to people’s unique needs, preferences and work styles. Things like daylight, fresh air and access to green spaces are proven to enhance well-being. Also, we’re seeing a greater need for both private and collaborative spaces at work that balance focus areas with more lively and social zones.

We’re in a moment where we can redefine what it means to go to the office, making it a place people want to be rather than need to be. These shifts signal an exciting transition from static office layouts to dynamic, adaptable environments that foster joy and engagement.

How exactly does the workplace of the future look like? What design elements complement it?

Goldstein: The workplace of the future isn’t just where we work—it’s where we connect, create and thrive. It’s a reflection of who we are, how we collaborate and what we value most.

Some key design elements focus on creating a workplace that is both dynamic and flexible while also leaning into advanced technology. Imagine an office where barriers drop between in-person and remote collaboration, where hybrid meetings are effortless and where digital tools empower every individual to be more connected and productive. From open social hubs to private focus areas, these spaces enable choice and freedom. They empower employees to tailor their surroundings to fit their unique tasks and work styles.

Inclusivity is also at the heart of the future workplace. Thoughtfully designed to embrace everyone, these spaces honor neurodiversity, mobility and individual ergonomic needs. Features such as wellness rooms, biophilic design elements and operable windows or outdoor spaces to provide fresh air will prioritize physical and mental health, while deep-focus quiet zones will cater to employees seeking distraction-free work environments.

We also know that sustainability will be vital to the future workplace. Think of spaces designed to reduce their environmental footprint through all-electric utilities, low-carbon materials, eliminating waste and preserving nature. These future workplaces will not only respond to how people work today but also anticipate evolving needs of the environment around them, ensuring they remain vibrant, relevant and sustainable for years to come.

Indeed, sustainability is a growing trend. How do you implement green practices into your designs?

Goldstein: Sustainability is embedded in everything we do. It’s the starting point for every project. Last year we introduced an industry first—the Gensler Product Sustainability Standards—which have established clear and ambitious performance criteria for the building materials that designers across our company select for our projects worldwide. Starting with some of the highest-impact product categories—things like drywall, carpet tile, insulation, acoustic ceiling tile and furniture—we’re prioritizing the use of low-carbon, healthy materials.

Since launching the GPS Standards, more than 2,800 products have been vetted for compliance and more than 1,500 designers and 1,000 manufacturers have been trained to meet our rigorous criteria.

And we’re just getting started. GPS v2.0 will launch this year, expanding into even more categories of building materials. These standards not only help reduce embodied carbon but also ensure materials are healthier for occupants, installers and manufacturers alike. And in practice, GPS has transformed our project delivery, streamlining sustainable decision-making for our clients.

Have you also been experimenting with AI and how you can incorporate it into your workplace designs?

Goldstein: Innovations in AI are helping us push the creative envelope further by enabling new ways to explore, refine and realize design concepts. We’re not just using it—we’re pioneering it through tools we’ve developed in-house that integrate AI and advanced data analytics.

For example, our AI Sandbox initiative allows our teams to experiment with design iterations in parallel, generating and analyzing hundreds of options in the time it would traditionally take to develop just a few. This approach not only accelerates decision-making but also empowers our designers to think more expansively and unlock new levels of creativity.

READ ALSO: What’s Defining Office in 2025?

We’re also integrating AI into tools that support real-time decision making. This helps us to quickly adapt workplace layouts, ensuring the ever-evolving employee needs are met. By combining the speed and precision of AI with the ingenuity of our designers, we can create environments that enhance collaboration, support hybrid work and promote well-being—all while saving significant time and resources.

One particularly exciting application involves AI-driven visualization tools that transform sketches and concepts into photorealistic renderings almost instantly. This allows us to focus more on the creative process, iterating quickly to perfect design intent and delivering ideas to clients in a way that’s both immersive and inspiring.

Our work with AI isn’t about replacing the human touch—it’s about amplifying it. By integrating these tools into our process, we’re able to explore the boundaries of innovation and create spaces that are not only functional but transformative for those who use them.

Speaking of transformative, please expand on how workplace design influences employee motivation and professional fulfillment.

Goldstein: A well-designed workplace can significantly impact motivation and professional fulfillment by fostering a sense of belonging, purpose and connection. Our research shows that environments designed with employee well-being in mind enhance creativity and engagement.

Some major factors to help enhance the employee experience are creating spaces that support focus, cooperation and relaxation. A good example of this is our design for Edelman UK’s London headquarters, which has a variety of seating types and biophilic touches, enabling employees to work comfortably and feel inspired. These kind of thoughtful design choices not only boost productivity but also strengthen an organization’s culture and workers’ sense of belonging.

Your 2025 design forecast also highlights multi-use districts as a key theme this year. Tell us more about the ways offices can seamlessly integrate into these dynamic environments.

Goldstein: Offices in multi-use districts represent the future of work, where the boundaries between professional, social and personal lives dissolve. These districts aren’t just about where you work—they’re about how you thrive. By embedding offices within neighborhoods with a rich blend of amenities like retail, dining, entertainment and residential spaces, they become part of a dynamic ecosystem.

Take Fifth + Broadway in Nashville, for example. This mixed-use development reimagines the site of the old Nashville Convention Center, turning it into a vibrant hub right in the heart of Music City. It blends retail, dining, entertainment, residential and office spaces, reconnecting iconic landmarks like Honky Tonk Row, the Ryman Auditorium and Bridgestone Arena into a 24/7 neighborhood.

With a 425,000-square-foot Class A office tower and a 350-unit residential tower, it strikes the perfect balance between modern design and Nashville’s rich traditions, creating spaces where people can work, play and truly feel connected to the city.

By prioritizing accessibility and connectivity, these districts encourage teamwork and enhance the overall workplace experience. … People are empowered to flow seamlessly between focused work, spontaneous collaboration and rejuvenating moments of downtime, all within a walkable, amenity-rich neighborhood.

The post Gensler’s Co-CEO on the Workplace of the Future appeared first on Commercial Property Executive.

Long Beach-based engineering and technical services provider Mangan Inc. has signed a 37,000-square-foot lease at Kilroy Realty Corp.’s Aero Long Beach office campus in Long Beach, Calif.

Mangan plans to relocate its headquarters from 3901 Via Oro Ave. to the new office space, with move-in scheduled for November 2025. JLL worked on behalf of the ownership in the leasing deal, while Savills represented Mangan.

Owned and managed by Kilroy Realty, Aero Long Beach is a 957,706-square-foot office campus completed between 1986 and 2000. The complex consists of six buildings located at 3750-3900 Kilroy Airport Way on a 50-acre site.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

Over the past 12 months, Kilroy Realty landed more than 15 leases at Aero Long Beach, encompassing more than 141,000 square feet. The property’s tenant roster features SCS Engineers, Canon Inc., DeVry University, Blue Shield of California, SCAN Health Plan and Cushman & Wakefield.

Buildings range in size from approximately 96,000 to 220,000 square feet across two to eight floors, according to the same data provider. 3880 and 3900 Kilroy Airport Way received LEED Silver certification, while the 3760 and 3840 properties were awarded the LEED Gold, CommercialEdge data shows. Amenities include open-air gathering spaces, a fitness center and an Everytable café.

The campus is adjacent to the Long Beach Airport, near Interstate 405. Downtown Los Angeles is 25 miles north.

JLL Managing Directors Jason Fine and Monica Enes worked on behalf of Kilroy Realty, while Savills Senior Managing Director Steve Pisarik and Senior Vice President Bruce Schuman represented Mangan Inc. in arranging the deal.

Los Angeles office vacancy and asking rates

The national office vacancy reached 19.7 percent as of January 2025, a recent CommercialEdge report shows. This represents a 180-basis-point increase year-over-year and a 10-basis-point decrease from the previous month. Los Angeles posted a 16.4 percent office vacancy rate in the first month of the year, lower than the U.S. average.

The national full-service equivalent listing rate was $33.38 per square foot in January. Los Angeles ranked forth among Western markets with highest asking rates, at $42.01 per square foot, trailing San Francisco ($70.56), the Bay Area ($54.38) and San Diego ($42.57).

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SL Industrial Partners, a member of The Silverman Group, had purchased a 293,740-square-foot industrial asset in Greensboro, N.C. The property traded for $29.5 million from Tectonic, according to Guilford County public records.

SL Industrial Partners now expanded its industrial portfolio in North Carolina to more than 6 million square feet.

Cushman & Wakefield negotiated on behalf of the seller and is the leasing agent in charge of the property.

READ ALSO: Top 5 Emerging Industrial Markets in 2024

Developed by Tectonic with $16.5 million in construction funds from United Bank, the asset came online in 2023, CommercialEdge shows. The property is at 3618 McConnell Road and provides easy access to interstates 40, 85 and 840. Piedmont Triad International Airport is 21 miles away, while Winston-Salem, N.C., is within 34 miles of the property.

Sitting on a nearly 23-acre lot, the single-story distribution facility features 36-foot clear heights, ample column spacing, 60-foot speed bays, 30 dock doors, ESFR sprinkler systems and 30 knockouts. Additional features include trailer parking and 202 vehicle parking spots.

Cushman & Wakefield’s Tom Townes and Ryan Conboy worked on behalf of the seller. The property is available for lease, with the same team retained by SL Industrial Partners in charge of leasing efforts.

Big purchases in the area

The news comes after SL Industrial Partners recently sold an industrial property in the state, within the Charlotte market. In late November, the company sold a 402,390-square-foot building in Concord, N.C., to Stonelake Capital Partners, in a $51 million deal.

One of last year’s significant industrial deals closed near Charlotte and Greensboro. Equus Capital purchased a nine-building industrial portfolio for $124 million from Investcorp. Totaling 1.4 million square feet, this portfolio includes single-tenant distribution properties.

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As 2024 drew to a close, the single-tenant net lease market showed a welcomed burst of activity, wrapping up the year with impressive growth in the final quarter. While many investors had been cautious earlier in the year, the year-end push offers hope for a more active 2025. The fourth-quarter total of $13.8 billion in investment sales—a 57.6 percent increase from the same period last year—signals not just an uptick in transactions but a resurgence of confidence in the market. Investors who had been holding off earlier in 2024 are now jumping back in, showing that despite the uncertainty, the sector still has strong appeal.

Cap rates have climbed steadily for nine consecutive quarters and now average 6.78 percent. While the increase of just nine basis points in fourth quarter may seem minor, it’s a signal of broader market shifts. Investors are still adjusting to higher borrowing costs, and 1031 exchange buyers have pulled back significantly. The rise in cap rates signals a shift in the pricing of risk in today’s cautious environment.

A difficult investor environment

Navigating the market in 2024 hasn’t been easy for net lease investors. With inflationary pressures, interest rate hikes, and murky forecasts for Federal Reserve policy, investors have had to be far more strategic. For many, balancing short-term market volatility with long-term investment goals has been a challenge. The uncertainty driven by the election season only added another layer of complexity, as buyers weighed the political landscape along with financial pressures.

Despite these pressures, the resilience of the net lease market is no accident. The sector’s stability—driven by long-term leases with creditworthy tenants and low tenant turnover—has kept investor interest strong. Even in the face of rising interest rates, these fundamentals continue to provide a buffer against broader economic fluctuations.

Looking ahead to 2025, new challenges will undoubtedly arise, from regulatory changes to evolving capital markets. But with strategic planning and a focus on core fundamentals, net lease investors can weather these uncertainties. For those who’ve been waiting for the right moment, it may finally be time to act – especially with the market showing promising signs of stabilization after a volatile year.

—Posted on February 27, 2025

The single-tenant net lease market posted a slight uptick in transaction volume during third quarter 2024, with $10.3 billion in sales volume reported. While this represents a 3.6 percent rise from last quarter, year-over-year activity remains down. However, just this small increase now puts the net lease sector on track to outpace 2023’s annual total, as nearly $32.5 billion has been logged in 2024 year-to-date.

The industrial sector remained the dominant contributor to investment sales activity, representing 61.5 percent of this quarter’s volume. While net lease industrial witnessed a healthy increase in transaction volume, the retail sector reported a much more modest quarter-to-quarter increase, as the office sector reported a second straight quarter of declining sales volume.

Cap rates continued to rise across all net lease sectors, with the overall single-tenant average reaching 6.71 percent in third quarter. Up 12 basis points in the last three months, average cap rates have now increased steadily for eight consecutive quarters.

Several disrupters are set to influence investor sentiment in the final months of the year. With the U.S. Presidential election right around the corner and continued uncertainty regarding the timing and severity of interest rate cuts, it remains to be seen whether potential buyers will make a push to close deals before year-end, or if appetites will cool in hopes of a more favorable environment in 2025.

—Posted on November 27, 2024

At mid-year 2024, the overall single-tenant net lease market continued to struggle with reduced investment sales activity. Office volume was down approximately 43 percent from last quarter, and retail property transactions fell 56 percent in the last three months. The 17 percent boost in quarterly industrial activity was only enough to push the combined volume to $8.8 billion, making it the second slowest quarter of sales activity in over ten years. At this time, and without an uptick in volume during the second half of 2024, it’s likely the market will fall short of matching last year’s stunted totals.

Even with one or two interest rate cuts this year, which are still far from guaranteed, the market will need time to react and adjust. Activity is not expected to balloon overnight, although transaction volume will almost certainly increase somewhat in response to more affordable debt. Rather, investment sales between now and year-end will primarily be driven by upcoming loan maturities, opportunistic acquisitions of distressed assets, 1031 exchange activity and other tax-motivated investment decisions. Elevated interest rates, coupled with the upcoming U.S. presidential election, have created a muddy, uncertain environment that many investors are simply waiting out if they have that luxury.

With today’s shifting market conditions, property values have dropped. Average cap rates for the overall net lease market have been on an upward trajectory since bottoming out in third quarter 2022. In the last seven quarters, cap rates have increased 93 basis points to the current average of 6.57 percent. While the last three months saw a decline in average cap rates for the single-tenant office and industrial sectors, further reductions are not expected. Instead, cap rates across all net lease sectors may experience some fluctuation quarter to quarter, especially if transaction volume remains slow.

—Posted on August 28, 2024

During the first quarter of 2024, the single-tenant net lease market reported rebounding investment sales activity as levels increased to $11.2 billion—up more than 26 percent from the previous quarter. While this represents a slight 4.5 percent decline compared to this time last year, the market has performed consistently in four out of the last five quarters, with the first three months of 2024 putting the market on a promising trajectory to surpass 2023’s total.

Average cap rates for the combined net lease sector increased 20 basis points during first quarter to 6.50 percent—the highest average seen since mid-2015. Unsurprisingly, single-tenant office cap rates are the highest at 6.81 percent, while retail remains the lowest at 6.38 percent. Year-over-year, however, the net lease industrial sector has seen the most significant increases. At 6.55 percent, industrial cap rates now sit 102 basis points higher than this time last year. As buyers and sellers continue to adjust their pricing expectations in today’s market, further increases across all sectors should be expected as we move through 2024.

Buyer distribution

One notable trend across the single-tenant net lease market is a shift in buyer distribution. The most dominant investor group in the last decade has been private buyers, regularly capturing between one-third and one-half of all net lease activity. In the first three months of 2024, that dynamic shifted as public REITs became more active.

With 36 percent of the overall single-tenant market, public REITs also dominated market share in the office and retail sectors. They were less involved in industrial acquisitions though, outpaced by a noticeable uptick in foreign capital investment.

These observations don’t mean private investors are out of the market, however. Ratios are likely to even out as the year progresses, but with interest rates still elevated, some individual investors who aren’t being driven to act by a 1031 exchange, for example, might decide to rest on the sidelines for a little while longer.

Lanie Beck is the Senior Director of Content & Marketing Research at Northmarq. She is responsible for leading the content strategy for the firm and producing research reports in support of the organization’s commercial investment sales division.

—Posted on April 28, 2024

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As of Feb. 5, publicly listed U.S. equity REITs traded at a median discount to consensus net asset value per share estimate of 14.30 percent.

The industrial sector traded at a 22.86 percent discount to NAV estimate, while the office sector traded at a discount of 25.52 percent—currently the greatest median discount to NAV estimate.

For industrial REITs, Terreno Realty Corp. traded at the largest premium to NAV estimate at 7.45 percent. EastGroup Properties Inc. and Prologis Inc. followed, trading at discounts to NAV estimates of 0.92 percent and 3.24 percent, respectively.

Welltower Inc. traded at the largest premium to NAV estimate of all U.S. REITs at 99.14 percent. At the bottom of the list are Industrial Logistics Properties Trust and Hudson Pacific Properties Inc., with large discount to NAV estimates of 68.3 percent and 69.03 percent respectively.

Iman Niazi is an assistant manager in the Real Estate Client Operations Department of S&P Global Market Intelligence. If you are interested to learn more about the products and services available within S&P Global Real Estate data, please visit us here.

—Posted on Feb. 27, 2025

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As of December 2024, new orders declined by an average of 0.5 percent year-over-year, amounting to $3.2 million, according to data from the U.S. Census Bureau. Despite this overall dip, certain industries demonstrated notable gains. The Durable Goods Industries sector emerged as the top performer, posting an 11.9 percent increase compared to December 2023. The Electrical Equipment, Appliances and Components category followed closely, registering a 7.7 percent rise, while orders for Machinery expanded by 6.6 percent. Likewise, the Fabricated Metal Products segment recorded a 4.3 percent uptick.

Conversely, the Transportation Equipment sector faced a significant setback, with orders plummeting by 13.5 percent year-over-year. Meanwhile, the Furniture and Related Products category experienced only a marginal increase of 0.2 percent. Orders for Primary Metals inched up by 1.0 percent, while the Nondurable Goods Industries sector saw a 2.8 percent rise. Additionally, the Computers and Electronic Products segment reported a 2.9 percent boost in new orders.

Month-over-month growth

On a monthly basis, new orders increased by 3.6 percent from November 2024, amounting to $20.3 million. Five sectors experienced growth, with two of them recording double-digit gains. The Computers and Electronic Products segment led the way with an impressive 24.5 percent surge, while the Transportation Equipment sector rebounded with a 13.5 percent jump. At the same time, orders for Machinery expanded by 7.9 percent, while the Durable Goods Industries and Electrical Equipment, Appliances and Components sectors registered increases of 7.8 percent and 7.6 percent, respectively.

On the downside, the Furniture and Related Products industry posted the steepest monthly decline, with orders dropping by 8.3 percent. The Primary Metals sector experienced a slight contraction of 0.5 percent, followed closely by Fabricated Metal Products, which dipped by 0.4 percent. Additionally, orders within the Nondurable Goods Industries sector edged down by 0.2 percent.

—Posted on February 26, 2025

As of November 2024, new orders decreased by an average of 2.8 percent year-over-year, totaling $16.2 million, according to the U.S. Census Bureau. Among all industries, the Electrical Equipment, Appliances and Components sector stood out with a 2.9 percent increase compared to November 2023. The Nondurable Goods Industry category came in second with a modest 0.7 percent gain, while new orders for Fabricated Metal Products rose by 0.4 percent. Similarly, Computers and Electronic Products recorded a slight uptick of 0.3 percent.

In contrast, orders in the Transportation Equipment sector suffered a sharp decline of 16.7 percent year-over-year. New orders for the Durable Goods Industries fell by 6.4 percent, while the Machinery category posted a 1.3 percent drop. Orders for Furniture and Related Products slipped by 0.9 percent, and Primary Metals recorded a slight decrease of 0.4 percent.

Month-over-month growth

Month-over-month, new orders experienced a 7 percent drop compared to October 2024, amounting to $42.2 million. All sectors reported negative growth; Orders for Furniture and Related Products decreased by 1.3 percent, while the Computers and Electronic Products segment recorded a 2.2 percent decrease.

The largest month-over-month losses were seen in the Fabricated Metal Products sector, which fell by 10.7 percent, and Machinery, where orders decreased by 10.6 percent. Both the Electrical Equipment, Appliances and Components and Transportation Equipment sectors posted a 9.2 percent decrease. Additionally, new orders in the Durable Goods Industries fell by 8.8 percent, while the Primary Metals sector contracted by 7.9 percent.

—Posted on January 27, 2025

As of October, new orders increased by an average of 3.4 percent year-over-year, totaling $20.1 million, according to the latest data from the U.S. Census Bureau. The Transportation Equipment sector led all industries with a notable 9.5 percent increase compared to October 2023. The Electrical Equipment, Appliances and Components category followed with a 6.1 percent rise, followed closely by Durable Goods Industries, with a 5.4 percent gain. Meanwhile, orders for Fabricated Metal Products saw a 4.7 percent increase.

Primary Metals and Computers and Electronic Products both recorded a 3.2 percent increase, reflecting moderate year-over-year growth. Meanwhile, new orders in the Furniture and Related Products sector expanded by 2.9 percent, while Machinery posted a smaller uptick of 2.2 percent. The Nondurable Goods Industries sector, which accounts for a significant share of manufacturing, grew more modestly by 1.7 percent.

Month-over-month growth

On a month-over-month basis, new orders increased by 0.8 percent when compared to September, or $4.7 million. At 4.5 percent, orders in the Primary Metals sector recorded the highest increase, followed Nondurable Goods Industries, up 3.3 percent. At the same time, orders grew 2.4 percent for Fabricated Metal Products. The Machinery segment also recorded growth, increasing 1.3 percent from the previous month.

However, not all industries performed positively. The Computers and Electronic Products category experienced the steepest drop, falling 13.4 percent compared to September. The Transportation Equipment sector saw a 5.0 percent month-over-month decline, reversing its annual gains. Additionally, the Durable Goods Industries and The Electrical Equipment, Appliances and Components segments contracted by 1.8 percent, highlighting ongoing variability within the manufacturing sector.

—Posted on December 27, 2024

As of September, new orders decreased by an average of 2.1 percent year-over-year, totaling $13 million, according to the latest data from the U.S. Census Bureau. Despite the overall decline, several industries posted notable year-over-year growth. The Computers and Electronic Products sector saw the largest increase, with new orders rising by 2.7 percent compared to September 2023.

This was followed by a 3.4 percent gain in the Electrical Equipment, Appliances and Components category and a 3.3 percent rise in Fabricated Metal Products. The Furniture and Related Products sector also grew by 2.8 percent, while Primary Metals experienced a smaller 1.1 percent increase.

Conversely, the Transportation Equipment sector recorded the sharpest year-over-year decline, dropping by 9.6 percent. Durable Goods Industries and Machinery also saw declines of 2.8 percent and 1.0 percent, respectively. Nondurable Goods Industries, which make up a substantial portion of the manufacturing sector, dipped slightly by 1.4 percent.

On a month-over-month basis, new orders remained relatively flat, inching up by 0.1 percent from August, or $332,000. The Computers and Electronic Products sector led the gains with a significant 19.1 percent increase, while orders in the Transportation Equipment segment grew by 7.8 percent. The Electrical Equipment, Appliances and Components category followed with a 4.6 percent rise.

In contrast, Nondurable Goods Industries posted a 3.1 percent decline, while Primary Metals dropped by 4.3 percent. Meanwhile, Machinery and Fabricated Metal Products recorded slight decreases of 1.0 percent and 1.3 percent, respectively, showcasing mixed results across industries.

—Posted on November 26, 2024

As of August, new orders fell by an average of 0.6 percent, amounting to $3.9 million, based on data from the U.S. Census Bureau. However, three sectors showed improvement compared to August 2023. The Computers and Electronic Products sector saw a significant 3.2 percent increase in new orders, while Furniture and Related Products posted a 1.1 percent gain. Fabricated Metal Products saw a modest 0.2 percent rise.

Year-over-year, nearly all surveyed manufacturing industries experienced negative growth, except for these sectors. The Primary Metals sector faced the steepest decline, with orders dropping 1.9 percent. The Electrical Equipment, Appliances and Components sector saw a 1.1 percent decrease, and the Machinery sector recorded a 0.9 percent dip. Nondurable Goods Industries followed with a 0.8 percent decline, while Transportation Equipment orders fell by 0.6 percent.

On a month-over-month basis, new orders grew by 4.5 percent, totaling $25.8 million as of August. Growth was seen in all but one sectors. Transportation Equipment led with a 13.2 percent surge, followed by a 10.5 percent increase in Electrical Equipment, Appliances and Components. Durable Goods Industries posted a 7.5 percent gain, and Computers and Electronic Products saw a 6.5 percent rise. Fabricated Metal Products orders increased by 5.8 percent.

In contrast, the Furniture and Related Products segment posted the largest monthly decline, falling by 0.5 percent. Nondurable Goods Industries saw a modest 1.8 percent increase, while the Primary Metals sector grew by 3.5 percent. Orders in Machinery rose by 3.8 percent.

—Posted on October 23, 2024

As of July, new orders increased by an average of 3.7 percent year-over-year, totaling $20.8 million, according to the latest data from the U.S. Census Bureau. The largest year-over-year growth was observed in the Furniture and Related Products category, where new orders surged by 7.7 percent compared to July 2023. Meanwhile, the Nondurable Goods Industries sector posted a solid 4.5 percent increase, closely followed by a 4.2 percent rise in the Fabricated Metal Products sector.

During the same period, the Durable Goods Industries segment saw a more moderate 2.9 percent uptick, with Transportation Equipment orders growing by 2.8 percent, Machinery rising by 2.3 percent, and Primary Metals recording a 2 percent increase. Both the Computers and Electronic Products and Electrical Equipment, Appliances, and Components sectors experienced smaller gains, each posting a 1.8 percent rise in new orders.

On a month-over-month basis, new orders decreased by an average of 3.1 percent, or $18.4 million. In contrast to the annual trend, most sectors saw a drop in new orders compared to June 2024. The only exception was the Furniture and Related Products segment, where orders rose by 1.4 percent. Meanwhile, the Nondurable Goods Industries sector remained virtually unchanged.

Across nearly all industries, July recorded negative month-over-month growth. The steepest decline occurred in the Computers and Electronic Products sector, where new orders plummeted by 17.6 percent. Similarly, the Electrical Equipment, Appliances, and Components sector experienced an 11.2 percent drop, while the Machinery sector reported a 7.3 percent decrease. The Transportation Equipment sector saw a 6.7 percent decline, closely followed by a 6.4 percent drop in the broader Durable Goods Industries.

—Posted on September 23, 2024

As of June, new orders declined by an average of 5.2 percent, equivalent to a $32.6 million, according to U.S. Census Bureau data. However, there were two sectors that showed improvement compared to June 2023. The Computers and Electronic Products sector experienced a notable surge in new orders, rising by 2.1 percent, while Nondurable Goods Industries posted a 1.3 percent gain.

Year-over-year analysis reveals that nearly all surveyed manufacturing industries experienced negative growth, with only two exceptions. The most significant decline was observed in the Transportation Equipment sector, where orders plummeted by 26.2 percent. Additionally, the Durable Goods Industries recorded an 11.2 percent decrease, and the Primary Metals sector saw a 4.8 percent drop.

On a month-over-month basis, new orders saw a modest decline of 0.1 percent, amounting to $629,000 as of June. The growth in new orders continued to vary across different sectors. The Computers and Electronic Products sector led the increases with an 18.6 percent surge. This was followed by a 5.8 percent rise in the Electrical Equipment, Appliances, and Components sector, a 2.9 percent uptick in Machinery, and a 1.1 percent gain in Durable Goods Industries.

Conversely, the Fabricated Metal Products segment recorded the sharpest monthly decline, falling by 5.4 percent. Orders for Furniture and Related Products decreased by 4.7 percent, the Primary Metals sector dropped by 4.5 percent, and the Nondurable Goods Industries sector experienced a 1.2 percent decrease.

—Posted on August 23, 2024

As of May, new orders rose by an average of 0.9 percent, or $5.5 million, according to data from the U.S. Census Bureau. The most substantial increase compared to May 2023 occurred in the Computers and Electronic Products sector, where new orders climbed by 4.1 percent. The Furniture and Related Products segment experienced a 3.6 percent rise, Nondurable Goods Industries grew by 3.1 percent, and Fabricated Metal Products saw a 2.7 percent uptick.

Year-over-year, all but three surveyed manufacturing industries showed positive growth. As of May, the Transportation Equipment sector saw the steepest decline, with a rate of -6.3 percent. Meanwhile, orders in the Durable Goods Industries segment decreased by 1.3 percent, and the Machinery sector recorded a 0.2 percent drop.

On a month-over-month basis, new orders increased by an average of 2.0 percent, or $11.9 million, as of May. Reflecting similar yearly trends, nearly all surveyed sectors experienced an uptick in new orders. Transportation Equipment saw a 6.4 percent increase, Furniture and Related Products grew by 3.6 percent, Fabricated Metal Products and Durable Goods Industries rose by 3.4 percent, and orders in the Electrical Equipment, Appliances, and Components sector increased by 2.8 percent.

The only decline was in the Machinery segment, which fell by 0.8 percent. Orders for Nondurable Goods Industries edged up by 0.8 percent, Primary Metals increased by 1.2 percent, and the Computers and Electronic Products sector rose by 1.9 percent.

—Posted on July 24, 2024

As of April, new orders increased by an average of 3.4 percent, or $19.4 million, according to data from the U.S. Census Bureau. The most significant rise compared to April 2023 was in the Fabricated Metal Products sector, where new orders surged by 5.9 percent. The Nondurable Goods Industries saw a 5.5 percent gain, Primary Metals increased by 5.3 percent, while Machinery saw a 4.1 percent rise.

Year-over-year, all but one surveyed manufacturing industries showed positive growth. As of April, the only decrease came from the Transportation Equipment sector, where the rate stood at -5.3 percent. Meanwhile, orders recorded a 1.0 percent increase for Furniture and Related Products. At the same time, the Durable Goods Industries sector recorded a 1.2 percent increase.

However, on a month-over-month basis, new orders fell by an average of 5.0 percent, equating to $30.9 million as of April. Unlike the yearly trends, all surveyed sectors experienced a decline in new orders. Nondurable Goods Industries saw a 0.3 percent decrease, Primary Metals declined by 0.7 percent, Fabricated Metal Products fell by 2.8 percent, and Furniture and Related Products decreased by 3.4 percent.

The most significant monthly drop was recorded within the Transportation Equipment segment, which plummeted by 19.5 percent. Orders for Computers and Electronic Products fell by 17.7 percent, Durable Goods Industries saw a 9.8 percent decrease, and the Electrical Equipment, Appliances and Components sector decreased by 8.6 percent. Machinery orders also recorded a 4.1 percent decline.

—Posted on June 24, 2024

In March, there was a notable downturn in new orders, averaging a decrease of 0.9 percent or $5.6 million, as per data gathered by the U.S. Census Bureau. Comparing this to March 2023, the most significant surge was observed in the Nondurable Goods Industries sector, with new orders rising by 0.5 percent.

When examining year-over-year trends, all surveyed manufacturing industries showcased negative growth patterns, with only two exceptions. The Primary Metals sector saw the steepest decline at -5.3 percent, trailed by Transportation Equipment at -2.9 percent, Durable Goods industries at -2.3 percent, Machinery at -1.8 percent, and Electrical Equipment, Appliances and Components at -1.7 percent. Meanwhile, orders for Furniture and Related Products experienced a slight 0.3 percent decrease.

On a month-over-month basis, new orders increased by an average of 11.1 percent—equal to $61.4 million—as of March. Contrary to yearly patterns, all sectors surveyed experienced growth in new orders. The most remarkable spike was witnessed in the Transportation Equipment sector, which saw a 25.5 percent rise in new orders. Following closely behind was the Computers and Electronic Products segment, boasting a robust 22.9 percent gain. Durable Goods Industries also experienced a surge of 13.8 percent, while the Electrical Equipment, Appliances and Components sector saw a 10.6 percent uptick.

Conversely, other industries experienced growth rates that fell below the double-digit percentage mark. Nondurable Goods Industries observed a commendable 8.6 percent increase, while the Fabricated Metal Products segment saw a 7.2 percent uptick. Similarly, Machinery orders increased by 7.1 percent, while Primary Metals recorded a 1.4 percent rise.

—Posted on May 23, 2024

As of February, new orders increased by an average of 3.6 percent, translating to $19.4 million, according to data from the U.S. Census Bureau. Compared to February 2023, the most substantial rise came from the Fabricated Metal Products sector, where new orders climbed by 7.1 percent. The Computers and Electronic Products segment followed with a 6.5 percent gain, Durable Goods Industries recorded a 4.5 percent increase, followed by Transportation Equipment, where orders were up by 4.4 percent.

Year-over-year, all surveyed manufacturing industries displayed positive growth trends. As of February, the smallest increase came from the Furniture and Related Products sector, where the rate stood at 2.4 percent. Meanwhile, orders recorded a 2.8 percent increase for Nondurable Goods Industries. At the same time, the Machinery sector recorded a 3.3 percent increase.

On a month-over-month basis, new orders increased by an average of 3.3 percent—equal to $17.9 million—as of February. Consistent with yearly patterns, all sectors surveyed experienced positive growth in new orders. Transportation Equipment saw the most remarkable surge at 13.6 percent. Orders for Furniture and Related Products climbed by 7.2 percent, Durable Goods Industries saw a 6.3 percent increase, and the Computers and Electronic Products sector posted a 3.6 percent shift. Machinery orders closely followed with a 3.0 percent growth rate.

Meanwhile, orders for the other industries recorded growth rates below the 3 percent mark. Nondurable Goods Industries observed a 0.7 percent increase, while the Electrical Equipment, Appliances and Components segment experienced a 2.4 percent increase. At the same time, orders for Fabricated Metal Products were up by 2.5 percent, while Primary Metals registered a 2.6 percent increase.

—Posted on April 22, 2024

Year-over-year through January, new orders decreased by an average of 1.6 percent, equal to $8.7 million, based on data from the U.S. Census Bureau. The Computers and Electronic Products sector recorded the most significant increase, up by 5.4 percent from January 2023. Fabricated Metal Products followed closely with a 4.5 percent rise. Electrical Equipment, Appliances, and Components saw a 1.3 percent growth, while orders for Primary Metals increased by 0.6 percent.

However, there was inconsistency in the year-over-year changes, with five sectors experiencing declines as of January 2024. Transportation Equipment had the largest decrease, down by 6.4 percent. Meanwhile, orders for Furniture and Related Products declined by 3.2 percent. Nondurable Goods Industries decreased by 2.2 percent, Machinery by 0.4 percent, and Durable Goods Industries by 0.9 percent.

Looking at the month-to-month data for January, new orders showed an uneven pattern, with an average decrease of 8.9 percent, or $52.4 million. Similar to the yearly trend, most industries experienced a decline in new orders, except for four. Fabricated Metal Products saw the most significant growth, up by 9.3 percent. Primary Metals increased by 8.1 percent, while Furniture and Related Products saw a 4.4 percent rise. At the same time, Machinery experienced a 0.5 percent increase.

Conversely, the Transportation Equipment sector experienced a significant decline of 36.7 percent in new orders, followed by Computers and Electronic Products (-25.6 percent) and Durable Goods Industries (-15.8 percent). Electrical Equipment, Appliances, and Components recorded a 2.9 percent drop, while Nondurable Goods Industries decreased by 1.7 percent.

—Posted on March 22, 2024

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LBA Logistics has purchased a 220,240-square-foot, fully occupied Class A industrial facility in Glendale, Ariz. The property changed hands for $39 million, according to CommercialEdge.

Echo Real Estate Capital Inc., in joint venture with Grandview Partners, was the seller. Cushman & Wakefield brokered the deal for the partnership.

The facility, known as Building A, is at 9701 N. 151st Ave. within Echo Park 303, an industrial campus that includes a 455,936-square-foot second building, and is fully occupied by HubStarr Logistics.

READ ALSO: Top 5 Markets for Industrial Transactions

The industrial park is close to Interstate 10 and the Loop 303 industrial corridor, allowing easy access within the Southwest Valley submarket and through the Greater Phoenix area. Phoenix Sky Harbor International Airport is 31 miles from the facility, while Mesa Gateway Airport is within 63 miles.

Echo Park 303’s Building A features 32-foot clear heights, two grade-level doors, 56 dock-high doors and 440 vehicle parking spots. The property, together with the second building at 9501 N. 151st Ave., was designed by LGE Design Build and came online in 2023. Developed by Echo Real Estate Capital Inc., the two-building business park was financed by a $53.6 million loan originated by Pacific Coast Capital Partners, CommercialEdge shows.

Executive Vice Chairman Will Strong, Directors Michael Matchett and Jack Stamets, together with Senior Associate Molly Hunt and Senior Financial Analyst Madeline Warren with Cushman & Wakefield represented the seller.

Phoenix industrial sales

The company recently brokered another deal in Phoenix. In early January, CIP Real Estate picked up a 809,230-square-foot Class A industrial park in Mesa, Ariz., from Canyon Partners Real Estate LLC. The multi-tenant campus known as Broadway 101 Commerce Park traded for $168.3 million, in a transaction that represented the largest single deal for an industrial park in the Southeast Valley of Phoenix.

During the same week, LaSalle Investment Management also made a notable purchase in the metro: the company picked up a 536,122-square-foot, five-building industrial campus in Tempe, Ariz.

The post LBA Pays $39M for Phoenix Industrial Asset appeared first on Commercial Property Executive.

Sunrise Industrial Park One and Two total more than 509,000 square feet. The larger of the two buildings, 3101 Marion Drive, totals more than 271,600 square feet and dates from 1997, based on CommercialEdge data. The other building, the 237,600-square-foot 4601 E. Cheyenne Ave., is of the same vintage. Put together, the buildings are currently 78 percent leased to 10 tenants.

The assets feature 24- to 30-foot clear heights, dock-high loading, ESFR sprinklers and evaporative cooling systems, as is common in this part of the country, though they are banned in new commercial buildings. Floorplans between 20,000 square feet to 89,000 square feet are currently available, with Jerry Doty of Colliers International representing the new owner.

MDH Partners’ James Hwang oversaw the acquisition for the company, with Newmark’s Bret Hardy and Andrew Briner representing Link Logistics.

READ ALSO: Industrial Real Estate’s Future Depends on Adaptability

The company has been on an acquisition roll recently. In 2024, MDH acquired more than 9 million square feet of industrial space in various markets, including a near year-end deal that saw it buy a portfolio of 12 buildings ranging from 140,300 square feet to 1 million square feet.

Supply overshoots industrial demand in Las Vegas

Preleasing on newly completed industrial projects in Las Vegas fell dramatically in the fourth quarter of 2024, bringing the market’s vacancy to 8.6 percent, according to Colliers data. A year earlier, vacancy was roughly 3 percent, and throughout 2022 and much of 2023, the rate hovered around 2 percent.

Net industrial absorption in the fourth quarter of 2024 was 467,260 square feet, Colliers noted. That brought net absorption for the entirety of 2024 to 4.7 million square feet, a decrease of 38.9 percent compared with 2023.

Even so, developers are still quite active in the Las Vegas industrial market, with 5.9 million square feet slated for completion during 2025, Colliers reported. Only 2.5 percent of that space preleased.

The post MDH Partners Enters Las Vegas With $94M Buy appeared first on Commercial Property Executive.

The Minneapolis portfolio has 17 buildings and spans nearly 1.9 million square feet, while the Baltimore acquisition includes 10 buildings totaling 881,000 square feet. The locations and square footage of each asset in the two portfolios were not released and the company declined to offer more details, including the seller or sellers of the assets.

The company described the properties in general terms noting they have highly diversified tenants, high average clear heights, ample loading docks and parking spaces, as well as proximity to major thoroughfares, employment centers and residential neighborhoods.

READ ALSO: The Future Demand for Industrial Is Decarbonized

The firm, which has been among the top five largest cross-border buyers of U.S. real estate over the past five years, focuses on key U.S. industrial markets with significant population bases, diversified economies and resilient tenant demand.

Investcorp noted that as of the fourth quarter of 2024, market rent growth over the past three years averaged 13.4 percent in Baltimore and 11.4 percent in Minneapolis, according to Green Street Advisors data. These figures outpace the 9.3 percent average for the top 50 U.S. metropolitan areas.

Baltimore has seen a recent influx of major corporations including Optum Inc., JLL, Under Armour and Morgan Stanley. Minneapolis has a diverse economy that features 17 Fortune 500 companies like Target Corp., Best Buy Co., 3M Co. and General Mills.

In the U.S., the Bahrain-based firm invests primarily in the industrial and residential asset classes, with 98 percent of its portfolio coming from those two sectors. As of September, nearly 60 percent of Investcorp’s real estate assets under management in the U.S. were in the industrial sector. Since 1996, Investcorp has acquired approximately 1,400 properties totaling more than $26 billion.

Growing U.S. industrial presence

The Minneapolis and Baltimore deals come about five months after Investcorp made three industrial acquisitions totaling about 1.5 million square feet for approximately $300 million. The Dallas and Atlanta infill portfolio had 16 buildings totaling 597,161 square feet and expanded the firm’s existing significant industrial presence in both markets. The West Coast infill portfolio includes 17 buildings encompassing 539,909 square feet across Denver, Las Vegas, San Diego and the San Francisco Bay Area. The Tampa industrial portfolio had eight buildings comprising 279,887 square feet.

Investcorp officials noted well-located, multi-tenanted assets continue to attract interest from tenants and investors as re-shoring and nearshoring efforts reshape the industrial and manufacturing landscapes in the U.S. The three portfolios reflected those characteristics and were expected to provide a resilient cash flow with year-over-year industrial rent growth.

Last April, Investcorp acquired a 1.3 million-square-foot, 31-building industrial portfolio in South Florida and Denver for about $200 million.

A month earlier, Investcorp formed a new investment vehicle valued at $526 million with two leading sovereign wealth funds to focus on acquiring U.S. industrial assets. The investment vehicle’s buying capacity was estimated at about $1.5 billion.

Several properties in Indiana and Florida previously owned by Investcorp changed hands last year. In July, Sperry Equities acquired Northwest Indiana Logistics Portfolio with 639,829 square feet across two buildings in Portage, Ind. Investcorp had owned the assets, which are in the Chicago industrial market, according to CommercialEdge data.

Cypress Park, a five-building industrial park in Orlando, Fla., with 256,838 square feet, was sold to Harbert Management Corp. in April for $40.5 million. The industrial park had been acquired by Investcorp in 2021 for $28 million, according to CommercialEdge.

The post Investcorp Pays $335M for Industrial Portfolios appeared first on Commercial Property Executive.

American Assets Trust Inc. has sold Del Monte Shopping Center, a 673,155-square-foot retail destination in Monterey, Calif. Federal Realty Investment Trust purchased the asset for about $123.5 million.

AAT had acquired the asset in April 2004 for $115 million, according to CommercialEdge information. The current sale will allow the company to focus on other markets where it can achieve greater operational efficiency, President & CEO Adam Wyll said in prepared remarks.

Located at 1410 Del Monte Center, the property is at the intersection of Highway 1 and Munras Avenue. It’s the only regional mall within a 24-mile area. Downtown Monterey is less than 2 miles away, while the city’s regional airport is within 5 miles.

READ ALSO: What’s Driving the Retail Sector’s Growth?

Completed in 1967 on almost 47 acres, Del Monte Shopping Center was expanded in 1987 and most recently renovated in 2007. Its roster features more than 65 national retailers, including Apple, Macy’s Whole Foods Market, Lululemon and Sephora, among others. Regional brands are also part of the mix.

The property was 83 percent leased at the time of sale. Laura Tinetti and Molly Morgan of JLL’s 10Twelve boutique lifestyle leasing team will represent FRT in the remerchandising and leasing of Del Monte Shopping Center going forward.

AAT’s retail inventory

American Assets Trust’s retail portfolio comprises approximately 2.4 million rentable square feet. One of its largest properties in California is Carmel Mountain Plaza, a 520,228-square-foot shopping center in San Diego.

The retail sector is expected to adapt to changing consumer preferences, economic challenges and technological advancements. A key trend for 2025 is the focus on necessity-based retail, with grocery-anchored shopping centers proving resilient to evolving demographics. Suburban migration and hybrid work are driving demand for convenience-oriented shopping experiences.

The post Central Coast Shopping Center Sells for $124M appeared first on Commercial Property Executive.

Pacific Tree Capital has purchased 2525 Main, a 143,269-square-foot office property in Irvine, Calif., form J+R Group for $37.6 million. Cushman & Wakefield represented the seller.  

Sold for approximately $262 per square foot, 2525 Main ranks among the highest price-per-square-foot sales for a multi-tenant office building valued over $20 million nationwide post-pandemic. In 2014, J+R Group acquired it from Menlo Equities for $36 million, CommercialEdge data shows.

In 2024, the U.S. office market saw a total of $41 billion in sales, with properties changing hands at an average of $174 per square foot, according to a recent CommercialEdge report. Austin, Miami and Manhattan registered the most expensive deals, prices averaging $396, $365 and $364 per square foot, respectively. Los Angeles ranked sixth, properties in the metro selling for $272 per square foot on average.

A downtown Irvine office building

Completed in 1982 and renovated in 2016, the Class A property at 2525 Main St. is less than 1 mile from Interstate 405 and John Wayne Airport. The five-story asset includes a 41,000-square-foot data center, as well as an on-site cafe, according to CommercialEdge information.

The building’s roster features nine tenants, among which SMS Data Center, Seagra Technology Inc., OSI Digital and Better Tax Relief, the same data provider shows. The property was 98 percent leased at the time of the sale.  

Cushman & Wakefield Vice Chair Jeffrey Cole, Senior Director Nico Napolitano, Managing Director Kevin Nolen, Senior Director Jason Kimmel and Brokerage Specialist Kristen Schottmiller led the team that facilitated the deal for the seller.

The post Orange County Office Asset Trades for $38M appeared first on Commercial Property Executive.

• 548 W. 22nd St., Manhattan

Sale Price: $50.5 million

California-based cybersecurity company Fortinet Inc. has purchased the 38,100-square-foot retail building in Chelsea from Atlas Capital Group. The buyer, which already had a New York City location, plans to use the four-story building as its office, The Real Deal reported. It is unclear if the current tenants will continue to lease space at 548 W. 22nd St., or if Fortinet Inc. will continue to operate from both New York City locations.

The property came online in 1920 and was last upgraded in 2021. It features 11,258 unused air rights and is currently occupied by NADA New York, Shah Garg Foundation and Santa’s Secret.

• 73 Wooster Street #COM, Manhattan

Sale Price: $25.4 million

The 8,920-square-foot retail unit of the multifamily building at 73 Wooster St. was acquired by Acadia Realty Trust from EPIC, a London-based owner and developer of commercial real estate. The asset previously changed hands in 2011, when EPIC paid $15 million to Vornado Realty Trust for it.

The five-story building is in SoHo and totals 37,443 square feet. It dates back to 1929 and was last updated in 2003. The retail condo is currently leased to Italian luxury brand Moschino.

• 2134 Coyle St., Brooklyn

Sale Price: $22.4 million

Westhab Inc. has purchased the 20,411-square-foot, two-building retail asset in Brooklyn’s Sheepshead Bay from Slate Property Group. The buyer, an affordable housing provider and developer, landed $124 million loan originated by Wilmington Trust, for the development of a residential project at the property.

In July 2024, Slate Property Group acquired the pair of buildings in a $24.4 million portfolio deal, with plans to construct a seven-story residential community with 175 units. The development site has already received approvals since 2022 for a residential project.

The buildings at 2134 and 2150 Coyle St., came online in 1956 and include 55,407 square feet of unused air rights.

• 2481 Creston Ave., Bronx

Sale Price: $7.1 million

Joey’z Shopping purchased the 14,662-square-foot retail building in the borough’s Fordham neighborhood from Abro Management Co. The buyer secured a $4.3 million acquisition loan from Interaudi Bank. The single-story building originally came online in 1955 and includes 15,931 square feet of additional air rights. Tenants here include Citibank and Dresses for Less Clothing.

• 82 Beaver St. #B, Manhattan

Sale Price: $5.5 million

A private buyer picked up the 7,092-square-foot retail component of a 15-story residential building from Red Pine Capital Partners. The buyer landed a $3.7 million loan from SMS Financial through an amended and restated note. The commercial unit is within 1 Wall St. Court, also known as the Beaver Building or Cocoa Exchange. Designed by Clinton and Russell, the property was completed in 1904 as an office building and later converted into a condominiums in 2006.

—Posted on February 26, 2025

The post Top 5 NYC Retail Building Sales—January 2025 appeared first on Commercial Property Executive.

Nationwide, January 2025 office visits were 40.2 percent lower when compared to pre-pandemic January 2019. A confluence of factors, including last month’s polar vortex, as well as the mid-week New Year’s Day, likely resulted in fewer office visits than usual. 

New York continued to lead the return-to-office pack, with office visits in the Big Apple just 19.0 percent lower than in January 2019. Analyzing the year-over-year data indicates that the polar vortex likely had a greater impact on employees in typically warmer climates while employees in cities that tend to have colder winters seemed less affected.

Temporary setback for RTO 

Several factors seem to have converged in January 2025 to temporarily hamper the return-to-office recovery. First, last month brought a polar vortex to much of the United States, compelling Americans to stay indoors and avoid unnecessary trips outside—including to the office. January 1st also fell on a Wednesday this year, and many people likely took advantage of the calendar luck to extend their vacation through the weekend—leading to fewer January office visits compared to years when New Year’s Day falls earlier in the week. 

As a result, the January 2025 bump appeared relatively muted: visits in January 2025 were only 17.7 percent higher than in December 2024, compared to a 31.3 percent month-over-month increase from December 2023 to January 2024. And visits were 40.2 percent lower than they were in pre-pandemic January 2019—a slightly worse showing than the 39.2 percent pre-pandemic visit gap of December 2024. 

New York continues to lead the RTO pack 

The meteorological and calendar challenges seem to have impacted office visits on a metro area as well, with few cities analyzed making significant RTO strides in January 2025. The sole exception was New York, where January 2025 visits were only 19.0 percent lower than they were in January 2019—a slightly smaller visit gap than the previous month.

Many of the cities where residents are used to and equipped for the colder weather—Chicago, Boston, and New York—seemed to have experienced a relatively minimal impact from the arctic blast. The one exception was Denver, which was exceptionally frigid—with subzero temperatures—so that even those used to cold may have opted to work from home. 

But in metro areas where weather tends to be relatively warm—including Atlanta, Houston, Washington, D.C., and Dallas—the impact of the polar vortex was visibly stronger. In these cities, the year-over-year visit gap ranged from 7.5 percent (Atlanta) to 12.0 percent (Dallas)—as employees without proper winter jackets or snow tires likely chose to stay cozy and avoid the chill.

January 2025’s RTO stats may not have been particularly impressive, but the relatively weak office data is likely more a reflection of last month’s unique challenges rather than a slowdown in the RTO momentum. With the weather now back to normal and no mid-week holidays in the near future, the coming months will be critical in evaluating if the RTO is in fact slowing down or whether January just marked a temporary setback within a still unfolding story. 

For more data-driven insights, visit placer.ai. 

This blog includes data from Placer.ai Data Version 2.1, which introduces a new dynamic model that stabilizes daily fluctuations in the panel, improving accuracy and alignment with external ground truth sources.

—Posted on February 26, 2025

The post Placer.ai Office Index—January 2025 Recap appeared first on Commercial Property Executive.

Proptech is constantly improving. But with so many options, how do you know what is worth the investment? The CPE Executive Council shares what they’re most excited about.

Improving AI

The increase in data-driven decision making powered by new and improving AI tools. I see this trend in investment due diligence, asset management, risk profiling, operational efficiency and customer experience. More companies are digging into the stories their data is telling them, discovering better KPIs and methods in the process and making impactful adjustments. With market conditions continuing to extend asset hold periods, the industry has focused inward on AI capabilities, truly optimizing the data available to improve performance. I see that innovation driving increasingly better outcomes for property investors, operators and renters. —Janine Jovanovic, CEO, LeaseLock

Advancing Data Science

We are using data science to unlock insights that were literally not attainable before. We will continue to push boundaries this year. But we are only using data science for our specific purposes. The more people utilize data science in different aspects of the CRE market, the smarter we will be as an industry and the better the outcomes will be. —Ryan Severino, Chief Economist & Head of U.S. Research, BGO

High-Touch Service

Recognizing the importance of high-touch service across asset classes, our firm launched our own custom app called Hiffman HQ in mid-2024. Tenants in all Hiffman National-managed office, retail, healthcare and industrial properties can now use the app to book conference rooms, submit maintenance requests, learn about on-site programming and access lifestyle-related content. It marked the first time HqO’s platform—which powers our app—was rolled out in the industrial sector. The migration of proptech outside of conventional sectors like office and multifamily is a trend we believe will accelerate in the months ahead. —Carrie Szarzynski, Senior Managing Director, Hiffman National

Understanding Retail

I’m excited to see the new AI innovations that involve understanding the retail customer. There is so much more to learn about the changing shopper. I also can’t wait to see how or if PropTech is integrated into adaptive reuse as there is such a need to understand, integrate and deliver to the changing worker and consumer. —Dave Ebeling, Owner, Ebeling Communications

Interested in joining the CPE Executive Council and being featured in future articles? Email Jessica Fiur.

The post CPE Executive Council: Proptech Innovations to Get Excited About appeared first on Commercial Property Executive.

The borrower was a joint venture of InLight Real Estate Partners and an Ares Management Real Estate fund. The loan will be used for lease-up of the project in addition to construction.

As currently planned, the first phase of Eastport Logistics Park will feature four buildings with clear heights of 32 to 36 feet, 135- to 185-foot truck court depths, 222 dock doors, 418 trailer parking stalls and 691 car parking spaces.

The two larger buildings (100 and 200) will total approximately 312,000 square feet, and the two smaller buildings (300 and 400) will total about 132,000 square feet. The second phase will offer build-to-suit options as large as 688,000 square feet.

READ ALSO: Port Activity Rebounds

The development’s location in Jacksonville’s Northside submarket is just off I-295, 5 miles from the I-95 interchange and 4 to 5 miles from the Port of Jacksonville’s Dames Point, ICFT CSX and Blount Island terminals. The project also has the capability for rail service by CSX, a main line of which abuts the property to the north.

The park is scheduled to deliver in the first quarter of 2026. 

Languid activity

The industrial real estate sector in Jacksonville’s Northside submarket has an overall vacancy of 5.7 percent on an inventory of about 32.5 million square feet, according to a fourth-quarter report from Cushman & Wakefield. Net absorption in the latest quarter was a negative 84,000 square feet, which was about on par for the region as a whole. This reflected a surge in deliveries of warehouse/distribution space with little preleasing.

Just after New Years, Affinius Capital provided a $77.4 million loan to ForeFront Commercial Real Estate, in conjunction with an Ares Management Real Estate fund, for their development of West Worth Commerce Center, a 992,000-square-foot industrial campus in Fort Worth, Texas.

Last fall, Affinius collaborated with Bank OZK on two loan deals.

The pair extended a $135 million loan to a joint venture of DECA Cos. and Wildcat Capital Management for the development and lease-up of an 850,000-square-foot industrial property in Perris, Calif.

They also loaned $83.8 million to a joint venture between Lincoln Property Co. and Goldman Sachs for the construction and lease-up of Waterstone, an 894,000-square-foot, four-building industrial development in Kyle, Texas, near Austin.

In each transaction, Bank OZK was the senior lender, while Affinius originated the subordinate portion of the note.

The post InLight, Ares Management JV Lands $82M for Industrial Project appeared first on Commercial Property Executive.

Apple is working on a 250,000-square-foot AI server manufacturing facility in the Houston area as part of a four-year, $500 billion investment in the U.S. Completion is scheduled for 2026.

The firm will use the factory to produce servers for Apple Intelligence, its AI system for iPhone, iPad and Mac computers, previously manufactured outside the country.

Apple’s $500 billion plan also includes hiring around 20,000 new employees across the U.S. Targeted sectors feature R&D and software development, as well as AI and machine learning.

READ ALSO: Industrial Real Estate’s Future Depends on Adaptability

The technology giant also intends to grow its U.S. Advanced Manufacturing Fund from $5 billion to $10 billion. The fund’s expansion includes a multibillion-dollar commitment from Apple to produce advanced silicon in TSMC’s Fab 21 facility in Arizona, where it already employs more than 2,000 workers.

Also part of the $500 billion investment, Apple will establish a new manufacturing academy in Michigan and expand its R&D investments to advance innovative fields like silicon engineering. The firm will also expand its data center capacity in North Carolina, Iowa, Oregon, Arizona and Nevada.

Long-time partners

Apple will develop the new factory together with long-time partner Foxconn, according to Reuters. Last year, the subsidiary of Taiwan-based Hon Hai Precision Industry Co. acquired an industrial facility and additional land to boost its AI server production in Houston. This expansion project is expected to bring $225 million in capital investment.

Foxconn also owns a 3,000-acre, multi-building development in Wisconsin dubbed Science and Technology Park, which focuses on advanced manufacturing and data infrastructure production, and a 6.2 million-square-foot industrial facility in northeast Ohio, used for electric vehicle production.

One of the strongest manufacturing markets

Houston is home to more than 7,000 manufacturers with a total annual production worth more than $75.1 billion, according to the Greater Houston Partnership. The metro also ranks second in the U.S. for manufacturing GDP.

Houston’s industrial pipeline at the end of last year reached 12.4 million square feet, the third largest nationally, surpassed only by Phoenix (22.4 million square feet) and Dallas (18.9 million square feet), according to the latest CommercialEdge report. The market’s vacancy rate clocked in at 7.2 percent as of December, 80 basis points below the national average.

The post Apple Earmarks $500B for US Investment appeared first on Commercial Property Executive.

“We’ve reached a critical juncture where the surge in demand for decarbonization-enabling sites presents a significant opportunity for property owners,” JLL Division President–Global Industrials Meaghan Elwell told Commercial Property Executive. “They have the capabilities to enhance energy efficiency, adjust rental rates upward and ultimately boost their property values.”

To compile the report, JLL evaluated the leased footprint of major occupiers in 18 major industrial and logistics hubs in North America, Europe and Australia, assessing current supply and construction pipelines, and analyzing publicly stated sustainability targets and other relevant details. The 900 occupiers in the study represent about 850 million square feet of leased space. 

JLL found that occupiers are taking a stronger interest in decarbonization-enabling sites for a number of reasons, but top of this list is power availability and security. Increased automation, fleet electrification, the surge in advanced manufacturing, and competition with data centers for limited energy resources are reshaping market dynamics. 

Occupiers are thus prioritizing energy-smart buildings to drive operational efficiencies, and for good reasons. Energy-efficiency upgrades can reduce costs by 10 percent to 35 percent for industrial properties, the report explains. Fleet electrification can save logistics companies 6 percent to 8 percent in overall P&L.

Another factor is the age of industrial portfolios. As inventory ages rapidly—with 76 percent of industrial stock over a decade old in the U.S., and 69 percent in Europe—retrofitting buildings will be a strategy for owners to mitigate obsolescence risk, and allow them to attract top tenants.

READ ALSO: C-PACE in NYC: Will the Program Finally Take Off?

Also, the sector faces heightened operational security threats from climate risk, the report explains. That is due to complex operations and a greater presence in areas more vulnerable to extreme weather events.

Struggling to meet the demand

The demand for decarbonized sites is there, but the industrial market will struggle to meet that demand, though the overall results will vary by market and industry, JLL found. Across the 18 hubs researched in its study, 41 percent of projected demand for low carbon space will not be met by 2030.

In some instances, industrial and logistics landlords may be a little behind the curve in offering energy-efficient features.

“It’s particularly striking that more landlords and owner-occupiers haven’t leveraged industrial warehouse rooftops for solar installations—a commercial real estate decarbonization strategy that could help tenants to offset escalating energy costs while advancing carbon reduction objectives,” Elwell said.

Average lease terms are about seven years for industrial tenants, which means that leases inked now need to consider the 2030 targets of reducing emissions by 50 percent—an interim goal for many occupiers. So while the goal is a number of years off, the impact is now, with occupiers re-evaluating their current spaces in light of their future carbon reduction targets, the report explains.

Tenant activities are typically responsible for 90 percent to 100 percent of operational carbon emissions in industrial buildings, according to the report, compared to 55 percent to 75 percent in offices. So, collaboration between tenants and landlords, especially in the form of co-investments, will be key for the further decarbonization of the sector, JLL found.

The post The Future Demand for Industrial Is Decarbonized appeared first on Commercial Property Executive.

As flexible workspaces remain a vital component of the office sector, several markets continue to stand out for their expansive coworking presence. February CommercialEdge data offers insights into the coworking landscape across these top-performing markets, highlighting shifts in footprint and market share.

Nationwide, coworking spaces add up to 58.5 million square feet across 7,776 locations, accounting for 2 percent of the country’s total leasable office stock. At the forefront, Manhattan retained its position as the largest coworking hub, with more than 7.8 million square feet spread across 275 locations, representing 2.3 percent of the metro’s total rentable office inventory. This underscores the enduring demand for flexible space in one of the world’s most competitive real estate markets.

Other metros with large coworking shares

Chicago and Los Angeles followed closely, each with coworking stocks amounting to 2.2 percent of total leasable office supply—above the national average, according to CommercialEdge. Chicago’s 269 coworking locations encompassed 2.9 million square feet as of February, while Los Angeles led in site count with 293 locations totaling nearly 4 million square feet. Atlanta also matched this 2.2 percent share, with 244 coworking spaces collectively covering close to 2.1 million square feet.

Denver and Phoenix posted comparable figures, with coworking making up 2.1 percent and 1.9 percent of their respective office stocks. Denver recorded 1.4 million square feet across 236 locations, while Phoenix followed with 1.3 million square feet across 155 sites.

Dallas-Fort Worth continues to be a one of the top coworking markets, with 2.3 million square feet spread across 284 locations, representing 1.8 percent of its total office space. As per CommercialEdge data, Boston and Houston report similar proportions, with Boston’s 2.7 million square feet—211 locations—and Houston’s 1.7 million square feet—232 locations—each comprising 1.8 percent of their markets’ rentable inventory.

Washington, D.C., rounds out the top 10 with 2.8 million square feet of coworking space distributed in 279 locations, representing 1.6 percent of the metro’s total office supply.

—Posted on February 18, 2025

The post Top Markets With the Largest Coworking Footprints appeared first on Commercial Property Executive.

• 2 Park Ave., Manhattan

Sale Price: $357 million

Morgan Stanley sold the 852,731-square-foot office building in the borough’s NoMad neighborhood to Haddad Brands. The deal was announced in early December as what would have been the largest office sale of the year in New York City, according to The Real Deal. The 1928-built asset previously changed hands for $565 million in 2007, when Morgan Stanley picked it up from L&L Holding Co.

Fried Frank advised Haddad Brands during negotiations, with the seller planning to occupy the property. The asset was last upgraded in 2011, rises 345 feet and includes 41,465 square feet of retail space

• 470 Park Ave. S., Manhattan

Sale Price: $147.5 million

A week later, another NoMad property changed hands: Williams Equities acquired the 227,053-square-foot office asset at 470 Park Ave. S. from SJP Properties and PGIM Real Estate. The buyer secured acquisition funds in the form of an $100 million senior loan via a consolidated note that replaced a previous $56 million debt, and a $10 million second loan, both originated by MetLife Real Estate Lending.

The 17-story building previously traded in 2018 for $245 million. Originally completed in 1925 and last updated in 2012, the office property features 19,000 square feet of retail space. Its tenant roster includes M&T Bank, Kiko USA and Array Architects, among others.

• 767 Third Ave., Manhattan

Sale Price: $88 million

Nathan Berman’s Metro Loft Management picked up the Turtle Bay property from Sage Realty. Eastdil Secured negotiated on behalf of the seller.  Metro Loft Management secured a $55 million acquisition loan from Bank Hapoalim International.

The 286,212-square-foot office building rises 40 stories and dates back to 1980. Tenants here include Acacia Research Corp., Harvest Capital Credit Corp. and The Cole Group, among others.

The buyer formed a joint venture with Quantum Pacific Group to convert the half-vacant property to residential, under the City of Yes housing reform, according to The Real Deal. The 286,212-square-foot office building rises 40 stories and dates to 1980.

• 1370 Broadway, Manhattan

Sale Price: $75.3 million

American Exchange Group purchased the 234,846-square-foot property, also known as the Fischel Building, from Invesco Real Estate. The buyer closed the acquisition through Sentry Realty, its real estate arm, in partnership with 60 Guilders. Fortress Investment Group provided acquisition financing totaling $66 million through two loan agreements.

The deal closed at a significant discount when compared to the previous sale in 2014, when Invesco paid $186 million. Located in the borough’s Garment District, the 16-story asset was completed in 1922 and includes 5,000 square feet of retail space.

• 24 W. 57th St., Manhattan

Sale Price: $67.2 million

The Central Midtown office building changed hands from APF Properties to Soloviev Group. The seller marketed the property as a development site after it defaulted on a $48.9 million CMBS loan.

Soloviev Group owns multiple plots in the area, as well as the office tower across the street. While it remains unclear what will happen to the new asset, the buyer will likely build a luxury condominium asset, according to Commercial Observer.

Also known as The New York Gallery Building, the property is totaling 110,808 square feet and includes 88,722 square feet of office space and 13,246 square feet of retail space. Originally completed in 1928 and upgraded in 2009, the 20-story building is leased to Galerie St. Etienne, Michelle Roth Design Studios and luxury brand Riflessi, among others.

—Posted on February 25, 2025

The post Top 5 NYC Office Building Sales—January 2025 appeared first on Commercial Property Executive.

Miami International Tradeport is at 11130-11450 N.W. 122nd St. in Medley, Fla., just east of the Florida Turnpike and south of Okeechobee Road. The location provides easy access to Miami International Airport, PortMiami and major highways.

The buildings reportedly are suitable for logistics, distribution and manufacturing users and feature 30- to 36-foot clear heights, 54-foot column spacing and 130-foot non-shared truck courts, as well as ESFR sprinkler systems, LED lighting and ample parking.

Colliers’ EVP Erin Byers, Senior VP Lauren Pace, VP Ruben Suarez and EVP Steven Wasserman will be marketing the property, which has available spaces ranging from 34,000 to 140,000 square feet.

Mixed picture for Miami-Dade’s industrial market

The Miami-Dade industrial real estate market has seen net absorption fall to a negative 750,000 square feet over 12 months, as average vacancy has risen from 2.0 percent in 2022 to 5.5 percent at the start of this year, according to a January newsletter from Smith Commercial Property Group, of Doral, Fla.

“Tenant demand is slowing and rent growth has moderated after a sharp rise of 31.9 percent over three years,” Smith reported. “Despite these challenges, Miami remains a vital logistics hub with strong international trade links through its airport and port. Supply constraints, driven by geographical barriers like the Everglades, keep vacancy rates below the U.S. average, and rent growth is expected to pick up by 2026.”

This past November, BGO Cold Chain acquired Medley Cold Logistics, a 178,000-square-foot Class A cold storage facility in Medley, Fla., from Truist Securities for a reported $60 million. JLL arranged the deal for Truist. The one-story warehouse at 7600 N.W. 82nd Place is fully occupied by Quirch Foods.

The post Prologis Taps Colliers to Lease Miami-Area Business Park appeared first on Commercial Property Executive.

Apollo has entered into a definitive agreement to acquire Bridge Investment Group Holdings Inc. The deal is an all-stock transaction with an equity value of about $1.5 billion, anticipated to close in the third quarter of this year.

Bridge will function as an independent platform within Apollo’s asset management division, keeping its brand, management team and capital formation team. Executive Chair Bob Morse will join Apollo as a partner and head the real estate equity franchise.

Founded in 2009, Bridge had approximately $50 billion in residential and industrial assets under management as of December. The company, which went public in July 2021, will expand Apollo’s real estate equity platform and boost its origination capabilities in both real estate equity and credit.

Apollo Global Management aims to more than double its assets under management from about $700 billion to $1.5 trillion by the end of 2029, according to the Financial Times. Additionally, the company plans to increase its annual debt originations to $275 billion within the same timeframe.

Strategic advisors for the agreement

BofA Securities, Citi, Goldman, Sachs & Co. LLC, Morgan Stanley & Co. LLC and Newmark Group are acting as financial advisors, while Paul, Weiss, Rifkind, Wharton & Garrison LLP provides legal counsel and Sidley Austin LLP is acting as insurance regulatory counsel to Apollo.

J.P. Morgan Securities LLC is serving as financial advisor to Bridge, while Latham & Watkins LLP is acting as legal counsel. Lazard is working as financial advisor to the special committee of the Bridge Board of Directors and Cravath, Swaine & Moore LLP is acting as legal counsel.

The post Apollo to Acquire Bridge Investment for $1.5B appeared first on Commercial Property Executive.

SCHEELS has signed a 210,000-square-foot lease at Brookfield Properties’ Mayfair Mall, a 1.2 million-square-foot property in Wauwatosa, Wis. The vacant space will undergo a full renovation and expansion before the opening of the new store, set for the spring of 2027.

SCHEELS leased the space that was previously occupied by Boston Store. The latter closed its doors in 2018, when its parent company The Bon-Ton Stores Inc. went out of business, BizTimes reported.

The Wauwatosa location is slated to become Wisconsin’s largest all-sports store and employ more than 500 people. The company has two more locations in the state, in Appleton and Eau Claire.

It will also be the 36th SCHEELS nationwide. The firm’s 35th location, a 240,000-square-foot property in Cedar Park, Texas, is scheduled to open in the fall of 2026.

Mayfair Mall, up close

Mayfair is an enclosed, two-level mall that was completed in 1957 and renovated in 2001. Its roster includes Macy’s and Nordstrom as anchor tenants, but also Barnes & Noble, Urban Outfitters, Gap, Five Guys and Victoria’s Secret, among others.

The mall occupies an 84-acre site at 2500 N. Mayfair Road near Interstate 41, less than 11 miles west of downtown Milwaukee.

Redevelopment plans in motion

In 2022, the city of Wauwatosa acquired the 15-acre Boston Store property with the intention of bringing it back to life and signed a development agreement with Brookfield in 2024. The agreement involved securing a new retail anchor for the vacant space and redeveloping the adjacent land into a multifamily community. The site is at the south end of Mayfair.

Brookfield initially secured Dick’s Sporting Goods as a tenant, according to Milwaukee Business Journal. However, the company decided to refuse the location in August 2024.

Now, with the SCHEELS contract in place, the city will transfer the store and 7 adjacent acres to Brookfield in exchange for about 4 acres owned by the property company, located to the south of the store, the same source reveals. More than 900 housing units and additional retail space will be developed across four buildings on that parcel.

The post Brookfield Scores Big Lease at Milwaukee Mall appeared first on Commercial Property Executive.

Seefried Industrial Properties and a U.S.-based family office have signed a 152,014-square-foot long-term lease at their 1700 Madeline Lane facility in Elgin, Ill., with David C. Cook, a 150-year-old Christian organization. The nonprofit will use the space as its main distribution center.

CBRE brokered the deal on behalf of the tenant, while the landlord was represented by Cushman & Wakefield.

The recently built Class A speculative industrial property is within Chicago’s Interstate 90 Golden Corridor submarket, and features 32-foot clear heights, ESFR sprinkler systems, a 2,980-square-foot office space, a drive-in door and 22 exterior docks. Additionally, it includes 138 vehicle parking spots and 35 trailer parking spaces. David C. Cook will be the anchor tenant at 1700 Madeline Lane, with another 168,932 square feet still available for lease.

READ ALSO: Top 10 Markets for Industrial Deliveries

The asset was developed by Seefired Industrial properties as a two-building industrial campus totaling 465,360 square feet. Earlier this month, the developer sold the second building, a 144,414-square-foot facility at 1705 Madeline Lane, to an Atlanta-based plastic molded parts manufacturer.

Chicago ends 2024 with high vacancy

At the end of last year, Chicago’s vacancy rate was 9.7 percent, marking a 570 basis-point year-over-year increase, a recent CommercialEdge industrial report shows, mainly due to the excess supply added between 2021 and 2022. The national vacancy rate stood at an average of 8 percent.

Meanwhile, Chicago’s pipeline decreased by 5.6 million square feet year-over-year to 7.6 million at the end of 2024. The pipeline represented 0.7 percent of total stock, below the 1.7 percent national average and other peer markets such as Phoenix (5.3 percent), Kansas City (3.9 percent) and Dallas (1.9 percent).

The post Seefried JV Signs 152 KSF Chicago Tenant appeared first on Commercial Property Executive.

RFR has recapitalized 475 Fifth Ave., a 275,738-square-foot trophy office asset in Manhattan, securing new debt and equity and escaping foreclosure.

The deal includes a new three-year loan amounting to $160 million issued by Citibank and JPMorganChase. The same lenders had held the previous $180 million property debt due in September 2024, according to CommercialEdge information. The recapitalization also includes the infusion of new capital, although the new equity partners remain anonymous.

RFR had partnered with Penske Media Corp. to purchase the asset in 2022. Nuveen Real Estate sold 475 Fifth Ave. for $291 million, CommercialEdge shows, after having invested $60 million in capital expenditures nine years prior.

The 24-story building debuted in 1926, its floorplates ranging from 4,103 to 18,382 square feet. Amenities comprise a newly renovated lobby and a public art program, to name a few. The property achieved LEED Silver certification in 2015.

READ ALSO: 2025 Top Commercial Mortgage Banking and Brokerage Firms

The property is more than 90 percent leased, according to Commercial Observer. Its largest tenant is Penske Media, which signed a long-term lease for nearly 110,000 square feet. The roster also includes design firm Stantec and investment company Kylin Management.

New York Public Library is across the street from 475 Fifth Ave., while Grand Central and Bryant Park are within walking distance.

RFR’s road to stabilization

RFR’s New York portfolio nears stabilization through recent recapitalizations, Co-Founder & Principal Aby Rosen said in prepared remarks. This month, the company landed a $1.2 billion CMBS note to refinance 375 Park Ave., according to multiple sources. The loan retired the office tower’s previous $1.1 billion debt.

The company rounded up 2024 with another significant office deal, having obtained a three-year extension for the note encumbering 17 State St. The 571,000-square-foot property was subject to a $180 million CMBS loan originated by JPMorganChase.

Manhattan’s mixed office signals

Manhattan’s office market has seen significant changes across several key markers since the beginning of the year, according to a recent CommercialEdge report.

The borough’s vacancy rate climbed only 10 basis points year-over-year to 16.6 percent in January—well below the national average of 19.7 percent. Meanwhile, listing rates dropped 3.6 percent year-over-year and settled at $68.2 per square foot, while the national office rents were up 5.8 percent during the same interval.  

However, office lending has shown signs of revival. Earlier this month, Ivanhoé Cambridge secured a $1.12 billion loan for the refinancing of a 42-story trophy tower in Midtown Manhattan.

The post RFR Recaps Manhattan Office Tower appeared first on Commercial Property Executive.

Overall, 865 office projects were awarded a level of LEED certification in 2024, up by 51 from 2023, accounting for 267 million square feet combined. Yet, the number of LEED Platinum certifications dropped from 72 to 63, across 18.1 million square feet. Furthermore, 39 were project certifications and 24 recertifications. Sorting USGBC’s data by property type, award level and square footage, we have extracted some of the largest ones. Here is the list of the top five LEED Platinum-certified buildings in the U.S.

1. 71 South Wacker, Chicago 

Chicago’s previously named Hyatt Center renewed its LEED Platinum certification in October 2024 with a scorecard of 81 points. Its first LEED Platinum certification was awarded in July 2019.  

The 48-story, 1.7 million-square-foot office tower also renewed for the 17th year its ENERGY STAR certification (first one given in 2008), and also holds a Toby award, a BOMA 360 Performance Program designation and IREM Sustainable Property certification. Its transit score is a perfect 100, and the walking score is not far behind, at 97.  

The asset has been under Irvine Co.’s ownership umbrella since 2010, sold by PSP Partners for $625 million. Current tenants at the tower include IBM, Colliers and Goldman Sachs, according to CommercialEdge data.  

2. 540 West Madison, Chicago 

Second largest in the list is another Chicago-based asset, 540 West Madison. The 31-story, 1.1 million-square-foot property received its fourth LEED Platinum certification in January 2024, with a scorecard of 86 points. The first three LEED Platinum awards were issued in 2009, 2014 and 2018.  

The project also received ENERGY STAR ratings in 11 of the 21 years of its existence and holds a BOMA 360 Performance Program designation. Noteworthy features pertaining to sustainability include rainwater harvesting and rooftop bees. The rainwater harvesting system comprises three 1,000-gallon cistern tanks on the sixth floor and three 1,500-gallon cistern tanks on the garage level. The collected rainwater is used to irrigate the garden on the sixth floor and the plaza at the main entrance.  

Meanwhile, on the 29th floor, the building has an apiary with roughly 150,000 bees. Their honey is bottled and passed out to tenants, visitors and students, and used in specialty drinks at the café located on the building’s ground floor. In 2013, Third Millenium Group acquired it from the Bank of America for $350 million and one year later it completely renovated the asset. Current tenants at the property include BMW, DRW, Evolent Health and SAC.  

3. Market Center, San Francisco 

Located in San Francisco, Market Center is a two-skyscraper complex comprising 555 and 575 Market Street in the metro’s Financial District. The group project spans across nearly 900,000 square feet and was recertified to the Platinum level in November 2024.  

The assets’ sustainability features include automated control systems, LED lighting systems installed throughout the common areas, a real-time energy management platform that monitors energy use in five-minute intervals and building systems that optimize performance. In addition, low-flow fixtures help conserve water, and are used in combination with real-time water usage meters.

Air quality is ensured via air scrubbers. Mechanical systems increase the supply of outdoor air and continuously cycle fresh, filtered air throughout the buildings, while monitoring real-time air quality levels, measuring indicators such as carbon dioxide, particulate matter, VOCs, temperature and humidity.  

Paramount Group acquired both buildings in 2019. The previous owner, EQ Office, had acquired them in 2016, and cosmetically renovated them a year later. Tenants include Waymo, Pacific Maritime Association, Amazon, the Honorary Consulate of Norway and Norcal Group.

4. One Sansome Street, San Francisco 

Rising 42 stories high in San Francisco’s North Financial District, One Sansome Street has maintained LEED Platinum certification since 2014, when it became the first building in San Francisco to achieve LEED Platinum v4 certification. In April 2024, the 738,880-square-foot property was recertified to the LEED Platinum level with a scorecard of 80 points.  

The office tower has a rare amenity in the city, as it is one of the few buildings in San Francisco where the BART station is directly accessible from the lobby. On the ground floor, One Sansome has nearly 16,000 square feet of hospitality and event space including a historic 8,000-square-foot atrium, fully restored in 2023. For 21 years since 2003, the project has been an Energy Star certified building.  

Since 2010, One Sansome Street has been under Barker Pacific Group’s ownership. The firm is behind the sustainability upgrades and improving the LEED Gold award it held at the time of the purchase, to LEED Platinum in 2014, 2019 and 2024. Tenants at the property include Sotheby’s, Newmark, HIG Capital and Wish. 

5. 560 Mission Street, San Francisco 

The 31-story high-rise at 560 Mission Street in San Francisco’ South Financial District recertified its LEED Platinum designation in January 2024, with a scorecard of 81 points. The building has maintained its Platinum rating since 2010. 

Owned by Hines, the asset was built in 2002 and encompasses 731,682 square feet of space with ground floor retail. The largest tenants in the building are J.P. Morgan and Ernst & Young. Recently, J.P. Morgan announced expanding its footprint in the building by another 60,000 square feet. 

560 Mission is all electric, and since 2023 it has been 100 percent powered by renewable energy, produced at a solar installation atop the Sunset Reservoir in San Francisco and at a wind project in Mojave, Calif. The renewable electricity is purchased through a community choice energy program. Like 540 West Madison in Chicago, this San Francisco property also has two rooftop beehives. 

The post Top 5 LEED Platinum-Certified Buildings in the US appeared first on Commercial Property Executive.

Until a few months ago, C-PACE in NYC was limited to financing just qualifying retrofits of existing buildings. Investors found it difficult to use due to high barriers to entry and excessive qualification standards. This, combined with elevated program costs and onerous requirements—and especially during the years of low interest rates—pushed borrowers toward other, more attractive alternatives for financing, recalls Cliff Majersik, senior advisor at the Institute for Market Transformation.

READ ALSO: Why C-PACE Lenders Remain Resolute

“C-PACE was a financing option of last resort for energy upgrade projects under $10 million in NYC,” confirmed Lucas Nagy, vice president of structure finance at EcoSmart Solution, Taurus Investment Holdings’ energy platform.

Simply put, C-PACE’s improvement in borrowing rate over conventional equipment financing was not worth the additional upfront costs and administrative headaches for most property owners in NYC. Additionally, Freddie and Fannie were not providing lender consent to C-PACE, so even if a multifamily property owner wanted to use C-PACE, their lender would not allow it, Nagy pointed out.

New parameters for C-PACE in NYC

In late 2024, C-PACE in NYC was amended to include new construction projects and the maximum loan term was increased to 30 years. This lengthy procedure took note of the city’s local PACE law, and involved a NYC administrative rulemaking process and revised guidance from the New York State Energy Research and Development Authority. The passage of the NYC “gas ban bill” in 2021 also impacted the framework, noted Curtis Probst, president of New York City Energy Efficiency Corp., a nonprofit that also serves as administrator for NYC’s C-PACE program.  

Following the introduction of the new guidelines, the market appears to be in for a green surprise, as funding for new construction is the most common application for C-PACE financing around the country, according to Michael Doty, senior director of originations at Nuveen Green Capital, a company that surpassed $3 billion in C-PACE originations last year alone.

New construction projects in NYC are now PACE-eligible and automatically qualify for funding equal to 30 percent of hard costs, provided that the building is designed following a suite of energy efficiency measures considered best practice for new buildings today, including all-electric, clarified Jacob Roth, vice president of project underwriting and C-PACE Programs at PACE Loan Group.

In addition, new construction projects that comply with an electrification requirement are exempt from the cost-benefit-ratio calculation. “Since the NYC C-PACE program contains the ‘all-electric’ requirement for new construction projects, there is no CBR requirement for new construction projects,” said Probst.

Retrofit programs were also expanded last year to include an updated list of prequalified improvements, making C-PACE requirements less stringent for users. The new guidelines exempt retrofit projects of low-carbon buildings, which must not use fossil fuels for any major building system. “Buildings eligible for C-PACE will have the lowest possible carbon impact throughout their life,” noted Doty.

C-PACE in NYC projects

111 Wall Street

Just a handful of projects in NYC used C-PACE since its launch four years ago. But it started loud, with an $89 million C-PACE transaction in 2021, issued by Petros PACE Finance for 111 Wall Street, a 25-story building in Manhattan’s Financial District. At that time, it was also the largest single C-PACE transaction ever closed in the U.S.

The PACE financing was part of a $500 million acquisition and reposition financing closed by the building’s joint venture partners, Wafra Capital Partners and Nightingale Properties.

The planned PACE-eligible renovations at the 1.2 million-square-foot tower included a full upgrade to the building’s facade and a complete remake of the HVAC air conditioning and MEP systems, as well as fully redundant power systems.  

730 Third Avenue

Another prominent project that used C-PACE financing was TIAA’s 730 Third Avenue, Nuveen’s NYC headquarters in Midtown Manhattan. In the fall of 2021, Greenworks Lending (now Nuveen Green Capital) provided $28 million C-PACE financing with a 25-year financing term, backing a $120 million renovation plan.

The C-PACE amount was used for multiple energy efficiency measures, including lighting, roof insulation and replacement of all windows with smart windows that adjust to light automatically to help control the temperature inside the building.

The C-PACE financed measures also helped reduce the property’s greenhouse gas emissions, supporting the building in averting nearly $100,000 in annual fines under the city’s Local Law 97 of the Climate Mobilization Act.

Brooklyn United Methodist Church Home

The Brooklyn United Methodist Church Home in Brooklyn has been operating for 150 years. Founded as an elderly housing community, it now serves as a skilled nursing facility with 120 beds. In 2023, the property was granted a $5 million C-PACE loan for energy improvements to ensure compliance with New York’s Building Performance Standards.

In this case, the developer sought retroactive refinancing for the installation of a combined heat and power system for the facility, and financing for further improvements including a new boiler, lighting system and air-handling units. These energy improvement measures funded by PACE Equity led to a reduction in carbon emissions by 265 metric tons per year, placing the property well below the 2024 emissions limit, and ensuring the building complies with Local Law 97.

66 Main

Bayview PACE closed $3.5 million in C-PACE financing in 2024, for a mixed-use asset at 66 Main St. in Yonkers. The 10-story property encompasses 170 apartments and 19,900 square feet of retail space on the ground floor. The loan utilized a combination of retroactive C-PACE and future PACE-eligible tenant improvements. The funds were used for energy efficiency upgrades, HVAC repairs and replacements.   

Dutch Meadows

Also in 2023, PACE Equity issued a $2.7 million loan for the first new construction of a 104-unit multifamily project, in Schenectady, N.Y., dubbed Dutch Meadows. The developer leveraged low-cost and non-recourse funding from PACE Equity to improve the project’s IRR while developing an energy-efficient multifamily project.

What’s behind C-PACE deals?

The verve around sustainability, energy efficiency and green building begs the question: How much of C-PACE do investors need to fill their capital stacks, and how much is ESG-driven?

Overall, this financing tool is primarily being used to reduce reliance on more expensive sources of debt or equity, with some investors also seeing it as a tool to further ESG goals, said Roth. For developers who are undertaking the development of green buildings to fulfill ESG commitments, C-PACE acts as a built-in reward for those choices. For developers looking for creative ways to complete a capital stack, “C-PACE helps make good design, good business,” according to Doty.

The reality is that C-PACE is a valuable financing instrument that works well in certain instances depending on project characteristics, alternative sources of capital and market conditions, believes Probst. “While some investors are interested in the ESG aspects, to date, we have not seen ESG considerations driving transactions,” he added.

Another development for C-PACE is increasing bank acceptance of partnering with it. “More and more traditional lenders are warming up to C-PACE, both because it preserves their senior loan position and because their client, the owner/developer, enjoys significant benefits through a more optimized capital stack,” Anne Hill, SVP, Bayview PACE, told CPE last year. “Banks recognize that C-PACE can fill gaps in the capital stack to get deals back on track when conditions are tight,” she added. With C-PACE non-recourse financing, the bank remains in the lead position in the event of loan defaults.

2025 expectations

This financing tool saw considerable growth during the high interest rates period. So with lower interest rates now and an updated requirements list, will C-PACE in NYC show growth or soften?

While we have seen the Fed cut rates a few times last year, we haven’t seen a corresponding decline in commercial real estate rates, Roth pointed out. But should we see this decline, C-PACE will continue to be attractive as investors look to capitalize on that momentum, he believes.

C-PACE financing volumes are partially a function of the absolute level of interest rates, and of equal or greater importance, is the relative attractiveness of C-PACE versus other financing sources. “While this relationship changes over time, we believe that increasing stakeholder familiarity with C-PACE, and the changes made to the NYC C-PACE program, will support broader adoption of PACE,” expects Probst.

C-PACE is an incredibly adaptable financing tool, Doty said, as it grew quickly and consistently throughout the country during a historically low-interest rate environment. While certainly the reduction in bank liquidity and rising interest rates drove C-PACE adoption in the last couple of years, growth is expected, even in a declining interest rate environment.

Nagy believes that sophisticated asset-backed securities investors understand the low, long-term risk that C-PACE provides relative to other real estate-secured debt instruments. The financing instrument is programmatically designed to fund low-risk energy improvements that, in turn, yield increases in property operating income. Securing C-PACE financing means getting stabilization-priced debt before the property has stabilized or restabilized.

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Los Angeles and Long Beach saw the most significant growth as they benefited from shippers that diverted cargo ahead of the first ILA strike in nearly 50 years, as well as efforts to move freight ahead of labor and tariff uncertainties. Baltimore and Montreal were the only ports that saw decreased volumes.

Savills anticipates that short-term strategies such as front-loading will continue in 2025, if trade policy volatility remains. Additionally, as supply chains diversify, trade will be reduced between U.S. ports and China.

“The data confirms importers are front-loading freight, yet warehouse leasing has been slow,” Mark Russo, vice president of industrial research for Savills, told Commercial Property Executive.

“We expect a demand recovery in port markets in 2025, driven by inventory movement and ultimately dependent on the consumer’s health.”

Danny Williams, executive managing director at Newmark, concurred that the front-loading of imports due to tariffs and cargo re-routes from Gulf and East Coast distributors has bolstered LA-LB’s TEU import volume in recent months.

“Longer rail dwell times, however, suggest a good portion of this cargo is destined for markets outside of Southern California,” Williams said.

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A moderate uptick in touring and leasing activities can be observed, according to his colleague, Dain Fedora, head of Southwest U.S. research at Newmark.

“However, occupiers are still proceeding with caution due to remaining uncertainty surrounding tariffs, inflation, etc.,” he said.

Port development activity brisk

CRG recognized the increasing demand for logistics and distribution space near major ports early on, making strategic investments in key markets like Savannah, Mike Demperio, the company’s executive vice president of the Southeast region, told CPE.

The Cubes at West Port and The Cubes at Interstate Centre II are examples of the company’s commitment to support supply chain efficiencies in proximity to the Port of Savannah, according to Demperio.

The Cubes at West Port is a 764-acre master-planned industrial park in Bryan County, Ga., approximately 25 miles west of Savannah. The development will include a 1 million-square-foot industrial facility for Lecangs.

The Cubes at Interstate Centre II is a 300-acre development within the broader Interstate Centre industrial park in Bryan County, Ga., approximately 25 miles west of Savannah.

“The project was designed to accommodate growing demand for logistics and warehouse space, driven in part by the recent expansion of the Port of Savannah, located about 30 miles east,” Demperio said.

CRG’s first building at the development, the 700,000-square-foot Building A, was leased to McKesson Medical-Surgical in November 2021. The second warehouse, the 465,250-square-foot Building E, has been completed, while Buildings B and C are currently under construction.

A fifth building is also planned. Upon completion, The Cubes at Interstate Centre II will comprise nearly 4.3 million square feet of Class A industrial space.

“As container volumes continue to rise, we anticipate strong demand for well-located, state-of-the-art distribution centers to help companies mitigate congestion and labor challenges while optimizing access to major transportation networks.”

Houston, Jacksonville, Georgia markets stay active

JLL reported that there have been substantial transaction volume increases in Houston (20 percent increase year-over-year) and Jacksonville (48 percent increase year-over-year), according to Trent Agnew, senior managing director & industrial group leader at JLL.

Notable deals such as Stonepeak acquiring over 1.8 million square feet of industrial space in Jacksonville and purchasing Houston’s Independence Logistics Park demonstrate strong interest from diverse investors who believe these markets will outperform the broader industrial market, including core funds, separate accounts and infrastructure funds, he said.

“Looking ahead, we anticipate a marked increase in activity in established markets like New Jersey and Southern California,” Agnew told CPE.

“As leasing demand accelerates in 2025, following the container growth experienced in 2024, and rents bottom out, these markets will offer an attractive entry point for investors who have been historically priced out.”

Earlier this year, Avison Young reported on two speculative Class A industrial buildings totaling 540,408 square feet that are coming to the new Northeast Georgia Inland Port.

Alliance Industrial Co. will break ground this quarter on the Alliance 985 Business Park, which is slated to be delivered in early 2026 at 3605 Atlanta Hwy Flowery Branch, Ga.

Avison Young has arranged the sale of the 66.75 acres of land needed for the development. The first building will be 113,536 square feet, and the second will be 426,872 square feet.

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