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.

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.

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.

The post Blackstone Closes $8B Real Estate Debt Fund appeared first on Commercial Property Executive.

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.

The post Basis, Lion Creek Form CRE Investment Partnership 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.

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 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.

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.

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.

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.

The post Transactions: March 2025 appeared first on Commercial Property Executive.

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.

• 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.

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.

• 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.

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.

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.

The post C-PACE in NYC: Will the Program Finally Take Off? appeared first on Commercial Property Executive.

During the very last session of last week’s MBA-CREF conference, an audience member asked a question that got a big reaction from the panelists: How important is it for the Federal Reserve and its chairman, Jerome Powell, to remain independent of the President and of Congress? The consensus among the panelists was: It’s critical.

Moody’s puts the “utmost importance” on Fed independence and has made the potential for a change in that status part of its risk matrix, said Kevin Fagan, senior director & head of economic research. The rating agency’s position is “we should let the experts do what they do,” he said.

President Donald Trump is, at his core, a dealmaker, and commercial real estate is where he honed those skills. So there are CRE executives who secretly or not-so-secretly wish our new leader would get in there and engineer a lower cost of capital. Lowering short-term rates should help get property deals flowing again and give businesses and consumers more buying power. (Treasury rates, the key CRE borrowing benchmark rate, typically fall when the fed funds rate falls, though the two haven’t tracked recently.)

The president has expressed a desire to do just that. But as we know, Powell and the other Fed governors resisted pressure from the president and elected to pause the benchmark rate at 4.25 to 4.5 percent during their first post-inauguration FOMC meeting.

Dueling objectives

The Federal Reserve was created by Congress as a central bank in 1913. The Fed, which has been independent of the Treasury Department since 1951, is responsible for monetary policy with the goal of maintaining stability in the banking system and the economy.

Currently, that goal is rubbing up against the administration’s fiscal policy goal of waking up a sluggish economy, said Victor Calanog, global head of research and strategy & chief economist for Manulife Real Estate Finance Group.

People often would like the Fed to “put the cape on” to rescue the economy, Calanog said. And you could say it did just that in 2020 and 2008 when it dropped rates to the 0 to 0.25 percent range to stimulate borrowing.   

But, he said, other countries should serve as a cautionary tale for why our central bank should remain independent. “When central banks lose independence, it debases a country’s currency,” he said.

So while the U.S. is still seen as a safe haven for foreign investors, devaluing our currency would discourage that capital from coming here, further driving up our nearly $1 trillion trade deficit.  

With the U.S. economy also facing the impacts of U.S.-imposed tariffs and an expiring tax law, for now Fed independence is a certainty in an uncertain world. But these are interesting times, and anything can happen.

Yesterday, citing Article II of the Constitution, President Trump signed an executive order that gives him oversight over all new regulations and the strategic agendas of the executive branch’s independent agencies, including the Federal Trade Commission, the Federal Communications Commission and the Federal Reserve. The one exception to the EO was the Federal Reserve’s monetary policy function.

The post Capital Ideas: So What If the Fed’s Not Independent? appeared first on Commercial Property Executive.

The fund closed in May 2024 with $925 million in total commitment, surpassing its initial $750 million target and hitting its hard cap. With the closing of the Blackstone loan, Alterra has now secured more than $1 billion in financing for the fund. Other lenders previously providing financing to the fund include Truist Financial Corp., Bank of Montreal and Bank of America Corp., according to Bloomberg. It was Alterra’s first financing with the Blackstone team, which is actively deploying capital into compelling investment opportunities, including the IOS sector.

A vertically integrated investor, developer and operator of IOS, Alterra has acquired more than 300 sites in 36 states. The firm focuses on prime locations with access to essential infrastructure as well as properties that are situated in dense, infill industrial clusters surrounded by other IOS users. Last year, Alterra IOS was very active, purchasing 102 IOS properties.

One of its biggest milestones last year was closing on a 51-property portfolio sale to Peakstone Realty Trust in an off-market transaction valued at $490 million. The assets are located in 14 states and span 440 usable acres. The non-development portfolio, 45 of the 51 properties sold, was fully leased at closing.

READ ALSO: Why Industrial Outdoor Storage Will Always Be In

Justin Horowitz of Cooper Horowitz worked with Alterra IOS Venture III to market and source the Blackstone financing.

Alterra IOS deals

The loan finances the recent purchase of nearly 50 properties. Most were markets like Atlanta, Chicago and Tampa, Fla., Bloomberg reported.

One of the sites was 2201 E. Higgins Road in Elk Grove, Ill., in the Chicago market. The site, which has 4.8 usable acres and 35,000 square feet of warehouse space, was purchased in October with two other Chicago-area properties. The fully paved site is near O’Hare International Airport and within proximity of I-90, I-290 and I-294, providing access to the Midwest and beyond.

All three properties are fully leased to a global leader in the equipment rental industry. Alterra IOS also acquired 22634 S. Frontage Road East, a 4.4-usable-acre, paved site with 36,000 square feet of warehouse space that is near the city of Joliet, Ill. The location provides access to I-8- and I-55 and the CenterPoint Intermodal Center, the nation’s largest inland port. The third site in the portfolio is 300 W. Chicago Ave., a 4.9-usable acre property with 34,000 square feet of warehouse space. The fully paved site offers immediate highway access to Chicago and the Midwest points east and west through I-90 and I-94 and north and south through I-65.

More recently, Alterra IOS has expanded its industrial outdoor storage holdings in the Dallas-Fort Worth market to 10 assets with the January acquisition of four properties totaling nearly 35 usable acres. Each of the properties are located within 20 miles of downtown Dallas, providing access to the metro’s network of state and interstate highways, international airports and freight transportation.

In December, Alterra acquired three IOS sites totaling 23 usable acres in the Portland, Ore., market expanding the firm’s regional footprint to six assets. The sale included properties in Portland, Milwaukie, Ore., and Hubbard, Ore.

A month earlier, Alterra purchased a seven-property portfolio with assets in Dallas, Minneapolis, Indianapolis, Chicago, Cleveland, St. Louis and Nashville metro areas. The fully leased portfolio has a total of 23 usable acres.

Alterra also acquired four properties totaling 17 acres in the Greater Houston area in September.

The post Blackstone Provides $190M Loan to Alterra IOS appeared first on Commercial Property Executive.

Oceanview Life and Annuity Co., an affiliate of Bayview Asset Management, is the lender. Scheduled to open in phases starting late 2025, West Harbor is currently 80 percent preleased.

Upon completion, the 42-acre area will feature high-end retail, entertainment and dining. Plans call for 117,205 square feet of leasable building space and 204,000 square feet of ground area, along with a 6,200-seat amphitheater. The development represents a $500 million investment into the waterfront community.

The city of Los Angeles and the Port of Los Angeles selected Jerico Development and The Ratkovich Co. through an RFP process. The development will also provide direct waterfront access, including 200,000 square feet of leasable waterside space designated for vessel excursions and other waterfront attractions.

Newmark advised the West Harbor team and arranged the recapitalization by providing an accretive capital solution for the project’s completion and stabilization.

READ ALSO: Why C-PACE Lenders Remain Resolute

The refinancing, structured with a new senior loan and subordinate C-PACE financing, was arranged by Newmark Executive Vice Chairman Bill Fishel, Directors Alethia Halamandaris and Wyatt Strahan, and Associates Anna Sporrong and Broderick Flagg.

This full leverage, non-recourse refinancing of the West Harbor development will provide the time and resources required to bring the experiential retail project to fruition, Fishel told Commercial Property Executive.

Construction financing of this manner of leasehold real estate in any environment is challenging, he added. “The incredible outcome we achieved here belies the decade-plus of work by the Port of San Pedro and the Jerico and Ratkovich teams alongside the thoughtful, differentiated approaches of both Bayview and Petros, pairing existing PACE, bridge and new PACE financings to elegantly effectuate a new waterfront experience for the region.”

In one of South Florida’s largest office deals last year, Bayview Asset Management renewed its 55,071-square-foot office lease at Merrick Park, at 4425 Ponce de Leon Blvd. That deal was led by Colliers Vice Chair Stephen Rutchik and Vice President Tom Farmer, who represented landlord Brookfield Properties.

This week, a 146,901-square-foot grocery-anchored retail center in Los Angeles was financed for $32 million by 21 Alpha Group and Intelligent Design Real Estate through Forbright Bank for Crenshaw Plaza.

The post Los Angeles Retail Project Obtains $62M Refi appeared first on Commercial Property Executive.

The principals of 21 Alpha Group and Intelligent Design Real Estate have obtained $32 million in senior financing through Forbright Bank for Crenshaw Plaza, a 146,901-square-foot grocery-anchored retail center in Los Angeles.

JLL arranged the three-year, floating-rate loan. Proceeds will refinance existing debt, pay for closing costs and support future leasing expenses. 

The property became subject to a $31 million loan in 2020, when the joint venture acquired it in a $33.7 million portfolio deal that also included the retail space at 3540 Slauson Ave., according to CommercialEdge data. Wells Fargo Bank provided the five-year note.

Crenshaw Plaza, up close

Completed in 1967 and renovated in 2004, the five-building Crenshaw Plaza is at 3210 W. Slauson Ave., covering a 5-acre site. The property was 97 percent leased at the time of sale, its tenants having average leases of 9.3 years. 

Vallarta Supermarkets anchors the retail center, occupying 31.5 percent of the gross leasable area under a 15-year lease. The roster also includes Planet Fitness, Foot Locker and AutoZone.

Crenshaw Plaza is at the intersection of West Slauson Avenue and Crenshaw Boulevard, which sees approximately 72,000 vehicles per day. The shopping center is also adjacent to the Hyde Park light rail station, on the Metro K Line. 

JLL Capital Markets Director Spencer Bergthold, Senior Managing Director Charles Halladay and Associate Daniel Skerrett led the company’s Debt Advisory team that brokered the deal on behalf of the joint venture.

Grocery-anchored shopping centers continue to prove their resilience in the market, driven by consistent consumer foot traffic and the demand for convenience-oriented retail experiences. In 2025, the retail sector is expected to undergo significant transformation due to shifting consumer preferences, increasingly oriented toward necessity-based centers.

The post 21 Alpha Group JV Lands Refi for Los Angeles Retail Center appeared first on Commercial Property Executive.

Loan originations will focus on first mortgages secured by high-quality properties owned by institutional sponsors and sited in major markets. Meanwhile, securities investments will leverage KKR’s position as the largest third-party purchaser of risk retention CMBS B-Pieces, according to the company.

As of press time, a KKR spokesperson had not replied to Commercial Property Executive’s request for additional information.

KKR management emphasized the timing of the close, “underpinned by the opportunity to lend on high-quality, well-located assets at conservative leverage levels on re-set property values,” and stated that “private capital will play an increasingly important role in the commercial real estate market as loan demand continues to climb.”

Since 2015, KKR’s real estate credit strategy has originated $43.4 billion of loans. The firm had $14 billion invested in commercial mortgage-backed securities as of September 2024.

Wide-ranging activity

Characteristically, KKR has been an active investor over the past year.

For example, last July KKR acquired a 12-building logistics park in southwest Houston from Artis Real Estate Investment Trust for $234 million. Park 8Ninety totals about 1.8 million square feet and was completed between 2017 and 2022.

Then in August, capital accounts advised by KKR purchased an approximately 2 million-square-foot, six-building portfolio of Class A logistics assets for $377 million. The facilities are in gateway and infill submarkets in Seattle, Atlanta, Philadelphia, New Jersey and the San Francisco Bay Area.

On a different front, last May KKR and Healthcare Realty Trust Inc. entered into a strategic joint venture to own and invest in medical outpatient buildings. Healthcare Realty was to receive about $300 million for its contribution and partnered with KKR to explore further acquisitions.

The post KKR Closes Opportunistic Credit Fund at $850M appeared first on Commercial Property Executive.

LBA Realty, of Chicago, was the seller, according to information provided to Commercial Property Executive by CommercialEdge.

The two assets are Buildings D and E, at 16000 and 15716 Wolff Crossing, respectively. The assets were built in 2021. Both feature a 36-foot clear height, excess trailer parking, ESFR sprinklers and multiple points of ingress and egress.

They are fully occupied by three tenants, according to PCCP. Among these, information from CommercialEdge lists CEVA Logistics at 16000 Wolff Crossing and LBA Logistics at 15716 Wolff Crossing. A PCCP spokesperson was unable to provide additional information.

CEVA Logistics is one of the largest 3PLs and was purchased in 2019 by shipping titan CMA CGM, based in Marseille, France. The company’s headquarters building there was designed by renowned architect Zaha Hadid.

The AllianceTexas master plan

Elizabeth Creek Gateway is 20 miles north of downtown Fort Worth in the 27,000-acre AllianceTexas master-planned development. Features of use to warehouse/distribution tenants in AllianceTexas include two Class I rail lines (BNSF Railway and Union Pacific), a BNSF intermodal facility, a cargo airport (Perot Field Fort Worth Alliance Airport), FedEx and UPS sort hubs, and an Amazon air hub, as well as major thoroughfares connecting to the Greater DFW MSA and elsewhere.

In addition, Elizabeth Creek Gateway is 20 miles west of Dallas Fort Worth International Airport and 20 miles north of Fort Worth Meacham International Airport.

WPT Capital Advisors focuses on the U.S. industrial warehouse and distribution sector and currently manages about $3 billion of assets on behalf of various global investment partners.

Vacancy and rents both rise

Just last month, Alterra IOS grew its Metroplex industrial portfolio through the acquisition of four industrial outdoor storage properties totaling about 35 acres.

North Fort Worth, along with South Dallas, has been an active industrial space submarket within Dallas–Fort Worth, according to a fourth-quarter report from Marcus & Millichap. Together, the two areas added 25.5 million square feet over the 12 months through June 2024, boosting supply by 4.8 percent.

However, Marcus & Millichap reported that “nine of 10 submarkets had year-over-year vacancy increases, with the sharpest climbs recorded in North Fort Worth and DFW Airport.”

Still, of the six submarkets that have more than 100 million square feet of inventory, annual rent growth was the strongest in North Fort Worth and South Stemmons, also according to Marcus & Millichap.

The post PCCP Funds $72M Loan for 1 MSF Warehouse Acquisition appeared first on Commercial Property Executive.

Alexandria Real Estate Equities, Uber Technologies and basketball team Golden State Warriors have secured a $500 million refinancing loan for two office buildings in San Francisco that serve as Uber’s headquarters. The trophy duo encompasses 586,208 square feet in the Mission Bay neighborhood.

Goldman Sachs and Barclays provided the five-year, fixed-rate, single-asset, single-borrower CMBS note in a deal arranged by CBRE. To secure the loan, the joint venture made a down payment of $100 million on the existing debt, a $600 million financing package originated by JPMorgan Chase & Co. in 2020, public records show. Wells Fargo served as trustee.

READ ALSO: San Francisco Office Construction Rebounds Amid High Vacancy

Uber and Warriors each have a 45 percent stake in the two office buildings, while Alexandria owns the remaining 10 percent. The duo is at 1655 and 1725 Third St., next to the Chase Center arena and about 3 miles south of downtown San Francisco.

Completed in 2021, the 11-story buildings feature 45,911-square-foot floorplates, as well as LEED Gold certifications. Amenities consist of a café, a smoothie bar, as well as landscaped roof decks, to name a few.

Rounding up Uber’s Mission Bay campus are the office assets at 1455 and 1515 Third St., which measure a combined 486,600 square feet and bring the property’s total square footage to 1 million. Uber subleased these buildings to OpenAI in 2023.

CBRE Executive Vice Presidents Brad Zampa and Michael L. Walker arranged the financing on behalf of the venture. According to the firm’s research, the non-agency loan closings for banks rose to 43 percent in December, up from the 18 percent registered in September.

San Francisco’s office market sees better days

San Francisco’s office scene sees signs of improvement. Although the market’s vacancy rate rose 240 basis points year-over-year, landing at 34.2 percent in December, the last quarter of 2024 marked the first three-month period of positive absorption recorded since 2019, according to a report by Cushman & Wakefield.

This shift toward 2024’s tail-end spurred lending revival in the metro. In January, a joint venture between Bain Capital Real Estate and Phase 3 Real Estate Partners Inc. obtained $484 million to refinance a three-building life science complex totaling 566,661 square feet in Brisbane, Calif.

The post Uber JV Lands $500M for San Francisco HQ appeared first on Commercial Property Executive.

Origination figures released yesterday by the Mortgage Bankers Association show lending is rebounding despite higher-for-longer rates and global and domestic uncertainties.  

In MBA’s Commercial/Multifamily Mortgage Originations Index, Q4 2024 originations were 84 percent higher than Q4 2023’s and 30 percent more than Q3 2024. MBA’s preliminary estimates show volume for the year rose 39 percent versus 2023. Set to exceed $500 billion when the numbers are finalized in April, 2024 originations came close to 2022 originations of $560 billion.

Originations are still not at the level they were in 2021 (nearly $700 billion), “but they were definitely higher than 2023” when less than $300 billion was originated, said Reggie Booker, MBA associate vice president Commercial/Multifamily Research, during the MBA-CREF conference San Diego.

After a slow first half of the year, borrowing picked up in Q3 and continued to grow for the rest of the year. For Q4, MBA found that every property type saw a year-over-year increase from Q3 2024: office (up 105 percent), industrial (up 94 percent), multifamily properties (up 69 percent) and retail (up 48 percent).

For 2025, MBA forecasts a 16 percent increase over 2024 originations. Of that, $361 billion will be multifamily—also a 16 percent increase. In 2026, originations are expected to exceed $700 billion with more than $400 million of that being multifamily.

A complex backdrop

Despite the progress, the industry is still facing a number of challenges, MBA Chief Economist & Senior Vice President of Research & Business Development Mike Fratantoni told executives during his economic outlook presentation.

In 2025, $957 billion or 20 percent of the $4.7 trillion in outstanding CRE mortgages are set to mature. With that, there will be a significant amount of distress transactions as well as a lot of opportunity for mortgage executives.

But a “very, very complex” macroeconomic environment—including a weakening global economy, slower U.S. growth and looming trade wars—are expected to keep the 10-year Treasury, CRE’s key benchmark, trading between 4 and 5 percent for this year. “By the end of the year, I expect we’re not going to be in much of a different place than we are today for at a (4.5 percent) 10-year,” the economist said.

Fratantoni told executives to “be on their toes” when rates fluctuate to the lower end of 4 percent: “As we saw in September, October last year, when you get that moment where rates drop to the lower end of that range, you got to be ready to go because I don’t think it’s going to last very long.”

The post MBA-CREF Special Report: Lending Grows Amid ‘Complexities’ appeared first on Commercial Property Executive.

Hines, which serves as the 1.2 million-square-foot building’s asset manager and property manager, also participated in the deal, the funding of which was led by Wells Fargo, Bank of America and Bank of Montreal.

The building currently is 97.2 percent leased, with tenants including Salesforce, Stifel, Dechert LLP, US Bank, Lloyds Bank and Standard Chartered.

Ivanhoé Cambridge acquired 3 Bryant Park from EQ Office for $2.2 billion in early 2015, according to information provided by CommercialEdge. The building was completed in 1972.

READ ALSO: Top 100 Office Leases of 2024 Point to Stabilization

Ownership reportedly has been making ongoing capital investment since acquiring the property. Amenities include direct access to Bryant Park, on-site retail anchored by Whole Foods and Equinox, an outdoor plaza of more than 16,000 square feet, a new conference center, a sky lobby with a coffee bar and immediate access to the 42nd Street Subway station, serving the B, D, F, M and 7 lines. The property also features an array of dining options including Valbella, Shake Shack and Rosetta Bakery.

The JLL Capital Markets Debt Advisory team who represented the borrower was led by Senior Managing Directors Christopher Peck and Drew Isaacson, Managing Director Lauren Kaufman and Directors Jennifer Zelko and Christopher Pratt.

More demand for big bucks

Based on its location equidistant from multiple transit hubs, including Grand Central Terminal, Penn Station and the Port Authority Bus Terminal, the Bryant Park micro-market is one of New York City’s strongest office submarkets, JLL stated. Its current 0.8 percent vacancy for trophy assets compares favorably with other submarkets, and its rents are running about 50 percent higher than the average for Midtown Class A properties.

More broadly, with respect to the capital markets, JLL commented that current trends “indicate increasing liquidity for large office loans, buoyed by ample debt capital and increased confidence in the sector.”

To put that in numbers, since the third quarter of 2024, JLL has seen a significant surge in demand for large commercial real estate loans. That’s part of a nearly 30 percent rise in lender quotes for deals exceeding $100 million in the second half of 2024, versus the same period in 2023.

This past August, Yeshiva University signed a 32-year lease expanding its presence at Herald Center, in Midtown, to 160,000 square feet. The Class A property is owned by JEMB Realty, which represented itself in the lease negotiations; the university was represented by Savills.

Yeshiva University intends to use the additional space at Herald Center to expand its presence in the health sciences, such as occupational therapy and speech-language pathology.

The post Ivanhoé Cambridge Lands $1.1B Refi for Manhattan Tower appeared first on Commercial Property Executive.

The firm’s index measuring lending activity and sentiment rose 21 percent from the third quarter of 2024 and 37 percent year-over-year. For the fourth quarter, the index measured 259, exceeding the five-year pre-pandemic average of 229.

There was a 184-basis-point spread on closed commercial mortgage loans in the fourth quarter 2024, marking a 49-basis-point decline year-over-year and a 1-basis-point increase from the third quarter of 2024.

The percentage of CBRE’s non-agency loan closings for banks in the fourth quarter rose to 43 percent compared to just 18 percent in the third quarter and a 40 percent share a year earlier. Loan payoffs, efforts to clean up balance sheets and a more favorable regulatory outlook boosted banks.

Last month, a CREFC index also suggested optimism.

Tight loan spreads

For multifamily loans, spreads narrowed by 12 basis points during the quarter to 156 basis points. That was the tightest spread since the first quarter of 2022, primarily due to compression in agency loan spreads.

Capital remains abundant for Class A properties with high-quality tenants, Robert Martinek, director at EisnerAmper, told Commercial Property Executive.

“Although 2024 saw a substantial amount of new inventory entering the market, it is anticipated that in 2025 we will see a decline in new construction,” Martinek said.

READ ALSO: The Trump Effect on Tariffs, Taxes, T-Bills

“As vacancy rates decrease, leasing will probably continue its upward momentum. Loans that were restructured during the pandemic will soon come due, and we can expect sustained lending activity.”

He said the biggest question moving forward is where interest rates will be.

“The jury is still out, as some market participants see the new administration’s tariffs as a roadblock,” according to Martinek. “However, if inflation slows, we should see additional rate cuts. This should lead to improvement across most real estate sectors and increased commercial lending.”

Fed cuts create positive yield curve

Dillon Freeman, Fidelity Bancorp Funding Senior Commercial Loan Officer, told CPE the latest Federal Reserve cutting cycle has produced a positive yield curve, presenting an attractive opportunity for banks to revisit deploying longer-term loans.

“The attractiveness of lending collateral to the Fed via reverse repo transactions has fallen relative to the yield earned on new loans,” he said. “Banks have seen a fall in non-interest income as loan originations have subdued. The need for income added to a widening spread between cap rates and lending costs could see banks re-entering the market after limited activity over the last 18 months to 24 months.”

While many are still sitting on the sidelines, waiting for a more favorable lending environment, a transition from hesitation to adaptation is occurring, reflected in the latest surge in lending activity, according to Lisa Flicker, head of real estate & senior managing partner at Jackson Lucas.

“Investors have moved past the era of ‘extend and pretend,’ and the strong recovery in lending activity signals a shift to a new phase—one of ‘hope and cope,’” Flicker told CPE. “As higher rates continue to be the new normal, the market adjusts accordingly.”

The post CRE Lending Activity Sees Strong Recovery appeared first on Commercial Property Executive.

Cannon TTM, a Cannon Commercial division, has obtained $60 million in financing to acquire a 2 million-square-foot industrial portfolio comprising two buildings, one each in Jacksonville, Fla., and Hammond, La. The properties are both fully leased to regional grocery chain Winn-Dixie. JLL secured the 10-year, fixed-rate CMBS loan.

The Jacksonville location is 12 miles from Jacksonville International Airport in the Riverside submarket, while the Hammond site is between New Orleans and Baton Rouge, La. Both assets are considered mission-critical distribution centers for Winn-Dixie, a subsidiary of Southeastern Grocers, which is owned by ALDI.

READ ALSO: Industrial Sector Transitions as Supply Shrinks

The long-term occupancy by Winn-Dixie and the assets’ locations in growing Southeast markets made this deal an attractive one for lenders, according to JLL Senior Managing Director Jeff Sause, who facilitated the deal along with Associate Joshua Blank.

Cannon TTM is an arm of Cannon Commercial, a private real estate investor associated with Tinder founder Justin Mateen and his brother Tyler Mateen. The firm recently acquired Wilshire Rodeo Plaza in Beverly Hills, Calif., from Nuveen for $211 million, in the largest transaction in that city since 2019.

CMBS lending surged in ‘24

CMBS lending has bounced back from interest rate doldrums in 2022 and ‘23, with issuance rebounded in 2024 to $108 billion, marking a 168 percent increase from 2023, according to Trepp. 

The resurgence was led by $70.7 billion in single-borrower issuance, indicating borrowers’ preference for floating-rate loans, which seems to represent a belief that interest rates will continue to decline.

Industrial loans via CMBS totaled only 8 percent of last year’s volume, Trepp reports. Retail loans were about a third of the total, however, compared with about 21 percent in 2019.

The post Cannon Commercial Gets $60M in CBMS Financing for Industrial Deal appeared first on Commercial Property Executive.

Over the past decade, green financing for commercial real estate has been growing steadily. There are now a variety of debt instruments that allow property owners and developers to access capital for the purpose of making properties eco-friendlier and more resilient. Tax credits for certain green investments are another financing tool.

And that got me wondering: With President Trump taking aim at what he has called “green new deal policies” at the federal level and casting doubt on climate change generally, could the commercial real estate capital markets make a retreat from sustainability?

Time will tell, but two C-PACE lenders I spoke with last week are confident that their product will remain in demand despite the messages coming from Washington.

The Commercial Property Assessed Energy Program, otherwise known as C-PACE, was launched in 15 years ago to provide property owners with low-cost, long-term (25 to 30 years) financing for sustainability and efficiency improvements, with borrowers repaying their loans through a special tax assessment. The program is authorized by state legislation—not the federal government—and currently 40 states have C-PACE programs.

“C-PACE is private capital, not federal funds, so changes to budgets, incentives, and such have little to no impact on C-PACE operations,” said Jessica Baily, president & CEO of Nuveen Green Capital.

Under the first Trump administration, according to Bailey, cumulative C-PACE originations grew at a CAGR of roughly 160 percent, and the program expanded from five to 18 states. “C-PACE has consistently been a purple policy,” Bailey said.

The program really took off, however, during COVID and then when interest rates spiked. By the end of 2023, $7 billion of C-PACE financing had been completed to date and $2 billion of that was completed that year, according to C-PACE Alliance.

Demand-drivers

A big driver of C-PACE activity has been the need for property owners to meet the wave of local and state building performance standards aimed at reducing GHG emissions from buildings. According to PACE Equity data, currently 40-50 cities have rolled out or are in the process of rolling out building performance standards. (See map)

“That to me is evidence that this is really a bottom-up, grassroots effort across the country,” said Beau Engman, president & founder of PACE Equity.

Engman also pointed to how building codes across the country are changing to align with the goals of the Paris Accord, which, incidentally, President Trump withdrew the U.S. from (once again) on his first day in office.

“Regardless of what happens there, there is a trajectory that’s very consistent on building codes improving at a steady rate,” Engman said.

But the real seal of approval, Engman said, comes from the lenders whose consent is needed to make C-PACE part of a project’s capital stack.

C-PACE has expanded despite the anti-ESGE backlash from politicians and some corners of the investment world. Will that sentiment be emboldened by Trump’s disdain for Biden-era sustainability initiatives? Perhaps.

Nevertheless, Bailey pointed to C-PACE’s benefits beyond lowering emissions that will help ensure the program’s longevity. “While the focus may turn away from ESG,” she said, “we believe there will be an emphasis on economic development and resiliency. C-PACE has funded many resiliency projects, and this number is steadily increasing. In addition, to date, over 49,000 jobs have been created by NGC’s C-PACE financed projects.” 

It will also continue to be a “cost-effective” financing tool in what looks to be an uncertain rate environment going forward, she said.

The post Capital Ideas: Why C-PACE Lenders Remain Resolute appeared first on Commercial Property Executive.

Last week, President Trump issued an executive order to Federal agencies to cut 10 regulations for every new one they institute. This regulation-light approach could have some positive implications for commercial real estate bank lending, which has fallen off considerably in recent years.

For example, big banks, those with assets of $100 billion or more, may get a reprieve from the new capital reserve requirements of the Basel III Endgame, a sweeping set of rules proposed by the Federal Reserve, the Office of the Comptroller of the Currency and the FDIC.

Under Basel III Endgame, which is scheduled to begin in less than six months, common equity, tier 1 capital for affected bank holding companies will increase by an aggregate 16 percent, according to the Brookings Institute. 

Meanwhile, it will raise the cost of bank capital to borrowers by roughly 20 percent, according to James Millon, president of U.S. debt & structured finance for CBRE.

READ ALSO: The Trump Effect on Tariffs, Taxes and T-bills

The case against Basel III

Basel III is an international alliance that was formed in 2009 to prevent another financial meltdown like the GFC. Basel III Endgame, also known as “Basel IV,” is intended to be the final set of rules, and it is focused on capital reserve requirements. Some member countries are already implementing their Endgame rules while others are in various stages of formulating them.

But are the rules necessary for the U.S.? “Many larger money-center banks have been under close regulatory scrutiny since the GFC, with many undergoing quarterly stress tests and audits by regulators,” Millon said, noting banks have easily passed those stress tests.

With the new U.S. administration’s deregulation promises, bankers and commercial real estate interests are hopeful that Basel III Endgame will not be finalized in its current, proposed form.

“There are signals that it might be reproposed in a form that is capital neutral,” said Sairah Burki, CREFC managing director & head of regulatory affairs and sustainability.

Burki noted that Representative French Hill (R-Ark), the new chair of the House Financial Services Committee, has already indicated a willingness to withdraw and repropose it, integrating changes in banking regulations with other regulatory priorities.

Millon suggested, however, that some industry experts hold the view that the new administration will maintain the current regulatory framework for governing regulatory capital.

Will the U.S. be in step with other countries?

While market participants are hopeful that Trump’s deregulatory stance will translate into a softening or reversal of cumbersome and unnecessary regulation, not complying with or making major changes to the Basel Accords could have mixed results, noted Dr. Victor Calanog, who serves on the Economic Advisory Council of the Counselors of Real Estate.

“On the one hand, it may mean less regulation for banks and fintech firms, allowing banks to potentially lend more,” he added. “On the other hand, less regulation may mean the return of higher risk, which these regulations were designed to mitigate.”

Burki noted that undoing regulations does not happen overnight and typically must go through a notice and response process.

In the case of Basel III, for example, she said, all three banking regulatory agencies need to agree to new proposals and noted that the Fed’s former vice chair of Supervision Michael Barr, prior to resigning, said that the Fed would not engage in significant rulemaking activity until new leadership is installed at the OCC and FDIC. 

“Deregulation advocates need to encourage the administration and Congress to focus on key priorities, and what specifically needs to be deregulated and how,” suggested David McCarthy, CREFC managing director & head of Legislative Affairs. “Deregulation is not monolithic, even within the CRE finance industry.”

Some sectors favor certain regulations, whether for safety and soundness reasons, investor protection or regulatory capture. It’s easier to do business if a competitor is more heavily regulated, McCarthy noted.

“There are opportunities to pare back burdensome regulation for efficiency and pro-growth at the federal level, and we’re working with Congress and the administration to do that,” he said. “We also have to be cautious when rolling things back so as not to take away certainty or stability or potentially leave something open to a future, less friendly regulator to tinker with.”

New Trump policies and Fed rates

The big banks had pulled back from the commercial real estate lending market for some time due to limited payoffs, which restricted the amount of capital available to originate new loans. Many opted instead to focus on warehouse lines for institutional funds.

With improvements in capital markets in the third and fourth quarters of 2024, however, banks experienced quicker-than-expected payoffs and began to originate new loans again.

Now, Millon said: “The uncertainty of Basel III created issues in modeling proper ROE (return on equity) and, in some cases, took banks out of the (CRE lending) market completely.”

Meanwhile, there are a number of new Federal policies taking shape that could further restrict lending, namely tariffs and mass deportation. Trump has already imposed tariffs on Canada, Mexico and China—though he has put the Canadian and Mexican tariffs on hold—and he has vowed to deport immigrant workers who are in the country illegally.

“If new trade and labor policies prove restrictive, it will push up inflation, potentially slowing rate cuts or even forcing the Fed to raise rates,” Calanog warned. “Long-term rates like the 10-year U.S. Treasury rose by about 100 basis points even as the Fed cut short-term rates by 100 basis points.”

Higher interest rates for longer could raise the cost of capital for CRE investment, “dampening deal flow,” Burki said.

Trump’s low-rate push

The Fed is independent of any branch of government, but Trump is likely to continue messaging it on his monetary policy desires. Following last week’s short-term rate pause, the president said the Fed was signaling weakness in the economy or “playing politics” by not cutting rates.

Fed chairman Jerome Powell was appointed by Trump during his first presidential term, but they’ve had a bit of a rocky relationship, Burki said. He cannot legally fire Powell, whose term doesn’t end until next year. Besides, Powell cannot alone lower rates, it takes a vote by the entire board, which will retain a Democratic majority until 2026.

Until there’s more certainty around how policies are finalized and actually implemented, Calanog noted, “expect volatility for interest rates, which also likely means volatility in CRE cap rates.”

The post What Deregulation Could Mean for CRE Bank Lending appeared first on Commercial Property Executive.

Eight properties in the portfolio are Class A industrial assets with an average vintage of 2014. A 46,182-square-foot office property in Irvine, Calif., was also included in the financing.

The JLL debt advisory team working on behalf of the borrower was led by Capital Markets President Kevin MacKenzie, Senior Managing Director & Industrial Co-Lead Brian Torp and Director Spencer Seibring.

“There was strong interest from the insurance companies for this well-diversified, Class A, stabilized portfolio,” Torp told Commercial Property Executive.

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

The facilities feature clear heights ranging from 28 to 36 feet and ample dock doors. They are fully leased to 13 tenants representing various industries, including consumer goods, home improvement and third-party logistics.

Refinancing portfolios brings economies of scale

Bundling multiple buildings into a single loan portfolio finance has many advantages with few disadvantages, according to Ivan Kustic, vice president at MetroGroup Realty Finance.

“The obvious advantages for the lenders are economies of scale as larger building owners with substantial portfolios typically have institutional-quality assets that are well maintained,” Kustic said. “The borrower is well-capitalized and a dominant landlord in the market. A large amount of capital can be deployed in one transaction. The loan request is typically lower leverage.”

There are advantages for the borrower as well. According to Kustic, the lender usually allows the borrower to substitute assets in and out of the credit facility.

“The larger portfolio multi-asset loans generally receive more favorable pricing. Borrowers are dealing with one institution in originating the loan as well as ongoing servicing interactions,” Kustic explained.

He added that the difficulty in assembling multiple assets for a single credit facility is matching multiple portfolio assets to lenders’ preferred criteria. Capital sources have very specific preferences in their security, such as size, use, age, configuration and demographics. Not all buildings offered in portfolio finance often fit the lender’s lending criteria.

Bixby, PGIM expand portfolios

Two weeks ago, in the Orange County market, PGIM Real Estate worked to remain the sole owner of Bella Terra, a lifestyle center of more than 1 million square feet in Huntington Beach, Calif.

DJM Capital Partners and PGIM purchased the asset in 2015 for $100 million, and DJM subsequently sold its ownership interest.

In October, Bixby Capital Management purchased a Class A industrial portfolio from Huntington Industrial Partners. The Mesquite, Texas, three-building collection totals 533,632 square feet.

The post Bixby Capital Lands $142M Loan for 2 MSF Portfolio appeared first on Commercial Property Executive.

Heitman has closed its Real Estate Debt Partners III fund with $806 million in capital commitments, surpassing the $600 million target. The investment vehicle will finance projects in both traditional and alternative property sectors.

The company will pursue loan investments ranging from bridge to construction and preferred equity, as well as mezzanine, PERE Credit reported. HDP III is slated to target returns stemming from core-plus to value-add strategies.

A meaningful portion of the fund’s capital will be allocated toward alternative sectors, the same source revealed. One such sector is health-care real estate, where Heitman already teamed up with Catalyst Healthcare Real Estate last July to deploy $300 million in the development of medical office properties across the nation.

READ ALSO: What Defines the Best CRE Investments Today?

Following in the footsteps of its predecessor, HDP III may also target U.S. residential developments, particularly student housing, PERE reported.

Heitman recently made moves in more traditional real estate, purchasing a 300,000-square-foot warehouse in Norfolk, Va. This investment, marking its first U.S. industrial acquisition, aligned with the company’s core-plus strategy.

Heitman’s debt platform had $5.5 billion in assets under management as of December. The firm manages $48 billion in assets globally.

Private lenders step up

As traditional lenders are veering away from providing capital to sectors where they had otherwise been involved for many years, a new opportunity emerges for private entities to fill the void.

The prospect of a recovering market boosts confidence among debt and equity providers. While other sources dried up, private lenders have maintained their involvement and some even expanded their offerings.

One such example is ACORE Capital LP’s Credit Partners II fund. With equity commitments of roughly $1.4 billion, the investment vehicle marked the largest ACORE credit fund focused on originating and managing transitional debt across the U.S.

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In early 2025, borrowers tasked with putting capital stacks together are starting to find themselves on stronger footing than they’ve been for a few years.

They may not quite have the pick of lenders they did before rate hikes started in 2022. But the long-awaited easing of interest rates, improved fundamentals in many asset sectors and an increasing number of attractive deals are prompting some lenders to rethink their pullback from the market. That’s offering more options for the borrowers seeking to package debt and equity, especially for those in a position to bring strong projects and deals to the table.

That bodes well for debt across the spectrum. “Both senior and mezzanine financing remain a market need, so I’d anticipate continued expansion from lenders across the capital stack,” said Aaron Jodka, director of capital markets research at Colliers.

That said, it isn’t clear how much terms will change, considering that 10-year Treasury yields—which have a more direct impact on CRE lending—have yet to change much.

Market rebound

As always, CRE borrowers will benefit from established relationships with lenders and deals involving high-quality projects and properties. Yet in a welcome development, some lenders may be more open to new clients this year. Life companies, CMBS conduits and commercial banks, which favored their best clients in recent years, will “start to come out of the woodwork again in search of additional customers and additional lending opportunities,” predicted Charles Krawitz, chief capital markets officer & head of commercial lending at Alliant Credit Union.

Also figuring into wider capital-stack options are projected improvements in the market. CBRE forecasts investment activity will increase as much as 10 percent this year. Lower rates will boost investors’ confidence in their underwriting, moving some of the cash on the sidelines back into the market.

“Greater confidence in the economy and improved rates of return on property investments will drive this activity, despite the continued high cost of debt capital,” observed Darin Mellott, CBRE’s head of U.S. capital markets research. “Cap rates are likely to decline slightly in 2025, but we expect them to decline more slowly and stabilize at higher percentages compared to past cycles.”

The prospect of improving market conditions is further expanding confidence among providers of debt and equity. Private lenders have been stalwart participants when other sources have pulled back, and some report that they are further expanding their offerings. “We see significant opportunities,” commented John Brady, Oaktree Capital Management’s global head of real estate. “The need to recapitalize assets is immense, given the unprecedented and drastic repricing.”

In November 2024, Oaktree launched Formida Capital, which will specialize in loans from $5 million to upward of $75 million. A focus will be higher-leverage senior financing, mezzanine loans, preferred equity and participating debt.

“We anticipate that commercial real estate investment activity will increase by up to 10 percent in 2025.”

—Darin Mellott, Head of U.S., Capital Markets Research, CBRE

Preferred equity will become more necessary in 2025 to help plug the gap to a cash-neutral refinance. Sponsors would rather give up some interim cash flow in exchange for not needing to do a capital call, said Greystone senior managing director Eric Rosenstock.

In 2024, many sponsors were hesitant to refinance using preferred equity and instead were extending their current debt instrument, with the belief that the Federal Reserve would cut rates enough to make their deals cash-neutral or even a cash-out, Rosenstock added.

“However, the temperature of what’s to come for the next 12 months has most definitely changed and sponsors are becoming more comfortable with “gap” capital that will eventually be repaid using supplemental financing from the GSEs.”

Borrowers with solid deals always have leverage in negotiating terms, and the current environment makes that even more true. A lender that’s skillful at structuring earnouts, for instance, will have more to bring to the table, to the benefit of borrowers. As Krawitz put it, “We’ll give you X dollars and additional proceeds if you provide us between month 18 and month 24 (documentation) that shows your debt service coverage has improved from Y to Z.”

The cost of capital

The market is beginning to respond to the lower interest rate environment, according to Boulder Group President Randy Blankstein, but the reduction in the federal funds rate doesn’t represent an automatic lowering of the cost of capital.

“The expectation is that the lower Secured Overnight Financing Rate will assist in spurring transactions in 2025, as lower borrowing costs will encourage money to come off the sidelines to reenter the market, increasing buyer demand,” he said.

However, he cautioned, the impact on transaction velocity will remain muted until the 10-year Treasury yield follows the federal funds rate and heads lower. The 10-year Treasury yield ended 2024 at a little over 4.5 percent. A year earlier, the yield stood at just over 3.9 percent.

“With the Fed’s latest action and commentary, the market responded with a pullback in the stock market and the yield on 10-year Treasuries rising to levels seen in (early 2024),” said Jodka. “Clarity on interest rates and the Fed’s path is important for investors, but so, too, are benchmark levels.”

Overall, capital will be easier to come by in 2025, as lenders increase their interest in CRE, said Krawitz. “When you’ve sunk so low, it isn’t hard to come bouncing off the floor.

“There will still definitely be challenges at play. We aren’t going to suddenly find everyone being hyper-aggressive, but it’s going to be encouraging overall to the marketplace.”

Read the February 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 February 2025 issue of CPE.

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BKM Capital Partners has expanded an existing partnership with StepStone Real Estate, the real estate arm of StepStone Group, for the $154 million recapitalization of Pacific Business Center, a 10-building, 748,813-square-foot industrial campus in the Las Vegas market.

Constructed between 1996 and 1998, Pacific Business Center is comprised of 1045-1175 American Pacific Drive, 160-194 Gallagher Crest Road and 1060-1110 Mary Crest Road in Henderson, Nev. The Class A campus is 90 percent occupied with a diverse mix of high-quality tenants. In-place rents are projected to be 30 percent below market rate, giving BKM an opportunity for immediate value creation. The industrial center is in a designated Foreign-Trade Zone.

BKM, a Newport Beach, Calif.,-based real estate fund manager and operator that focuses exclusively on multi-tenant industrial assets in the Western United States, acquired the industrial center’s properties from Northwestern Mutual Real Estate as a portfolio transaction in July 2019 for $113 million. At that time, it was the firm’s largest deal.

The institutional-grade assets have had more than $12.4 million in capital improvements since 2010. Projects included installing high-quality HVAC and EVAP systems and LED lighting, as well as upgrading office finishes and painting building exteriors. Other features include 24- to 28-foot clear heights, ESFR sprinkler systems and new TPO roofs. BKM has since made other improvements to the facilities, including cosmetic renovations in 2017, according to CommercialEdge. Several of the buildings have two-level office build-out components, CommercialEdge reported.

Partnering with StepStone

In August 2023, BKM formed a partnership with StepStone Real Estate for a GP-led secondary direct transaction that included ownership in Pacific Business Center. SRE acquired interests in two assets, including Backlot Burbank, a light industrial property in Burbank, Calif., leased to entertainment companies. As part of that partnership agreement, SRE would invest in other small- and mid-bay industrial properties across Western U.S. markets.

READ ALSO: Stars Align for CRE Secondary Funds

The recapitalization of Pacific Business Center increases SRE’s ownership in an asset and market that both firms view favorably. BKM notes Las Vegas’s dynamic industrial market fundamentals combined with the asset’s rent growth potential and stable cash flow provide a strong foundation for success.

The Las Vegas industrial market is a versatile market that caters to both big-box tenants and smaller occupiers, with strong demand for spaces under 50,000 square feet, according to Cushman & Wakefield. The market has seen steady leasing activity, but an influx of new supply may give tenants greater leverage in lease negotiations, the firm stated in its third-quarter 2024 report for the Las Vegas industrial market. However, rising vacancy rates – the overall vacancy rate was 8.8 percent, up 180 basis points quarter over quarter in Q3 – may delay new development, which could help balance supply and stabilize vacancy levels, according to Cushman & Wakefield.

BKM’s other activities

The recapitalization of Pacific Business Center represents another milestone for BKM, which has invested more than $4.5 billion in more than 120 small and mid-bay light industrial properties since 2013. The firm has a value-add strategy and targets under-managed and under-capitalized assets. Over the past two years, BKM has acquired high-quality assets at pricing well below replacement cost. It has also undertaken several other recapitalizations.

In December, BKM partnered with Kayne Anderson Real Estate for a $550 million recapitalization of a nine-property light industrial portfolio totaling more than 2.1 million square feet in several urban markets. The largest of the properties is Hughes Airport Center, a 672,424-square-foot asset in Las Vegas. The rest of the portfolio is located in California, Arizona, Colorado and Washington state.

That same month, BKM recapitalized three San Diego business parks from its BKM Industrial Value Fund II LP, with Tokyu Land US Corp. for $76.9 million.

More recently, BKM acquired West Belt Business Park, a five-building industrial park totaling 260,887 square feet for $34.1 million in Houston’s Westchase submarket. Longpoint Realty Partners sold the property, according to CommercialEdge data.

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The joint venture of Blue Owl Capital, Crusoe Energy Systems and Primary Digital Infrastructure has obtained a $2.3 billion loan to capitalize a 206 megawatt build-to-suit data center development in Abilene, Texas. J.P. Morgan provided the note in a Newmark-brokered deal.

The three companies formed the $3.4 billion joint venture in October. Funds managed by Blue Owl’s Real Estate division and Primary Digital Infrastructure will jointly finance the 998,000-square-foot, two-building data center, which is being designed, developed and operated by Crusoe.

Oracle has already committed to the entire complex under a long-term lease, according to Data Center Dynamics. Occupancy is scheduled to commence in the second half of this year.

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

The project is part of Lancium Clean Campus, an 1,100-acre development that broke ground in late 2022 and was initially set to be a bitcoin farm. It currently has 200 megawatts of data center power capacity, with a total of 1,000 megawatts to be energized by the end of the year and an additional 1,000 megawatts in process.

Crusoe broke ground on the Abilene campus last year and is expected to deliver initial capacity in the following months. The site will also boast 300 megawatts of on-site self-generation. Once complete, the facility will be capable of running up to 100,000 GPUs on a single network.

The purpose-built data center is also set to include high-density data halls specially designed for AI workloads and use renewable energy sources, including nearby wind power. The design will support both direct-to-chip liquid cooling and air cooling.

Newmark Co-President Jordan Roeschlaub, Vice Chairman Clint Frease and Managing Director Ben Kroll, along with Head of Data Center Capital Markets Brent Mayo, secured the loan.

Data centers on the rise

Despite power constraints, the data center market is expected to continue to thrive, the expansion of AI applications being a major driver behind the growth. Global data center energy demand is set to double in the next five years to 100 gigawatts, according to a JLL report.

Texas had almost 440 completed data centers including colocation, hyperscale, cloud and enterprise data centers as of the third quarter of 2024, according to a LandGate Corp. report. That number is poised to grow, with two developments in the state already announced since the beginning of the year.

Earlier this month, Lincoln Property Co., Gigabit Fiber and Tradition Holdings formed a partnership to develop a data center campus in South Dallas. Dubbed GigaPop, the project will comprise more than 800,000 square feet across four buildings and will boast up to 540 megawatts.

Also in the Metroplex, Provident Data Centers formed a joint venture with PowerHouse Data Centers for the construction of a hyperscale campus in Grand Prairie, Texas, which is set to be one of the largest in the U.S. The first phase of the 768-acre project is expected to generate about 500 megawatts, while the entire campus will have 1.8 gigawatts of capacity at full build-out.

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DLC Management Corp. has received a combined $43.7 million for a two-asset, 605,820-square-foot retail portfolio in metro Columbus, Ohio.

TriState Capital Bank provided a five-year, fixed-rate $30 million loan for Taylor Square in Reynoldsburg, Ohio, while Dollar Bank issued a five-year, $13.7 million note for Tuttle Crossing in Dublin, Ohio. JLL arranged both transactions.

DLC Management had purchased the two retail centers last month from the joint venture of Island Capital and Casto, for a total of $76.3 million. Institutional Property Advisors represented the seller.

Two metro Columbus retail centers

Completed in 2000 on a 48.3-acre site, the 378,102-square-foot Taylor Square underwent renovations in 2023. The property is at 2793 Taylor Road, just off Interstate 70, which is transited daily by 97,000 vehicles. The Walmart-anchored shopping center features 34 tenants including Marshalls, JoAnn, Dollar Tree and Bath & Body Works. Taylor Square was 99.7 percent leased at the time of the deal.

Tuttle Crossing is a 226,718-square-foot retail center covering an 18.7-acre site. Completed in 1996 and renovated in 2022, the Walmart shadow-anchored property currently has seven tenants including Best Buy, Ashley Furniture, Macy’s Furniture Gallery, Cost Plus World Market and Ross Dress For Less. The shopping center is at 5800 Britton Parkway near Interstate 270, a location transited daily by 117,360 vehicles. Tuttle Crossing was 97.8 percent leased at closing.

Downtown Columbus is 14 miles away from both properties, west of Taylor Square and south of Tuttle Crossing.

JLL Capital Markets Senior Managing Directors Scott Aiese and Claudia Steeb, together with Director Alex Staikos, led the Debt Advisory team that secured the financing package.

Grocery-anchored shopping centers continue to meet the needs of changing demographics, demonstrating their resilience. In 2025, the retail sector will lean even more into necessity-based retail, catering to the increasing demand for proximity-based and convenience-oriented shopping experiences.

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Constructed between 1984 and 2000, the properties are currently 96 percent occupied. They provide easy access to the New Jersey Turnpike and downtown Philadelphia. Having a multiple-building setup and varying suite sizes, the portfolio also gives tenants significant growth flexibility.

Brennan will continue to operate the portfolio, which it bought in 2017. Since the acquisition, the company has upgraded the properties, including converting office space to industrial.

Philadelphia’s office market slowed and prices dropped in the fourth quarter, with vacancy rising 510 basis points over the past 12-month period ending in October, according to CommercialEdge.

Chris Massey, managing principal at Brennan Investment Group, said that strong demand and tight occupancies for small-bay suite sizes throughout the overall market have made the portfolio more attractive.

READ ALSO: Why Light Industrial Properties Will Continue to Shine

“Vacancy rates are low-single digits for this type of space, and there is basically no new construction due to high costs for building small footprint buildings,” he told Commercial Property Executive. “We believe our in-place rents are still significantly below where new leases are getting done.”

Brennan Investment Group’s portfolio totals approximately 56 million square feet across 29 states.

Philadelphia’s strong light-industrial demand

Marcus Partners’ Mid-Atlantic team has been acquiring portfolios of light industrial product in the suburban Philadelphia metro.

“The metro offers an expansive regional highway network and a deep labor pool and features exceptional population density and demographics,” Ryan McDonough, the company’s principal & CIO, told CPE.

The portfolios typically feature functional, Class B product needing physical repositioning and a diversified, multi-tenanted rent roll with shorter-term leases. “We are buying at a healthy discount to replacement cost with in-place rents that offer mark-to-market upside. This compelling risk-reward profile works across various economic scenarios, including a “higher-for-longer” rate environment,” McDonough added.

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JLL Capital Markets worked on behalf of the borrowers to arrange the loan from New York Life Real Estate Investors. Managing Director Chip Sykes and Vice President Kelsey Bawcombe led JLL’s debt advisory team.

“The region is consistently ranked as one of the top places in the nation to live, work, raise a family or start a business,” Sykes told Commercial Property Executive.

“Cary’s advantageous location near one of the fastest-growing metro areas in the nation and several premier research universities has propelled the city’s economic and population growth. This dynamic growth in the region has led Cary to become a preferred residential corridor in the Raleigh MSA.”

Fenton, created in 2021, includes 246,000 square feet of retail space, 357 multifamily units as part of The Allison and 183,000 square feet of office space, creating a vibrant live-work-play environment.

Near Cary Town Boulevard, Fenton provides easy access to the Raleigh-Durham-Chapel Hill area and I-40. It is 15 minutes from downtown Raleigh and has robust employment hubs, such as the Research Triangle Park. The region has a population of 2 million.

READ ALSO: Why the Metroburb Model Works: An NJ Success Story

This region has become a hotspot for the health-care, technology and biotech industries. The University of North Carolina at Chapel Hill, North Carolina State University and Duke University are nearby.

The trendy retail section welcomes chef-driven restaurant concepts and nearly all merchandising categories and their national brands.

Rising demand for mixed-use developments

“The macroeconomic success of the Research Triangle, particularly in Cary, has been a driving force behind the region’s mixed-use development performance,” Marcus Jackson, principal with Avison Young’s Capital Markets team, told CPE.

“For many years, Cary was considered a traditional single-family suburban market. Still, following the pandemic-induced population boom, which attracted younger residents used to the ‘live-work-play’ lifestyle, mixed-use development increased to meet the evolving demands of the city’s population,” he said.

Cary’s retail sales and multifamily occupancy benefit from remote workers who retained their high-paying salaries in major gateway cities, as well as the Research Triangle’s highly educated workforce in the health-care, technology and biotech industries.

In October, the debt for another mixed-use property, Smoky Hollow, in nearby Raleigh, was refinanced through a $134 million loan provided by Barings. Kane Realty Corp., Williams Realty & Building Co. and Lionstone Investments are the project’s developers.

In June, Hines completed North Loop Green, a 1 million-square-foot mixed-use development in Minneapolis. The developer teamed up with AFL-CIO Building Investment Trust and Marquee Development to deliver the property, which comprises 10,000 square feet of retail space, a 1-acre public park, 350 residential units, 100 short-term rental residences and 350,000 square feet of office space.

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This year is a new dawn for commercial real estate investment, with a morning sky that includes both bright spots and dark clouds. This was a metaphor used by panelists from LaSalle Investment Management speaking at a Jan. 15 press conference to describe the firm’s views on the economy, capital markets and investment priorities as they are presented in its 2025 Global Outlook report.

Bright spots include increasingly positive investor sentiments, prices more closely matching bond yields, more readily available debt and large decreases in short-term interest rates. The dark clouds include geopolitical uncertainty, slumped transaction volumes and persistently high long-term interest rates.

A gray morning sky

According to Brian Klinksiek, the firm’s global head of research and strategy, the positive sentiments are a good sign for the year to come, but “the sky is looking a little gray.” The views, held by participants from a November 2024 JLL Research survey, can be attributed to a perceived soft landing for the U.S. economy and easier-to-attain capital despite long-term bonds remaining unappealingly high.

“Transaction activity is still subdued, but prices and rates are much more aligned with bond market realities,” Klinksiek said. The value signal is not as strong as it was; at its core, this is about markets pricing in a reduced risk of recession, Klinksiek noted.

READ ALSO: How Geopolitics Will Shape CRE Investment in 2025

In a similar vein, the panelists stressed that despite being on the upper end of a trough for commercial real estate investment, negative markers such as distressed property volumes and capital costs are nowhere near those of the Global Financial Crisis, which saw a peak of nearly 12,000 distressed commercial and multifamily properties worldwide. By contrast, the current Great Tightening Cycle of 2023 and 2024 saw approximately 3,000, nearly half of which are office buildings and multifamily communities. Looking at this data in context, many European institutional investors are “more optimistic about the U.S. than some U.S. investors are right now,” said Tara McCann, Americas head of investor & consultant relations.

Navigating investments in the new year

Here, the darkest cloud in the distressed bunch is the office sector, which is reeling from tumbling sales prices and further rising vacancy rates. Equally detrimental has been the capital stack and asset valuations, which have fallen by 9 percent year-over-year through December 2024, according to data from CommercialEdge. 

But LaSalle has its raincoat on. “(Office) is continuing to go through pain, but some opportunities will continue to come out of that if you play the right markets,” advised Jeff Shuster, president of LaSalle Value Partners US.

Richard Kleinman, Americas Head of Research and Strategy, likened both investing in office and commercial real estate more broadly to getting breakfast at a diner in New York City, where some menu items far outshine others. These include medical buildings and industrial outdoor storage, alongside flex logistics spaces.

For their parts, industrial demand is both “oversubscribed and undersubscribed,” while investors need to be more selective about retail, a sector that’s seen a recent surge in construction starts.

Even elements of the office sector are promising prospects, provided that the asset is modern and conveniently located with a strong tenant roster. “We prefer amenities in and around the building, within a 24/7 lifestyle market,” Brad Gries, the firm’s head of Americas told Commercial Property Executive. Los Angeles’ Century City and Park Avenue in Manhattan have caught the firm’s eye, according to Kleinman. “It’s all about demand, and where we see tenants looking for space,” Kleinman said.

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The deal, collateralized by eight properties, covers 163 acres of industrial outdoor storage, as part of a portfolio in Dallas; Houston; Laredo, Texas; Phoenix; San Antonio; Commerce City, Colo.; Detroit and Savannah, Ga.

Lantern Real Estate Advisors + Partners represented GreenPoint in the transaction.

Realterm has been on an IOS run, most recently picking up 2340 Rose Place W. in Roseville, Minn., and joining Titan Development in a deal to build a Class A, 440,300-square-foot industrial project in Laredo.

About a year ago, Realterm took the plunge by acquiring three Northeast outdoor storage truck terminals from Yellow Corp.’s Chapter 11 bankruptcy.

Regional banks’ retreat, high interest rates force move

Realterm’s entry in providing capital is a logical move, according to Ivan Kustic, vice president, MetroGroup Realty Finance.

“Knowledgeable, successful real estate managers, providing capital to various asset classes of properties that they have owned and managed for many years is a prudent move in today’s environment,” Kustic told Commercial Property Executive.

Current yields achieved by short-term capital providers are reasonable risk-based returns, Kustic observed. “Their experience and knowledge of the assets help efficiently execute the lending process. A void has been created by regulated capital sources in the short-term/bridge capital market. We have seen the success of recent entries in this area of bridge type of capital by debt funds, life companies and CMBS lenders.”

According to Robert Wasmund, founder & CEO of Ascent Developer Solutions, the company launched its lending offering to fill a void in customizable and reliable real estate financing amid a market disrupted by quantitative tightening, the retreat of regional banks and high interest rates.

“The rate curves continue to make this a challenging market to transact,” Wasmund told CPE. “A reduction in rates would lead to more supply being available for development.”

READ ALSO: What’s Ahead for CMBS in 2025?

The U.S. government is encouraging greater participation of private capital in the lending industry. As a result, institutions and private real estate companies of all types are venturing into the so-called “private capital” space, according to David Frosh, CEO at Fidelity Bancorp Funding.

“Regional banks remain under significant constraints and face challenges that could persist for years if interest rates do not decline,” he said.

“Enticed by promises of high returns, investors are readily providing the necessary funding,” Frosh added. “Companies like Realterm are increasingly entering this space, bringing entrepreneurial optimism and strong execution skills.”

But while such optimism may serve private real estate investment companies well, lending is a fundamentally different business, Frosh cautioned.

“Unlike real estate investment, lending leaves almost no room for error. Optimists often do not make good lenders over the long term. Successful lenders operate with the assumption that a severe downturn is always imminent. The current wave of enthusiasm around private capital and the significant leverage of this capital should serve as a cautionary signal for those entering the field.”

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American Real Estate Partners has obtained a four-year loan extension for 1600 Market St., an iconic 39-story, 825,968-square-foot office tower in Philadelphia’s Central Business District. The transaction, which also includes access to an increased future lease funding line, has ensured the full capitalization of the property.

Senior lenders Natixis Corporate & Investment Banking and BlackRock, along with mezzanine lender JPMorgan, extended the loan’s maturity through a complex financing structure. As part of the deal, AREP made a significant equity investment in the property. The firm declined to release the investment’s amount.

Natixis CIB provided the five-year, $162.5 million loan in February 2022 that refinanced the Class A property. AREP had acquired the tower in February 2018 from Equity Commonwealth for $160 million.

READ ALSO: Philadelphia Office Prices Drop, Construction Slows

Peter Bayard, managing director at Natixis CIB, was involved in arranging the new transaction.

“The loan extension ensures the long-term financial stability of the property, which is a significant advantage relative to the challenges other projects are facing in today’s commercial real estate market. Our partnership highlights the strength and confidence AREP and our senior lenders, Natixis, BlackRock and JPMorgan, all have in the property’s future,” Brian Katz, co-founder & president of AREP, told Commercial Property Executive.

Katz said the extended funding also gives AREP the resources to maintain 1600 Market’s position as a trophy building and continue attracting high-quality tenants seeking superior properties with stable owners that can perform.

Tenant roster growing

PNC Bank, which has its regional headquarters at the property, is the anchor tenant at the building that is currently 70 percent leased. PNC has committed to 233,411 square feet through May 2031, according to CommercialEdge data.

Recent lease transactions include HNTB—which is occupying 38,375 square feet—Lockton Insurance and Your Part Time Controller, according to AREP. Other tenants include Security Risk Advisors, which leases 21,687 square feet, Stifel, NorthMarq Advisors, Gallagher Law, Crum & Forster and AEGIS insurance firm, the same source reveals.

Focus on amenities

The Center City tower is one block from the Philadelphia City Hall and two blocks from JFK Plaza. Completed in 1982, the building features floorplans of 23,000 square feet and seven elevators, CommercialEdge shows, as well as 10,000 square feet of retail space.

AREP’s $15 million, multi-year renovation of the property was completed in January 2021. The high-rise features at least 8,000 square feet of amenities including collaboration space, conference rooms, wellness and fitness areas and a coffee bar from Elixr, a local favorite. The building has received recognition for its tenant experience app—AREPx—and for the amenity floor design and use of pop art.

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The joint venture had purchased the asset from Nuveen Real Estate for $227.3 million back in 2014, according to Pacific Business News. The Massachusetts Mutual Life Insurance Co. provided a $120.5 million loan for the acquisition.

Completed in 1987 on some 41 acres, Town Center of Mililani underwent a $13 million renovation which was completed in 2017. The retail property is at 95-1249 Meheula Parkway, close to Highway 2.

Times Supermarket, Walmart, Consolidated Theaters, Longs Drugs, UFC Gym and Straub Family Health Center anchor the open-air shopping center. Its roster features a total of 78 tenants which also include AT&T, Bank of Hawaii, Five Guys, Great Heights, Fun Factory, Ninja Sushi, Panda Express, Pizza Hut, Starbucks, Supercuts, Taco Bell and Supercuts, among others.

READ ALSO: Retail Space in Focus: What’s Driving the Sector’s Growth?

With a 140-year history of real estate financing, PGIM Real Estate had $212 billion in assets under management and administration as of September 2024. In November, the firm provided a $171.4 million loan for the refinancing of the Southeast Grocery-Anchored Portfolio, a collection of eight retail properties totaling nearly 1.2 million square feet.

Hawaii’s retail scene

Oahu’s retail market has strong fundamentals due to its dense population and dynamic neighborhood areas, PGIM Managing Director Tom Goodsite said in prepared remarks. However, the state saw a significant drop in investment activity in the third quarter of 2024.

There were no retail investment sales recorded between July and September in Hawaii, according to a CBRE report. The third quarter of last year also witnessed a notable shift in rental trends, with the overall average net asking rent decreasing to $39.66, down $8.68 from the previous quarter. Additionally, the availability rate for retail spaces increased to 4.8 percent, up by 0.3 percent over the quarter.

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Genesis, a joint venture between Bain Capital Real Estate and Phase 3 Real Estate Partners Inc., has obtained $484 million to refinance GENESIS Marina, a three-building life science complex totaling 566,661 square feet in Brisbane, Calif.

Brookfield’s Real Estate Credit group originated the loan, in a deal arranged by JLL Capital Markets.

The partnership had initially secured a $450 million construction loan originated in 2021 by Massachusetts Mutual Life Insurance Co., according to CommercialEdge. The note was to mature this year.

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

Developed on an approximately 9-acre waterfront lot, the campus is close to U.S. Highway 101. The location on the 132-acre Sierra Point peninsula provides access to South San Francisco’s life sciences hub, as well as to the entire San Francisco area.

GENESIS Marina came online in December 2023 and includes three purpose-built facilities:

• 3000 Marina Blvd., a six-story building totaling 194,702 square feet
• 3300 Marina Blvd., a five-story building totaling 197,959 square feet
• 3500 Marina Blvd., a five-story building totaling 174,000 square feet

Including lab and office space, the Class A buildings feature floorplates ranging between 35,000 square feet and 43,500 square feet, passenger elevators, access to an on-site fitness center and a total of 1,037 parking spots spread across two levels. Other amenities feature a conference and event center, an on-site dining space, a cafe and an outdoor terrace, as well as EV stations, among others.

Life science real estate is struggling

According to a recent CommercialEdge report, the U.S. life science sector recorded just 948,000 square feet in construction starts at the end of last year, as opposed to more than 30 million square feet of lab space starting construction between 2021 and 2023. The difference in new projects is due to a record low lab space demand and a high volume of new supply.

San Francisco had 3.8 million square feet of office space under development as of November 2024, the report shows. The market ranked second on a national level after Boston (with 9.3 million square feet in the pipeline).

One notable life science project currently underway is IQHQ’s The Spur, a 330,000-square-foot building in South San Francisco, Calif. The developer topped out the first phase of the project in April 2024 and completion is expected later this year. The construction of the fully-electric life science building is backed by a $275 million loan.

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SkyREM has obtained $170 million in financing for 10 primarily industrial and warehouse distribution assets across seven states in the Northeast, Southeast and Midwest regions. JLL represented the borrower in securing a fixed-rate, five-year loan from Apollo affiliates.

The refinanced portfolio totals approximately 2.5 million square feet. The properties were 99 percent leased as of closing to 15 diverse tenants across various industries, including warehousing, technology, aerospace, manufacturing, government and logistics. The average tenant’s tenure is approximately eight years.

The JLL Debt Advisory team included Senior Managing Directors Peter Rotchford and Steven Binswanger, Executive Managing Director Riaz Cassum and Senior Director Lucas Borges.

SkyREM is a vertically integrated real estate investor, owner and developer with a diversified U.S. portfolio. In July, the firm bought an industrial property near Savannah, Ga., a recently built 647,496-square-foot distribution facility, from BlueScope Properties Group.

Nationwide, the industrial sector reached a stabilization phase in 2024. Only 330.7 million square feet were delivered last year through the end of November, according to a recent CommercialEdge report, signaling less development as demand for space cooled off. At the same time, higher borrowing costs made construction loans more expensive.

The post SkyREM Lands $170M for 2.5 MSF Industrial Portfolio appeared first on Commercial Property Executive.

ForeFront Commercial Real Estate, along with an Ares Management Real Estate fund, has obtained a $77.4 million loan to finance the development of West Worth Commerce Center, a 992,000-square-foot industrial campus in Fort Worth, Texas. Affinius Capital originated the loan.

West Worth Commerce Center is set to include four buildings with 32-foot to 36-foot clear heights, 274 dock-high doors, 12 drive-in doors, and parking for 235 trailers and 912 cars. The property is just off Interstate 820 between interstates 30 and 20, providing connectivity to the Metroplex area.

READ ALSO: Industrial Sector Settles After Supply Surge

The development is about 35 miles from DFW International Airport and 45 miles from Dallas Love Field Airport. The location serves the area’s growing e-commerce, logistics and distribution needs, and the west Fort Worth submarket in particular  demonstrates robust absorption, Affinius Managing Director Tom Burns said in prepared remarks. 

Affinius Capital, previously known as USAA Real Estate and Square Mile Capital Management, is an institutional real estate investment firm with about $64 billion in assets under management. Last year, the company provided part of the financing for Edenvale Industrial Park, a 636,000-square-foot project in San Jose, Calif.

DFW industrial boom moderates

Industrial development in the Dallas-Fort Worth market slowed in the third quarter of 2024, according to a Colliers report. Construction activity was down to 19 million square feet, the smallest total since Q2 2017, marking a 5 percent quarter-over-quarter drop.

The decrease came on the heels of a spurt of development in response to pandemic-era demand for product. Following eight consecutive quarters of new supply of more than 10 million square feet, the third quarter deliveries dropped sharply, to 5.8 million square feet.

There is still some overhang of space, however. The vacancy rate thus remained unchanged from the previous quarter, staying at 9.6 percent, the report shows.

The post ForeFront JV Lands $77M for DFW Industrial Project appeared first on Commercial Property Executive.

A 30-story, Class A office property at 303 E. Wacker Drive on Chicago’s East Loop secured in $62.5 million collateralized first mortgage, senior-secured acquisition and lease-up loans.

The loan comes from Northwind Group, a Manhattan-based real estate private equity firm, and was structured so that $32.5 million was advanced for the acquisition, with the remaining $30 million held back as a good-news facility for accretive future leasing costs.

Repeat Northwind borrowers 601W Companies and David Werner Real Estate Investments acquired the property at a significantly low basis, reflecting over a 65 percent discount to the previous purchase price.

John Vavas of Polsinelli Law Firm represented Northwind.

A star of the Chicago office market

The property, which totals over 1 million square feet and includes a 282-space parking garage, is 75 percent occupied, with five years remaining on the lease term.

Since the pandemic, some 300,000 square feet of new leases have been signed there, making it one of Chicago’s best-performing office buildings by leasing volume.

“For various reasons, the Chicago CBD has endured incredible trauma over the past several years,” Jeff Brown, CEO of T2 Capital Management, a real estate private equity firm located just outside Chicago, told Commercial Property Executive.

READ ALSO: What’s Defining Office in 2025?

“With this purchase within the East Loop office market, it is encouraging to see well-heeled groups step out and be contrarians while also providing a benchmark on pricing. 303 E Wacker is a core located property, and Northwind’s commitment to fund good news money (leasing commissions and tenant improvement allowances for new leases) bodes well for the property’s viability,” Brown said.

The prior owners renovated and upgraded the asset for $32 million, including a new amenity center on the 30^th floor overlooking Lake Michigan.

In August, a joint venture between two New York City-based firms—Lloyd Goldman’s BLDG Management Co. Inc. and David Werner Real Estate Investment—acquired 100 Wall St., a 29-story Manhattan building from Barings for $116 million with a loan from Northwind Group.

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A $104 million loan for Phase One of Centro City’s 350,000-square-foot retail component was issued by Hudson Bay Capital. It is part of Miami-based developer Terra’s overall $291 million in permanent financing secured for the 38-acre mixed-use development.

The new financing will pay off the development’s existing construction loan, provided by Apollo Global Management and Mack Real Estate Credit Strategies in 2022.

Centro City includes 1,200 market-rate residential apartments, green space for residents, a newly reimagined shopping center with lifestyle-oriented retail and restaurants, a Class A office building and a Mater Academy K-8 Charter School.

Connected to the community

“At Terra, we prioritize creating spaces that offer not just accessibility but real connectivity to the vibrant heart of their communities,” David Martin, CEO of Terra, told Commercial Property Executive.

“Centro City exemplifies this vision, strategically located in the heart of West Little Havana, where residents and businesses can tap into Miami’s key employment centers, cultural landmarks and transportation corridors,” he added.

“This is part of a broader strategy we’ve applied across South Florida, from Coconut Grove’s Grove Central to our upcoming Upland Park development, which will redefine mobility and living in West Miami-Dade. Our commitment is to build more than just developments; we create dynamic, sustainable ecosystems that enhance communities and drive economic growth.”

READ ALSO: Retail Construction Starts Surged in H1 2024

Target, Ross Dress for Less, DD’s, Fresco y Mas, Walgreens and Bank of America are among the tenants for the 95 percent-leased property in the center of Miami-Dade County, just west of Little Havana.

Walker & Dunlop’s Keith Kurland and Gangemi Law Group represented Terra in the transactions. Holland & Knight Partners Joe Dewey, Brett Holland, Shawn Amuial and Shaina Kamen, together with Associate Brian Piper, represented Hudson Bay Capital.

“Mixed-use multifamily developments featuring retail in Miami continue to garner interest from residents, investors, and lenders,” said Michael J. Romer, co-founder & managing partner of Romer Debbas LLP. “This most recent financing is a positive sign as lenders begin to awake from a relatively dormant market cautiously. The combination of multifamily, retail and warm weather is the magic formula entering 2025.”

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High interest rates, slumped property valuations and maturing debts across commercial real estate have weakened investors’ appetites. Altus Group reports that as of the third quarter of this year, transaction volumes were at their lowest point since 2013, while the total square footage that traded was at a nearly 15-year trough.

In contrast, general partner-led secondaries funds are feasting on the opportunity to acquire equity interests in real estate assets and funds from existing investors. Blackstone, Goldman Sachs and Lexington Partners are some of the bigger names forming secondary vehicles, but institutional investors, pension funds, family offices and sovereign wealth funds across the globe are also partaking as fund managers or fund investors.

PJT Partners, an asset advisory and fundraising services firm, reports that real estate secondaries funds have raised nearly $12 billion in capital over the past seven quarters. In the first half of 2024 alone, $3.4 billion was raised, accounting for 6 percent of all capital raised for closed-end real estate funds, the highest portion of total fund closures since 2019.

Secondaries enable investors to gain a stake in premium assets at a discount while fund managers get the liquidity and stability that’s hard to come by today.

The perfect storm

With limited partners not realizing expected distributions from funds, which on average are down 70 percent since their peak, investments from secondaries have an irresistible appeal for fund managers. “When (transaction) volumes are slow, it means investors are not getting the normal distributions, which puts them in an illiquid position,” said Jeff Giller, partner & head of real estate at StepStone Group, which recently closed on a $7.4 billion secondaries program focused on the private equity sector.

This is happening while real estate owners are having to service higher interest rate debt or refinance existing properties with less proceeds than their existing loan payoff amounts. S&P estimates that more than $950 billion worth of commercial mortgages are set to mature this year, increasing by more than $300 billion by 2027. It’s a perfect storm.

“Managers are unable to raise capital by selling their assets, (some) loan levels are down and some lenders are out of the market entirely,” observed Giller.

And these difficulties don’t account for other worrisome macroeconomic trends or sector-specific struggles, such as hybrid work for office and supply-chain slowdowns for industrial.

“Because of the pandemic, a number of managers across all asset classes decided to extend their funds’ lives because it wasn’t the right time to sell,” according to Achal Gandhi, CIO & head of indirect real estate strategies at CBRE Investment Management. “After that, we had an inflationary spike and an interest rate cycle, where managers said the same thing.” 

How investors stand to benefit

But what’s in it for the secondary investors? For starters, secondaries allow them to purchase otherwise inaccessible assets on a discounted basis. A February 2024 study from Neuberger Berman found that real estate secondaries reported a sub-75 percent discount to net asset value from 2022 and 2023.

In the longer term, this means higher gains. “It’s a good J-curve mitigant,” said Elizabeth Bell, managing director & co-head of real estate at Hamilton Lane. “You can immediately step into a fund and get access to mature assets at a discount, and that’s a great entry point.”

This even goes up to the portfolio level, where an LP’s need for liquidity may cause them to sell off entire collections of assets.

GP-led secondaries typically allow the investor to conduct more due diligence on the assets in the funds they’re investing in. “You’re not buying out the GP, because you depend on their knowledge and expertise to manage the assets, but you are getting access to the assets at somewhat of a discount by infusing new capital to help the GP create opportunities and solve problems,” Giller explained.

What’s more, secondaries by nature gain an equity stake in existing assets, sidestepping contentious development and debt structuring processes.

In turn, you “can expect a shorter time horizon to reach stabilization, quicker liquidity and less exposure to market volatility vs. traditional funds,” according to Brian Di Salvo, partner of capital advisory at Park Madison Partners.

Areas of interest

The preferred investments are “those that have continuing economic and upside potential,” said Ron Dickerman, CEO of Madison International Realty, which is in the process of raising capital for its ninth secondaries fund. On the flip side, risks such as low vacancy, expiring debt or a large lease maturity would disqualify a potential secondaries investment, according to Dickerman. Therefore, office properties take a back seat to other property types.

The potential lies almost entirely in assets benefiting from growing demand for consumer goods ranging from groceries to electronics, services and computing power. In the industrial sector, which has posted some of the largest payouts of all asset classes, Madison and other firms focus on cold and outdoor storage, intermodal, single-tenant and small-bay facilities. Dickerman is motivated by demand for delivered groceries, which is expected to grow nearly tenfold by the end of the decade.

Other promising areas are medical office facilities, which benefit from a growing health-care and pharmaceutical industry and an aging population. Data centers, for similar reasons, are “built for GP-led secondaries,” according to Di Salvo. “Surging data needs due to the rapid expansion of AI and cloud computing create significant capital requirements for these assets.”

Another winner to emerge on the retail front are convenience-oriented retail centers, which Gandhi says are posting high yields and relying on non-discretionary spend. In Di Salvo’s model, any asset where “you expect to see several legs of growth in the underlying business plans over the next five to 10 years is a compelling one,” said Di Salvo.

Higher for longer—a good thing?

Experts expect higher-for-longer interest rates will be a net benefit for secondaries investors since the appeal of acquiring cash-producing assets at a discount supersedes any market cycle.

“This is not a point-of-time opportunity,” predicted Cherine Aboulzelof, co-head of BGO Strategic Capital Partners, which is currently capitalizing its third secondaries fund. “With the wall of maturities coming due, a lot of these triggers will continue for the next few years.”

“While high interest rates are depressing transaction activity in the current market environment, once cap rates adjust to reflect the reality of the new, higher rate environment, the markets will reset and we will return to a more normalized transaction environment,” predicted Giller.

That said, the next 18 to 24 months seems like the best time for getting into secondaries. But that doesn’t mean the opportunity will disappear, noted Kilian Toms, managing director of CBRE Investment Management’s Real Estate Partners strategy. “Term extension will continue to be a catalyst for why fund managers and GPs will continue to use the space, specifically in markets where business plans are delayed in periods of dislocation.”

With this in mind, Toms believes managers’ focus has changed and may affect why secondaries funds are capitalized in the future. “The market has shifted from more of a carried interest, compensation-oriented market to more of a long-term, growth-oriented market,” he concluded.

Read the January 2025 issue of CPE.

The post Stars Align for CRE Secondary Funds appeared first on Commercial Property Executive.

Despite a slow start in early 2024, San Francisco’s office construction activity picked up pace as the year progressed and became one of the largest in the nation. Developers are continuing to break ground on new developments, with most projects belonging to the life science sector, according to CommercialEdge data.

In contrast, the market’s sales activity was low through 2024, on par with 2023’s trend. Nevertheless, San Francisco emerged as the priciest office market in the U.S., surpassing Manhattan in terms of average sale price per square foot.

Second-largest pipeline in the country

As of November, 3.8 million square feet of office space was under construction across 20 properties in San Francisco, representing 2.3 percent of existing stock—above the national figure 0.8 percent. Among similar markets, Boston led the rankings with 3.6 percent, while San Francisco outperformed Los Angeles (0.7 percent), Manhattan (0.6 percent) and Chicago (0.3 percent). When adding office projects in planning stages, San Francisco’s share reached 9 percent, second after Miami (9.4 percent) and surpassing Boston (8.6 percent).

In terms of square feet underway, San Francisco had the second largest pipeline, after Boston’s 9.3 million square feet. The vast majority of the project rising within the market are life science developments.

Kilroy Realty’s Buildings D, E and F at Kilroy Oyster Point, slated to aid 865,000 square feet of space, is one of the largest projects under construction. A trio of life science buildings are part of the developer’s 3 million-square-foot waterfront project in South San Francisco. Construction commenced in 2022 and the delivery date was pushed to the end of 2025.

Another notable project is IQHQ’s The Spur, a 326,000-square-foot high-tech life science building at 580 Dubuque Ave. in the same submarket. Backed by a $275 million construction loan, the development topped out earlier this year and is expected to come online in early 2025.

Year-to-date through November, developers delivered 2.7 million square feet across 13 properties in the metro, representing 1.4 percent of total stock, while construction starts included 911,700 square feet of space across three properties—accounting for 0.5 percent of total stock.

Among notable properties that came online recently is Lane Partners’ Southline Building 1, a 375,000-square-foot life science building at 30 Tanforan Ave. also in South San Francisco. The property, financed by a $373 million construction loan, represents the first phase of Southline, an office and R&D development that will comprise up to 3 million square feet of space.

Office-to-residential conversions in San Francisco

The office sector is still struggling with high vacancies and office-to-residential conversions have emerged as an attractive option. Recently, CommercialEdge launched the Conversion Feasibility Index, a Yardi-powered tool that measures a building’s potential for a residential makeover.

The CFI score has three tiers, with Tier I office properties being the most suitable candidates. San Francisco had 112 properties—totaling 11 million square feet—in the Tier I category. Additionally, the metro had 295 office building in the Tier II category, totaling nearly 36.3 million square feet.

Work has begun on the repurposing of the historic Humboldt Bank Building. In October, Forge Development Partners started the conversion of the 1908-built mid-rise totaling 91,804 square feet. The developer plans to invest $70 million in the reimagining of the office building into a 124-unit residential community. The Seligman Group is the owner of the property that bears a CFI score of 91 points.

Prices high, low investment activity

Year-to-date through November, San Francisco’s office sector saw $747 million in deals, with 29 properties totaling nearly 1.9 million square feet changing hands. The metro continued last year’s limited sales activity: in 2023, transactions amounted to $722 million and 2.3 million square feet.

Among gateway metros, San Francisco’s total sales volume surpassed only Seattle’s ($687 million), while Manhattan led the nation with $3.8 billion in deals.

One of the priciest sales in San Francisco this year was the $222.2 million acquisition of Sand Hill Commons, a 133,000-square-foot, two-building office campus in Menlo Park, Calif. The buyer was Norges Bank Investment Management, that acquired a 97.7 percent ownership stake in the property from Clarion Partners and Invesco Real Estate.

Office properties changed hands at an average sale price of $384 per square foot—significantly above the national average of $179 per square foot. Among gateway markets, San Francisco emerged as the priciest office market, outperforming the usual leader Manhattan ($379 per square foot), that was followed by Miami ($376 per square foot), Los Angeles ($355 per square foot) and Washington, D.C. ($213 per square foot).

San Francisco’s vacancy rate highest in the U.S.

San Francisco’s office vacancy rate clocked in at 27.7 percent as of November—surpassing the national figure of 19.4 percent and marking a 400-basis-point increase. Tech markets are posting some of the highest rates in the country, with San Francisco and Austin ranking first.

In contrast, one of the lowest rates were registered in similar markets, such as Miami (14.4 percent), Los Angeles (15.7 percent), Manhattan (16.7 percent) and Boston (16.8 percent). The only gateway metro with a significant increase in vacancy was Seattle, that recorded a 25.8 percent figure.

In May, Google gave up 300,000 square feet of office space at One Market Plaza, a two-building office complex totaling 1.6 million square feet in San Francisco. Nevertheless, notable office leases transpired recently in the metro. Among them is Alexandria Real Estate Equities Inc.’s 258,581-square-foot, long-term deal with Vaxcyte Inc. The company has been an anchor tenant at Alexandria Center for Life Science, a two-building property in San Carlos, Calif.

Flex office providers increasing operations in the metro

San Francisco’s coworking market comprised 3.7 million square feet of space as of November, more than in Miami and Seattle, that had 2.9 million square feet each. The share of flex office space as percentage of total leasable office space in the metro reached percent 2.2 percent, above the national figure of 1.9 percent.

The flex office provider with the largest footprint in the metro remained WeWork, with operations totaling 736,795 square feet. The companies that followed were Gateway Labs by Lilly (438,339 square feet), Regus (337,544 square feet), Studio by Tishman Speyer (237,947 square feet) and Spaces (186,402 square feet).

The post San Francisco Office Construction Rebounds Amid High Vacancy appeared first on Commercial Property Executive.

The seven-story waterfront project at 9551 E. Bay Harbor Drive reportedly will be both the only trophy office building on Bay Harbor Islands and Miami’s only Class A office building offering private boat access. It will feature 75,000 square feet of “ultra-luxury office space” and a ground-floor waterfront restaurant, in a location across from the Bal Harbor Shops.

3650 Capital provided the financing. Construction will start at the end of this month and is scheduled for completion in late 2026. Leasing will be handled by Cushman & Wakefield.

The developers could not be reached for further information.

The project is driven by an influx of high-net-worth residents to Bay Harbor Islands and the resulting need for luxury office space for companies supporting this migration, Irwin Tauber, co-founder & CEO of Taubco, said in a company statement.

READ ALSO: When Office Meets Hospitality

The ground-floor restaurant reportedly will offer in-suite dining service for building tenants, while the building will feature private boat slip access and dockage, along with a rooftop venue.

The building has been designed by Miami-based architect Luis Revuelta, known for multiple luxury buildings in Miami.

Cushman & Wakefield Vice Chair Brian Gale, with Executive Managing Directors Andrew Trench and Ryan Holtzman, and Senior Director Edward Quinon, will oversee office leasing efforts.

Scanty preleasing

Overall vacancy in the Miami-Dade office market has risen by 80 basis points year-over-year, driven by the recent delivery of 830 Brickell, according to a third-quarter report from Cushman & Wakefield. The 556,000-square-foot building was 93 percent preleased, but the new tenants are still building out their respective spaces.

Adjusted for that blip, the overall vacancy would be about 15.1 percent, although a total of seven office projects with a combined 837,000 square feet are underway, with only 14 percent preleased. Net absorption nonetheless remains positive, Cushman & Wakefield reported.

In July, CMC Group nailed down a $69.9 million refinance for its 4000 Ponce, a 190,000-square-foot office building in the Miami suburb of Coral Gables, Fla. The floating-rate, five-year loan was provided by City National Bank of Florida and arranged by a JLL team.

The post JV Secures $74M Loan for Metro Miami Building appeared first on Commercial Property Executive.

At its final meeting of the year, the Federal Reserve Open Markets Committee slashed interest rates by another 25 basis points on Wednesday, a move identical to its meeting last month. Heading into 2025, the current federal funds rate target range is 4.25 to 4.5 percent, level with the range of December 2022. The current range is a full percentage point down from the peak of 5.25 to 5.5 percent.

The anticipated move follows a second straight month of rising inflation, which may throw a wrench in the Fed’s plans. The annual rate increased from 2.6 percent in October to 2.7 percent in November, while core inflation has increased from 3.17 percent in July to 3.32 percent last month. 

Mindful of these trends, Fed Chair Jerome Powell underscored the central bank’s neutral approach to its dual mandate of slowing inflation while protecting the labor market, despite the recent indicators. “Today was a closer call, but we decided that it was the best decision towards achieving both of our goals,” Powell said at today’s press conference.

What the Fed decides to do in 2025 depends on a number of factors, but it will likely cut rates fewer times than anticipated at September’s meeting, in part due to persistent inflation, which the committee projects to fall to 2.5 percent in 2025. The median FOMC participant anticipates that the committee will cut twice in 2025, with rates falling to 3.9 percent at the end of 2025, and to 3.4 percent at the end of 2026. At the press conference, Powell said: “We are at or near a point where it will be appropriate to slow the pace of future adjustments. But we still see ourselves on track to continue to cut.”

Stability, at last?

With most of the economy’s key indicators proving resilient, some industry experts are optimistic about the state of commercial real estate investment in 2025. “Anticipated interest rate cuts by the Federal Reserve are expected to reduce borrowing costs, enhancing the appeal of real estate investments,” said Carey Heyman, managing principal for real estate at CLA, a consulting firm.

READ ALSO: Is This the Start of CRE’s New Growth Cycle?

Others are a bit more cautious in their outlook. In the mind of Tamas Mark, global head of real assets at IQ-EQ, an asset management and administration firm, how investors will fare next year will likely be due more to political events than monetary policy. The chief driver could be policy changes by the incoming Trump administration. “Changes in tax policies, the impact of potential tariffs and a tax decrease might result in higher inflation and interest rate hikes, potentially also slowing down the forecasted rate cuts by the Fed,” Mark told Commercial Property Executive.

At the same time, Mark is optimistic about investors’ prospects going into the second half of the decade. “For now, the U.S.’ strong income growth with tailwinds from decreasing supply creates momentum,” he said.

The post Fed Cuts Interest Rates in Final 2024 Meeting appeared first on Commercial Property Executive.

The five-year, interest-only loan was provided by Goldman Sachs. The refinancing offers the borrower extended flexibility, enabling a strategic exit from the investment under more favorable market conditions, according to JLL.

The two-building complex was completed in 1981 and comprehensively renovated in 2019. Its amenities include shared outdoor spaces, lounge space and a conference center, as well as ample parking. Currently, it’s 95 percent occupied with a diverse tenant mix, including the California State Lands Commission and Mutual of Omaha.

100 Howe is between Sacramento’s Campus Commons, Highway 50 and Sierra Oaks office submarkets. This location provides ready access to University Village, Howe Avenue and East and Midtown Sacramento, as well as to major freeways, public transportation and the American River Bike Trail.

READ ALSO: When Office Meets Hospitality

The JLL Capital Markets Debt Advisory team that represented Fenway Capital Advisors was led by Director Olga Walsh and Vice President Bharat Madan.

Fenway acquired the property from KBS Realty Advisors in late 2017 for $11.5 million, according to information provided by CommercialEdge, which rates the property as Class B.

Smaller government

Ongoing consolidation and relocation of offices by the state government has been a big factor in occupancy losses in the Sacramento office market, which have now gone on for 16 straight quarters, according to a third-quarter report from JLL. Overall office vacancy is now 21.2 percent, and although Class A direct asking rent continues to rise, so too are concessions, as overall direct asking rent declines.

Just two months ago, Manulife US Real Estate Investment Trust sold 400 Capitol Mall, a 501,308-square-foot office tower in downtown Sacramento. The asset traded for $117 million. The buyer was an entity related to Buzz Oates Real Estate, a Sacramento-based privately held commercial real estate investment management company.

The post Fenway Capital Secures Refi for Sacramento Office Property appeared first on Commercial Property Executive.

Consolidated Investment Group has secured a five-year, fixed-rate note amounting to $17.5 million for two Class A industrial assets in Aurora, Colo., totaling 235,987 square feet. JLL arranged the loan.

Dubbed Building 5 and 6, the properties are within Consolidated’s Eastpark 70, a six-building industrial campus encompassing 1.1 million square feet. The two facilities were the park’s latest addition, having made their debut in 2022, while the other four structures opened between 2016 and 2019. A seventh 116,550-square-foot build-to-suit facility is in the planning stages.

Building 5 and 6 feature 32-foot clear heights, dock-high and drive-in doors, as well as 120 parking spaces combined. The former’s truck court reaches a depth between 130 and 185 feet.

READ ALSO: You’ve Survived Till 2025. Now What?

Performance Contracting’s deal to occupy the entire 77,140-square-foot Building 6 and Empire Today’s lease for 60,350 square feet inside Building 5 brought Eastpark 70 to full occupancy. The deals closed last year.

Carrying the addresses 19722 & 19922 E. 22nd Ave., the two facilities are less than 3 miles from Interstate 70 about 16 miles east of downtown Denver. The Colorado Air and Space Port, as well as The Denver International Airport, are within roughly 15 miles.

JLL Directors Rob Bova and William Haass represented Consolidated Investment Group in the financing proceedings.

Denver International Airport attracts investors

Industrial investment skyrocketed throughout Greater Denver, with deals amounting to north of $1.1 billion during the first 10 months of the year, according to a CommercialEdge report. By comparison, in 2023 investment volume only reached $485 million. Other Western markets fared significantly better this year, such as the Bay Area ($3.0 billion) and Los Angeles ($2.4 billion).

The markets’ heightened investor interest is closely linked to the Denver International Airport, which plays a key role in the region’s logistics and distribution operations. Investcorp’s 1.3 million-square-foot portfolio acquisition is one such example. The collection traded for $200 million, and its 31 assets are located within Denver and South Florida.

Greater Denver’s industrial vacancy rate stood at 9.6 percent in October, above the national average of 7.2 percent and higher than all other Western Markets, the same source shows. The metro’s industrial pipeline reached 6.8 million square feet in October, a figure outshined only by Phoenix (28.1 million) and the Inland Empire (10.2 million).

The post Consolidated Secures $18M for Denver-Area Industrial Assets appeared first on Commercial Property Executive.

Blue Owl Real Estate, Chirisa and PowerHouse Data Centers have received a $600 million loan for a 50 megawatt build-to-suit data center development in Northern Virginia. Newmark arranged the financing through a syndicate headed by Société Générale.

Located in the 300-plus-acre Chirisa Technology Park in Richmond, the project is preleased to hyperscale graphics processing unit provider CoreWeave. The development broke ground earlier this year and is scheduled to deliver its initial capacity in 2025.

Newmark’s Jordan Roeschlaub and Jonathan Firestone, along with Clint Frease, Nick Scribani, Ben Kroll and John Caraviello, in collaboration with Brent Mayo, secured the loan.

Newmark did not reply to Commercial Property Executive’s request seeking additional information about the property and the financing.

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

Blue Owl Real Estate is a leading real estate private equity platform with $27 billion in assets under management. Chirisa is a global investor active across digital infrastructure and real estate in the Americas and Europe. PowerHouse Data Centers is owned and operated by American Real Estate Partners and offers turnkey data center solutions, from site selection and acquisition through design, construction and operations.

Their $5 billion joint venture emerged just this past fall, focusing on developing large-scale AI/high-performance computing data centers on a build-to-rent basis. The Richmond development is the partnership’s first.

Tighter than tight

The data center market in Northern Virginia remains the nation’s largest, with an inventory of more than 2,600 megawatts and another 1,150 megawatts under construction in the first half of the year, according to a CBRE report. NoVa was also the second-tightest data center market in the U.S. after Hillsboro, Ore., the vacancy rate reaching 1.5 percent at the end of June.

In response to increasing concerns about power constraints, one proposed data center campus in Virginia will be sited near an existing nuclear power plant and will be accompanied by a hydrogen production facility and several small modular reactors. Green Energy Partners is developing the campus, the first of its kind in the U.S., on a 641-acre site in Surry and plans to invest $6.5 billion over the next 13 years.

The post Blue Owl, Chirisa, PowerHouse Get $600M for NoVa Data Center appeared first on Commercial Property Executive.

BentallGreenOak and Urban Renaissance Group LLC have secured a refinancing loan for Plaza 600, a 209,256-square-foot office building in downtown Seattle. The ownership secured a committed capital of over $10 million and will reposition the property.

Urban Renaissance Group has owned Plaza 600 since 2012, when it acquired the property from The Vance Corp. for $54.8 million, with the help of a 10-year $68.9 million loan originated by CIBC Bank USA. URG recapitalized the tower in partnership with BGO in 2019.

Completed in 1969, the office building at 600 Stewart St. rises 20 stories and features 5,063 square feet of retail space. The property underwent renovations multiple times, with the latest completed in 2023. These last upgrades focused on the main lobby area, as well as the amenity spaces, adding a bike room with showers and a conference center for the tenants. The building’s roster comprises Regus, Hoffman Construction Co., Washington Council for Behavioral Health, MBI Seattle and HKM Employment Attorneys LLP.

JLL Managing Director Cleita Harvey, Director Tim Jones and Associate Broker Charlotte Evans are handling leasing at the property.

A well-positioned property in downtown Seattle

Plaza 600 is between the Retail Core and the South Lake Union neighborhood. The Amazon Headquarters campus and The Spheres corporate offices are adjacent to the property. The office tower is near metro, bus and light rail stops, as well as Interstate 5. Plaza 600 also holds a walk score of 100.

The office sector is still struggling, with the national vacancy rate hitting 19.4 percent at the end of October, up 160 basis points year-over-year, according to a recent CommercialEdge report. Tech markets hold the highest rates, including Seattle, which registered a 390-basis-point jump since October 2023, hitting a 25.8 percent vacancy rate.

The post BGO JV Secures Refi for Seattle Office Tower appeared first on Commercial Property Executive.

BKM Capital Partners, a fund manager specializing in value-add light industrial properties, has undertaken a $550 million recapitalization of a nine-property portfolio with Kayne Anderson Real Estate. The light industrial facilities total more than 2.1 million square feet in urban markets in the western United States.

The largest of the properties is Hughes Airport Center, a 672,424-square-foot asset in Las Vegas. The rest of the portfolio, including four buildings in California, and others in Arizona, Colorado, and Washington state, measure between about 141,000 square feet and 256,000 square feet.

READ ALSO: Industrial Report: Automation and AI Shape Future Demand

The portfolio’s varied tenant base and shorter lease terms mean that BKM and Kayne Anderson will enjoy a favorable rent rollover profile at the properties, and thus are poised to capitalize on the high annual rent growth seen in the small-bay industrial sector, according to BKM.

The deal represents Kayne Anderson’s first entry into the light industrial sector. The Boca Raton, Fla.-based alternative asset manager otherwise specializes in senior housing, student housing, medical office, multifamily housing and self-storage.

Newport Beach, Calif.-based BKM has long been bullish on light industrial, which it defines as industrial properties smaller than 200,000 square feet, with spaces of less than 50,000 square feet. Also this month, the company recapitalized a smaller portfolio of three San Diego business parks from its BKM Industrial Value Fund II LP, with Tokyu Land US Corp., for $76.9 million.

Light industrial still robust

While the pandemic-related retail surge may have subsided, small-bay industrial properties are thriving thanks to several enduring structural trends that continue to drive demand, BKM Senior Managing Director, Acquisitions & Dispositions Brett Turner told Commercial Property Executive.

“The continued growth of e-commerce has made last-mile logistics, particularly in infill areas of population centers, indispensable to meet consumer expectations for same-day and next-day delivery,” Turner commented.

Retail isn’t the only driver, however. Reshoring of manufacturing, which is supported by federal incentives and geopolitical shifts, has increased the need for flexible spaces that can accommodate related ancillary and support services needing light manufacturing, assembly, and R&D, he added. Multi-tenant small-bay industrial, with its adaptability and tenant diversity, serves an array of industries, including logistics and construction, but also technology and life sciences.

“With limited new supply and high barriers to entry in the most sought-after markets, these assets are positioned to capture rent growth and occupancy regardless of market conditions. They are resilient even during economic fluctuations.”

The post BKM Recaps Light Industrial Portfolio for $550M appeared first on Commercial Property Executive.

It is the first joint venture between BKM and Tokyu Land US Corporation, a real estate investment and operating company owned by Japan-based Tokyu Fudosan Holdings Group.

These small-bay facilities, aggregating 342,073 square feet, are in the active industrial submarket corridor of Otay Mesa. BKM acquired them five years ago and invested $1.4 million in upgrades.

Otay’s strategic location along the U.S.-Mexico border positions it as a critical hub for cross-border trade, nearshoring and warehouse distribution.

Borderpoint Business Park at 6754, 6774 and 6794 Calle de Linea comprises 16 units totaling 173,330 square feet across three buildings. It features 22- to 24-foot-clear ceiling heights, 104 dock-high loading doors and 14 grade-level loading doors.

READ ALSO: Why Light Industrial Properties Will Continue to Shine

Otay Crossing Business Park has three units within two buildings at 2340 Enrico Fermi Drive and 10025 Siempre Viva Road. The 64,833-square-foot property features 24-foot warehouse clearance, 27 dock-high loading doors and three grade-level loading doors.

Otay Distribution Center includes eight units totaling 103,910 square feet in two buildings at 6987 and 6995 Calle de Linea. The park features 24-foot-clear ceilings, 63 dock-high loading doors and a single grade-level loading door.

The assets are all that’s left of BKM’s Otay Mesa industrial portfolio, a six-park package that BKM acquired from Stockbridge Capital Group in 2018 for $71.6 million.

These properties were also individually reorganized to create better functionality and efficiency. The efforts resulted in an 86 percent increase in the portfolio’s weighted average in-place rental rate.

The three parks are leased to 21 tenants with 2.2 years of WALT and rents approximately 17 percent below current market rates. BKM, which will serve as the joint venture’s domestic operating partner, is leveraging upcoming expirations to implement improvements and secure market rental rates in early 2025.

Light industrial space market remains tight

The South County San Diego small bay, multi-tenant industrial leasing market will remain robust through 2024, according to Jackson Childers, JLL associate.

“Unlike the 10 million square feet of larger block product (50,000+ square feet) delivered in Chula Vista and Otay Mesa in the past five years, the supply of multi-tenant industrial space has been stagnant,” Childers told Commercial Property Executive.

“While developers have focused on maximizing coverage and thus built larger warehouse units, the robust tenant mix in the 5,000 to 15,000 square foot range has been neglected. Thus, 25-year-old buildings offering smaller suites achieve rents 25 percent higher than brand-new ‘big box’ construction.”

As warehouse vacancy climbs toward 15 percent in South County, for owners of small bay, Childers said multi-tenant projects are largely insulated from the difficulties of competing against a set of five, and sometimes 10, similar spaces.

“Looking toward 2025, we expect resiliency within this product type, as the pipeline for new multi-tenant industrial is empty as usual,” he said.

READ ALSO: Are Co-Warehousing Solutions a Game-Changer for Industrial?

Recently, the San Diego industrial/flex market has seen increases in vacancy at 10-year highs, according to Eli Randel, Crexi COO, told CPE.

“Those rates could potentially increase from new deliveries and from proposed tariffs and their impact on trade,” Randel said. “However, the San Diego industrial/flex market generally remains healthy and tight, even at these higher vacancy levels, and had previously experienced good rental rate growth.”

Given the relative health of this market, it’s unlikely there was severe asset-level distress associated with the recap, Randel explained.

The post BKM Recapitalizes San Diego Light Industrial Assets appeared first on Commercial Property Executive.

SL Green Realty Corp. has signed a purchase option agreement to acquire its partner’s 49.9 percent interest in 100 Park Ave., an 834,000-square-foot Manhattan high-rise. PGIM Real Estate acquired the asset in a venture with SL Green in 2000.

Additionally, the company also modified the building’s existing $360 million mortgage, extending the final maturity date to December 2027 and maintaining the 2.25 percent interest rate. The lenders also provided a new $70.0 million future funding facility to support leasing costs at the property. Newmark advised the borrower, while CBRE worked on behalf of the loan providers.

Although the lenders were not mentioned, a syndicate led by German commercial bank Helaba provided a $360 million loan in February 2014, according to The Real Deal, and a $215 million refinancing in 2009.

READ ALSO: Manhattan Office Shows Strength in a Still Lackluster Market

The company previously closed on the modification of the loan in April. At the time, the deal extended the note’s maturity date to December 2025, while the interest rate was maintained at 2.36 percent.

The 36-story property came online in 1949 and was redeveloped in 2009. The high-rise holds LEED Gold certification and features floorplates ranging between 10,336 and 45,245 square feet, as well as 21,600 square feet of first-floor retail space.

Amenities at the Midtown Manhattan tower include a game room, a cafe bar and lounges, as well as conference and meeting rooms. The property also has an amenity center on the second floor, providing a golf simulator and personal training studio.

Newmark Co-Heads Adam Spies and Doug Harmon advised SL Green in the deal. CBRE Vice Chairman Doug Middleton worked on behalf of the lenders.

Busy period for SL Green

At the beginning of this month, SL Green and its joint venture partners closed on a $1.3 billion mortgage modification and extension for One Madison Avenue, a fully renovated 27-story office building in Manhattan. The note’s maturity date was extended through November 2027.

In November, the firm sold an 11 percent ownership interest in One Vanderbilt, a 1.7 million-square-foot high-rise also in Manhattan. Mori Building Co. purchased the stake in a deal that valued the asset at $4.7 billion.

The post SL Green to Buy Out PGIM at Manhattan High-Rise appeared first on Commercial Property Executive.

McGee Business Center I and II are two fully leased Class B shallow-bay business parks totaling 231,696 square feet, in San Bernardino County. The seller was ‘C’ McGee Electric, according to CommercialEdge data.

Business Park I is at 2300 S. Reservoir St. in Pomona and was completed in 1981. It consists of four buildings totaling 129,800 square feet. Business Park II is at 12301–12395 Mills Avenue in Chino and was delivered in 1987. It comprises five buildings totaling 101,896 square feet.

The two properties total 71 industrial suites averaging 3,263 square feet. The buildings have minimal office buildouts, about 5 percent each, a JLL spokesperson told Commercial Property Executive. Tenant uses include traditional warehousing/distribution and light manufacturing space for small businesses.

READ ALSO: Inland Empire Industrial Assets Trade Less Often, but Fetch Top Dollar

McGee Business Center is less than a mile from CA-60 (Pomona Freeway) and has convenient access to CA-71 (Chino Valley Freeway) and I-10.

The JLL Capital Markets team was led by Senior Director Peter Thompson and analysts Kyle White and Nick Englhard.

Deep demand for shallow-bay

In early November, Cabot Properties acquired a four-building, 669,000-square-foot industrial portfolio in the Inland Empire from Link Logistics for $202 million. In an unusual angle, Cabot was actually repurchasing three of the four properties, having developed and built them between 2018 and 2021.

This past summer, Matthews Real Estate Investment Services reviewed the reasons for increasing interest in shallow-bay, multi-tenant industrial properties. These include the assets’ appeal to a large number of users, shorter lease terms that allow timelier ability to mark rents to market, and a relative shortage of shallow-bay spaces, as developers focus primarily on larger industrial projects.

The post Proficiency Capital Secures Loan for Inland Empire Buy appeared first on Commercial Property Executive.

The fund will focus on distressed credit opportunities in New York’s office and retail real estate sectors, including existing loans, loan portfolios and controlling CMBS securities. It will also originate loans.

The $250 million commitment is just the beginning, since SL Green plans to raise roughly another $250 million by the end of this year. New York offers a robust pipeline of investment opportunities, according to a company statement.

“After nearly a four-year hiatus, we are now… lending on and investing in mortgage and mezz loans and debt securities,” SL Green Chairman & CEO Marc Holliday said during the company’s most recent earnings call in October. 

“This quarter, we invested nearly $110 million in various debt and debt-like investments, and that’s on top of the other DPE investment activity we did earlier this year,” Holliday said. “This marks the return to an extremely profitable business.”

The debt investments closed thus far combined with the pipeline that the company has been building throughout 2024 will serve to seed the debt fund, Holliday said.

“The fund will provide additional capital resources enabling us to reestablish ourselves as the dominant provider of subordinate capital for New York City commercial assets,” he predicted.

READ ALSO: Why Aren’t Mortgage Rates Dropping After the Fed Rate Cut?

A major commercial landlord in New York, SL Green holds an interest in 55 buildings totaling 31.8 million square feet. That includes interests in 28.1 million square feet of Manhattan buildings and 2.8 million square feet securing debt and preferred equity investments.

CDPQ, based in Montreal, has about $452 billion in assets under management, including $45.6 billion in real estate in more than 1,500 properties.

Manhattan office market still struggles

The Manhattan office market continues to suffer from weak demand. The number of office-using jobs in the market dropped 0.53 percent year-over-year in September, according to CommercialEdge, losing positions in all major categories: financial services, information and professional and business services.

Asking rents in Manhattan decreased by 3.2 percent year-over-year in November, averaging $68.48 per square foot, CommercialEdge reports. For the first time in years, Manhattan wasn’t the most expensive office market in the country. San Francisco now has that distinction, besting Manhattan by 66 cents per square foot.

Investors are still interested, however. Manhattan continues to lead the nation in office asset sales volume, reaching almost $3.3 billion year-to-date through October, CommercialEdge noted.

This is nearly double Manhattan’s $1.7 billion recorded during the same period last year, though average sale prices in the market have dropped in recent months, to $344 per square foot, putting Manhattan fourth for sale prices among U.S. office markets.

The post SL Green Bags $250M for Opportunistic Debt Fund appeared first on Commercial Property Executive.

Unico Properties has secured a $35 million refinancing loan for 1201 Pacific, a 305,000-square-foot Class A office tower in Tacoma, Wash. Gantry’s insurance-arm Genworth Life Insurance Co. provided the 10-year, fixed-rate, non-recourse note, which replaces the previous 10-year loan that expired in September.

Gantry Principal Mike Taylor and Senior Director Jeff Ballaine arranged the deal on behalf of the borrower.

Unico acquired the property in 1997 from WPAS for $28.8 million, with the help of a $36 million loan originated by Genworth Financial, according to CommercialEdge information. The building’s current assessed value is at $39 million, the Puget Sound Business Journal reported.

Completed in 1969, the LEED Gold-certified office tower rises 25 stories, making it the tallest building in Tacoma. The tenant roster includes Regus, Merrill Lynch, WSP, Vandeberg Johnson & Gandara, RBC Wealth Management and Panattoni Development, CommercialEdge data shows. The property had a 15 percent vacancy rate at the time of the transaction.

Seattle office vacancy rate climbs

Located at 1201 Pacific Ave., the building is across the street from a T Line light rail stop and 1 mile from Tacoma train station, which connects the city to downtown Seattle, some 33 miles north.

Seattle’s office market has been facing significant challenges this year, according to a recent CommercialEdge report. The metro, along with the Bay Area, Austin and San Francisco, had one of the highest vacancy rates across all U.S. markets as of October. Climbing 390 basis points year-over-year, Seattle’s rate reached 25.8 percent that month. This significant increase was in part due to a number of large projects being delivered.

The post Unico Lands $35M Refi for Tacoma High-Rise appeared first on Commercial Property Executive.

Andrew Glanzman and Adam Gallistel have been named co-CEOs of CBRE Investment Management.

The appointments come after nearly two years during which CBRE IM operated without a CEO. Charles Leitner, the last to hold the position, retired at the end of 2022.

Glanzman’s promotion is effective immediately. He joined CBRE IM in 2010, and has served as the firm’s president since 2022. Previously, he was the chief operating officer. He will remain president in his new tenure, and will oversee the firm’s larger business strategy and day-to-day operations. He currently works out of the firm’s Los Angeles office and will move to its New York City global headquarters in 2025. Previously, he was an attorney at Mayer Brown LLP, and did work in corporate securities transactions.

Gallistel, the head of Americas real estate and global real estate credit at Singapore-based GIC, will assume his new role in April 2025. In addition to working alongside Glanzman, Gallistel will also become chief investment officer, directing the firm’s strategies across commercial real estate and heading up investor engagement. According to CBRE, Gallistel’s focuses will include data centers and asset classes that intersect directly with infrastructure investments.

In their new roles, both Gallistel and Glanzman will oversee the firm’s executive committee.

READ ALSO: How Infrastructure Investment Drives Industrial Space Growth

Kim Hourihan, the firm’s current global chief investment officer, will remain in her role through the end of March of next year, departing at the end of June.

CBRE IM ranked first in CPE’s latest survey of top investors, with a portfolio valued at $109 billion.

Synergistic skillsets

Glanzman praised the new leadership structure in an interview with Commercial Property Executive, seeing the differing, yet “complementary” backgrounds between him and Gallistel as uniquely suited to the current investment environment.

“I have experience in big strategy and building businesses, while (Gallistel), as an LP, embodies the client-centric approach that we have today,” Glanzman said. “We bring different, yet very complementary skill sets to create something that’s quite powerful.”

Going into 2025, Glanzman is optimistic about where commercial real estate investments will go, following a year of slumped property valuations and low transaction volumes. “We are increasingly optimistic about opportunities in the market in terms of where we see values going for properties in terms of transactions, trading and transparency, and we are having a number of positive conversations with investors who are becoming more active again,” he added.

The post CBRE Investment Management Names Co-CEOs appeared first on Commercial Property Executive.

Lessen Relocates Chicago Office to Growing Tech Corridor

In the largest new office lease in Chicago’s Central Loop for 2024, Lessen, a tech-enabled, end-to-end solution for real estate property services, signed a 77,000-square-foot lease at 203 N. LaSalle St., a 27-story, 624,724-square-foot, Class A mixed-use building in Chicago’s Central Loop.

Transwestern brokers were able to leverage the building’s full set of amenities, direct access to nearly every CTA line and its debt-free owners to stand out among other Central Loop office buildings. They also received a boost from Google, which is renovating the James R. Thompson Center office building at 100 W. Randolph St. into its new Chicago headquarters. When completed in 2026, the building will house about 2,000 Google employees.

Transwestern’s Kathleen Bertrand, Eric Myers and John Nelson represented the building’s ownership, Sumitomo Corp. of Americas, in the June transaction. Jake Ehrenberg and Brian Means of JLL represented Lessen.

“There is new momentum and potential revitalization in the Central Loop thanks to Google’s purchase of the James R. Thompson Center,” Bertrand told Commercial Property Executive. “Tech companies such as Lessen are being drawn to buildings like 203 N. LaSalle St. that are close to the Thompson Center.”

Davis Acquires Minnesota MOB in Complex Deal

In a “complicated” transaction that took nearly a year to complete, Davis, a Minneapolis-based real estate firm, acquired WestHealth, a three-building, 201,000-square-foot outpatient medical center in Plymouth, Minn., for $72 million in October from Harrison Street Real Estate.

It was one of the largest single-asset sales in the Minneapolis/St. Paul market this year. Located at 2805, 2855 and 3005 Campus Drive, the portfolio anchored by Allina Health comprises two outpatient buildings, an ambulatory surgical center and emergency/urgent-care facility.

Financing was arranged by Healthpeak and Eric Gundersen of Alerus Financial. Stewart Davis, executive vice president of acquisitions at Davis, led the Davis team. Brian Bruggeman of Colliers represented Allina Health. Chris Bodnar, Cole Reethof and Brannan Knott of CBRE marketed the property for Harrison Street.

CEO Mark Davis cited capital market instability and fluctuating interest rates and the building’s restrictive ground lease with limited term remaining as challenges in getting the deal across the finish line.

“A prospective buyer for WestHealth had to have significant confidence in the anchor tenant to believe that these issues could be resolved smoothly,” Davis told CPE. “Otherwise, the deal risked falling apart. Ultimately, Allina found the right partner in Davis and after considerable effort, we successfully reached an agreement with HSRE.”

$21M C-PACE Loan Kicks Off HQ in Kansas City

Bayview PACE of Coral Gables, Fla., played a key role in the capital stack for Kansas City-based Masters Transportation to build a new 324,000-square-foot corporate headquarters and flex/industrial facility, providing $20.5 million C-PACE funding in July for the development.

The Commercial Property Assessed Clean Energy financing from Bayview PACE complemented other funding, including a $31 million construction loan and $20 million in sponsor equity. Bayview PACE also worked with the Port Authority of Kansas City to structure the PACE assessment to allow for a bond lease providing the property with a real estate tax exemption and a ground lease.

Marco Lainez, senior vice president of originations for Bayview, arranged the transaction. Alex Hilton and Jake Frodyma of Walker & Dunlop in Overland, Kan., represented the borrower.

The C-PACE financing represented 28 percent loan-to-cost. The 20-year non-recourse loan was structured with three years of interest only. The financing provided the sponsor a unique structure at 70 percent costs whereby C-PACE was coupled with Simmons Bank.

“As is the case with many C-PACE transactions, it can take some time getting the bank comfortable with consenting to the financing, although it’s been in use for over a decade,” Lainez shared.

Walker & Dunlop spearheaded discussions between Simmons Bank and Bayview PACE, Lainez said, so the Bayview team could answer all of the bankers’ questions about C-PACE financing.

Adding to the deal’s complexity, the borrower entered into a ground lease with the Port Authority as part of an economic development incentive package.

“There have only been a few C-PACE transactions with ground leases completed, but it’s a growing trend in the industry, particularly as ground-lease dominated markets like New York City get more active in C-PACE,” Lainez said.

Wingstop Lands on New HQ in Uptown Dallas

When successful restaurant chain Wingstop outgrew its corporate office space near Addison Airport in the Dallas suburb of Addison, they made the bold decision to leave the “’burbs” behind. Working with CBRE for about a year, Wingstop executives wanted a cool walkable location in the city loaded with amenities to appeal to workers.

The end result: CBRE arranged for Wingstop to lease 112,000 square feet on the top four floors of the four-story 245,961-square-foot One West Village in Uptown Dallas on the west side of US 75. It became the second largest office lease transaction in Dallas this year.

CBRE Vice Chairman Josh White and Senior Vice President Ryan Buchanan represented Wingstop and CBRE’s Trey Smith served as a strategic adviser. The CBRE brokers worked with representatives of building owner OliveMill Holdings: Ryan McManigal, Peter Yates and Chris Selbo.

Amenities at the iconic glass building now dubbed “One Wing Village” include open floors for collaboration, a creative space with a podcast studio, a test kitchen, free catered lunches and a fitness center.

White said the transaction is an example of what he calls an underreported trend: companies creating office spaces that employees are compelled to come to.

“They knew exactly what they wanted from their office space and what they wanted to offer their employees. We were able to work closely with them to find the space and get the transaction done within a year,” he shared.

“It also bucks the trend of companies moving to the suburbs, and we expect more companies to follow in Wingstop’s move to the urban core,” White stated.

Gantry Secures Construction Takeout for LA Creative Office Campus

Independent commercial mortgage banking firm Gantry secured a $21.4 million construction takeout loan in August for Redcar Ltd.’s two-building creative office project located at 3520-3524 and 3512-3516 Schaefer St. in Culver City, Calif.

Gantry Principal Tony Kaufmann and Andrew Ferguson, an associate with Gantry’s San Francisco production office, represented Redcar in the transaction.

The loan was provided by Standard Insurance, a life insurance company and one of Gantry’s correspondent insurance company lenders. It features an attractive fixed rate with a three-year initial term and 30-year amortization. According Kaufmann, the loan has no structure on it, giving the borrower the flexibility to run its business plan.

The newly built Class A buildings have a total of 35,000 square feet and feature dramatic 18-foot ceilings, extensive glass, open-floor plans with modern interiors and landscaped exteriors with gathering spaces. The buildings are fully leased. Kauffman said Culver City, located in Los Angeles County, has a substantial creative and entertainment-driven industry base.

He noted office leasing in select Los Angeles boutique markets is performing well vs. office buildings in the traditional hotspots.

 “Not all office space is struggling in the current market cycle and a flight to quality has kept many newer properties on track,” he said.

NJ Regional Power Center Changes Hands for $117M

Institutional Property Advisors, a division of Marcus & Millichap, brokered the $116.5 million sale of Hamilton Marketplace, a 485,000-square-foot regional power center anchored by a 65,155-square-foot ShopRite grocery store near Princeton, N.J., to Paramount Realty in September. It was the largest single-asset open-air shopping center transaction to trade in New Jersey since 2017.

Marketed for the first time since it was developed in phases during the early 2000s, the center includes major retailers like Kohl’s, Ross, Staples, Barnes & Noble, Michaels, Old Navy, Ulta, Burlington and PetSmart. Located on more than 128 acres at Route 130 and Interstate 195, it is one of the nation’s best performing grocery-anchored power centers.

Brad Nathanson, IPA executive director and JP Colussi, IPA senior director, represented the seller SITE Centers, and procured the New Jersey-based buyer.

Hamilton Marketplace is one of numerous shopping centers SITE Centers has been selling in the past year across the country as it prepared a spinoff of Curbline Properties Corp. into the first and only public REIT focused exclusively on convenience retail assets.

Hamilton Marketplace drew a pool of private and institutional investors that hasn’t been seen since before the pandemic, Nathanson said, noting that retail fundamentals are the strongest he has seen in 20 years. Investors are attracted to vintage power centers with strong tenant bases because of the lack of new construction and high costs of re-tenanting.

Stos Enters Salt Lake City With $35M Industrial Buy

Stos Partners, a San Diego-based privately held commercial real estate investment and management firm, entered the growing Salt Lake City industrial market in July with the acquisition of a three-building 279,233-square-foot industrial complex for $34.99 million in an off-market transaction

Alex Harrold of Matthews Real Estate Investment Services represented Stos Partners in the transaction. Eli Priest, Jeff Heaton and Kyle Roberts of Newmark are overseeing leasing.

Led by Principal and Founder CJ Stos, Partner Jason Richards, Executive Vice President Jay Boyle and Vice President of Acquisitions Morgan Hill, the company is implementing a capital improvement program, stabilizing and re-tenanting the asset.

Stos said the team identified the property and began working to acquire it even though it was not on the market. He cited the prime location and functionality of the park, wide range of suite sizes and tenant diversification opportunities for the team’s interest.

Property features include 22-foot clear height, 49 dock-high doors and 18 drive-in ground-level doors.

Located on 14.5 acres at 900 W 2900/2950/3100, the property is near the I-15, I-80, I-215 and SR 201 freeways and about 10 miles from Salt Lake City International Airport.

“With the growth of ecommerce, logistics and manufacturing, Salt Lake City continues to strengthen as a key market for industrial users,” Stos said.

Wellness Tenant Joins the Mix at West Side NYC Property

If you want to have a relaxing spa day after a game of pickleball or shopping for a new car, a high-end luxury spa will be opening on the fourth and fifth floors of 660 Twelfth on Manhattan’s West Side thanks to a new 23-year lease for 43,027 square feet of space arranged by Avison Young.

Avison Young Principals Peter Gross and Nicola Heryet represented the landlord, 677 11^th Avenue Realty LLC. Kenneth J. Moore and Loy Carlos, principals at Classiques Modernes International Realty, represented the tenant.

Other tenants at the property at 660 12^th Avenue along the West Side Highway between 48^th and 49^th streets are the Bram Auto Lexus/Toyota dealerships, Glass Houses event space and Hell’s Kitchen Pickleball Club. The asset is now full with a diverse mix of unique tenancies that complement each other, Gross noted. Originally built in 2002, the seven-story, 300,000-square-foot asset was redeveloped in 2019. It has unobstructed views of the Hudson River, terraces on the fifth and seventh floors and 24/7 building security.

The brokers declined to identify the tenant at this time, noting only that it is considered New York City’s premier Asian-inspired spa. The modern, fully equipped spa will offer a Japanese/Korean service experience with outdoor amenities. Gross said the spa’s space will include one of the building’s wraparound, usable terraces.

The Avison Young team specifically targeted a specialty-use tenant for the property “given the dynamic make-up of the building.” “The deal, which is very complex, was achievable in large part due to the tenant’s vision of what the space will eventually become, but also to the ownership’s creative and flexible deal-making ability,” Gross told CPE. “There was a great deal of due diligence that was required by both parties prior to finalizing and, if it wasn’t for the owner and tenant feeling comfortable and trustworthy, this would have been just another prospective deal that came and went.”

Read the December 2024 issue of CPE.

The post These CRE Transactions Typify an Interesting 2024 appeared first on Commercial Property Executive.

The firms extended the final maturity date through November 2027, maintaining the interest rate at 3.10 percent over term SOFR, with a further reduction in spread when specific leasing thresholds are exceeded. Wells Fargo Bank led the facility of 14 global banks.

Designed by renowned architect Kohn Pedersen Fox, One Madison Avenue embraces the new standard for the modern work experience, using an ambitious adaptive reuse project. Its tower floors and retail spaces are 100 percent leased, and the property is more than 65 percent leased overall.

Tenants include Franklin Templeton, Coinbase, Palo Alto Networks and IBM, which moved into its new corporate headquarters in September. Additional tenants will be moving in throughout 2025.

READ ALSO: Law Firm Office Leasing Maintains Momentum

They take advantage of a property that emphasizes wellness by providing an HVAC system that circulates 100 percent fresh air, expansive floor-to-ceiling windows with heavy doses of natural light and nearly column-free spaces that maximize workspace efficiency.

Lenders understand the asset’s value

“Manhattan’s leading office properties continue to draw companies that value the local work ethic and culture,” Lisa Flicker, senior managing partner ‑ head of real estate, Jackson Lucas, told Commercial Property Executive.

“Teams based in the city work longer hours with greater intensity, contributing to a unique drive that’s hard to replicate elsewhere,” Flicker said. “While relocating teams may enhance quality of life, it often diminishes productivity and tenacity, creating a trade-off. I wouldn’t bet against premium assets in NYC—as it remains the hub where ambitious talent and top-tier workplaces converge for success.”

The transaction proves that the lenders understand the underlying asset’s value, according to David Curry, Farrell Fritz, P.C.

He told CPE that the “return to the office” movement is happening slowly, and this type of Class A space “with world-renowned landlords such as SL Green” is leading the way.

“It is encouraging to see lenders making deals that make sense with borrowers who have shown them a history of living up to their promises,” Curry said. “Hopefully, deals such as this will encourage borrowers and lenders to return to the table to ink longer-term deals.”

He said the issue remains: What about the Class B and Class C office space?

“These owners—and the lenders that have provided financing to them—are in for a tougher road, as values have declined, and rates are at their highest in several years.”

According to Curry, these buildings need to be upgraded to include some of the features that Class A buildings have, making them more attractive, which further hinders sensible financing deals.

Last month, SL Green Realty sold an 11 percent ownership interest in One Vanderbilt, its 1.7 million-square-foot Manhattan skyscraper. SL Green will continue to own a 60 percent stake in the 59-story tower that was fully leased at closing.

The post SL Green Secures $1.3B Mortgage Extension for NYC Tower appeared first on Commercial Property Executive.

To have your commercial real estate transaction featured, submit details to Agota Felhazi at agota.felhazi@cpe-mhn.com.

Read the December 2024 issue of CPE.

The post Transactions: December 2024 appeared first on Commercial Property Executive.

The funding reportedly will enable the ongoing leasing of the property, whose tenants already include Puttery, Velvet Taco, Sea Saw/Shinso, Chama De Fogo, Midtown Boba and Collectors Club.

Wynwood Walk is at 230 N.W. 29th St. in Miami, was completed in 1978 and is about 77 percent occupied, according to information provided by CommercialEdge.

Thor Equities has secured more than $100 million in financing with ACRES in the past 30 days. Earlier in November, Thor closed a $68.5 million construction loan for 377 Carlls Path in Deer Park, N.Y. This financing will be used to develop a 310,500-square-foot Class A industrial facility.

READ ALSO: Retail’s Post-Pandemic Recovery

Thor has also recently acquired a 270-acre industrial property in metro Atlanta, improved with a 506,220-square-foot facility with a dedicated 100 MVA substation and 50 MW power output. Thor describes the site as having the infrastructure needed for the development of data center or advanced manufacturing space.

Staying strong

Another recent deal, too, evidences the breadth of Thor Equities’ activities. In June the company acquired a 250,000-square-foot industrial facility in Laredo, Texas. The building was completed in 2023 and is occupied by a customs broker under a five-year lease.

Miami-Dade County’s retail market continues to absorb new construction faster than the admittedly limited quantity of deliveries, according to a third-quarter report from Colliers. Leasing in the latest quarter total 314,000 square feet, versus new supply of just 28,000 square feet.

It’s thus unsurprising that rents are up by 6.3 percent year-over-year, to $46.00 per square foot, triple net. Colliers predicts that current conditions will lead to metro Miami retail property values outperforming the national average.

The Wynwood submarket has a total vacancy of 6.5 percent on an inventory of 2.9 million square feet.

The post Thor Equities Secures Loan for Miami Retail Center appeared first on Commercial Property Executive.

Delinquency rates for mortgages backed by commercial properties increased slightly during the third quarter of 2024. This is according to the Mortgage Bankers Association’s latest commercial real estate finance Loan Performance Survey, released in October.

Delinquency rates for commercial mortgages backed by office properties continued to increase during the third quarter but declined for loans backed by lodging, retail and industrial properties. The commercial mortgage market is large and diverse, covering a range of property types, sizes and ages, geographic markets and submarkets, borrower types, vintages and more. Each of those differences is affecting loan performance, some to the good and some to the bad.

The balance of commercial mortgages that are not current increased slightly in the third quarter of 2024.

• 96.8 percent of outstanding loan balances were current or less than 30 days late at the end of the quarter, down from 97.0 percent the previous quarter.
• 2.7 percent were 90+ days delinquent or in REO, up from 2.5 percent the previous quarter.
• 0.3 percent were 60-90 days delinquent, up from 0.2 percent the previous quarter.
• 0.3 percent were 30-60 days delinquent, down from 0.4 percent the previous quarter.

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The share of loans that were delinquent increased for some property types, particularly office, and decreased for industrial, lodging and retail properties.

• 7.8 percent of the balance of office property loan balances were 30 days or more days delinquent, up from 7.1 percent at the end of last quarter.
• 5.6 percent of the balance of lodging loans were delinquent, down from 5.8 percent the previous quarter.
• 3.8 percent of retail balances were delinquent, down from 4.5 percent.
• 1.2 percent of multifamily balances were delinquent, up from 1.1 percent.
• 0.6 percent of the balance of industrial property loans were delinquent, down from 0.8 percent.

Among capital sources, CMBS loan delinquency rates saw the highest levels but were flat during the quarter.

• 4.8 percent of CMBS loan balances were 30 days or more delinquent, unchanged from the last quarter.
• Non-current rates for other capital sources remained more moderate.
• 0.9 percent of FHA multifamily and health care loan balances were 30 days or more delinquent, unchanged during the quarter.
• 0.9 percent of life company loan balances were delinquent, down from 1.0 percent.
• 0.5 percent of GSE loan balances were delinquent, up from 0.4 percent the previous quarter.

The post Commercial Mortgage Delinquency Rates Increased in Q3 appeared first on Commercial Property Executive.

PREIT has obtained $80 million to refinance Woodland Mall, a 1.2 million-square-foot shopping mall in Grand Rapids, Mich. Starwood Capital originated the loan, according to CommercialEdge information.

The note has a fixed 7.35 percent interest rate over five years. The JLL-arranged transaction will save the company roughly $5 million in interest expenses.

The property’s previous debt was a $130 million loan originated by U.S. Bank in 2016, the same source shows. Five years later, the lender agreed to amend and restate the note.

Then, in 2023, the mortgage was modified twice. The final amendment moved its maturity date to November 2024 with an additional option to extend through May 2025.

A closer look at the super-regional mall

Woodland Mall came online in 1969 on some 61 acres. In the late 1990s the property underwent several renovations including new flooring and curves to the ceiling throughout the mall, and new lighting and decor. PREIT acquired the asset in 2006 for $177.4 million and started redeveloping it prior to the pandemic.

READ ALSO: Retail’s Post-Pandemic Recovery

In 2017, Sears closed the 313,000-square-foot store that anchored the property. The structure was demolished and replaced with an expansion wing that includes a nearly 90,000-square-foot Von Maur store, the retailer’s first West Michigan location.

Apart from Von Maur, the shopping mall now features more than 100 regional and national retailers such as JCPenney, Macy’s, Phoenix Theaters, Barnes & Noble, MAC, Apple, Lego, Claire’s, Forever 21, Game Stop, Lush, Starbucks, Pandora, Sephora, Urban Outfitters, The Cheesecake Factory and Spencer’s, among others.

Located at 3195 28th St. SE, Woodland Mall is in an area where the daily traffic count reaches approximately 85,000 vehicles, according to PREIT. The super-regional mall attracts shoppers from a 60-mile area and serves households with the average income of more than $100,000 within a 15-mile radius.

The post PREIT Gets $80M for Michigan Shopping Mall appeared first on Commercial Property Executive.

CFM Properties has obtained a combined $38.5 million for The Gateway Center, a 272,300-square-foot regional shopping center in West Bloomfield, Mich. Citibank and Red Oak Capital Holdings provided the financing.

The larger note, originated by Citibank, is a five-year, $24 million CMBS loan, according to CommercialEdge information. The interest-only note carries a rate of 7.7 percent.

The $14.5 million bridge loan issued by Red Oak is also interest-only, with a two-year initial term. Red Oak’s Stratos Athanassiades, Thomas Gorski and Jesus Martinez handled the financing proceedings. SF Capital Group’s Matt Shane was also instrumental in the deal.

The property’s previous debt included a $42.5 million financing package originated by Seven Hills Realty Trust in 2021. Of the total, approximately $5.1 million were earmarked for tenant improvements and capital expenditures.

Rethinking Gateway Center

Completed in 1999 on a 3-acre site, The Gateway Center was 95 percent leased at the time of closing. Retailers such as Whole Foods, Kohl’s, Walgreens and Dunham’s Sports anchor the property.

The bridge loan proceeds will refinance only part of the shopping center, the 115,491-square-foot portion that includes Kohl’s, Harbor Seafood, J. Alexanders Restaurant, four other in-line stores and a currently empty lot. The remainder will be refinanced through the CMBS note.

CFM Properties plans to retain the Kohl’s pad and sell all outparcels to pay back the Red Oak loan. The ownership also intends to either redevelop Kohl’s into a luxury residential community or renew Kohl’s lease and refinance the pad long-term. 

The Gateway Center is at 7130-7440 Orchard Lake Road, near U.S. Road 10. Downtown Detroit is some 23 miles southeast. 

The post CFM Properties Lands $39M for Detroit-Area Retail Center appeared first on Commercial Property Executive.

JLL Capital Markets arranged the financing through Nationwide, of Columbus, Ohio. The funding is in the form of a seven-year, fixed-rate, interest-only loan.

The Seagis Class A Industrial Portfolio consists of three newly completed properties:

•  1700 Eller Drive in Hollywood, Fla., is a 199,643-square-foot facility that’s just east of Fort Lauderdale–Hollywood International Airport and has direct access to Port Everglades.

•  8315 NW 27th St. in Doral, Fla., is a 117,831-square-foot warehouse in Doral, Fla., within the company’s Transal Park, near Miami International Airport.

•  2013 McCarter Highway, Newark, N.J., is a 178,200-square-foot warehouse located near major transportation routes and logistics hubs, such as Newark Liberty International Airport.

All three assets were delivered between 2023 and 2024 and feature 32- to 40-foot clear heights, ample truck and car parking, optimized building depths, and numerous loading doors.

READ ALSO: Why Industrial Outdoor Storage Will Always Be In

The JLL Debt Advisory team was led by Senior Managing Directors Jim Cadranell and Gregory Nalbandian and Vice President Michael Lachs. According to JLL, the portfolio is occupied by credit tenants, with a weighted average lease term of almost 10 years.

Gateway focus

This past January, Seagis obtained a $122 million loan for the financing of a 13-property, 1.1 million-square-foot industrial portfolio Northern New Jersey, New York City and South Florida. JLL arranged the five-year, fixed-rate loan through a correspondent lender. The properties ranged substantially in age, from three to 50 years old, but illustrated the company’s focus on infill properties in gateway East Coast markets.

Overall industrial space vacancy in Miami–Dade County rose by 70 basis points over the prior quarter, to 3.9 percent, according to a third-quarter report from JLL. New leases and renewals in the quarter totaled more than 800,000 square feet.

Significantly, net absorption year-to-date has been about 2.8 million square feet, as against deliveries over the same period of 6.9 million square feet and a pipeline of nearly a further 4.2 million square feet, just 4 percent of it preleased.

The post Seagis Secures $102M for East Coast Industrial Portfolio appeared first on Commercial Property Executive.

Steiner NYC has landed $148.5 million for the refinancing of Admirals Row, a 696,000-square-foot, mixed-use property part of Brooklyn Navy Yard. Deutsche Bank provided the note in a transaction arranged by Walker & Dunlop.

Previous debt included a $228 million construction loan issued by M&T Bank and BNY Mellon in 2018, as well as a $50 million loan originated by the New York City Regional Center.

Admiral Row encompasses more than 350,000 square feet of light industrial and creative manufacturing space leased by the Brooklyn Navy Yard Development Corp., as well as 160,000 square feet of retail including the 75,000-square-foot space leased by Wegmans—the company’s first supermarket in New York City.

In addition, the 8-acre property comprises a 5,000-square-foot community facility and a parking structure and lot with 701 spaces combined.

READ ALSO: Why Aren’t Mortgage Rates Dropping After the Fed Rate Cut

Located at 399 Sands St., Admiral Row is within 1 mile from Interstate 278—also known as the Brooklyn-Queens Expressway—as well as the Manhattan and Brooklyn bridges. Steiner Studios, a film and television production facility encompassing 900,000 square feet of soundstages and support space, is likewise 1 mile away.

The Walker & Dunlop team that represented and advised Steiner NYC in securing the financing included Senior Managing Directors Jonathan Schwartz, Aaron Appel, Keith Kurland and Adam Schwartz, together with Managing Director Michael Diaz and Capital Markets Specialist William Herring.

Overhauling New York City’s largest industrial campus

Admirals Row is part of the $2.5 billion Brooklyn Navy Yard redevelopment project. Plans call for the creation of 5.1 million square feet of manufacturing space, as well as the improvement of the Yard’s connectivity with the surrounding neighborhoods. More than 450 businesses operate within the Yard, generating upward of $2 billion annually for the city.

The Admirals Row site formerly housed the officers of the Navy Yard throughout buildings constructed before the 1900s. However, the Yard closed in 1966, and the residences were abandoned in the 1970s. Decades later, the site changed hands and the Brooklyn Navy Yard Development Corp. took ownership.

Financing development in the Big Apple

Several entities support development throughout the five boroughs. One of them is The New York City Regional Center. 

The NYCRC has provided nearly $1.6 billion in financing over the past 15 years for real estate and infrastructure projects throughout Brooklyn, Queens, Manhattan and the Bronx. Beside financing Steiner’s Admirals Row, the company also funded the Navy Yard redevelopment’s first phase with a $60 million loan.

New York City outer boroughs’ new industrial leasing activity clocked in at 2.2 million square feet during the first three quarters, representing an 18.7 percent spike year-over-year, according to a report by Cushman & Wakefield.

Despite the heightened activity, the industrial vacancy rate stood at 5.1 percent in September—marking an 80-basis-point increase compared to June—the report shows. The index hasn’t been over the 5 percent mark since 2020.  

The post Steiner Lands $149M for Brooklyn Navy Yard Property appeared first on Commercial Property Executive.

TECfusions has obtained some $300 million for the development and expansion of its data center in Clarksville, Va.

The 15-year loan will fund the development’s Phase I buildout, as well as the company’s other key initiatives that include AI-ready infrastructure and sustainable power generation solutions.

The company started gathering funds for the project in January 2024. There are $160 million already allocated for construction, while the remainder will be used for the completion of the project’s Phase I.

Plans call for the development of four data halls with a combined capacity of 37.5 megawatts. The third one, dubbed C-Hall, came online in September, while the fourth one, D-Hall, is currently underway and expected to reach completion by February 2025.

The expansion of the Clarksville data center comes in response to higher capacity needs from one of its key tenants. In October, TensorWave leased 1 gigawatt of AI infrastructure capacity at the facility, marking one of the largest commitments in the sector.

READ ALSO: More Data Centers, Please!

The 22.5-acre property is at 250 Burlington Drive. TECfusions acquired the 196,000-square-foot facility with 500 kilowatts already live and immediately started upgrading it. According to the company’s website, the data center has 80 megawatts already leased and the company is looking to bring the campus to a full site capacity of 220 megawatts.

The company also recently acquired 66 acres for the expansion of the campus, that will also include some houses for people working on the development, according to Data Centre Dynamics. The same source reported that the city will provide 20,000 gallons of water and sewer per day for the project.

AI drives data center demand

AI capital expenditures in recent years amounted to more than $300 billion, with investment accelerating in 2024, according to a recent JLL Data Center Report. AI represented about 20 percent of the new data center demand in 2023 and will continue to fuel this demand going forward.

However, development is going at a faster pace than the power grid can support, especially with construction having increased in secondary markets. With vacancy levels having reached record lows, nearly all data center projects are already preleased ahead of completion, and this trend expected to continue in the next few years.

Last month, Cologix obtained significant funds to finance its upcoming data center developments. Through a mix of debt and equity, the company secured $1.5 billion for its campuses in Ashburn, Va., Columbus, Ohio, and Montréal.

The post TECfusions Lands $300M for Virginia Data Center appeared first on Commercial Property Executive.

AW Property Co. has obtained $55.2 million in acquisition financing for a North Carolina medical office portfolio totaling 297,500 square feet. The nine properties are in Burlington, Durham and Greensboro.

JLL worked on behalf of the borrower and placed the 10-year, fixed-rate loan. The Guardian Life Insurance Co. provided the note, according to public records show.

The firm acquired the portfolio with an average vintage of 2006 from Healthcare Realty in July. The seven Guilford County assets changed hands for a combined $79.4 million, public records also show.

The medical facilities were 99 percent leased at the time of sale to healthcare systems and independent physician practices, with credit tenants representing 73 percent of in-place income. Some of the companies occupying space within the portfolio include Cone Health, Duke Health and UNC Health.

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

Located on or adjacent to hospital campuses, the traded properties include:

• Cone Health Neurology Clinic, a one-story building in Greensboro
• Church Street Medical Park, a three-building campus in Greensboro
• A two-story facility at 2001 N. Church St. in Greensboro
• Wesley Long MOB, a three-story building also in Greensboro
• Alamance Eye Center, a 2007-completed property in Burlington
• UNC Family Medicine Center, a medical facility in Durham
• Duke Medical Center in Durham

JLL Senior Managing Director Travis Anderson and Senior Director Anthony Sardo led the Capital Markets Debt Advisory team representing the borrower.

MOB investment activity set to grow

The medical office real estate sector remains strong, with outpatient demand projected to rise by 26 percent over the next decade, according to a Savills report. Additionally, economic conditions, such as interest rate cuts, are likely to stimulate further investing in medical office buildings.

Earlier this week, Onicx Group acquired Trinity Oaks Medical Arts Building, a two-story, 31,000-square-foot asset in Trinity, Fla. Part of a three-building BayCare Health System campus, the property came online in 2008.

The post AW Property Lands $55M for MOB Portfolio appeared first on Commercial Property Executive.

Vista Property Group has received $32 million for the refinancing of 609 West Randolph, its 95,000-square-foot, Class A boutique office building in Chicago’s West Loop/Fulton Market. JPMorgan Chase & Co. provided the five-year, 7.23 percent fixed-rate loan in a deal arranged by JLL.

The transaction marked the second refinancing of the property this year, according to CommercialEdge information. Initially, Vista took out a $30.7 million construction loan from Bank OZK in 2021, which matured in January.

Then, the owner obtained a $30.4 million in bridge financing from the same lender. That note had a maturity date set in January 2025.

READ ALSO: Life Cos. Drive More Lending While Banks Take a Back Seat

Completed in 2022, the office building features touchless technology and floorplates of 5,500 to 7,100 square feet. Amenities include a penthouse lounge and conference room, a green rooftop space with an amenity terrace, offices with private outdoor terraces and a lobby design modeled after boutique hotels.

The LEED Silver-certified property was 93.5 percent leased at the time of closing to 10 tenants. The roster includes Fetch Rewards, Buford Capital and NTT Data, among others.

Because it’s barely a block from the Ogilvie Transportation Center, the building offers quick access to three Metra commuter rail lines, as well as two Chicago Transit Authority elevated lines and numerous CTA bus lines. In addition, Interstate 90/94 is two blocks west.

JLL’s Debt Advisory team led by Managing Director Christopher Knight, Associate Matt Maksymec and Analyst Katia Novi represented the borrower.

Seeking stability

Chicago’s CBD office market is seeing greater stability, as total availability has decreased for two straight quarters, to 28.9 percent, according to a third-quarter report from Colliers.

Further, some timelines for proposed new developments have been pushed back to 2026–27, as office-to-residential conversions too are reducing office inventory.

In Fulton Market specifically, the total availability is 22.4 percent, on an inventory of 7.7 million square feet.

In July, Fulton Street Cos. topped out 919 West Fulton, their $300 million, 409,000-square-foot office building in the West Loop/Fulton Market submarket. The 11-story building is expected to open next year.

The post Vista Property Group Refinances Chicago Office Building appeared first on Commercial Property Executive.

Lincoln Property Co. has received $68.2 million in refinancing for Royal Palm I and II, two Class A office buildings totaling 465,592 square feet in Plantation, Fla. Barclays provided the fixed-rate loan, in a deal arranged by JLL Capital Markets.

Lincoln Property purchased the office campus in August 2014 for $128 million from Duke Realty, with the help of a $66.5 million acquisition loan originated by Metropolitan Life Insurance Co., according to CommercialEdge information.

Built between 2001 and 2007, Royal Palm I and II rise eight, respectively nine stories on a 25.4-acre site. The property also includes a four-level parking garage with 1,927 car spots. Amenities feature conference rooms, a fitness center and a wellness room. Royal Palm I also incorporates 22,908 square feet of retail.

READ ALSO: Sizing Up the Prime Office Building Landscape

The tenant roster at the two towers includes Regus, Tobias Financial Advisors, American Global, Pediatric Associates, Upchurch Watson White & Max and Fort Lauderdale Eye Institute, among others, CommercialEdge shows.

Located at 850, 900, 950 and 1000 S. Pine Island Road, the office campus is some 9 miles from downtown Fort Lauderdale and has access to Interstate 595. Downtown Miami is 30 miles south.

Senior Managing Director Paul Stasaitis and Associate Maddy McMillen led the JLL Debt Advisory team that represented the borrower.

Miami—an expensive office market

Miami emerged as one of the most expensive office metros among gateway markets, with an average price of $354 per square foot year-to-date through August, according to CommercialEdge research. Its vacancy rate clocked in at 14.1 percent, well below the 19.4 percent national average.

In one of the largest financing deals this year so far, OKO Group and Cain International received a $565 million permanent loan from TYKO Capital for 830 Brickell, a 57-story, 638,355-square-foot building in Miami’s financial district. The high-rise is the second-tallest office tower in the city.

The post Lincoln Property Lands $68M Refi in South Florida appeared first on Commercial Property Executive.

Bridge Industrial has secured a $117 million construction loan for a four-building, 714,491-square-foot industrial project in San Jose, Calif., according to Santa Clara County records. Bank OZK issued the funds with First American Title Insurance Co. as trustee. The developer expects to complete Bridge Point San Jose in 2025’s fourth quarter.

Bridge acquired the 32.8-acre site for $134 million in 2021, leveraging an $81.2 million acquisition loan from Invesco. Plans at the time called for the demolition of the existing campus prior to constructing the new industrial park.

READ ALSO: CRE Sentiment Index Hits All-Time High

Bridge Point San Jose’s buildings are set to measure 358,180, 202,735, 83,751 and 69,825 square feet. The two larger facilities will have 36-foot clear heights while smaller ones will cap at 32 feet. The park will have a combined 77 dock-high doors—with roughly half featuring mechanical pit-levelers—and six ground-level doors. Truck courts are slated to measure from 185 to 135 feet in depth. Parking will consist of 344 car and 99 trailer spaces in total.

The development is at 2150 Commerce Drive, less than 3 miles from the San Jose Mineta International Airport, as well as roughly 33 and 35 miles southeast of the Oakland and San Francisco international airports, respectively. The Port of San Francisco is about 48 miles northwest.

Bridge Industrial targeting infill assets

Bridge is continuing its strategy of targeting infill industrial assets in supply-constrained core markets ripe for redevelopment or capital improvements.

In July, the company kicked off the office-to-industrial redevelopment of Ryder System Inc.’s former headquarters, a 248,989-square-foot office building in Medley, Fla. The developer plans to raise a 326,448-square-foot speculative industrial campus in its place. Ryder sold its former head office to Bridge for $42.1 million in March 2023.

Bridge is not the only developer looking to reshape office spaces. Earlier this month, Lincoln Property Co. began to put plans into motion for redeveloping a 218,268-square-foot office building into a 254,000-square-foot industrial project in Tempe, Ariz., by purchasing the 16.3-acre site upon which the office asset rises for $18.3 million.

Bay Area industrial assets priciest nationwide

The Bay Area’s industrial investment volume reached $2.7 billion year-to-date through September, securing the second spot nationwide—behind Dallas-Fort Worth—according to a recent CommercialEdge report. The market took the lead nationwide for sale prices, with assets trading at an average of $476 per square foot through September, more than triple the $130 national figure.

The overall vacancy rate in the Bay Area stood at 7.5 percent at the end of the third quarter, 50 basis points above the national average. The supply-constrained market’s pipeline still had 3.5 million square feet under construction as of September, although this was significantly behind other Western regions, such as Phoenix (33.8 million), the Inland Empire (10.2 million) and Denver (7.6 million), the same source shows.

In July, Hines secured $120.3 million for the construction of a 636,000-square-foot industrial project in San Jose. Edenvale Industrial Park is slated for completion in 2025.

The post Bridge Industrial Lands $117M for Bay Area Project appeared first on Commercial Property Executive.

The firm announced that MacKenzie will succeed Jody Thornton in this position. Thornton will assume the role of executive chairman of Americas Capital Markets, where he will continue overseeing various initiatives.

MacKenzie has been a top producer for more than 10 years, handling 925 transactions totaling more than $35 billion across all property sectors and U.S. regions.

“We are very thoughtful about succession planning at every level of the company; it is a meritocracy that layers throughout our system and allows us to retain and grow our people over long careers at JLL,” MacKenzie told Commercial Property Executive.

Given the continued growth of the firm’s capital markets platform and its increased connectivity between business lines, the time was right for this move, MacKenzie commented.

“I’ve spent the majority of my career with this company, starting as an analyst nearly 20 years ago. I am extremely excited to move into this next chapter, which involves further building on the strong foundation leadership has formed and driving our teams to even greater success and innovation on behalf of our clients,” MacKenzie added.

READ ALSO: What to Watch for in the Trump Presidency

MacKenzie began as an analyst in the Dallas office in 2004 and was promoted to a role in production just one year later. He held various roles (at HFF and JLL), first moving to co-heading the Orange County office in 2011, then overseeing the Los Angeles and the Pacific Northwest offices.

Later, he was head of the West region and was added to the executive committee (HFF) in 2018.

MacKenzie helped direct the firm’s national initiatives, such as strategic transactions and private capital. Most recently, he was head of production for JLL Capital Markets.

As president, he will handle capital market transactions while assisting with the businesses’ strategic growth and objectives.

The post JLL Names New President for Americas Capital Markets appeared first on Commercial Property Executive.

As national banks work out problem loans and prepare for new capital reserve requirements, they are limiting new real estate loan exposure. As a result, alternative lenders are stepping up to fill this gap, often at a significantly higher price than bank loans. Life insurance companies, however, offer more competitive rates than private lenders, like debt funds and family offices, and, therefore, are capturing a larger share of the core floating-rate business.

“We are seeing the groups who have various buckets of capital throughout the risk spectrum, such as Athene, Met Life, Voya, and Eagle Realty, to be most successful in deploying debt capital for the current needs of the market,” said Al Moczul, senior vice president of Life Company & Joint Venture Equity at Berkadia.

Commercial mortgage loans have been part of the insurance company asset mix for the last 20 to 30 years. Their real estate allocation is “very ambitious” and growing each year, according to Ivan Kustic, vice president at MetroGroup Realty Finance.

According to the Mortgage Bankers Association, the dollar volume of commercial and multifamily loans made by life companies grew 60 percent between the first and second quarters of 2024. With $12.8 billion in new loans, life companies’ share of the $4.7 trillion in outstanding CRE debt is now 16 percent or $753 billion.

Lending by depositories grew just 21 percent between Q1 and Q2. But banks are still by far the largest holder of outstanding CRE debt at 38 percent or $1.78 trillion, according to MBA.

READ ALSO: CMBS Issues Power Through Despite Rising Delinquencies 

“Most (life company) insurers are inline or slightly above last year’s volumes,” said Mike Cale, senior vice president of Capital Markets at Berkadia. “There has been an increase of rate-locked transactions over the past 30 to 45 days as a result of the dip in the treasury market. If the reduction in treasury rates continue into 2025, we would expect (life company loan) volumes to increase next year.”

What life companies finance

Most life companies have established lending criteria, policies, practices and preferences, and only lend on the major property types: retail, office, multifamily or industrial, Kustic said. As such, they have tended to avoid some property types, like hospitality and self storage, as they view those as businesses that require a high level of expertise and management. But, with banks less active today, they are getting a look at a lot more opportunities.

“The majority of their allocations have gone toward and are still going toward multifamily and industrial,” he said, but noted a recent uptick in their appetite for hospitality. 

And, while they continue to look for opportunities in growth markets, such as the Sun Belt states, they remain active in stable markets with reduced supply, such as the Midwest, Moczul noted.

According to Kustic, large life companies with portfolios of $100 billion or more typically lend only on assets in major metropolitan markets and have minimum loan amounts of $50 million. Meanwhile small and midsize life companies have a long history making $3 million to $10 million loans in secondary and tertiary markets. “Their ability to understand these markets and provide risk-based pricing helps in their overall portfolio performance,” he suggested.

Life companies tend to limit their exposure to large CBD office buildings or regional retail malls—the two asset classes experiencing the most value deterioration.

Kustic’s firm represents two midsize life companies, with portfolios of $11 billion and $20 billion, and neither has had a foreclosure in the last five years and they’ve had little or no delinquencies.

Why borrowers prefer life insurance loans

One key feature of most life insurance loans today is they are non-recourse, said Gantry Director Charlie Kokernak. “Many of our life companies can’t accept deposits or a recourse guarantor, even if they wanted to, but that credit enhancement is something that the banks can lean on at times,” he contended.

Banks may also require a depositary relationship with borrowers. “If a client has $10 million on deposit in the bank and is asking for a $5 million loan, of course the bank would be comfortable giving them that loan without a personal guarantee,” Kokernak added. 

Large life insurance lenders Gantry works with are comfortable going up to $100 million, but there are a handful of companies that will go up to $300 million. At that point, however, the lender wants some type of additional relationship with the borrower.

“When comparing a non-recourse product from a life company and a bank, we are finding that the vast majority of the time, what they (life companies) are offering is competitive if not more competitive terms,” Kokernak continued.  

The life insurance industry uses the 10-year treasury bill rate (4.37 percent on Nov. 1) as the index they match plus 2.0 percent to 2.5 percent. Banks typically charge Prime based on SOFR (4.9 percent on Nov. 3) plus 2.0 percent to 3.0 percent. Private lenders, like debt funds and family offices, charge 2.0 percent to 4.0 percent more than banks.

To illustrate, Kokernak cited a recent life company loan that came in at a high-5 percent on a fixed-rate, non-recourse basis for a self storage and industrial transaction he recently shopped for a client. The banks his client had banking relationships with came in at low- to mid-6 percent and were not only looking for a depository relationship but were looking for some semblance of recourse, whether that was partial recourse that burnt off or full recourse from the start. “So, in that regard, the life company provided better pricing,” he added.

The bottom line

Banks and higher-cost alternative lenders may provide a little less leverage than life companies, but leverage is not always the top concern for lenders.

“What’s really been limiting loan proceeds over the last 18 to 24 months is the cash flow in place at the asset, as cap rates in many instances are below the coupon or borrowing rate,” Kokernack said. “As a result, most lenders across the board, including life companies, are maxing out between 55 to 65 percent of the asset’s value or cost of the project.” But, he added, most life companies can go as high as 75 percent.

The pull-back by banks is a three-fold problem, according to Shlomi Ronen, founder & managing principal at Dekel Capital. New capital reserve requirements also caused bank stocks to plummet, stifling their ability to raise capital. Additionally, he said, because banks lend capital based on their balance sheet and they are experiencing a low level of loan payoffs, the amount of capital available to recycle back into the lending market is limited.

READ ALSO: The Dizzying Pace of Data Center Investment

Life companies’ cost of capital is dramatically lower than banks’ because they fund loans from their general account, which is the premiums paid by policyholders, explained Kustic. He also noted that most of them contract with other capital sources, such as pension funds and municipalities, to invest their money in commercial mortgages and manage their portfolios. A number of insurance companies have also formed debt funds, allowing them to offer borrowers a wider variety of loan types.

“Oftentimes we will talk to a life insurance company about a prospective loan, and they would say our general account would be interested in providing the loan with these terms, and our managed account would be interested with slightly different terms,” Kustic said.

Life insurance company lenders are also more patient, providing terms from seven to 20 years. “These durations match up well with insurance and annuity products that the life insurance company offer clients,” Kustic mentioned.

“Lately, with interest rates higher, borrowers have been asking for shorter terms of three and five years to get through these higher rate times in anticipation of lower rates in the future,” he added, noting that while some of the life companies are accommodating these requests, ironically, the inverted yield curve for shorter-term loans are priced higher than 10-year loans. 

Responding to changing needs

While life companies have traditionally offered longer-term, fixed-rate, permanent financing, Moczul said, over the last five years they also have offered transitional loans and construction financing for three to five years with flexible prepayment options. “Insurance companies have had to pivot to deploy these types of strategies to meet the market demand,” Cale noted.

He also said that due to consolidation within the industry, private equity firms which have acquired insurance companies are entering this space. “The net positive of this effect has given insurance companies alternative products to offer, such as shorter-term bridge loans, preferred equity and constructions loans,” Cale added.

Banks are facing a “wall” of CRE loan maturities—according to MBA, nearly $2 trillion of CRE’s outstanding debt will mature over the next three years—at a time when asset valuations have dropped up to 50 percent for office and 30 percent for multifamily. But the problem is having little impact on life company loans because the majority of their loans are on a longer maturity schedule (10 to 20 years vs. five to seven years for bank loans), Kokernak pointed out.

The development industry has experienced the biggest gap in financing availability since banks exited this segment of the market, said Gregory Michaud, managing director & head of Real Estate Finance at Voya Investment Management, noting banks have long been the biggest source of construction capital. As a result, Voya, formerly a life company that now manages capital investment for institutional investment funds, ramped up its construction financing program over the last 24 to 30 months. “We have had a construction loan program for over two decades and come in and out of the market when we believe there is good relative value,” he mentioned.

Construction loans originated recently have provided “the best relative value,” Michaud pointed out, but spreads have compressed since more private lenders have entered this space to fill the void left by banks pulling out.

Voya, which invests in core, core plus and opportunistic strategies, established the Commercial Mortgage Loan Fund along with 27 separate managed accounts, which are sources for funding commercial loans totaling approximately $14.5 billion of Agency Advice Units. Michaud noted that his company expects to finish this year with $2.5 billion in loan volume, with an average deal size of $30 million. However, the largest deal this year was $90 million. 

The post Life Cos. Drive More Lending While Banks Take a Back Seat appeared first on Commercial Property Executive.

Donald Trump is headed back to the White House in a couple of months. Regardless of whether you’re celebrating his win or lamenting Harris’ loss, it’s not too early to look at what a Trump presidency could mean for commercial real estate investors and lenders.

With the Dow, the S&P and the NASDAQ Composite all rallying today, it would seem that Trump’s election is considered a good sign for business, and, therefore, good for CRE. That remains to be seen, of course. But there are a number of likely positive outcomes for CRE and a few potential concerns.

READ ALSO: Why Aren’t Mortgage Rates Going Down?

On taxes

For starters, Trump aims to cut the corporate tax rate from 21 percent to 15 percent, and he wants to lift the cap on local and state tax deductions. With the Tax Cuts and Jobs Act of 2017 set to expire for individuals in 2025, he’s promised to make the individual tax cut permanent. He also wants to extend and increase the TCJA tax cuts for businesses and make the estate tax cuts permanent.

With Harris, investors were facing a potential increase in the capital gains tax, which would have endangered 1031 exchanges and carried interest. Such a proposal is less likely to be supported by Trump and what is now a Republican-led Congress, though there are some Republicans that support a rollback. 

“We have to make the case that the current rules are good for real estate and the economy, and, with a Trump administration, we may not have as steep a hill to climb,” Jeffrey DeBoer, president & CEO of the Real Estate Roundtable, told Commercial Property Executive contributing writer Dees Stribling in a pre-election article last month.

On housing

Let’s not forget, Trump got his start as a real estate developer, and he knows how hard it is to get things built. Citing regulation as a key reason for the high cost of housing, he has vowed to work with local jurisdictions to make the approval process less onerous and less expensive. He has also proposed making some federal lands available for housing production. (Harris also proposed these measures.) And by controlling immigration, he believes he will relieve some of the pressures on supply.

He also vowed to reduce mortgage rates by slashing inflation and to promote homeownership through tax incentives and support for first-time buyers—no further specifics have been offered just yet.

But if you are a real estate developer trying to get an affordable project built in a suburban community that is resistant to change, Trump is not likely to help your case with the NIMBYs. He’s promised to preserve suburban property values by safeguarding single-family zoning, and he is opposed to the affordable housing mandates many communities are facing—and resisting.   

On economic development and tariffs

Trump aims to attract new foreign businesses with lower taxes and less regulation, and he will impose penalties on U.S. companies that ship jobs abroad. That’s all fuel for the growth of manufacturing and logistics facilities.

But his proposal to impose stiff tariffs on imports­—60 percent on items from China and 10 to 20 percent on items from other countries—could be problematic for U.S. commerce and CRE. In a recent Brookings Institute paper, Senior Fellows Wendy Edelberg and Maurice Obstfield wrote: “Experience shows and economists agree that tariffs lead to persistently higher prices for customers. But the near-term damage will be even greater if massive disruptions in supply chains create chaos for businesses that rely on imports.”

On energy and the environment

Part of Trump’s plan to cut inflation is to lower energy costs by investing in and deregulating domestic production of oil, natural gas and coal. The U.S. still has a complicated relationship with fossil fuels, but this is definitely a change in course from the last administration, which made it its mission to tackle climate change through increased regulation, the $300 billion Inflation Reduction Act and the Bipartisan Infrastructure Law.

Trump wants to roll back a lot of environmental regulations and redirect funds from “Green New Deal” programs to much-needed infrastructure improvements. He has taken particular aim at programs incentivizing the transition to electric cars.

Carrying out these promises, however, will not be easy for Trump. Any major revisions to the IRA would require the support of Congress, and many Republican states have already benefited from the law’s programs in terms of investment and job creation. The White House can, however, slow down rulemaking and the distribution of funds. Meanwhile, the Supreme Court’s recent overturning of the Chevron doctrine, which allowed federal agencies to implement and enforce regulation based on their interpretation of federal law passed by Congress, could make the IRA and other programs and regulations more susceptible to litigation.

Currently, though, many of the building performance standards and mitigation strategies that are helping decarbonize real estate and make it more resilient are happening at the local and state level.

“Some of it is immune, somewhat protected from shifts at the federal level and somewhat agnostic in terms of who is the next president,” said Sairah Burki, managing director & head of regulatory affairs and sustainability at the Commercial Real Estate Finance Council, during a recent conversation for my sustainability podcast.

Well, here we go! With real estate hopefully on the verge of its next upcycle and a new president in the Oval Office, it will be an interesting four years.

The post Capital Ideas: What to Watch for in the Trump Presidency appeared first on Commercial Property Executive.

In the second-largest deal of its kind in the U.S. to date, Jay Paul Co. has obtained $220 million in C-PACE financing for 200 Park Ave., a 965,000-square-foot office building in San Jose, Calif. Nuveen Green Capital provided the financing in a JLL-brokered deal that brought NGC’s total originations volume to more than $3 billion.

The borrower used the funds to recapitalize the building’s sustainability and resiliency measures, as well as refinance existing debt. In October 2021, Jay Paul took out a $350 million construction loan originated by JPMorgan Chase, according to CommercialEdge information.

The 19-story building, the tallest in downtown San Jose, came online last year. The LEED Gold-certified property features floorplates averaging 65,000 square feet, 16 passenger elevators and about 2,900 car parking spaces.

READ ALSO: C-PACE Is Helping Borrowers ‘Optimize’ the Capital Stack

Common-area amenities also include a 20,500-square-foot fitness center, 24,300 square feet of outdoor terraces and EV charging stations. The building has multiple sustainable features, including solar PV arrays, high efficiency lighting and insulated high performance envelope.

The transit-oriented property is close to a host of dining and retail options. San Jose Mineta International Airport is some 3 miles northwest.

JLL Capital Market’s Debt Advisory team representing the borrower comprised Director Matt Cimino and Senior Managing Director Bruce Ganong.

C-PACE loans pick up pace

The deal is part of a larger ongoing trend, as more and more investors and developers turn to C-PACE financing. According to PACENation, this type of loans involving commercial projects totaled nearly $7.2 billion at the end of December 2023.

Earlier this fall, Carlyle committed $1 billion to North Bridge ESG LLC to facilitate the firm’s origination of C-PACE loans. The partnership, reportedly designed to allow North Bridge to meet changing market demands on a broader scale, was Carlyle’s largest commitment to C-PACE at the time.

The post Jay Paul Co. Lands $220M C-PACE Loan for Bay Area Property appeared first on Commercial Property Executive.

No property type has gone from niche to institutional as fast as data centers, and none has changed so quickly.

One of the biggest shifts over the past 10 years has been the switch from multi-tenant and multi-story co-location facilities in urban settings to single-customer, single-story facilities in the suburbs.

“Pretty much everything we’re doing is a single customer per building if not a single customer for the entire campus,” said IPI Partners Managing Director Matt Weisberg during a data center session at the ULI fall conference in Las Vegas. “The density and economies of scale and everything really necessitate going with that.”

READ ALSO: Getting in the Heads of Data Center Tenants

Therefore, capital requirements for the core and shell and the MEP demands have risen “dramatically,” Weisberg added. “(With) our latest generation of buildings we’re doing, we easily have facilities that are going over $1 billion per facility because of the extreme density right now. And so capitalizing that…is getting much more interesting than it was at the very beginning.”

Fortunately, the amount of capital converging on the sector has increased significantly. The current wave of investment was ignited during Covid-19 when data centers were responsible for keeping us online for entertainment, shopping, work and education, according to Kristina Metzger, vice chair of CBRE Data Center Capital Markets.

“And suddenly it clicked for so many investors and individuals that no matter what’s going on in the macro economy, it doesn’t change our need to access data centers and information,” said Metzger said.

During that period, there was a 46 percent increase in “MDAs” (main distribution centers), CBRE found. The advent of AI created another push for investors.

Diverse strategies and investment types

Investors come to data centers with a variety of strategies—from development to core, and data centers offer diversity because they are not always thought of as real estate, Metzger noted. They are also considered infrastructure, “TMT” (technology, infrastructure and telecommunications) and project finance.

Meanwhile, investors are willing to write bigger checks. Five years ago, Metzger explained, there was a real bifurcation between powered shell investments (you provide the core and shell and some infrastructure while the tenant builds out the interior and critical infrastructure, maintains the space and operates it) and turnkey investments (you completely build out the space, maintain it and most likely operate it). Investors tended to favor shell investments as they learned the industry. As the property type has “institutionalized” and investors have grown more comfortable, there is now great interest in both powered shells and the more capital-intensive turnkey projects.

READ ALSO: Capital Is Ready for the Next Upcycle

The cost difference between turnkey and shell is about three to one, Weisberg noted. But demand for this data center type tends to outweigh power shell because many tenants are growing rapidly and don’t have the capacity to build out their own projects.

Not without risks

While the growth potential for data centers seems limitless, there are risks, including electric power, capital expenditures, economies of scale, obsolescence and environmental impacts, according to ULI/PwC’s Emerging Trends in real estate report.

Rob Morris, CEO of Skybox Data Centers, would put personnel. “There’s so few people that know how to design, build and operate data centers in the U.S.,” he told the audience. “So we’re just gasping for air in terms of finding, training and building new professionals in the space that can help us to scale because that takes some time.”

The post ULI Special Report: The Dizzying Pace of Data Center Investment appeared first on Commercial Property Executive.

To have your commercial real estate transaction featured, submit details to Agota Felhazi at agota.felhazi@cpe-mhn.com.

Read the November 2024 issue of CPE.

The post Transactions: November 2024 appeared first on Commercial Property Executive.

The CMBS market, however, is a tale of contrasting fundamentals, as delinquencies and special servicing rates for existing loans (5.7 percent and 8.8 percent in September) continue to climb. But despite those rumblings, experts say CMBS remains a reliable avenue for borrowers looking to capitalize stable, cash-flow-positive commercial properties and portfolios, albeit at terms that may be less appealing than in the past. For some, it may even be the only way to get financing these days.

The current advantages

One of the most appealing elements of CMBS today is its ability to navigate market challenges such as interest rates, cap rates and treasury yields.

In response to nearly 16 months of rate hikes, for example, underwriters offered five-year fixed-rate terms instead of the traditional 10-year. “While it’s a higher rate that you may not love, you are only locking it in for five years, which allows you to refinance out after that period,” Trepp Chief Product Officer Lonnie Hendry told Commercial Property Executive.

Borrowers also find the structure more flexible and responsive to market conditions in ways that portfolio lenders aren’t, according to Kevin Swartz, executive director of Tri-State equity & finance at Avison Young. 

Borrowers with stabilized, cash-flow-positive benefit from the loans’ nonrecourse underwriting, all while getting higher proceeds than banks and other lenders would offer. For some, however, it may be the only option.

Underwriters, meanwhile, are feeling more comfortable about market conditions. “The leading factor of this origination boom is that the markets realize that the Federal Reserve was not going to raise rates in 2024 unless something outside the norm happened, and that stability increased the availability of capital,” said Hendry.

The changes in the 10-year treasury yield this year have been “dramatic,” coming down to 3.75 percent since the year’s high of 4.7 percent back in April, noted Walker & Dunlop Executive Vice President Susan Mello. But the context is important, given 2023’s sharp increases in bond yields.

Inside the bonds

The majority of deals securitized this year—nearly two-thirds—have been single-asset, single-borrower transactions. According to CREFC, $50.6 billion of SASB had been issued by Oct. 4, while conduit issuance was about $24 billion and CLO issuance was $7.6 billion.  

Generally, these are larger portfolio deals for well-capitalized, well-located assets that are out of other capital providers’ price ranges, according to James Millon, U.S. president of debt and structured finance at CBRE. 

In October, a joint venture of Tishman Speyer and Henry Crown & Co. obtained $3.5 billion in proceeds to refinance Rockefeller Center in the largest-ever CMBS transaction for a single office asset. The five-year loan carried a fixed interest rate of 6.23 percent.

Office SASBs dominated the market last year, but this year, large single-asset deals are being done across all property types. In September, LBA Logistics secured $578 million in CMBS financing for a 25-property portfolio of industrial buildings that spans 10 states.

“We have a lot of data centers, industrial portfolios and multifamily portfolios this year and very few last year,” Millon detailed. “You’ve seen retail, hospitality, net lease—just about every asset class coming through the system as it relates to SASB.”

Given where interest rates lie, it’s often not a matter of choice for many borrowers with large loan requirements. “In the past, they have been able to (go) through syndications, but right now CMBS has been absolutely vital to keeping that market open and keeping those loans,” Swartz said.

The higher proceeds of the SASB loan gives borrowers a bit more autonomy, particularly in financing strongly performing industrial properties. “All lenders want good industrial,” she said. “It then becomes a matter of: What does the borrower want in terms of proceeds and (bid-ask) spreads?”

In the conduit market, there are pockets of opportunity. Barry Gersten, managing director of Capital Markets at Northmarq, sees retail, particularly unanchored neighborhood shopping centers, as well as older Class B and C industrial properties with strong occupancy as good candidates for CMBS. “(They’re) potentially very well-performing properties with local tenants that may very well have been there for a long time,” Gersten said. “They’re just going to be less appealing to certain institutional and portfolio lenders.”

Highest highs and lowest lows

Meanwhile, the delinquency and special servicing rates for existing CMBS issues continue to trend slowly but surely upward.  

Office properties have far and away the highest rate, at 8 percent, retail sits at 6.2 percent and industrial is at the bottom at just of 0.5 percent of loans becoming delinquent. This year alone, more than $602 billion in commercial mortgage loans are coming due.

But existing bonds are still by and large performing well. “The sky-is-falling narrative is a little bit of hyperbole relative to what the actual data says,” Hendry added.

Still, Hendry sees the Fed’s interest rate cuts as a net negative for investors whose initial 3.5 to 5 percent interest rates taken out several years ago may now be in the 7 to 9 percent range. “It means that your value is going to take a haircut on the appraisal, it means that you are going to have to come to the table with more capital upfront to refinance, and you may have to do a cash-in refinance as opposed to a cash-out one,” he detailed.

Special servicing also appears to be mostly an interest rate problem. “That borrower is going to have the same rate as anyone who’s in the market today with the maturing loan; they may not be able to get the proceeds that they need,” Swartz explained.

But the performance of existing bonds is context-dependent—it’s market by market and building by building. “You could have two buildings on the same street with significantly different outcomes, depending on how they are managed, the debt load they have and the tenant mix they have,” said Hendry.

For instance, a Class A office property in Portland, Ore., may be a lot worse off than one in Miami, which has recovered roughly 90 percent of its foot traffic since 2019, according to data from Placer.ai.

Forward-looking prescriptions

With the Fed broadly anticipating that its benchmark rate will fall to 4.4 percent before the end of the year, both the benefits and risks of CMBS are likely to be magnified. Lower interest rates mean more stability, which could change the nature of the lending terms, according to Mello. “You are going to see more fixed-rate, longer-term debt being put on,” she said.

Millon also anticipates rate cuts spurring more floating-rate originations. “With the Fed cutting rates, the short end of the curve is coming down,” he said. “The funds rate will come down, SOFR will come down, and that will allow people to tap more floating-rate executions.”

Read the November 2024 issue of CPE.

The post CMBS Issues Power Through Despite Rising Delinquencies  appeared first on Commercial Property Executive.

There are a number of signals in the market that commercial real estate is embarking on a new cycle. At ULI’s fall meeting in Las Vegas, debt and equity capital sources expressed their readiness to help fuel it.  

Debt funds back up banks

During a panel on alternative debt sources, non-bank lenders said they are waiting for transactions to restart because they will definitely see a large portion of new acquisition financings.

“Our PGIM house view is that values have reached their trough, and so we see a really good opportunity for investors to come in and buy deals,” said Jaime Zadra, managing director of originations for PGIM.

PGIM’s lending activity includes a debt fund formed eight years ago that has grown to $6 billion GAV. “Traditionally, the life insurance space is low leverage,” said Zadra. “Today it has morphed into moderate lending as well, predominantly fixed-rate lending on what I would describe as core so class A, Class B assets in primary locations.”

The non-bank lending group—which also includes debt funds, REITs, the GSEs and CMBS—has been carrying a growing portion of the commercial real estate debt load since money-center banks started pulling back post-GFC. When interest rates began to rise in 2022 and regional banks ran into trouble, alternative lenders found a flood of opportunity.

READ ALSO: ULI/PwC Release 10 Emerging Trends for 2025

“Borrowers that never wanted to talk to us because they were busy with the banks were now talking to us and other debt funds,” said Steve Fried, principal & head of originations for Mesa West Capital, which has had a debt fund for 20 years. “It was another great opportunity for us to step in and really increase the type of borrower, the profile of the borrower, the quality of the real estate, the amount of cash flow.”

Lately, Mesa West is also partnering with banks on high-quality construction deals so borrowers can get the loan-to-value they need.

But most of the activity that has resulted from the banks’ absence has been refinancings. Acquisition activity picked up in the second quarter, but the rise in 10-year Treasury has pushed back the clarity investors and lenders are waiting for, Fried noted.

But non-bank lenders cannot fill all the gaps. There is a greater need for construction financing and large loans, since debt funds don’t typically do mega loans or co-invest on loans. Fortunately for borrowers, the CMBS market has been an active provider of higher-proceed loans this year. “That’s where the banks and investment banks really come into play,” Zadra said, “which is why, for the market to really function as a whole, (it) needs these groups to come back.”

Despite the availability of capital alternative capital, office will continue to be difficult to finance, the panelists noted.

Worry is over for equity

During a general session in which the ULI/PWC Emerging Trend report was unveiled, panelists amplified the gist of the report: a new upcycle is beginning, though there are still some bumps in the road, including a shortage of affordable housing and work-from-home’s continued drag on office and many CBDs.

There is a lot more capital being “interested and curious,” as values have fallen and return profiles have become more attractive, according to Sara Queen, head of equity strategies for MetLife Investment Management.

“We are again much more positive, but there is a little bit of caution about what’s ahead in the next few months,” Queen said.

Mike Byrne, AEW’s CIO & head of private equity and debt for North America, echoed that sentiment, noting the firm is feeling good about its portfolio and is beginning to look for new opportunities for growth and new investments. “What a difference a year makes,” he said.

On the fundraising side, he said, it is “like a whole new world” with a renewed interest in core investments—not just opportunistic and niche assets.

Months before the Fed cut interest rates in September, for-sale inventory was returning with a 20 to 30 percent price reduction from peak and bidders were coming off the sideline, noted Hessam Nadji, president & CEO of Marcus & Millichap. “The Fed kind of put an exclamation point on the turning of the cycle.”

Recent movement in the 10-year Treasury rate in recent weeks, however, has moved sentiment back down, Nadji said. “It is not like the hockey stick that we had coming out of pandemic,” he said.

Jodie McLean, CEO of Edens, noted that retail has “been in the penalty box” for some time and did not have the value contraction that other property types had. “We are very optimistic about retail,” Edens said. “You have to be optimistic to be in retail. We’ve had almost no new growth since the Great Financial Crisis.”

In terms of the report’s markets to watch, the panelists were more measured in their enthusiasm. Queen cautioned that every city is a neighborhood-by-neighborhood story. “You can’t just look at Dallas and (say) everything works in Dallas—that’s not the case,” she said. “You still have to do your research. You still have to understand your submarkets and what the dynamics are there.” (See our story on the report for a full list of cities).

Once again, the overwhelming majority of the markets were in the Sun Belt. Byrne remarked on the lack of diversity on the list.

The post ULI Special Report: Bring on the Upcycle appeared first on Commercial Property Executive.

Macerich has refinanced Queens Center, a 968,000-square-foot shopping mall in Elmhurst, N.Y. The owner obtained a new $525 million loan that features a fixed interest rate of 5.37 percent and interest-only payments.

This marks the lowest refinancing rate the company has achieved since 2019, Macerich President & CEO Jack Hsieh said in prepared remarks. In addition, the deal is more favorable than what Macerich anticipated in its spring 2024 five-year forecast.

The property’s previous debt included a $600 million CMBS loan originated by Wells Fargo Bank in 2013, having U.S. Bank as trustee, according to CommercialEdge data. The note was due to mature next January.

A top-performing shopping mall

Queens Center consistently has been one of the top-performing assets in Macerich’s portfolio, according to Hsieh, being one of the most productive malls in the nation during its 50-year history.

The mall came online in 1972 on a 10-acre site formerly occupied by an amusement park, a supermarket and a parking place. Between 2002 and 2004, the property underwent a major redevelopment project, completed in two phases, which also expanded its original 605,000-square-foot size.

READ ALSO: Inside the Retail Stores of the Future

The tenant roster includes a diverse mix of retailers such as JCPenney, Macy’s, Abercrombie Kids, Timberland, Chick-fil-A, The Cheesecake Factory, Apple, Adidas, Applebee’s, Burlington, Chipotle, Claire’s, Dunkin’ Donuts, Game Stop, Foot Locker, KFC, MAC Cosmetics, Sephora, Shake Shack and Starbucks, among many others.

Primark, H&M, Warby Parker, Gap and Kiko Milano will soon open their doors in the Macerich-owned section of Queens Center, filling all available retail space. Ashkenazy Acquisition Corp.—which owns the JCPenney building at the mall—also recently announced that a Burlington store will open on its first floor just in time for the holiday season.

Located at 90-15 Queens Blvd., the shopping mall is at the junction of Queens Boulevard, the Long Island Expressway and Woodhaven Boulevard, featuring high visibility and accessibility. As the only super-regional mall in Queens, the property serves approximately 415.000 individuals within a 2-mile radius, according to Macerich. Its total trade area amounts to more than 2.4 million people.

The post Macerich Lands $525M for Queens Mall appeared first on Commercial Property Executive.

Glenstar, a national commercial real estate owner, developer and operator which has had ownership stakes in the 14.7-acre property dating back to 2006, did not disclose the name of its new equity partner.

However, Crain’s Chicago Business reported earlier this month a venture led by Patrick Halloran of Wayzata, Minn., was under contract to buy Presidents Plaza in a joint venture with Glenstar for more than $60 million. Halloran is an executive with private equity firm Wayzata Investment Partners. Dan Deuter, Tom Sitz and Cody Hundertmark of Cushman & Wakefield represented the seller in the transaction.

The sale is significantly less than the $147 million price tag from 2018, when Glenstar and TPG Angelo Gordon—then known as Angelo Gordon—acquired the office campus, according to CommercialEdge data. In July 2021, the owners refinanced the asset with a 10-year, $147.5 million loan provided by Bank of America.

READ ALSO: Chicago Office Buildings Trade for Less, Development Slows

Located at 8600-8700 W. Bryn Mawr Ave. in the O’Hare submarket, the buildings are LEED Gold certified and were completed in 1979 and 1982. The campus is at the four-way intersection of Cumberland Avenue and Interstate 90 and served by the CTA Blue line, which allows tenants to recruit employees from both the Chicago suburbs and city. Numerous dining, entertainment and retail venues are nearby.

Glenstar has served as the property and asset manager of the complex since 2006 and its property management team will continue serving tenants on-site and through Glenstar Connect, an app-based platform to improve tenant experiences. Crain’s reported the complex was 63 percent leased at the time of sale, down from 92 percent in 2018.

Upgrades planned

Glenstar and TPG Angelo Gordon invested $34 million to renovate the buildings in recent years. Property upgrades included a three-story atrium lobby, three-level health club, fully renovated lounge, café with full seating and 6,300-square-foot conference center.

The latest infusion of capital will enable Glenstar and the new equity partner to make about $16 million in additional capital improvements to common areas, add a golf simulator and build spec suites to make it easier and cheaper for new tenants to move in. The spec suites will feature open ceilings, collaborative working spaces and conference rooms.

Michael Klein, Glenstar co-founder & managing principal, said in prepared remarks the availability of fresh capital will allow the tenant improvement projects to move forward quickly because they will be insulated from interest-rate pressures and cash constraints. Klein noted companies want to be in top-tier buildings with modern, creative work environments that help with attracting top-level talent.

The post Glenstar JV Recaps Chicago Office Complex in $62M Deal appeared first on Commercial Property Executive.

Known as Core45, the project was delivered this summer, adding to the growth of the high-demand market. Benefit Street Partners provided the refinancing, which took out the property’s construction loan at more favorable terms.

The Class A property comprises two industrial, manufacturing and distribution buildings and is located along the heavily traversed I-45 corridor within the coveted South Dallas submarket.

Located at 1401 and 1501 E. Pleasant Run Road, the facilities measure 616,449 and more than 1 million square feet, respectively. The buildings feature optimal truck courts, extensive auto and trailer parking (900 auto stalls), 40-foot clear heights, approximately 4,000 square feet of speculative office space, ESFR sprinklers and cross-dock loading. They are designed to accommodate a variety of users, from multi-tenant arrangements to full-building occupants.

The property is 18 percent preleased to Owens Corning, an Ohio-based roofing, insulation and composite materials provider.

READ ALSO: E-Commerce Growth Revives Industrial Market

Rob Rubano, Brian Share, Michael Zelin, Max Schafer, Billy Coyle and Nikola Kretschmann led the Cushman & Wakefield Equity, Debt, and Structured Finance team. Additionally, the firm’s Industrial Advisory Group, led by Jim Carpenter, Jud Clements, Robby Rieke and Trevor Berry, provided local market advisory.

Population growth, job market boosts Dallas

Doug Ressler, business intelligence manager for CommercialEdge at Yardi, told Commercial Property Executive that Dallas-Fort Worth benefits from a robust economy, a growing job market and significant population growth.

“There is a strong demand for industrial space driven by e-commerce, global trade and the need for backup inventory,” he said.

The market has seen 55 consecutive quarters of positive net absorption, indicating consistent demand. Construction is ongoing at a high level, with millions of square feet in the pipeline. However, Ressler said vacancy rates are challenging despite high demand, which can impact rental rates and property values.

“There has been a slowdown in the development of large industrial spaces, which could limit options for larger tenants,” Ressler added. “Investors are becoming more cautious, which could affect financing and investment in new projects.”

According to Greg Langston, principal & managing director for Avison Young’s Dallas office, DFW’s industrial market has been one of the strongest ever because of its position as a national logistics hub.

“Our region’s central U.S. location and multimodal accessibility for road, rail and air are key to this reputation, as is our affordability compared to other distribution markets where average rents can easily exceed $12 to $16 per square foot,” Langston said.

As market vacancy is now elevated, Langston expects a slowdown in development activity through 2025.

DFW’s positive absorption trend continues

Josh Wheeler, senior vice president of development & acquisitions at Stonemont Financial Group, told CPE the DFW metroplex remains a leading hub for industrial growth, even as the market stabilizes following pandemic-driven expansion.

“Despite slowed construction and rising vacancy rates, DFW’s positive absorption trend continues, supported largely by population growth and increased manufacturing in northern Mexico and Texas,” Wheeler said. “As the market cools, we’re seeing a return to pre-COVID norms, positioning DFW to maintain its role as an industrial powerhouse.”

According to Justin Laswell, partner, CPA, for Moss Adams in Dallas, there is a robust demand in the Dallas industrial sector, driven by the region’s strong logistics network and consistent population growth.

“This market resilience is supported by high occupancy rates and steady rental increases as businesses prioritize proximity to major transportation hubs and consumers,” Laswell said.

He explained that despite economic uncertainties, Dallas’s industrial sector remains a top performer nationally, with developers racing to keep up with tenant demand across warehousing, manufacturing, and distribution spaces.

Foundry makes office-to-industrial conversions

For Foundry, DFW has been the breeding ground for projects, such as Horizon Landing, its first office-to-industrial conversion.

Jim Traynor, managing director of development & investments for Foundry Commercial in Dallas, said when Foundry looked at the DFW market from a big-picture perspective, “it was clear that demand for hyper-infill industrial projects remained incredibly strong.”

He observed however that the challenge is that very little—if any—industrial land is available in these prime pockets. At the same time, the rapid rise in interest rates hit suburban office buildings particularly hard, with liquidity drying up and property values taking a significant hit.

“This presented a unique opportunity, so we began conversations with office property owners about converting their spaces into industrial developments to meet market demand,” he said.

According to Traynor, not every city is equally suited for office-to-industrial conversions, as industrial developments have their own challenges and complexities. Within the Dallas – Fort Worth metroplex however, municipalities seem to be generally open to these types of deals and willing to collaborate.

Many cities with vacant office buildings embrace industrial conversions to attract jobs and boost tax revenues, Traynor explained. “While industrial use may not have been their first choice, they see office demand isn’t returning and are supportive. So far, we’ve only targeted areas where industrial development is already welcomed,” he added.

Certain Dallas submarkets have an oversupply of office space, making it crucial and exciting to repurpose these properties, according to Traynor. And since both the city and its residents have a real need for this space, he anticipates more projects like this. “It’s just a matter of identifying vacant office stock in the right areas where these conversions can succeed,” Traynor said.

Foundry Commercial announced last week that it is developing its seventh office-to-industrial conversion project and its second in the Dallas market.

The company will replace a 250,000-square-foot, 1980s-era office building in Plano, Texas, with two industrial assets totaling more than 300,000 square feet. Demolition work will begin this month, and the developer expects to complete both new buildings by the first quarter of 2026.

The post Grandview Partners, TRG Land $100M for Dallas Industrial Park   appeared first on Commercial Property Executive.

Noting that the commercial real estate industry has reached “an inflection point” and things are finally looking up, the Urban Land Institute and PwC have released their Emerging Trends in Real Estate 2025 forecast for the U.S. and Canada. As usual, the annual report also identifies the top cities to watch.

The emerging trends and rising metros are based on 450 interviews and 1,600 survey results from a broad swath of commercial real estate professionals, who, the report cautioned, are still not “wildly optimistic.”

“The commercial real estate market is stabilizing as we start to emerge from the volatility of the pandemic, and higher interest rates,” Andrew Alperstein, partner in PwC’s Financial Markets & Real Estate Group, told Commercial Property Executive in written comments. “And while a full recovery will be gradual, it doesn’t come without hurdles ahead.”

Interest rates and cost of capital are still the top economic concern for interviewees and respondents, the bulk of which are in the business of buying and selling real estate. Private property owners or commercial/multifamily developers represent 35.2 percent of the executives ULI and PwC drew their conclusions from, and real estate advisory, asset management or service companies comprise 20.1 percent. The next two greatest economic concerns were capital availability and job and income growth.

READ ALSO: What Happened to the Capital Markets

But capital costs fell slightly in importance over last year (down 40 basis points to 4.30 on a scale of 1 to 5), reflecting the Fed’s August announcement that it was ready to start dropping rates. The actual 50-basis-point cut came after most of the survey participants responded.

But Alpert noted that last year 45 percent of those surveyed expected profits to be just “fair,” and 13 percent feared they would be “poor.” This year, the number of respondents who expect their firm’s profits to be “good” or “excellent” rose by 20 percent.

The three biggest social/political concerns for the respondents and interviewees for 2025 are housing followed by political extremism and immigration policy—same as last year, although immigration beat out political extremism last year.

The top concerns for developers in 2025 are construction costs, labor availability and operating costs.

Top Emerging Trends for 2025

1. Be Careful What You Wish For

The Fed has begun making long-awaited interest rate cuts and respondents expect increased economic certainty to boost transaction volume and even some development. But CRE executives are also wary of how slower economic and job growth (i.e., the Fed’s soft landing) could impact demand, NOI and price appreciation. In sum, there is “a mixed outlook” for commercial real estate.

2. New Cycle Begins

“Healing” in the capital markets is beginning to enable the price discovery that has eluded the market since the Fed began hiking interest rates in March of 2022. There is ample capital—at a slightly more reasonable price—for acquisitions and refinancing. As investors reduce their “exposure,” they will be more willing to take on “new exposure.”  On the equity side, there is a growing consensus that prices have troughed.

3. Building Boom, Tenant Boon

Demand for most property types is stronger than pre-pandemic levels, respondents reported. In office, however, there is a “painful reckoning” of a seemingly more permanent nature. Oversupply in a number of property types has created a true tenant’s market. However, the report finds a widening bifurcation between newly constructed prime office and industrial spaces and older spaces with fewer amenities. Tenants’ advantage will be lessened once the development pipeline slows down. In multifamily, oversupply has led to falling rents, particularly in the Sun Belt. But demand is expected to absorb supply.

4. Now Where?

The report finds that Sun Belt migration has moderated as the region’s cost advantage is evaporating in many locations and relocation costs (moving expenses and higher interest rates) increase. Climate change will be a bigger factor in moves in coming years, and could also contribute to a slowing of Sun Belt migration since many of the catastrophic weather events occur in that region.

5. Many Solutions, No Answers

While most new housing production tends to be market-rate or luxury due to high construction costs, there is a sense that housing of any type is welcome and that lower-income residents will be able to occupy units vacated by the residents who move to newer buildings in a process called “filtering.” A federal solution to the housing crisis is needed, and both presidential candidates are promising to address the problem during their prospective administrations.

With CRE executives getting ready for the next upcycle, the second set of trends is property-focused. Respondents rated the core property types on a scale of 1 to 5, with industrial ranking highest and office ranking lowest for investment. Single-family housing ranked highest and office ranked lowest for development.

Key trends for property types  

1. Industrial Smart Growth

Industrial tenants will be carefully curating their logistics portfolios, focusing on supply chain efficiency, network diversification, technology and sustainability. Savvy owners and developers will be tailoring their product to cater to tenants’ more refined appetite for space. Nearshoring and onshoring will drive manufacturing growth.

2. Data Centers: Navigating Power Constraints and Skyrocketing Demand

The data center business is exploding, and CRE investors are clamoring to satisfy demand. “Development is highly profitable compared to other forms of real estate and long leases with credit tenants support high loan-to-value ratios,” the report authors wrote. Tenants’ intense power requirements currently make development challenging, but that is preventing the market from getting oversupplied and keeping rents high, the report found.

3. Senior Housing: Building New Muscle

As capital for new senior housing becomes available, the report recommends rethinking the traditional senior living models to offer more alternatives for aging baby boomers—now 20 percent of the population and growing—and for “middle-market” seniors in particular.

4. Retail Resilience: Weathering the Storm

Demand for physical retail has rebounded while there has been very little construction over the past few years, the report notes. As a result, retail vacancies are down, and rents are up. A number of retail bankruptcies and closures in 2024 seemed to threaten retail’s winning streak, but landlords have been able to backfill the space. Restaurants, experiential retail and “quasi-medical” tenants are all expanding. Drug store closures are a concern, but they also present a redevelopment opportunity.

5. Innovating the Suburbs: Is Life Sciences’ Growth
Sustainable

Life science continues to grow, though maybe not as fast as its real estate supply. According to the report, the life science inventory expanded by 20 percent since the start of COVID-19, but absorption has not kept pace in many markets. There are indications a new growth spurt for biotech is getting underway, igniting hope that new inventories will soon be absorbed.

Once again, the top 10 emerging markets for 2025 are mostly in the Sun Belt region. This year, they include Dallas/Ft. Worth; Miami; Houston; Tampa-St. Petersburg, Fla.; Nashville, Tenn.; Manhattan; Detroit; Columbus, Ohio; Charleston, S.C.; and New Orleans.

In 2024, the top emerging markets were: Nashville; Phoenix; Dallas/Fort Worth; Atlanta; Austin, Texas; San Diego; Boston; San Antonio; Raleigh/Durham, N.C.; Seattle; Houston; Denver and Charlotte, N.C.

The post ULI, PwC Release 10 Emerging Trends for 2025 appeared first on Commercial Property Executive.

The portfolio consists of the following properties:

•  Mokena Logistics I and II, 268,226 square feet across two buildings at 8965 and 8905 W. 187th St. in Mokena in the Joliet submarket;

•  Rockwell Logistics Center, a 174,262-square-foot building at 2545 W. 24th St. in Chicago in the City South submarket;

•  Asbury Drive, a 157,500-square-foot building at 850 Asbury Drive in Buffalo Grove in the Lake County submarket; and

•  Halsted Pershing Business Center, a 104,008-square-foot building at 815 W. Pershing Ave. in the Stockyards submarket.

Stream had purchased four of the five buildings (all but the last one on the list above) from Westcore Properties for $83.5 million this past July.

These Class A distribution and warehouse facilities total 703,996 square feet, and feature suites ranging from 25,100 to 174,262 square feet with an average clear height of 32 feet. The portfolio serves 10 diverse tenants, representing the IT, electronics manufacturing, health-care and construction industries; food distribution; and government agencies.

READ ALSO: E-Commerce Growth Revives Industrial Market

The buildings are in infill distribution sites or near key transportation networks within the Chicagoland MSA, according to JLL, and are situated in densely populated areas with extensive infrastructure and strong labor markets, enabling local and regional customer access.

The JLL Debt Advisory team was led by Senior Managing Director Colby Mueck, Senior Director Brian Walsh and Associate Tara Hagerty.

Portfolios are popular

Industrial portfolio transactions seem to be the “in thing” in Chicagoland this year.

In July, Sperry Equities acquired the two-building, 640,000-square-foot Northwest Indiana Logistics Portfolio, in Portage, Ind., from Investcorp for an undisclosed amount. JLL both brokered the deal on behalf of the seller and arranged a five-year, fixed-rate acquisition loan through New York Life Real Estate Investors.

In September, Venture One Real Estate purchased a five-building, 421,638-square-foot industrial portfolio through its VK Industrial VII acquisition fund. Zilber Property Group was the seller of the five buildings, in Mokena, Elgin, Willowbrook and Northbrook, Ill.

Just last week, Commercial Property Executive reported that  metro Chicago led the Midwest in industrial sales, with a combined $1.9 billion over the first eight months of this year. That figure represents 165 properties totaling 20.8 million square feet, according to CommercialEdge data.

The post Stream Realty Secures $63M for Chicago-Area Portfolio appeared first on Commercial Property Executive.

The build-outs are at the company’s campuses in various core markets, including Ashburn, Va., Columbus, Ohio, and Montréal. The new developments will be on recently acquired sites in Columbus, Des Moines, Iowa, and Vancouver, B.C.

The capital includes a $1 billion revolving multi-asset development debt facility and an additional $500 million in equity from both new and existing investors. The debt facility will provide Cologix with the flexibility to add new sites over time as needed. Both debt and equity raises were the result of strong investor interest, and were both oversubscribed, according to Cologix.

READ ALSO: How AI Is Pushing Cloud Data Center Providers to Scale Up

This new financing follows the company’s $1.13 billion and Can$1.07 billion in asset-backed securitizations beginning in 2021, along with $3 billion in equity recapitalization in 2022. Those infusions have fueled the company’s growth in recent years.

Cologix is in active growth mode. In June, the company acquired two data centers in Iowa from Connect Des Moines, marking its entry into the Des Moines market. Cologix also inked a deal to buy additional land in that market that will enable it to build more capacity to meet growing demand.

U.S. data center market seeing monster growth

Overall, the data center sector continues to expand as growth in AI and other power-intensive computing ups demand. Data center supply in primary U.S. markets increased by 10 percent, or 515 MW, during the first half of 2024 and by 24 percent, or 1,100.5 MW, year-over-year, according to a CBRE report. The vacancy rate in primary markets fell to a record-low 2.8 percent at the end of June, down from 3.3 percent a year earlier.

A record 3,871.8 MW of capacity was under construction during H1 2024, up by 69 percent from a year earlier, CBRE noted. But such growth has a downside, as available power isn’t always there to support the development, meaning delays for construction completions.

Nearly 80 percent, or 3,056.4 MW, of the underway data centers were preleased. CBRE reported. Cloud providers continued to lease most capacity, but AI providers also accounted for a significant amount of demand. 

Northern Virginia remained by far the largest market, followed by Dallas-Fort Worth, Chicago, Phoenix and Silicon Valley. Power availability is the top consideration in site selection.

The post Cologix Raises $1.5B for Data Center Development appeared first on Commercial Property Executive.

The two-year loan from Goldman Sachs has three one-year extension options. JLL Capital Markets arranged the financing.

The refinanced property comprises office and retail spaces, which total 505,994 square feet and are 98 percent leased.

The 21-story Class A office tower was completed in 2018 and features nine levels of garage parking. Tenants have access to an amenity deck with entertainment space, a tenant lounge, a fully equipped conference center and a fitness facility with locker rooms.

Salesforce, Invesco and the Dallas offices of law firm Akin Gump and accounting/advisory firm Weaver are among the property’s tenants. The project’s retail space is anchored by a Tom Thumb grocery store and the only Dallas locations for Fox Restaurant Concepts’ The Henry and North Italia.

READ ALSO: Coworking Spaces Surge Amid Changing Demand

The location on North Field Street in Uptown offers easy access to Victory Park, the Harwood District and downtown Dallas. It also boasts connectivity via Woodall Rogers Freeway, the McKinney Avenue Trolley and the DART Rail station.

The JLL Debt Advisory team was led by Senior Managing Director Jim Curtin, Managing Director Greg Napper and Vice President Rex Cruz.

Settling down

The Dallas–Fort Worth office market continues to slowly stabilize, although leasing still lags its historic pace, “suggesting that it will take considerable time for tighter market fundamentals to return,” according to a third-quarter report from Avison Young.

One of the challenges for landlords is that most recent leases have been for smaller tenants or for those that are upgrading—but also downsizing—their spaces to adjust for hybrid work arrangements, Avison Young reports. 

The Uptown submarket has seen a modest delivery total of 364,000 square feet year-to-date, though about 2.1 million square feet are currently underway. The submarket has a total availability of 26.7 percent, which is up slightly, year-over-year.

A couple of sizable recent office deals seem to span the range of ups and downs in the Dallas market.

Just last month, a joint venture of Enverra Real Estate Partners and Gulf Coast Western acquired Parkway Office Center North and South, a two-building, 230,000-square-foot distressed office campus in Dallas. The seller was Principal Financial, the asset’s former lender, which had foreclosed on the previous borrower, ORBIS Real Estate Fund I, an investment vehicle managed by APEX Pacific Partners Advisors.

Oil and gas company Gulf Coast Western is the largest tenant at the campus and has been there for more than a decade.

In contrast, back in April, a joint venture between Pacific Elm Properties and KDC secured a $290 million construction loan for Parkside Uptown, a 30-story, 500,000-square-foot office project in Dallas. Goldman Sachs Alternatives provided the four-year, floating-rate note.

The post RED Development JV Secures $227M Refi for Dallas Tower appeared first on Commercial Property Executive.

An Ares Management Real Estate fund has obtained a $475 million CMBS loan backed by a 4.8 million-square-foot, 25-building industrial portfolio spanning 12 states. Cushman & Wakefield arranged the floating-rate, single-borrower financing provided by a syndicate led by J.P. Morgan, with Morgan Stanley and Natixis Corporate & Investment Banking as joint bookrunners.

Ares Industrial Management is the portfolio manager. The buildings, located in 16 key growth markets, were 97 percent leased at the time of closing.

READ ALSO: What Happened to the Capital Markets?

The portfolio includes a mix of Class A and B bulk warehouses and light industrial properties. The most notable assets are two facilities in the San Francisco Bay Area totaling 518,300 square feet, three buildings in Southern California spanning 344,700 square feet and five properties in Houston totaling 693,900 square feet.

A 722,500-square-foot facility in Reno and a 797,600-square-foot Atlanta property are also part of the mix. The rest of the warehouses are spread out across several major markets including Salt Lake City, Phoenix, Denver, Orlando, Fla., Jersey City, N.J., Portland, Ore., Indianapolis, Chicago, and Las Vegas.

The facilities have an average age of 2005, 30-foot clear heights and an average of 5 percent of office space.

The Cushman & Wakefield Equity, Debt and Structured Finance team comprised Vice Chairs Rob Rubano and Gideon Gil, Executive Managing Director Brian Share and Managing Director Joe Lieske, along with Vice President Ernesto Sanchez and Associate Lars Weston.

Ares’ other financing deals

Ares Management Real Estate had approximately $51.5 billion of assets under management as of June 30, 2024. In July, a joint venture between one of its funds and NorthPoint Development obtained $244 million in refinancing for a 6.4 million-square-foot portfolio in Logistics Park Kansas City in Edgerton, Kan. The 10 properties came online between 2014 and 2017.

And, in February, an Ares Management real estate fund received a $150 million loan for a 1.8 million-square-foot, six-property industrial portfolio. The Class A properties were 40.9 percent leased at the time of closing, with letters of intent out on most of the vacant space.

The post Ares Gets $475M for 4.8 MSF Portfolio appeared first on Commercial Property Executive.

Overall, the index rose to 56 out of 100, up since the spring survey. A reading over 50 indicates favorable conditions. It’s the second consecutive index to score above 50, with the April survey reflecting an index of 52 after two years of ratings below 50.

“Improving expectations related to debt and equity markets are likely driven by a consensus that interest rates will decline,” according to the NAIOP report.

A total of 496 respondents from 374 distinct companies participated. The survey respondents are NAIOP members in the U.S. who are developers, building owners, building managers, brokers, analysts, consultants, lenders and investors in commercial real estate. Out of the total number of participants, eight took the survey after the Federal Reserve announced a 50-basis-point rate cut on Sept. 18.

Among the additional key findings:

• Respondents are optimistic about all index components except for construction labor costs.
• Respondents anticipate increased demand and rising valuations in commercial real estate.
• Much of the improvement is likely driven by expectations of declining interest rates.
• Increased optimism about market conditions is prompting developers and building owners to anticipate growth in their deal volume over the coming year.
• Most respondents expect to be most active in industrial or multifamily real estate during the next 12 months.

More reasons for optimism

Industry observers, including those who did not participate in NAIOP’s survey, found those and other reasons for optimism.

Lisa Nickerson, founder & CEO of Nickerson Cos., told Commercial Property Executive that she sees “bullish investors buying at significant discounts to pre-COVID sales prices.” This puts the industry in ‘pre-season training’ for a true return-to-office ‘game time.’ “But, because you bought it cheap, will they come?”

Nickerson said tenant needs have changed, and most successful companies have adapted to employee desires and behavior changes.

“Even well-located, Class A assets can’t just dust off their pre-Covid playbook,” she said. “Tenants are driven by employee sentiment, and employees care about who you are and what you stand for more than ever.”

READ ALSO: Why Worry About Rates? We’ve Been Here Before

According to Nickerson, employees consider sustainability, technology, health and wellness, and convenience important parts of the overall work experience. “Only owners and investors with a critical eye for asset positioning, amenity offerings and thoughtful leasing strategies will win the day,” she added.

PEBB confident about the next few months

Bret Fischer, director of asset management at PEBB Enterprises, told CPE that the commercial real estate industry has experienced considerable volatility and uncertainty since the Federal Reserve started increasing interest rates in March 2022.

“As inflation has lowered, rates have steadied, employment remains strong and the U.S. economy continues to expand, PEBB is confident in the commercial real estate development conditions over the next few months,” Fischer said.

He added that while the days of 0.1 percent SOFR are gone, rates seem to have settled into a more realistic and predictable range.

“Capital Markets will still be a challenge based on product type, but the past few years have proven that tenants want to occupy Class A projects. Well-located real estate projects with diligent capital sources will continue to be successful,” Fischer anticipates.

Many loans soon to mature

Pierre Debbas, Esq., co-founder of Romer Debbas LLP, said billions of dollars of capital are on the sidelines, waiting to be deployed once rates come down and the economics make sense to acquire properties.

“We have experienced a historic decline in transaction activity, and the rebound in 2025 should be significant, assuming the Fed is actually committed to substantial rate cuts,” Debbas said.

“There is a record level of loan maturities coming up next year, and this will force many owners to sell their assets if they struggle to refinance their properties. This will add supply to the market and provide opportunities for investors waiting patiently.”

Retail sales growth needed for a ‘soft landing’

Recent growth in retail sales provides a rational basis for an overall soft landing, according to Noel Liston, managing broker, Core Industrial Realty – Chicago. He told CPE that unemployment has ticked up lately but remains within a healthy and supportive range.

“Combining these factors with the FOMC’s recent half-point September rate cut, commercial real estate, particularly industrial real estate, seems positioned to perform well in the new post-pandemic normal,” Liston said.

According to Liston, an employed and healthy consumer is key to sustaining strong occupancy levels in commercial real estate, given the overweight domestic nature of the U.S. economy. “Productivity gains relative to other competing international economies and the impact of technology are also critical factors shaping occupancy levels for commercial real estate,” he said.

Liston added that further rate cuts by the FOMC could translate into lower capital costs for consumers.

While the residential real estate market has been stuck in neutral for the past few years, a lowering of interest rates could unleash pent-up demand in the sector, and that would provide ancillary benefits to the commercial markets through increased purchasing of durable goods, increased construction activity (both new starts and remodeling) and increased employment in the sector, Liston predicts.

“While there remains uncertainty about the course of future capital costs as well as geopolitical issues and a U.S. election around the corner, many in commercial real estate can see a growth path based on the resiliency demonstrated by the U.S. consumer,” Liston commented.

Fed delivered a ‘jolt’ of positivity

“As we all expected, the commercial real estate market would respond positively to any interest rate cut by the Fed,” said Michael Romer, Esq., co-managing partner at Romer Debbas. “Although smaller than most feel is needed, the recent reduction provided a jolt of positivity in the market.”

READ ALSO: What the 2024 Presidential Election Means for CRE

According to Romer, the commercial real estate market needs rate stability, lower inflation and commercial banks to lend again. Seeds of positivity have been planted, and the commercial real estate world is hopeful of real growth in 2025, he predicts.

“However, the election remains the elephant in the room. The two candidates have significantly different economic policies. The path forward will become much clearer in just a few weeks,” Romer said.

Transaction volume is starting to increase

According to Kip Sowden, CEO of RREAF Holdings, investor confidence remains relatively cautious despite the Fed’s recent action, as much of the rate drop was already priced in several months prior.

“Transaction volume is starting to increase, though this momentum remains moderate as broader economic uncertainties persist,” Sowden said. The slight increase in investor activity can be attributed to more favorable borrowing conditions and the expectation of stabilized economic growth.

“A rate reduction typically leads to lower capital costs, which enhances the attractiveness of CRE investments. Lower interest rates contribute to cap rate compression and higher asset valuations, spurring investment activity in high-demand sectors such as multifamily and industrial,” he observed.

Capital markets have proven resilient

“Life companies continue to meet or exceed their origination goals while growing allocations with little to no delinquencies in their portfolios,” said J.D. Blashaw, vice president at MetroGroup Realty Finance.

According to Blashaw, CMBS is facing challenges due to exposure to the office market. “Still, originations through the third quarter totaled $74 billion, more than $40 billion issued in 2023, as spreads have tightened for most asset classes, signaling strong demand from bond buyers,” he observed.

Blashaw added that banks and thrifts are historically the largest originators and holders of commercial real estate loans.

“They should benefit from the recent and anticipated interest rate cuts, reducing their cost of funds and allowing for more competitive pricing,” he said. “Development should be spurred on with short-term rates declining with most construction loans tied to SOFR, which moves mostly in lockstep with the Fed funds rate.

As capital markets have proven resilient in 2024 to the headwinds and uncertainties in the economy, Blashaw anticipates continued positive momentum heading into 2025.

Skilled labor remains a concern

Brian Gallagher, vice president, Corporate Development, Graycor, told CPE that higher interest rates remain a significant headwind.

“Developers will likely continue to face scrutiny from investors, which could slow some projects,” he said. “While we’ve seen some stabilization in construction costs, the availability of skilled labor remains a concern, particularly in specialized trades. Overall, commercial real estate fundamentals remain strong in some sectors where demand continues to outpace supply.”

Optimism increasing in ‘Wall Street South’

Jake Geleerd, co-founder & CEO of Tortoise Properties told CPE that sentiment for 2025 is more optimistic than earlier this year.

“We’re still seeing positive trends in job growth, construction costs and new development starts,” Geleerd said. “In South Florida, especially Palm Beach County, we anticipate continued double-digit job growth, driven by ongoing migration from the Northeast, solidifying us as ‘Wall Street South.’”

“Additionally, the substantial wealth transfer to South Florida, particularly Palm Beach County, is fueling the rise of ‘Silicon Valley South,’ attracting tech companies and a high-tech workforce.” He added that a key focus for 2025 will be the return to the office.

“Major employers like Amazon, JP Morgan Chase and Goldman Sachs require employees to return,” Geleerd mentioned. “Senior partners in law firms and private equity firms are urging junior colleagues back to stay involved in deals or risk losing opportunities, signaling a shift toward re-establishing in-office collaboration.”

Geleerd observed that favorable municipal financing and tax incentives, especially for affordable housing, support much of the new development activity.

“I expect this trend to continue into 2025,” he said. “However, construction costs may flatten or decrease slightly as development slows from the post-pandemic boom. While growth continues, it’s slower than in 2022-2023, leading to more competitive bidding and lower costs.”

Uptick in return-to-office trend

Brian Haines, chief strategy officer for FM:Systems, said that many organizations are successfully implementing return-to-office policies, and interest rates are starting to ease, so it’s no surprise that optimism is growing.

“We’re hearing the same from our client partners, both those who have returned to full-time office models and those with hybrid arrangements,” Haines said. “After years of pandemic-driven uncertainty, we’re finally approaching a new sense of normalcy. However, with commercial real estate being the second-largest expense for most employers, real estate decisions aren’t made on anecdotes or gut feelings alone.”

READ ALSO: Here’s a Surprising Shift in Remote Work’s Appeal

According to Haines, organizations using workplace management solutions to gather data over the past few years are better equipped to align their real estate strategies with how their people use—and plan to use—their spaces, as this positions them well for making more informed real estate choices, whether optimizing existing spaces or expanding their real estate footprint.

The post Will CRE Market Conditions Improve? appeared first on Commercial Property Executive.

As part of the transaction, the joint venture secured a five-year, $320 million loan facility. Lenders include Goldman Sachs and Blackstone, according to a report by The Real Deal.

The owners are touting the mixed-use building’s location, high ceilings, 100,000-square-foot-plus floorplates and vintage architectural elements as attractive to varied retail and office tenants.

The seven-floor building came online in 1896, according to CommercialEdge information. RXR acquired a 45 percent interest in the property for $225 million from The Chetrit Group in January 2012 and the remaining 55 percent in November 2012 for $255.6 million.

READ ALSO: Why the Office-to-Lab Conversion Trend Will Last

However, it was a $425.1 million refinance by Goldman Sachs in October 2019—just months before the World Health Organization officially declared the COVID-19 outbreak a pandemic—that put the building on a tricky course. Two prominent tenants, WeWork and Bed Bath & Beyond, went bankrupt, pushing the building to more than 50 percent in total vacancy.

Over the past two years, however, RXR nailed down more than 300,000 square feet of new and renewal leases to office tenants and induced long-time tenant 32BJ, an affiliate of the Service Employees International Union and the nation’s largest union of property service workers, to expand its lease by 21,000 square feet.

As a result, the building’s office component is fully occupied, and RXR reported that it’s in negotiations with multiple potential tenants for the remaining vacant retail space.

Leases vs. sales

Clearly, not all of 620 Ave. of the Americas’ neighbors are doing as well, because Manhattan’s Chelsea submarket currently has a total availability of 27.5 percent, according to a third-quarter report from Avison Young. That’s somewhat higher than the average for all of Midtown South, which is 21.2 percent, and higher still than the overall Manhattan average of 18.7 percent.

Transactions nonetheless seem to be ticking along. Three times so far this year, Chelsea properties have landed on Commercial Property Executive’s monthly tally of the top five NYC office building sales:

•  In January, it was Argentic Investment Management’s $21.5 million sale of 115 Seventh Ave., a 42,380-square-foot, 1924-vintage building, to Raymond Chan Architect PC.

•  In April, we reported the $31 million sale of 129 W. 29th St. by Samson Management to The Epoch Times, part of The Epoch Media Group. The 85,869-square-foot building was completed in 1911.

•  And in May, a private investor acquired the 7,410-square-foot 156 W. 29th St. for $6.3 million from a private seller, in a deal brokered by Cushman & Wakefield.

The post RXR Partners JV Secures $320M Recap for NYC Building appeared first on Commercial Property Executive.

In the largest CMBS loan deal for a single office asset to date, the joint venture of Tishman Speyer and Henry Crown & Co. has obtained $3.5 billion in refinancing for Rockefeller Center in Manhattan.

Bank of America and Wells Fargo served as co-lead managers on the five-year loan carrying a fixed interest rate of 6.23 percent.

Proceeds will repay the existing 20-year, $1.7 billion CMBS debt, along with mezzanine financing, scheduled to mature in May 2025. The note will also establish reserves for lease-related contractual obligations.

READ ALSO: Office Finance Freeze Begins Slow Thaw

Rockefeller Center came online almost a century ago and features 13 buildings totaling 7.3 million square feet. The joint venture became the sole owner of the 22-acre Midtown complex in April 2001, after purchasing the remaining 95 percent stake in the property for $1.85 billion, according to CommercialEdge.

The Class A campus comprises about 6 million square feet of office space, multiple retail destinations, event venues, dining options and tourist attractions. Recently, the ownership opened the 24,000-square-foot park atop Radio City Music Hall.

Rockefeller Center was 93 percent leased at the time of closing. The tenant roster includes Deloitte, Simon & Schuster, JP Morgan Chase and Lazard. Additionally, Christie’s signed a 25-year renewal for 400,000 square feet at 20 Rockefeller Plaza this August.

Over the years, the campus went through multiple capital improvements. Tishman Speyer renovated the Top of The Rock observation deck to provide new attractions and opened Skylift, a revolving glass-enclosed platform that elevates visitors nearly 900 feet in the air.

Inspired by the campus’ original plans, the ownership also restored the Channel Gardens and Rink areas as entrance points for tourists. In early 2020, the company obtained approval from the Landmarks Preservation Commission to open the underground passageways encircling the iconic Rink.

Manhattan’s largest office financing deals this year

Despite the economic constraints experienced during the last couple of years, significant office loans and refinancing transactions continued to close in Manhattan. In addition to strong fundamentals, the market recently saw an increase in year-over-year office attendance.

In June, Vornado Realty Trust obtained a $400 million refinancing loan for 640 Fifth Ave. The note has a fixed rate of 7.47 percent and is set to mature in July 2029.

And, two months prior, L&L Holdings Co. landed $911 million to refinance the 47-story 425 Park Ave. Sumitomo Mitsui Trust Bank originated the five-year note for the 670,000-square-foot tower.

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A joint venture of Mixson Properties, Frampton Strategy Group and Singerman Real Estate has secured $34 million in construction financing for the development of Whitepine Logistics Center, a 498,000-square-foot industrial campus in Richmond, Va.

JLL worked on behalf of the joint venture to secure the note through Texas Capital and will also handle leasing efforts. Other project partners include architecture firm McMillian Pazdan Smith. Construction is set to begin this November, with completion scheduled for early 2026.

The three-building development will feature front-park, rear-load configurations with 32-foot clear heights, designed to accommodate multiple tenants. The 210,600-square-foot Building 1 will have 40 dock-high loading doors with levelers, two drive-in doors, 60 trailer stalls and 185-foot truck courts.

READ ALSO: Top 5 Markets for Industrial Deliveries

Building 2 will measure about 90,720 square feet and feature 18 dock loading doors and 135-foot truck courts, while Building 3 will span 196,560 square feet and feature 37 dock doors and 142 car parking spaces.

Located at 8800 Whitepine Road, the campus will be close to Chesterfield County Airport. Downtown Richmond is some 17 miles away, while the Richmond International Airport is within 18 miles.

JLL Debt Advisory Managing Director Taylor Allison, Senior Director Reina Abboud and Analyst Jovi Rodriguez led the team brokering the deal. JLL’s local Richmond team comprising Managing Directors Muscoe Garnett and Jake Servinsky, along with Senior Vice President Adam Lawson, will spearhead the leasing efforts for the project.

Richmond’s steady industrial sector

The Richmond market saw a 30-basis-point decrease in its industrial vacancy rate from the second to the third quarter of this year, according to a Cushman & Wakefield report. The metro was slow in construction starts, with speculative projects accounting for 30.1 percent of the active pipeline. A total of 1.7 million square feet were absorbed year-to-date as of September.

Earlier this year, LEGO Group broke ground on Meadowville Technology Park, a 1.7 million-square-foot industrial building, according to the same source. The facility is rising on about 340 acres in Chester, Va.

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