Despite these setbacks, there was a notable increase in the under-construction pipeline, which reached 4.5 million square feet as of January. The jump marked a significant increase from the previous January, when a single project measuring 300,000 square feet was underway.

Projects, such as Ely Lily and Co.’s campus at the LEAP Research and Innovation District in Lebanon, Ind., are helping to sustain the market’s pipeline. In May, the company announced an additional $5.3 billion investment, building on the $3.7 billion already committed.

Later in the year, the firm revealed plans for the $4.5 billion Lily Medicine Foundry, the first facility to integrate research and manufacturing. These developments are keeping the market afloat and demonstrate a commitment to innovation and growth.

Smallest development pipeline among peer markets

Indianapolis’ industrial sector had nearly 4.5 million square feet under construction at the end of 2024, according to CommercialEdge data. These projects accounted for 1.2 percent of the market’s total inventory, slightly below the national average of 1.7 percent.

Compared to its peers, Indianapolis had the smallest amount of space underway. Phoenix ranked first with 22.3 million square feet, followed by Dallas (18.9 million square feet) and Houston (12.4 million square feet).

Early last year, Simtra BioPharma Solutions announced an expansion exceeding $250 million for its sterile fill/finish manufacturing campus in Bloomington, Ind. The new 150,000-square-foot facility is expected to be operational by this summer.

Another facility that is expected to come online this year is Sephora’s build-to-suit distribution center in Avalon, Ind. Developed by VanTrust Real Estate, the 746,672-square-foot facility broke ground last year and is part of the firm’s Avon Landings Commerce Park.

Completions remain below national figures

In 2024, Indianapolis had 6.1 million square feet in industrial completions across 13 properties, accounting for about 1.6 percent of total stock. This figure was below the national average of 1.9 percent.

Among its peer markets, Indianapolis had the least amount of new industrial space delivered last year. Phoenix led with 36 million square feet, followed by Dallas with 27.6 million square feet and Chicago with 14.9 million square feet.

Deliveries are expected to remain steady in 2025, as 4.2 million square feet of industrial space broke ground last year and are slated for delivery.

This quarter, Ambrose Property Group completed Building III, a 233,000-square-foot facility in Whitestown, Ind., within the Indianapolis Logistics Park Northwest. The first phase of the campus will comprise three buildings totaling more than 700,000 square feet.

Indy asset prices less than half the U.S. average

In 2024, the Indianapolis industrial real estate investment volume amounted to $320.7 million in sales from the 46 assets totaling 4.4 million square feet that changed hands. This placed the metro behind all its peer markets.

On average, Indianapolis assets traded for $73 per square foot, significantly lower than the national average of $167 per square foot. The Bay Area recorded the highest sale prices nationally at $414 per square foot, followed by Orange County ($314 per square foot) and Los Angeles ($294 per square foot).

In January, Libitzky Property Cos. acquired Park 130 @ Whitestown Building 3, a 319,336-square-foot facility in Whitestown, for $28.4 million. Sold by EQT Exeter, the property houses a distribution center operated by Frito-Lay.

Vacancy rates continue to rise

As of January this year, Indianapolis’ average industrial vacancy rate stood at 9.1 percent, marking a 650-basis-point increase from the previous year. This rate was also 1.1 percent higher than the national average. Among its peers, Orange County (5.0 percent) posted the lowest figure, followed by Atlanta (7.2 percent) and the Inland Empire (7.9 percent).

In May, Cummins Inc. leased a 1.1 million-square-foot building at Mohr Logistics Park, a 475-acre industrial campus. Mohr Capital completed the building in 2023.

As of January, the average listing rate within the Indianapolis metro was $4.9, notably lower than the national average of $8.4. Among peer markets, Orange County ($16.6) had the highest rate, trailed by Los Angeles ($15) and the Bay Area ($13.5).

The post Indianapolis Industrial Sector Fell Short in 2024 appeared first on Commercial Property Executive.

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

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

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

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

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

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

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

How are retailers optimizing their store spaces to improve efficiency?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Do you focus on specific regions for growth?

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

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

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

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

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

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

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

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

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

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

Episode highlights:

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

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

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

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

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

READ ALSO: Emerging Industrial Markets in the US

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

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

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

Staying in the game

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

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

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

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

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

READ ALSO: Why Light Industrial Properties Will Continue to Shine

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

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

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

Relevancy vs redevelopment: a balancing act

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

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

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

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

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

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

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

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

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

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

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

READ ALSO: 5 Trends Defining CRE Development in 2025

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

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

Ambrose’s industrial endeavors

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

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

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

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

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

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

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

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

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

READ ALSO: 3 Adaptive Reuse Projects That Pop

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

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

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

Winners and losers

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

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

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

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

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

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

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

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

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

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

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

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

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

Philadelphia’s retail scene

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

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

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

The post Empire Realty Sells Philly Shopping Center appeared first on Commercial Property Executive.

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

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

Manhattan office sales prices dip

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

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

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

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

A steady pipeline with large projects

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

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

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

Construction starts crash

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

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

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

Manhattan rents decreased in 2024

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

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

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

Office-to-residential policies in NYC

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

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

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

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

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

Coworking constantly improves

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

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

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

The post Manhattan Office Sector Leads in Sales Volume as Prices Dip appeared first on Commercial Property Executive.

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

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

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

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

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

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

Charlotte’s affordable industrial product

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

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

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

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

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

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

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

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

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

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

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

MOB’s resilience to continue

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

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

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

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.

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

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

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

READ ALSO: Manufacturing Surge Drives Industrial Expansion

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

A supply-constrained market

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Salt Lake City’s rise in office transactions

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

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

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

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

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

READ ALSO: Power Tools for CRE Energy Eficiency

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

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

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

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

Waste not, want not

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

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

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

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

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

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

READ ALSO: Why SoCal Industrial Continues to Present Opportunities

The lure of data centers

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

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

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

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

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

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

Data center boom sets off alarm bells

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

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

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

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

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

New regulations may slow development

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

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

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

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

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

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

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

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

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

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

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

Federal deregulation to benefit data centers

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

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

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

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

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

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

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

Big tech takes action to thwart more regulation

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

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

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

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

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

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.

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.

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

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

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

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

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

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

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

A resilient industry

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

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

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

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

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

Agentic AI creates greater efficiency

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

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

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

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

Subdued development

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

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

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

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

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

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

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

Aggressive expansion in South Florida

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

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

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

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

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

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

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

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

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

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

Investors continue to bet on MOBs

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

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

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

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

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

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

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

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

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

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

A Class A+ office building

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

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

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

Still recovering

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

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

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

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

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

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

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

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

READ ALSO: What Defines the Best CRE Investments Today?

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

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

CTO’s growing retail footprint

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

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

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

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

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

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

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

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

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

Investor interest in data centers to continue growing

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

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

The post Principal Closes $3.6B Data Center Fund appeared first on Commercial Property Executive.

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

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

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

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

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

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

San Francisco’s retail scene

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

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

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

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

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

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

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

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

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

Bullish on the West Brookhollow submarket

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

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

M2G leans into infill acquisitions

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

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

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

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.

Shorenstein Investment Advisers has teamed up with Tritower Financial Group to acquire The Xchange, a 480,000-square-foot office and R&D complex in Bedford, Mass., for $96 million. The new ownership also secured $50 million in acquisition financing provided by Barings, according to CommercialEdge.

The seller was Jumbo Capital Management, which previously purchased the office campus for $107.8 million in 2018, according to the same source.

The XChange is 99 percent occupied by a mix of tenants including iRobot, Nyobolt, Entegris and Quanterix. JLL’s Senior Managing Director Christopher Lawrence and Executive Managing Director Matt Daniels have been tapped to lease the remaining space at the property.

An eight-building innovation campus, The XChange is at 8 Crosby Drive, within Boston’s Merrimack Valley West submarket. Situated on 22 acres, the complex provides easy access to Massachusetts Route 3 and to Interstate 95, while being 21 miles from downtown Boston and Boston Logan International Airport.

Developed in 1968 and completely upgraded in 2017, The XChange buildings range between two and three stories. The properties feature loading docks, passenger elevators and 760 vehicle parking spots.

The amenity package contains a fitness center with a yoga studio, a modern café and outdoor seating spaces. The partnership plans to further enhance the property and add 70,000 square feet of R&D space.

Boston’s office investment activity

Since the start of the year, Boston’s office transaction volume placed it among the top-performing markets in the U.S., according to a recent CommercialEdge report. The metro recorded $2.5 billion in sales and ranked fourth, with office assets trading at an average sale price of $259 per square foot as of January. The value is the seventh-highest among the top 25 markets covered by CommercialEdge.

In late 2024, Norges Bank Investment Management purchased interests in two office properties in the area, as part of a larger deal. The bank paid $976.8 million for a 50.1 percent stake in a 3.7 million-square-foot office portfolio that included assets in Boston, San Francisco and Washington, D.C.

The post Shorenstein JV Pays $96M for Boston R&D Campus appeared first on Commercial Property Executive.

The deal calls for RCG to pay cash after the assumption of $470 million in pre-existing debt. GNL received a $25 million non-refundable deposit from the Atlanta-based real estate investment firm at the signing of the binding agreement.

GNL, a New York-based REIT, expects to use the net proceeds from the multi-tenant portfolio sale to significantly reduce the outstanding balance on its revolving credit facility. Strategic benefits of the portfolio sale cited by GNL include reducing leverage, improving its liquidity position and boosting occupancy to 98 percent, among other key portfolio metrics.

The transaction is expected to close in three phases with the sale of 59 unencumbered properties set to close by the end of the first quarter. The sale of 41 properties with loan assumptions is anticipated to close by the end of the second quarter.

READ ALSO: Net Lease Investment Volume Surges

Including the completion of the multi-tenant portfolio sale, GNL expects to have completed nearly $3 billion in dispositions by the end of the year. The portfolio, which is 91.6 percent leased, comprises assets in 28 states totaling 14.7 million square feet. The portfolio’s composition is 61 percent power centers, 22 percent grocery-anchored and 17 percent anchored centers. The top five tenants are: Petsmart, 4.9 percent; Dick’s, 4.5 percent; Kohl’s, 3.8 percent; Best Buy, 3.2 percent and Michael’s, 3.1 percent.

The portfolio covers most of the Northeast, Mid-Atlantic, Southeast, Midwest and Southwest, including Texas. The farthest west the portfolio goes is Nevada. Some of the properties in the planned deal are Fountain Square, a 166,346-square-foot center with tenants including Michael’s, Petsmart and Golf Galaxy, in Brookfield, Wis., and Centrum Shopping Center in Pineville, N.C., a 122,256-square-foot center with tenants including Home Depot, Best Buy and Super G Mart, an international supermarket.

Advisors for the transaction include BofA Securities serving as GNL’s exclusive financial advisor for the sale and BMO Capital acting as an advisor. Paul, Weiss, Rifkind, Wharton & Garrison LLP is providing legal counsel to GNL. Truist Securities served as a financial advisor to RCG Ventures and provided committed financing for the transaction. McGuireWoods LLP is providing legal counsel to RCG Ventures for real estate acquisition and financing matters. King & Spalding LLP is providing legal counsel to RCG Ventures for fund formation and transaction-related matters. Gibson Avenue Capital LLC is serving as an advisor to RCG Ventures.

Transforming GNL

The New York-based REIT launched its strategic disposition plan in 2024, with the objective of reducing debt, enhancing financial flexibility and lowering the cost of capital as it transitioned to a pure-play, single-tenant net lease company.

In August, GNL sold The Plant, a 367,000-square-foot super-regional retail center in San Jose, Calif., to a partnership between Arc Capital Partners and Milan Capital Management for $95 million. Completed in 2008, The Plant has 17 buildings across 45 acres. Tenants include Best Buy, Ulta Beauty, Ross Dress for Less, Petsmart, Game Stop, Applebee’s, McDonald’s and Starbucks.

GNL took ownership of the shopping center following a 2023 merger with The Necessity Retail REIT, which had purchased the asset in 2022.

Also, during the summer, GNL sold a 366,000-square-foot office property in Shinfield Park, Reading, U.K., for more than $27 million. GNL had owned the Foster Wheeler office property for about eight years.

In June, GNL sold a portfolio of nine cold storage properties to Americold Realty Trust, which had been leasing the assets, for $170 million. GNL had paid $153.4 million for the cold storage portfolio.

RCG Ventures growth

The planned deal with GNL continues a late-year shopping spree for RCG Ventures, which acquired two retail centers in two separate deals in December. The firm, founded in 2003, has acquired more than $1.6 billion in retail assets and managed as much as 14 million square feet of retail real estate.

RCG Ventures picked up Pinnacle Nord du Lac, a 215,058-square-foot retail center in Covington, La., for $27 million from Cypress Equities in mid-December. Pinnacle Nord du Lac was 96 percent leased at the time of sale. Tenants include Hobby Lobby, Academy Sports & Outdoors and Petco.

A few days earlier, the company purchased Oakland Plaza, a 167,000-square-foot shopping center in Troy, Mich., from Continental Realty Corp., on behalf of its Continental Realty Opportunistic Retail Fund I LP, for $25.6 million. The retail center was 97 percent leased when sold with tenants including Kids Empire, Rally House and several restaurants.

The post RCG Ventures Strikes $1.8B Portfolio Deal appeared first on Commercial Property Executive.

SL Industrial Partners, a member of The Silverman Group, had purchased a 293,740-square-foot industrial asset in Greensboro, N.C. The property traded for $29.5 million from Tectonic, according to Guilford County public records.

SL Industrial Partners now expanded its industrial portfolio in North Carolina to more than 6 million square feet.

Cushman & Wakefield negotiated on behalf of the seller and is the leasing agent in charge of the property.

READ ALSO: Top 5 Emerging Industrial Markets in 2024

Developed by Tectonic with $16.5 million in construction funds from United Bank, the asset came online in 2023, CommercialEdge shows. The property is at 3618 McConnell Road and provides easy access to interstates 40, 85 and 840. Piedmont Triad International Airport is 21 miles away, while Winston-Salem, N.C., is within 34 miles of the property.

Sitting on a nearly 23-acre lot, the single-story distribution facility features 36-foot clear heights, ample column spacing, 60-foot speed bays, 30 dock doors, ESFR sprinkler systems and 30 knockouts. Additional features include trailer parking and 202 vehicle parking spots.

Cushman & Wakefield’s Tom Townes and Ryan Conboy worked on behalf of the seller. The property is available for lease, with the same team retained by SL Industrial Partners in charge of leasing efforts.

Big purchases in the area

The news comes after SL Industrial Partners recently sold an industrial property in the state, within the Charlotte market. In late November, the company sold a 402,390-square-foot building in Concord, N.C., to Stonelake Capital Partners, in a $51 million deal.

One of last year’s significant industrial deals closed near Charlotte and Greensboro. Equus Capital purchased a nine-building industrial portfolio for $124 million from Investcorp. Totaling 1.4 million square feet, this portfolio includes single-tenant distribution properties.

The post SL Industrial Partners Makes $30M North Carolina Buy appeared first on Commercial Property Executive.

As 2024 drew to a close, the single-tenant net lease market showed a welcomed burst of activity, wrapping up the year with impressive growth in the final quarter. While many investors had been cautious earlier in the year, the year-end push offers hope for a more active 2025. The fourth-quarter total of $13.8 billion in investment sales—a 57.6 percent increase from the same period last year—signals not just an uptick in transactions but a resurgence of confidence in the market. Investors who had been holding off earlier in 2024 are now jumping back in, showing that despite the uncertainty, the sector still has strong appeal.

Cap rates have climbed steadily for nine consecutive quarters and now average 6.78 percent. While the increase of just nine basis points in fourth quarter may seem minor, it’s a signal of broader market shifts. Investors are still adjusting to higher borrowing costs, and 1031 exchange buyers have pulled back significantly. The rise in cap rates signals a shift in the pricing of risk in today’s cautious environment.

A difficult investor environment

Navigating the market in 2024 hasn’t been easy for net lease investors. With inflationary pressures, interest rate hikes, and murky forecasts for Federal Reserve policy, investors have had to be far more strategic. For many, balancing short-term market volatility with long-term investment goals has been a challenge. The uncertainty driven by the election season only added another layer of complexity, as buyers weighed the political landscape along with financial pressures.

Despite these pressures, the resilience of the net lease market is no accident. The sector’s stability—driven by long-term leases with creditworthy tenants and low tenant turnover—has kept investor interest strong. Even in the face of rising interest rates, these fundamentals continue to provide a buffer against broader economic fluctuations.

Looking ahead to 2025, new challenges will undoubtedly arise, from regulatory changes to evolving capital markets. But with strategic planning and a focus on core fundamentals, net lease investors can weather these uncertainties. For those who’ve been waiting for the right moment, it may finally be time to act – especially with the market showing promising signs of stabilization after a volatile year.

—Posted on February 27, 2025

The single-tenant net lease market posted a slight uptick in transaction volume during third quarter 2024, with $10.3 billion in sales volume reported. While this represents a 3.6 percent rise from last quarter, year-over-year activity remains down. However, just this small increase now puts the net lease sector on track to outpace 2023’s annual total, as nearly $32.5 billion has been logged in 2024 year-to-date.

The industrial sector remained the dominant contributor to investment sales activity, representing 61.5 percent of this quarter’s volume. While net lease industrial witnessed a healthy increase in transaction volume, the retail sector reported a much more modest quarter-to-quarter increase, as the office sector reported a second straight quarter of declining sales volume.

Cap rates continued to rise across all net lease sectors, with the overall single-tenant average reaching 6.71 percent in third quarter. Up 12 basis points in the last three months, average cap rates have now increased steadily for eight consecutive quarters.

Several disrupters are set to influence investor sentiment in the final months of the year. With the U.S. Presidential election right around the corner and continued uncertainty regarding the timing and severity of interest rate cuts, it remains to be seen whether potential buyers will make a push to close deals before year-end, or if appetites will cool in hopes of a more favorable environment in 2025.

—Posted on November 27, 2024

At mid-year 2024, the overall single-tenant net lease market continued to struggle with reduced investment sales activity. Office volume was down approximately 43 percent from last quarter, and retail property transactions fell 56 percent in the last three months. The 17 percent boost in quarterly industrial activity was only enough to push the combined volume to $8.8 billion, making it the second slowest quarter of sales activity in over ten years. At this time, and without an uptick in volume during the second half of 2024, it’s likely the market will fall short of matching last year’s stunted totals.

Even with one or two interest rate cuts this year, which are still far from guaranteed, the market will need time to react and adjust. Activity is not expected to balloon overnight, although transaction volume will almost certainly increase somewhat in response to more affordable debt. Rather, investment sales between now and year-end will primarily be driven by upcoming loan maturities, opportunistic acquisitions of distressed assets, 1031 exchange activity and other tax-motivated investment decisions. Elevated interest rates, coupled with the upcoming U.S. presidential election, have created a muddy, uncertain environment that many investors are simply waiting out if they have that luxury.

With today’s shifting market conditions, property values have dropped. Average cap rates for the overall net lease market have been on an upward trajectory since bottoming out in third quarter 2022. In the last seven quarters, cap rates have increased 93 basis points to the current average of 6.57 percent. While the last three months saw a decline in average cap rates for the single-tenant office and industrial sectors, further reductions are not expected. Instead, cap rates across all net lease sectors may experience some fluctuation quarter to quarter, especially if transaction volume remains slow.

—Posted on August 28, 2024

During the first quarter of 2024, the single-tenant net lease market reported rebounding investment sales activity as levels increased to $11.2 billion—up more than 26 percent from the previous quarter. While this represents a slight 4.5 percent decline compared to this time last year, the market has performed consistently in four out of the last five quarters, with the first three months of 2024 putting the market on a promising trajectory to surpass 2023’s total.

Average cap rates for the combined net lease sector increased 20 basis points during first quarter to 6.50 percent—the highest average seen since mid-2015. Unsurprisingly, single-tenant office cap rates are the highest at 6.81 percent, while retail remains the lowest at 6.38 percent. Year-over-year, however, the net lease industrial sector has seen the most significant increases. At 6.55 percent, industrial cap rates now sit 102 basis points higher than this time last year. As buyers and sellers continue to adjust their pricing expectations in today’s market, further increases across all sectors should be expected as we move through 2024.

Buyer distribution

One notable trend across the single-tenant net lease market is a shift in buyer distribution. The most dominant investor group in the last decade has been private buyers, regularly capturing between one-third and one-half of all net lease activity. In the first three months of 2024, that dynamic shifted as public REITs became more active.

With 36 percent of the overall single-tenant market, public REITs also dominated market share in the office and retail sectors. They were less involved in industrial acquisitions though, outpaced by a noticeable uptick in foreign capital investment.

These observations don’t mean private investors are out of the market, however. Ratios are likely to even out as the year progresses, but with interest rates still elevated, some individual investors who aren’t being driven to act by a 1031 exchange, for example, might decide to rest on the sidelines for a little while longer.

Lanie Beck is the Senior Director of Content & Marketing Research at Northmarq. She is responsible for leading the content strategy for the firm and producing research reports in support of the organization’s commercial investment sales division.

—Posted on April 28, 2024

The post 2024 Net Lease Sales Volume and Cap Rates appeared first on Commercial Property Executive.

LBA Logistics has purchased a 220,240-square-foot, fully occupied Class A industrial facility in Glendale, Ariz. The property changed hands for $39 million, according to CommercialEdge.

Echo Real Estate Capital Inc., in joint venture with Grandview Partners, was the seller. Cushman & Wakefield brokered the deal for the partnership.

The facility, known as Building A, is at 9701 N. 151st Ave. within Echo Park 303, an industrial campus that includes a 455,936-square-foot second building, and is fully occupied by HubStarr Logistics.

READ ALSO: Top 5 Markets for Industrial Transactions

The industrial park is close to Interstate 10 and the Loop 303 industrial corridor, allowing easy access within the Southwest Valley submarket and through the Greater Phoenix area. Phoenix Sky Harbor International Airport is 31 miles from the facility, while Mesa Gateway Airport is within 63 miles.

Echo Park 303’s Building A features 32-foot clear heights, two grade-level doors, 56 dock-high doors and 440 vehicle parking spots. The property, together with the second building at 9501 N. 151st Ave., was designed by LGE Design Build and came online in 2023. Developed by Echo Real Estate Capital Inc., the two-building business park was financed by a $53.6 million loan originated by Pacific Coast Capital Partners, CommercialEdge shows.

Executive Vice Chairman Will Strong, Directors Michael Matchett and Jack Stamets, together with Senior Associate Molly Hunt and Senior Financial Analyst Madeline Warren with Cushman & Wakefield represented the seller.

Phoenix industrial sales

The company recently brokered another deal in Phoenix. In early January, CIP Real Estate picked up a 809,230-square-foot Class A industrial park in Mesa, Ariz., from Canyon Partners Real Estate LLC. The multi-tenant campus known as Broadway 101 Commerce Park traded for $168.3 million, in a transaction that represented the largest single deal for an industrial park in the Southeast Valley of Phoenix.

During the same week, LaSalle Investment Management also made a notable purchase in the metro: the company picked up a 536,122-square-foot, five-building industrial campus in Tempe, Ariz.

The post LBA Pays $39M for Phoenix Industrial Asset appeared first on Commercial Property Executive.

Sunrise Industrial Park One and Two total more than 509,000 square feet. The larger of the two buildings, 3101 Marion Drive, totals more than 271,600 square feet and dates from 1997, based on CommercialEdge data. The other building, the 237,600-square-foot 4601 E. Cheyenne Ave., is of the same vintage. Put together, the buildings are currently 78 percent leased to 10 tenants.

The assets feature 24- to 30-foot clear heights, dock-high loading, ESFR sprinklers and evaporative cooling systems, as is common in this part of the country, though they are banned in new commercial buildings. Floorplans between 20,000 square feet to 89,000 square feet are currently available, with Jerry Doty of Colliers International representing the new owner.

MDH Partners’ James Hwang oversaw the acquisition for the company, with Newmark’s Bret Hardy and Andrew Briner representing Link Logistics.

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

The company has been on an acquisition roll recently. In 2024, MDH acquired more than 9 million square feet of industrial space in various markets, including a near year-end deal that saw it buy a portfolio of 12 buildings ranging from 140,300 square feet to 1 million square feet.

Supply overshoots industrial demand in Las Vegas

Preleasing on newly completed industrial projects in Las Vegas fell dramatically in the fourth quarter of 2024, bringing the market’s vacancy to 8.6 percent, according to Colliers data. A year earlier, vacancy was roughly 3 percent, and throughout 2022 and much of 2023, the rate hovered around 2 percent.

Net industrial absorption in the fourth quarter of 2024 was 467,260 square feet, Colliers noted. That brought net absorption for the entirety of 2024 to 4.7 million square feet, a decrease of 38.9 percent compared with 2023.

Even so, developers are still quite active in the Las Vegas industrial market, with 5.9 million square feet slated for completion during 2025, Colliers reported. Only 2.5 percent of that space preleased.

The post MDH Partners Enters Las Vegas With $94M Buy appeared first on Commercial Property Executive.

The Minneapolis portfolio has 17 buildings and spans nearly 1.9 million square feet, while the Baltimore acquisition includes 10 buildings totaling 881,000 square feet. The locations and square footage of each asset in the two portfolios were not released and the company declined to offer more details, including the seller or sellers of the assets.

The company described the properties in general terms noting they have highly diversified tenants, high average clear heights, ample loading docks and parking spaces, as well as proximity to major thoroughfares, employment centers and residential neighborhoods.

READ ALSO: The Future Demand for Industrial Is Decarbonized

The firm, which has been among the top five largest cross-border buyers of U.S. real estate over the past five years, focuses on key U.S. industrial markets with significant population bases, diversified economies and resilient tenant demand.

Investcorp noted that as of the fourth quarter of 2024, market rent growth over the past three years averaged 13.4 percent in Baltimore and 11.4 percent in Minneapolis, according to Green Street Advisors data. These figures outpace the 9.3 percent average for the top 50 U.S. metropolitan areas.

Baltimore has seen a recent influx of major corporations including Optum Inc., JLL, Under Armour and Morgan Stanley. Minneapolis has a diverse economy that features 17 Fortune 500 companies like Target Corp., Best Buy Co., 3M Co. and General Mills.

In the U.S., the Bahrain-based firm invests primarily in the industrial and residential asset classes, with 98 percent of its portfolio coming from those two sectors. As of September, nearly 60 percent of Investcorp’s real estate assets under management in the U.S. were in the industrial sector. Since 1996, Investcorp has acquired approximately 1,400 properties totaling more than $26 billion.

Growing U.S. industrial presence

The Minneapolis and Baltimore deals come about five months after Investcorp made three industrial acquisitions totaling about 1.5 million square feet for approximately $300 million. The Dallas and Atlanta infill portfolio had 16 buildings totaling 597,161 square feet and expanded the firm’s existing significant industrial presence in both markets. The West Coast infill portfolio includes 17 buildings encompassing 539,909 square feet across Denver, Las Vegas, San Diego and the San Francisco Bay Area. The Tampa industrial portfolio had eight buildings comprising 279,887 square feet.

Investcorp officials noted well-located, multi-tenanted assets continue to attract interest from tenants and investors as re-shoring and nearshoring efforts reshape the industrial and manufacturing landscapes in the U.S. The three portfolios reflected those characteristics and were expected to provide a resilient cash flow with year-over-year industrial rent growth.

Last April, Investcorp acquired a 1.3 million-square-foot, 31-building industrial portfolio in South Florida and Denver for about $200 million.

A month earlier, Investcorp formed a new investment vehicle valued at $526 million with two leading sovereign wealth funds to focus on acquiring U.S. industrial assets. The investment vehicle’s buying capacity was estimated at about $1.5 billion.

Several properties in Indiana and Florida previously owned by Investcorp changed hands last year. In July, Sperry Equities acquired Northwest Indiana Logistics Portfolio with 639,829 square feet across two buildings in Portage, Ind. Investcorp had owned the assets, which are in the Chicago industrial market, according to CommercialEdge data.

Cypress Park, a five-building industrial park in Orlando, Fla., with 256,838 square feet, was sold to Harbert Management Corp. in April for $40.5 million. The industrial park had been acquired by Investcorp in 2021 for $28 million, according to CommercialEdge.

The post Investcorp Pays $335M for Industrial Portfolios appeared first on Commercial Property Executive.

American Assets Trust Inc. has sold Del Monte Shopping Center, a 673,155-square-foot retail destination in Monterey, Calif. Federal Realty Investment Trust purchased the asset for about $123.5 million.

AAT had acquired the asset in April 2004 for $115 million, according to CommercialEdge information. The current sale will allow the company to focus on other markets where it can achieve greater operational efficiency, President & CEO Adam Wyll said in prepared remarks.

Located at 1410 Del Monte Center, the property is at the intersection of Highway 1 and Munras Avenue. It’s the only regional mall within a 24-mile area. Downtown Monterey is less than 2 miles away, while the city’s regional airport is within 5 miles.

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

Completed in 1967 on almost 47 acres, Del Monte Shopping Center was expanded in 1987 and most recently renovated in 2007. Its roster features more than 65 national retailers, including Apple, Macy’s Whole Foods Market, Lululemon and Sephora, among others. Regional brands are also part of the mix.

The property was 83 percent leased at the time of sale. Laura Tinetti and Molly Morgan of JLL’s 10Twelve boutique lifestyle leasing team will represent FRT in the remerchandising and leasing of Del Monte Shopping Center going forward.

AAT’s retail inventory

American Assets Trust’s retail portfolio comprises approximately 2.4 million rentable square feet. One of its largest properties in California is Carmel Mountain Plaza, a 520,228-square-foot shopping center in San Diego.

The retail sector is expected to adapt to changing consumer preferences, economic challenges and technological advancements. A key trend for 2025 is the focus on necessity-based retail, with grocery-anchored shopping centers proving resilient to evolving demographics. Suburban migration and hybrid work are driving demand for convenience-oriented shopping experiences.

The post Central Coast Shopping Center Sells for $124M appeared first on Commercial Property Executive.

Pacific Tree Capital has purchased 2525 Main, a 143,269-square-foot office property in Irvine, Calif., form J+R Group for $37.6 million. Cushman & Wakefield represented the seller.  

Sold for approximately $262 per square foot, 2525 Main ranks among the highest price-per-square-foot sales for a multi-tenant office building valued over $20 million nationwide post-pandemic. In 2014, J+R Group acquired it from Menlo Equities for $36 million, CommercialEdge data shows.

In 2024, the U.S. office market saw a total of $41 billion in sales, with properties changing hands at an average of $174 per square foot, according to a recent CommercialEdge report. Austin, Miami and Manhattan registered the most expensive deals, prices averaging $396, $365 and $364 per square foot, respectively. Los Angeles ranked sixth, properties in the metro selling for $272 per square foot on average.

A downtown Irvine office building

Completed in 1982 and renovated in 2016, the Class A property at 2525 Main St. is less than 1 mile from Interstate 405 and John Wayne Airport. The five-story asset includes a 41,000-square-foot data center, as well as an on-site cafe, according to CommercialEdge information.

The building’s roster features nine tenants, among which SMS Data Center, Seagra Technology Inc., OSI Digital and Better Tax Relief, the same data provider shows. The property was 98 percent leased at the time of the sale.  

Cushman & Wakefield Vice Chair Jeffrey Cole, Senior Director Nico Napolitano, Managing Director Kevin Nolen, Senior Director Jason Kimmel and Brokerage Specialist Kristen Schottmiller led the team that facilitated the deal for the seller.

The post Orange County Office Asset Trades for $38M appeared first on Commercial Property Executive.

• 548 W. 22nd St., Manhattan

Sale Price: $50.5 million

California-based cybersecurity company Fortinet Inc. has purchased the 38,100-square-foot retail building in Chelsea from Atlas Capital Group. The buyer, which already had a New York City location, plans to use the four-story building as its office, The Real Deal reported. It is unclear if the current tenants will continue to lease space at 548 W. 22nd St., or if Fortinet Inc. will continue to operate from both New York City locations.

The property came online in 1920 and was last upgraded in 2021. It features 11,258 unused air rights and is currently occupied by NADA New York, Shah Garg Foundation and Santa’s Secret.

• 73 Wooster Street #COM, Manhattan

Sale Price: $25.4 million

The 8,920-square-foot retail unit of the multifamily building at 73 Wooster St. was acquired by Acadia Realty Trust from EPIC, a London-based owner and developer of commercial real estate. The asset previously changed hands in 2011, when EPIC paid $15 million to Vornado Realty Trust for it.

The five-story building is in SoHo and totals 37,443 square feet. It dates back to 1929 and was last updated in 2003. The retail condo is currently leased to Italian luxury brand Moschino.

• 2134 Coyle St., Brooklyn

Sale Price: $22.4 million

Westhab Inc. has purchased the 20,411-square-foot, two-building retail asset in Brooklyn’s Sheepshead Bay from Slate Property Group. The buyer, an affordable housing provider and developer, landed $124 million loan originated by Wilmington Trust, for the development of a residential project at the property.

In July 2024, Slate Property Group acquired the pair of buildings in a $24.4 million portfolio deal, with plans to construct a seven-story residential community with 175 units. The development site has already received approvals since 2022 for a residential project.

The buildings at 2134 and 2150 Coyle St., came online in 1956 and include 55,407 square feet of unused air rights.

• 2481 Creston Ave., Bronx

Sale Price: $7.1 million

Joey’z Shopping purchased the 14,662-square-foot retail building in the borough’s Fordham neighborhood from Abro Management Co. The buyer secured a $4.3 million acquisition loan from Interaudi Bank. The single-story building originally came online in 1955 and includes 15,931 square feet of additional air rights. Tenants here include Citibank and Dresses for Less Clothing.

• 82 Beaver St. #B, Manhattan

Sale Price: $5.5 million

A private buyer picked up the 7,092-square-foot retail component of a 15-story residential building from Red Pine Capital Partners. The buyer landed a $3.7 million loan from SMS Financial through an amended and restated note. The commercial unit is within 1 Wall St. Court, also known as the Beaver Building or Cocoa Exchange. Designed by Clinton and Russell, the property was completed in 1904 as an office building and later converted into a condominiums in 2006.

—Posted on February 26, 2025

The post Top 5 NYC Retail Building Sales—January 2025 appeared first on Commercial Property Executive.

• 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

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Apollo has entered into a definitive agreement to acquire Bridge Investment Group Holdings Inc. The deal is an all-stock transaction with an equity value of about $1.5 billion, anticipated to close in the third quarter of this year.

Bridge will function as an independent platform within Apollo’s asset management division, keeping its brand, management team and capital formation team. Executive Chair Bob Morse will join Apollo as a partner and head the real estate equity franchise.

Founded in 2009, Bridge had approximately $50 billion in residential and industrial assets under management as of December. The company, which went public in July 2021, will expand Apollo’s real estate equity platform and boost its origination capabilities in both real estate equity and credit.

Apollo Global Management aims to more than double its assets under management from about $700 billion to $1.5 trillion by the end of 2029, according to the Financial Times. Additionally, the company plans to increase its annual debt originations to $275 billion within the same timeframe.

Strategic advisors for the agreement

BofA Securities, Citi, Goldman, Sachs & Co. LLC, Morgan Stanley & Co. LLC and Newmark Group are acting as financial advisors, while Paul, Weiss, Rifkind, Wharton & Garrison LLP provides legal counsel and Sidley Austin LLP is acting as insurance regulatory counsel to Apollo.

J.P. Morgan Securities LLC is serving as financial advisor to Bridge, while Latham & Watkins LLP is acting as legal counsel. Lazard is working as financial advisor to the special committee of the Bridge Board of Directors and Cravath, Swaine & Moore LLP is acting as legal counsel.

The post Apollo to Acquire Bridge Investment for $1.5B appeared first on Commercial Property Executive.

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.

Los Angeles and Long Beach saw the most significant growth as they benefited from shippers that diverted cargo ahead of the first ILA strike in nearly 50 years, as well as efforts to move freight ahead of labor and tariff uncertainties. Baltimore and Montreal were the only ports that saw decreased volumes.

Savills anticipates that short-term strategies such as front-loading will continue in 2025, if trade policy volatility remains. Additionally, as supply chains diversify, trade will be reduced between U.S. ports and China.

“The data confirms importers are front-loading freight, yet warehouse leasing has been slow,” Mark Russo, vice president of industrial research for Savills, told Commercial Property Executive.

“We expect a demand recovery in port markets in 2025, driven by inventory movement and ultimately dependent on the consumer’s health.”

Danny Williams, executive managing director at Newmark, concurred that the front-loading of imports due to tariffs and cargo re-routes from Gulf and East Coast distributors has bolstered LA-LB’s TEU import volume in recent months.

“Longer rail dwell times, however, suggest a good portion of this cargo is destined for markets outside of Southern California,” Williams said.

READ ALSO: Industrial Sector Transitions as Supply Shrinks

A moderate uptick in touring and leasing activities can be observed, according to his colleague, Dain Fedora, head of Southwest U.S. research at Newmark.

“However, occupiers are still proceeding with caution due to remaining uncertainty surrounding tariffs, inflation, etc.,” he said.

Port development activity brisk

CRG recognized the increasing demand for logistics and distribution space near major ports early on, making strategic investments in key markets like Savannah, Mike Demperio, the company’s executive vice president of the Southeast region, told CPE.

The Cubes at West Port and The Cubes at Interstate Centre II are examples of the company’s commitment to support supply chain efficiencies in proximity to the Port of Savannah, according to Demperio.

The Cubes at West Port is a 764-acre master-planned industrial park in Bryan County, Ga., approximately 25 miles west of Savannah. The development will include a 1 million-square-foot industrial facility for Lecangs.

The Cubes at Interstate Centre II is a 300-acre development within the broader Interstate Centre industrial park in Bryan County, Ga., approximately 25 miles west of Savannah.

“The project was designed to accommodate growing demand for logistics and warehouse space, driven in part by the recent expansion of the Port of Savannah, located about 30 miles east,” Demperio said.

CRG’s first building at the development, the 700,000-square-foot Building A, was leased to McKesson Medical-Surgical in November 2021. The second warehouse, the 465,250-square-foot Building E, has been completed, while Buildings B and C are currently under construction.

A fifth building is also planned. Upon completion, The Cubes at Interstate Centre II will comprise nearly 4.3 million square feet of Class A industrial space.

“As container volumes continue to rise, we anticipate strong demand for well-located, state-of-the-art distribution centers to help companies mitigate congestion and labor challenges while optimizing access to major transportation networks.”

Houston, Jacksonville, Georgia markets stay active

JLL reported that there have been substantial transaction volume increases in Houston (20 percent increase year-over-year) and Jacksonville (48 percent increase year-over-year), according to Trent Agnew, senior managing director & industrial group leader at JLL.

Notable deals such as Stonepeak acquiring over 1.8 million square feet of industrial space in Jacksonville and purchasing Houston’s Independence Logistics Park demonstrate strong interest from diverse investors who believe these markets will outperform the broader industrial market, including core funds, separate accounts and infrastructure funds, he said.

“Looking ahead, we anticipate a marked increase in activity in established markets like New Jersey and Southern California,” Agnew told CPE.

“As leasing demand accelerates in 2025, following the container growth experienced in 2024, and rents bottom out, these markets will offer an attractive entry point for investors who have been historically priced out.”

Earlier this year, Avison Young reported on two speculative Class A industrial buildings totaling 540,408 square feet that are coming to the new Northeast Georgia Inland Port.

Alliance Industrial Co. will break ground this quarter on the Alliance 985 Business Park, which is slated to be delivered in early 2026 at 3605 Atlanta Hwy Flowery Branch, Ga.

Avison Young has arranged the sale of the 66.75 acres of land needed for the development. The first building will be 113,536 square feet, and the second will be 426,872 square feet.

The post Port Activity Rebounds appeared first on Commercial Property Executive.

Echo Real Estate Capital Inc. has acquired Rampart Medical Campus, a two-building, 71,000-square-foot property in Denver. Healthcare Realty Trust sold the asset with the assistance of CBRE. 

The property changed hands for $8.6 million, according to Denver Business Journal, less than half of what it sold for in 2019. Back then, the sale price was $18.9 million.

The purchase marked Echo’s return to Colorado, where it previously owned health-care and retail properties. The firm’s portfolio also includes Arizona, Indiana, Illinois and Massachusetts assets.

Rampart Medical Campus, up close

The medical campus consists of two three-story buildings located at 125 and 130 Rampart Way, in the historic Lowry neighborhood. Originally completed in 1942 as a school, the property was converted to office use in 1983, according to CommercialEdge information. 

The asset was 45 percent leased by seven companies at the time of sale. Anchor tenants include Colorado Allergy & Asthma Centers, U.S. Dermatology Partners and Denver Oral & Maxillofacial Surgery. Echo Real Estate Capital took out financing from AGP Capital and Aspen Funds for capital improvements, cosmetic upgrades and spec-suite construction, to grow the property’s occupancy. 

Rampart Medical Campus is 4 miles east of downtown Denver, adjacent to the Lowry Town Center shopping mall. Rose Medical Center, the University of Colorado Anschutz Medical Campus and The Medical Center of Aurora are within a 5-mile radius.

Despite economic uncertainties, the medical office sector remains resilient, with outpatient volumes expected to increase by 26 percent over the next decade. Investors are increasingly interested in such properties due to their stable, long-term tenants. However, challenges such as workforce shortages, rising labor costs and high construction expenses persist.

The post Echo Real Estate Buys Denver Medical Campus at Steep Discount appeared first on Commercial Property Executive.

A joint venture between Altera Fund and TPG Angelo Gordon purchased a 10-asset medical office portfolio for $108 million. NHP sold the collection with Newmark representation. Capital One Bank provided acquisition financing.

The 300,000-square-foot portfolio encompasses properties throughout Arizona, Illinois, Massachusetts, Texas and Tennessee.

Altera’s investment strategy is to acquire value-add MOB assets at a substantial discount to replacement cost. The market for such deals is on an upward trajectory as investor and lender capital availability continues to increase, according to prepared remarks by Newmark Healthcare Capital Markets Senior Managing Director John Nero.

Newmark’s Nero together with Executive Managing Directors Jay Miele and Ben Appel, as well as Senior Managing Director Michael Greeley represented NHP in the portfolio sale.

MOB investment up in 2024, clearer skies ahead

Medical office building investment rebounded in 2024, with the sales volume climbing 61 percent year-over-year, according to Cushman & Wakefield’s research. Despite last year’s challenging liquidity conditions and less active capital markets, the 2025 forecast for the MOB sector appears to be positive.

This year, single-asset and small portfolio deals are set to continue capturing investor interest, while there’s also a potential for larger portfolio deals, Colliers National Director of Healthcare Services Shawn Janus previously told Commercial Property Executive.

One such single-asset MOB deal closed earlier this year. In January, a joint venture between TPG and Cypress West purchased Cool Springs Professional Center, a 47,000-square-foot building in Franklin, Tenn.

That purchase marked the venture’s eighth acquisition and its first purchase in Tennessee. The two companies joined forces in April 2024, with plans to acquire up as much as $300 million in medical office assets throughout the Sun Belt.

The post TPG Angelo Gordon JV Pays $108M for MOB Portfolio appeared first on Commercial Property Executive.

Demographics, deglobalization, digitization and decarbonization—four trends described by panelists at a CBRE Investment Management press conference as underlining any worthwhile investment during what many perceive to be the dawn of a new investment cycle.

These views lie in the backdrop of what Wei Luo, the company’s global research director highlighted as “sticky interest rates and higher for longer inflation.” Like many of its peers, the firm predicts two rate cuts this year, in the realm of 50 basis points.

Beyond the monetary realm, policy is a little less clear cut. Trump Administration tariffs against key trading partners could potentially increase demand for domestic manufacturing, though Luo sees these more as “starting points for negotiations” with Mexico, China, Canada and the European Union, and not persisting long-term.

Immigration, on the other hand, has led the firm to favor investing in real estate and infrastructure within metros experiencing more domestic than international in-migration. These are predominantly located in the Sun Belt. “We’re focused on the next Phoenix, Dallas or Nashville, Tenn.,” Luo said.

Sometimes, boring is better

As for how the economy and politics affect commercial real estate investing at the asset class level, panelists highlighted a shift from buying into historically appealing yet currently struggling sectors such as office to more trend-resistant, in-demand property types including modern industrial, health care, data centers and workforce housing.

The goal here is to be more resilient to the economy’s here-to-stay struggles and geopolitical uncertainty, all the while serving as a provider of liquidity. Bernie McNamara, the firm’s head of client solutions, labeled modern logistics as an example of this resilience, having experienced a “robust recovery” in 2024, following the industry’s lowest capital raising year since 2012. It’s also a provider of liquidity in a “liquidity-constrained market,” McNamara said.

READ ALSO: Industrial Report: Sector Transitions as Supply Shrinks

With these projects comes a need for infrastructure used to support them. What Robert Shaw, managing director of private infrastructure strategies refers to as a “boring” investor class is really just the electricity needed to power data centers, electric vehicle charging stations and industrial facilities. According to Grid Strategies, a power sector consulting firm, demand for electricity in general is projected to grow by 16 percent over the next five years. Houston’s CenterPoint energy, for example, experienced a 700 percent increase in its data center connection request queue in October.

Growth sectors of the future

Equally important to a resilient portfolio is a diversified one. Adopting a similar mindset to the infrastructure-dependent sectors, CBRE Investment Management has also taken a look at areas that rely on the physical presence of people; these include essential retail, health-care properties, self storage student housing, as well as market-rate and workforce housing. “These are the next-generation growth sectors,” said Lucy Fletcher, a fund manager with the firm’s indirect private real estate practice. “It’s about the opportunity to diversify across sectors and geographies.”

And investors may have less difficulty in actually picking some properties up, given a steep narrowing of bid-ask spreads, which reduced by an average of 17 percent in the first two weeks of this year, according to data from Market Axess. Many of the above properties, especially if they are acquired as part of a core investment strategy, “have durable cash flows at an attractive price,” despite capital declines of 20 to 30 percent in North America, said Liz Troni, a portfolio manager.

The post CBRE IM Panel Talks Next Generation of CRE Investing appeared first on Commercial Property Executive.

Completed in 1990, Century Square underwent renovations in 2016. The retail center encompasses 16 buildings spread across some 64 acres, CommercialEdge also shows.

Anchored by Lowe’s Home Improvement, Hobby Lobby, Shop’n Save, Dunham’s Sports, Luxury Cinemas and Planet Fitness, Century Square also features a diverse mix of regional and national retailers such as Dollar Tree, Taco Bell, Arby’s, Panda Express, McDonald’s, AT&T, First National Bank and Burlington, among others. The property was 82.7 percent leased at the time of sale.

READ ALSO: Net Lease Investment Volume Surges

Located at 1025-4775 Mountain View Drive, Century Square is some 10 miles from downtown Pittsburgh. The shopping center serves around 192,000 residents within a 5-mile radius, with the average household income of $90,434, according to Red Mountain.

Positive results for Pittsburgh’s retail market

Pittsburgh’s retail market recorded positive results in the last quarter of 2024, according to a recent Colliers report. Developers broke ground on some 116,650 square feet of retail space, significantly more than the 24,688 square feet recorded the previous quarter.

Meanwhile, the vacancy rate remained unchanged over the quarter, at 4.9 percent. In addition, last year’s fourth quarter marked the third consecutive quarter of positive absorption for the market, with the year-to-date total to 282,430 square feet.

The post Red Mountain Group Buys Pittsburgh-Area Shopping Center appeared first on Commercial Property Executive.

AREP stated that the amount reflects “significant growth” since it closed fundraising for its third investment fund, in 2022. Fund IV is AREP’s largest fund to date and relied in particular on institutional investors and high-net-worth individuals.

The new fund will focus on what AREP sees as “transformative opportunities in high-demand sectors,” mainly data centers and residential real estate—and predominantly the former. AREP intends to allocate 80 percent of Fund IV to expanding PowerHouse, AREP’s data center platform, to capitalize on the ever-growing demand for digital infrastructure.

This emphasis builds on a transition from office buildings into data infrastructure that AREP began around 2016, with its reported $212 million acquisition from Verizon of the 136-acre Quantum Park, in Ashburn, Va.

READ ALSO: Is the DeepSeek Scare Impacting Data Center Demand?

AREP’s previous funds, the company said, focused on a value-add/opportunistic strategy and became the basis for AREP’s long-term data center strategy.

AREP did not reply to Commercial Property Executive’s request for additional information.

Tough growth for data centers

Nationally, the data center sector is marked by the confluence of rising demand for capacity, driven by digital services, cloud computing, AI and 5G, and a record level of construction activity, according to a recent outlook from CBRE.

Despite the pace of construction, CBRE forecasts, the data center market will face challenges in keeping up with demand, driving higher utilization of existing facilities and reducing vacancy rates. In 2024, the average vacancy rate for primary markets fell to a record-low 2.8 percent and the average preleasing rate of new construction hit a record high, according to the report.

Based on that, CBRE expects average preleasing to hit 90 percent or more this year, alongside “rental rates rivaling the record highs of 2011-2012.”

CBRE’s outlook singles out five markets—Northern Virginia, Silicon Valley, Dallas–Ft. Worth, Atlanta and Chicago—as regions with greater competition for land and power.

The post AREP Closes Oversubscribed Fund at $309M appeared first on Commercial Property Executive.

Hamid Moghadam, who has led Prologis through its extraordinary growth as an industrial real estate investor and developer, will retire as the company’s CEO at the end of this year, the REIT said on Wednesday. He will then assume the role of executive chairman.

Moghadam will be succeeded by Dan Letter, the Prologis’ president and a 21-year company veteran.

Moghadam’s departure as CEO follows a four-decade run at Prologis and its predecessor, AMB Property Corp., which he co-founded 42 years ago in San Francisco. His career has been characterized by a series of landmark moves, starting with the company’s initial IPO in 1997.

Enterprise-level deals have been a hallmark of his leadership. The biggest by dollar value was Prologis’ $23 billion acquisition of Duke Realty. Completed in 2022, that acquisition added a 142 million-square-foot investment, development and management portfolio to Prologis’ footprint and included assets in 19 markets.

That followed the deal struck in 2019 for Liberty Property Trust. Highlights included the acquisition of a 107 million-square-foot operating portfolio and an expanded footprint in such markets as Chicago, Houston, Southern California, New Jersey and central Pennsylvania.

Yet another such acquisition unfolded in 2018, when Prologis bought DCT Industrial Trust for $8.4 billion, adding 71 million square feet to its operating portfolio. Such moves made Moghadam a frequent winner of CPE’s Industrial Property Executive of the Year award.

Letter, Prologis’ next CEO, started at AMB as a development manager in 2004. Since then, he has served in a variety of roles before becoming company president, including president of the U.S, central region and global head of capital deployment.

The post Moghadam to Step Down as Prologis CEO appeared first on Commercial Property Executive.

That quarter helped to create a 13 percent increase in full-year 2024 net lease investment volume, totaling $43.7 billion.

Industrial and logistics increased its share to 64 percent in the fourth quarter from 54 percent a year earlier. In 2024, net lease investment volume for industrial assets increased 87 percent from the prior year.

Net lease properties are characterized by a lease structure in which the tenant agrees to pay a portion or all of the taxes, insurance fees and maintenance costs in addition to rent.

Predictable cash flow

The net lease sector’s strong performance was generated by its predictable cash flow and mass appeal to investors seeking solid risk-adjusted returns, Will Pike, vice chairman of net lease properties for capital markets at CBRE, told Commercial Property Executive.

“We expect continued momentum this year, especially in retail and the industrial sector, as capital has proven to prioritize low-risk opportunities amid potential capital markets volatility in 2025,” he said.

Joseph Yiu, a partner at Leste Group, a global alternative investment manager, told CPE he was not surprised because the asset class has always performed well in times of uncertainty.

“With fundamentals and rent growth starting to deteriorate and plateau in other commercial real estate asset classes, 2 percent to 3 percent annual escalations on long-term net leases are beginning to look attractive on a relative value basis,” according to Yiu. “Cap rates on net leases have also widened over the last 24 months, so obtaining neutral or positive leverage is slowly becoming available for creditworthy borrowers.”

Deals consummated at year-end

As some traditional retailers struggle to maintain their customers or credit ratings, Damon Juha, partner & real estate practice vice chair at Saul Ewing, sees investors explore outside the traditional single-tenant NNN retail deals into other product types, such as industrial.

“There seemed to be a convergence of influences: investors responding to the Fed’s interest rate cuts, investors paying all cash (particularly for smaller deals such that the interest did not matter) and parties needing to consummate deals before year-end, particularly in light of the change of the administration,” Juha said.

READ ALSO: Understanding the Net Lease Reset

Net lease deals have historically provided a relatively low-risk alternative at price points where private investors can enter the market without financing, Juha added. ”Our clients continue to want to do deals, but time will tell if inflation risk and interest rates quell this sentiment.”

Growth in logistics and distribution facilities reflects trends like the continued expansion of e-commerce, supply chain shifts and the need for strategically positioned assets, according to Lanie Beck, Northmarq senior director, content & marketing research.

“Private investors drive the bulk of transaction activity, even as economic pressures like elevated interest rates and inflation influence the market,” Beck said.

Recent cap rate increases indicate a recalibration of risk, while stabilized single-tenant net lease properties continue to attract the attention of both private and institutional buyers, she observed.

“Industrial assets, as noted previously, have outperformed. On the other hand, retail and office sectors face mixed dynamics, with investors focusing on essential tenants and niche opportunities like health care or medtail,” Beck added. “Ultimately, the net lease market’s resilience comes from its knack for striking the right balance between stability and opportunity. The sector offers investors a relative haven in uncertain times.”

NNN energy leases

It’s also worth looking at the rise of triple-net multifamily leases, according to Sean Doak, chief revenue officer at PearlX.

“While most often employed in mixed-use developments, NNN energy leases that provide multifamily properties with energy amenities like solar power have been on the rise in the sector as a solution to various problems, most notably as a creative source of capital in a constrained investment environment,” Doak said.

“With elevated interest rates, limited capital availability, rising construction costs and aggressive building code regulations, multifamily developers are having to think outside of the box to make projects financially viable.”

Through an NNN energy lease, multifamily developers can lower development costs, comply with stringent regulations and enhance cash flow after the property’s delivery, all while offloading the insurance, taxes and maintenance overhead onto the tenant—a key feature of what makes NNN leases attractive in the first place, Doak said.

However, not all net lease is the same, Dave Sobelman, founder & CEO of publicly traded REIT Generation Income Properties, told CPE.

“It would be important to disaggregate the data into more defined categories considering more specific outlooks,” Sobelman said.

“For instance, industrial has become a very popular asset class since the advent of the pandemic. However, the bulk of industrial transactions in today’s market are typically sale-leaseback transactions to non-investment grade tenants who require capital and can no longer borrow at rates accretive to their balance sheets. These transactions were few and far between before 2020.”

Additionally, he noted that late in 2024, overall net lease transaction volume may have increased slightly from 2023, but it is still at historically low levels, reflected in a Northmarq report.

“These low levels of transactions have not been seen since approximately 2009 to 2010, immediately after the GFC,” he added.

The post Net Lease Investment Volume Surges 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.

Barings LLC has agreed to acquire Artemis Real Estate Partners, the companies announced on Wednesday morning. The sale is expected to close during the first quarter.

According to reporting from Private Equity Real Estate, the merger was in negotiation for more than a year. As of December 2024, Barings, a MassMutual subsidiary, had north of $50 billion worth of assets under management in its global real estate platform. By adding Artemis’ $11 billion in assets under management, the deal will increase Barings’ portfolio to upward of $60 billion. Financial terms of the deal were not disclosed.

Earlier this month, Barings and Trinity Capital, its joint venture partner, started construction on Phase Two of Horizon 16 Industrial Park, which will add 1.5 million square feet of industrial space to a 1.1 million-square-foot logistics campus.

Following the acquisition, Artemis’ team will join Barings, combining the firms’ investment and asset management capabilities. Founded in 2009, Chevy Chase, Md.-based Artemis has made value-add, core-plus, health-care and credit investments in the office, industrial, retail, medical office, multifamily, hospitality and self-storage sectors.

READ ALSO: What Deregulation Could Mean for CRE Bank Lending

Dechert LLP was Barings’ legal advisor for the acquisition, and Paul Hastings LLP served as counsel to Artemis. Berkshire Global Advisors was Artemis’ financial adviser.

Poised to prosper?

The acquisition comes at a time when the commercial real estate market cycle is characterized by lower interest rates, increasingly positive investor sentiments and renewed momentum in the debt markets. According to CBRE’s Lending Momentum Index, non-agency loan closings for banks rose 43 percent in the fourth quarter of 2024, compared to 18 percent in the third quarter.

Alternative investment strategies such as secondaries are also seeing a comeback, accounting for their highest share of capital raised for closed-end funds since 2019.

The post Barings Strikes Deal to Buy Artemis Real Estate Partners appeared first on Commercial Property Executive.

Anchored by Macy’s, JCPenney and Dillard’s, the retail asset also has an anchor vacancy where Sears used to be. The property also features a Cinemark movie theater and a number of inline stores.

The sale was a financial play for CBL. The property served as collateral for the firm’s non-recourse term loan, and proceeds from the sale were applied to the term loan principal balance, which was thus reduced to $680.3 million.

“The sale of Imperial Valley Mall demonstrates the demand for stable enclosed malls,” a CBL spokesperson told Commercial Property Executive. Moreover, the deal puts CBL on course to meet the loan principal balance extension test in November 2025, without contributing further capital beyond required amortization.

The firm applied the same debt-reducing strategy two weeks ago, when it sold two retail assets in Monroeville, Pa., for $34 million. CBL used part of the net proceeds to lower the outstanding principal of a $333 million loan. 

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

Chattanooga, Tenn.-based CBL is a major retail owner, with 88 properties totaling 55.4 million square feet in 20 states. Its portfolio includes 53 enclosed malls, outlet centers and lifestyle retail centers, as well as more than 30 open-air centers and other assets.

Portfolio occupancy was 90.3 percent at the end of 2024 for CBL, a 100-basis-point-increase over the quarter, but a 60-basis-point decline compared with portfolio occupancy of 90.9 percent at the end of 2023.

SoCal retail market improves

The demand for retail space in Southern California has seen a recent uptick, according to Avison Young, which reports net absorption of 151,000 square feet for the region in the fourth quarter of 2024, the first positive quarter after three straight quarters of negative absorption.

Meanwhile, retail vacancy decreased across all SoCal markets, coming in at 5.7 percent for the region, the report showed. The retail under-construction pipeline totaled 2.3 million square feet across 56 properties.

The post CBL Sells SoCal Mall appeared first on Commercial Property Executive.

Shaker Loudon Associates, an affiliate of Benderson Development, has sold a 120,049-square-foot Fresh Market-anchored shopping center in Latham, N.Y., just north of Albany. PCP Binghamton Associates LLC acquired the property for $26.9 million.

Institutional Property Advisors Senior Managing Director Jim Koury brokered the deal on behalf of the seller and procured the buyer.

The Fresh Market Commons in Latham is located at 664 Loudon Road, at the intersection between U.S. Route 9 and State Route 155. Interstate 87 is also close.

Completed in 2010, the three-building property is located on 10 acres. Its tenant roster also includes Petco, Crumbl Cookie, Sleep & Spas, European Wax Center and Verizon, according to CommercialEdge information. The new ownership had approximately 24,000 square feet available at the shopping center to reposition the property’s tenancy.

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

The property is within 1 mile of several other retailers including Walmart, Home Depot, Target and Lowes. Albany International Airport is less than 4 miles west of the shopping center, while downtown Albany, N.Y., is within 8 miles. 

Fresh Market Commons serves a population of more than 182,000 within 5 miles, with annual household incomes exceeding $116,700 within a 3-mile radius, according to Institutional Property Advisors.

The post New York Retail Center Sells for $27M appeared first on Commercial Property Executive.

The partnership of Highline Real Estate Capital, Square2 Capital and Lone Star Funds has acquired 401 E. Las Olas Blvd. in Fort Lauderdale, Fla.’s financial district. CBRE represented the seller of the 410,561-square-foot office asset and secured acquisition financing.

The same week, the office property at 350/450 E. Las Olas Blvd. changed hands for $208 million in what was, at the time, the market’s largest transaction in a decade.

DWS, an affiliate of Deutsche Bank’s asset management arm, sold both properties for a combined $428 million, according to Commercial Observer.

READ ALSO: Office Sector Faces Ongoing Challenges Into 2025

DWS had acquired 401 Las Olas in 2016 for $220 million, according to CommercialEdge information. Completed in 2002 and renovated in 2005, the 23-story office tower features floorplates averaging 24,397 square feet and four levels of parking, as well as retail space. The building is LEED Gold-certified.

The 2.4-acre property occupies a full city block. Bank of America, Greenberg Traurig, Boies Schiller Flexner, Motorola Solutions and UBS are among its tenants.

CBRE Vice Chairman Christian Lee and Vice President Sean Kelly led the team that represented the seller. In addition, Vice Chairmen Tom Traynor and Tom Rugg, together with Senior Vice President Amy Julian and First Vice President Andrew Chilgren, assisted the buyer in sourcing acquisition financing. Director Adam Spengler, Senior Associate Tom Rappa, Associate Henry Fenmore and Financial Analyst Matthew Lee were also instrumental in the deal.

Fort Lauderdale, an attractive market

“Downtown Fort Lauderdale has exploded in recent years with new residential,” Square2 Capital Principal Jay Caplin told Commercial Property Executive.

“It is attracting a phenomenal mix of amenities, retail and restaurants. It is also the only 24/7 submarket in Broward County, located near executive decision-makers. This combination, especially in a post-COVID work environment, creates an attractive space for recruiting new talent and returning employees to the office.”

READ ALSO: Net Effective Office Costs Edge Up

Caplin added the trend is not new and it’s expected to continue, especially since there is no new office construction planned along the Las Olas Boulevard corridor.

“The vast majority of any development in downtown has been for-sale and for-rent residential, and some hotels,” he noted.

According to Caplan, 401 Las Olas is among the top-tier buildings in South Florida and one of only two Class AA trophy office buildings on Las Olas Boulevard.

With an occupancy of 94 percent and a purchase price substantially below replacement cost, “given the very high quality of the property, it represents a highly attractive and opportunistic investment for the new owners,” he said.

One of South Florida’s ‘most exciting secrets’

“The rise of Fort Lauderdale’s office market is quickly becoming one of the region’s most exciting secrets,” JLL’s Brady Titcomb, who specializes in the Fort Lauderdale office market, told CPE.

“It offers a prime location for businesses seeking the vibrancy of an urban center in a unique waterfront setting without the hefty price tag. You can enjoy all the lifestyle perks of Miami but at a fraction of the cost and without the heavy traffic and congestion,” Titcomb added.

“The sales of 401 Las Olas and 350/450 Las Olas during an otherwise turbulent capital markets environment validate that downtown Fort Lauderdale is a secure investment destination,” mentioned Colliers Vice Chair Jonathan Kingsley.

“The two properties traded at premium prices on a per-square-foot basis, albeit with higher cap rates than prior sales. This is a direct result of the increase in lease rates and net operating income in a dynamic leasing atmosphere in downtown Fort Lauderdale.”

A strong alternative to pricier markets

Fort Lauderdale’s office market has become a strong alternative to New York’s Park Avenue, Miami’s Brickell and Los Angeles’ Century City, noted Todd Rosenberg, co-founder & chairman of Pebb Capital.

Pebb Capital’s Class A office property, 110 East Broward, has led leasing activity in Fort Lauderdale’s CBD, securing over 119,000 square feet of tenancy since last year. Notable new leases include ABA Centers of America (48,000 square feet), Seacoast Bank (7,795 square feet), and Ludlow Coffee Supply opening in 2025.

The post DWS Sells Fort Lauderdale Office Tower for $220M appeared first on Commercial Property Executive.

LBA Logistics has purchased a 491,329-square-foot Class A industrial building in Port Wentworth, Ga., within metro Savannah. Lowe’s sold the asset for $46 million, according to CommercialEdge data. JLL represented the seller, which was also the former tenant.

The home improvement retailer had picked up the property in 2006 for $20 million, the same source shows.

The cross-dock facility has 32-foot clear heights, 106 dock-high doors, ESFR sprinkler systems,149 trailer parking spaces and 126 vehicle parking spots. At the time of the sale, the building was vacant.

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

The single-story facility is at 50 Innovation Drive, near interstates 95 and 16, providing easy access through the Savannah-Hilton Head area. Additionally, Savannah/Hilton Head International Airport is 4 miles from the property, while Georgia Port Authority’s Garden City Terminal is roughly 6 miles away and downtown Savannah is within 12 miles.

JLL Senior Managing Directors Britton Burdette and Dennis Mitchell, Director Jim Freeman, together with Executive Managing Directors Bob Currie and Tim McCarthy, negotiated on behalf of the seller.

Port of Savannah attracts industrial investment

Investors traded $455 million in industrial assets across the Savannah-Hilton Head market last year, according to CommercialEdge information. The Port of Savannah is one of the fastest growing in the nation, so demand for high quality space is strong. Of the 11 assets that changed hands in 2024, nine were Class A.

In November last year, Goldman Sachs Alternatives paid $100.6 million for a 942,210-square-foot facility. Scannell Properties sold the building, which is part of Rockingham Farms Logistics Park.

Transwestern Investment Group also made a big purchase in the metro in the second half of last year. It acquired Interstate West’s Building C, a 1.2 million-square-foot distribution facility in Ellabell, Ga. The seller was VanTrust Real Estate, which also sold Building A of that same industrial park, to Goldrich Kest.

The post LBA Pays $46M for Savannah Industrial Asset appeared first on Commercial Property Executive.

Major outlet center owner Tanger has acquired another high-end shopping center. The 640,000-square-foot Pinecrest Mall is an open-air, grocery-anchored, mixed-use property in Orange, Ohio, part of Cleveland’s affluent eastern corridor. The $167 million purchase also included the asset’s residential and office components.

Such developments continue to gain popularity across the country, according to Michael Romer, co-managing partner at Romer Debbas.

“This is yet another example of the growing live-work-play trend in commercial real estate,” Romer told Commercial Property Executive. “With a housing shortage nationally, pairing shopping, dining and entertainment together with residential is a smart play on numerous fronts.”

“Open-air shopping has led the charge in the recent comeback of brick-and-mortar shopping, with recent foot traffic on par with prepandemic numbers,” added Rick Strauss, principal with Odyssey.

A Whole Foods Market anchors Pinecrest, alongside retailers Alo Yoga, UNTUCKit, Madewell, Sephora, Warby Parker, Indochino, Williams-Sonoma, Pottery Barn, REI, Nike and several others. Dining choices include Shake Shack, Kitchen Social, First Watch, Firebirds Wood Fired Grill, Silverspot Cinema and Pinstripes.

Tanger’s buying spree; open-air heats up

Over the past 16 months or so, Tanger also acquired The Promenade at Chenal in Little Rock, Ark., and Bridge Street Town Centre in Huntsville, Ala.

In October, Tanger Outlets Nashville opened, featuring 60 stores across seven buildings. The 290,000-square-foot, open-air shopping center in southeast Nashville was 97 percent leased at that time.

In August, CTO Realty Growth bought Carolina Pavilion in Charlotte, N.C., Millenia Crossing in Orlando, Fla., and Lake Brandon Village in Tampa, Fla. The three open-air shopping centers totaling some 1.2 million square feet sold for $137.5 million.

The post Tanger Pays $167M for Open-Air Shopping Center appeared first on Commercial Property Executive.

Landrock LP and Pendulum Property Partners have acquired a 16-story, 329,431-square-foot trophy office tower in Glendale, Calif. The Class A asset changed hands at a significant discount from its previous sale, in a deal arranged by Newmark.

Goldman Sachs Asset Management and Cruzan sold the property at 505 N. Brand Blvd. for $56 million, The Real Deal reported. The partners had purchased the building in 2018 for $93.5 million from Principal Real Estate Advisors.

Built in 1986, the tower recently underwent extensive capital improvements totaling $14 million or approximately $43 per square foot. The LEED Gold-certified building also includes 3,500 square feet of retail, as well as an on-site car wash and dry cleaners. The property features a total of 1,153 parking spaces in a multi-level structure.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

The asset is leased to a diverse roster of 19 tenants, with a weighted average remaining lease term of 4.2 years. One of them is Phonexa, a software company that added more than 18,000 square feet to its lease at 505 N. Brand Blvd. in April 2023, bringing the total occupied space to 42,000 square feet across the building’s top three floors.

Other tenants include UnitedHealth Group, CalSTRS, KB Financial Group, Packer, O’Leary & Corson law firm and Martin & Associates, an accounting firm.

The building’s location on North Brand Boulevard provides access to the 134 Freeway. The property is also within walking distance of retail and residential amenities, including The Americana at Brand, a 1 million-square-foot mixed-use property, and Glendale Galleria. Downtown Los Angeles is some 10 miles south.

Newmark team

Newmark Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairmen Ken White, Rob Hannan, Michael Moll and Laura Stumm, Executive Vice Chairman Kevin Donner, Managing Director Ben Lushing and Director Alex Beaton represented the seller.

Newmark Co-President of Global Debt & Structured Finance Jonathan Firestone, Vice Chairman Blake Thompson and Director Henry Cassiday led market financing alternatives throughout the transaction.

Los Angeles market moves

The sale is another recent example of office assets in the Los Angeles market trading at discounted prices. Earlier this month, a joint venture between Cross Ocean Partners and Palisade Group purchased 4500 Park Granada, a 222,667-square-foot office building in Calabasas, Calif., for $69.4 million from Gemdale USA in a deal also brokered by Newmark. The property previously changed hands in 2021 for $79 million, according to CommercialEdge information.

And late last year, Los Angeles County acquired The Gas Company Tower, a 1.3 million-square-foot office building in the city’s downtown, for $200 million. The property had been sold by Wilmington Trust after a September foreclosure on a $350 million CMBS loan.

In October, Southwest Carpenters Pension Trust acquired Union Bank Plaza, a 40-story, 701,888-square-foot office tower in Los Angeles for $80 million from Waterbridge Capital. The office building had sold for $104 million in April 2023.

The post Landrock, Pendulum Buy LA Office Tower for $56M appeared first on Commercial Property Executive.

Ogilvie Properties Inc. has sold Tech Center VI, a mid-rise office building in Colorado Springs, Colo., to Alloy Real Estate Capital LLC for $17.3 million. Cushman & Wakefield arranged the deal and represented the seller in the transaction.  

The 104,702-square-foot property had been under Ogilvie Properties’ ownership since 2019, when the company acquired it from Pace Properties for $12.1 million, according to CommercialEdge data.  

Executive Director Aaron Johnson, Managing Director Jon Hendrickson and Senior Associate Mitch Veremeychik from Cushman & Wakefield worked on behalf of the seller.

A closer look at Tech Center VI

Completed in 1985, Tech Center VI is a three-story office building situated on a 7-acre site at 5575 Tech Center Drive. While under the former ownership, the property underwent upgrades, which included a renovated lobby, restrooms and spec suites. The roster currently features 17 tenants, among which Workplace Resource, Benefit Dynamics Co., Engineering Systems Inc., Allied Universal and Moneywell. Most of the tenants are in the aerospace & defense government contractor industries. The property was 97 percent leased at the time of the sale.  

Tech Center VI is less than 7 miles north of downtown Colorado Springs, near Interstate 25. Denver is some 60 miles north.

Denver’s office market saw a slowdown in development activity, with 680,961 square feet of office space under construction across seven properties as of November 2024. Even though office deals in the city dropped by 31.3 percent year-over-year, Denver outperformed San Francisco and ranked among the top U.S. markets for investment activity, a recent CommercialEdge report shows.

The post Alloy Real Estate Buys Colorado Springs Asset appeared first on Commercial Property Executive.

A three-building, 261,950-square-foot light industrial portfolio in the New York metro’s Rockland County has changed hands for approximately $62.8 million after nearly four years of ownership by Lincoln Equities Group and PCCP. Invesco Real Estate acquired the I-287 Multi-Tenant Light Industrial portfolio in Valley Cottage, N.Y.

JLL Capital Markets represented the sellers, which teamed up for the first time in April 2021 to purchase the three-building industrial portfolio from Sasson Real Estate Group in a deal valued at $48.5 million. The ensemble is now 97 percent leased to 17 tenants from a variety of industries including logistics, storage, sales, showrooms, servicing and health care.

The 64,000-square-foot 711 Executive Blvd. dates back to 1999 and is located on 9.3 acres, according to CommercialEdge. Completed in 2008, 616 Corporate Way and 618 Corporate Way sit on nearly 14 acres, encompassing 85,790 and 112,160 square feet, respectively.

READ ALSO: Manufacturing Demand for Industrial Space Is Mushrooming

The buildings have suites ranging from 2,720 to 42,075 square feet. They feature a mix of traditional warehouse space with clear heights up to 30 feet and shallow-bay light industrial space with 20-foot clear heights. 711 Executive Blvd. has a total of 234 parking spaces while the buildings at 616 Corporate Way and 618 Corporate Way have 170 parking spaces.

The location offers connectivity to the affluent and densely populated markets of Bergen County, N.J., Westchester County, N.Y., and New York City. Situated just off Route 303, the portfolio is 3 miles from Interstate 287 and less than 6 miles from the Mario M. Cuomo Bridge, formerly known as the Tappan Zee Bridge, which connects Rockland and Westchester counties. The highway system in the area provides access to more than 980,000 consumers within a 30-minute drive and more than 9.8 million consumers within a one-hour drive.

More Lincoln, PCCP deals

Based in East Rutherford, N.J., Lincoln Equities Group owns, operates, develops and manages commercial and residential properties throughout the Northeastern region and Europe. In April, Lincoln closed on a $53.5 million senior construction loan provided by PCCP to develop Belleville Logistics, a two-building, 15-acre last-mile logistics campus in Belleville, N.J.

In December, PCCP and another partner, Distribution Realty Group, began construction on Middle Tennessee Industrial Center, a four-building, 703,902-square-foot speculative project in Murfreesboro, Tenn., in the Nashville, Tenn., market. The project is slated for delivery later this year. A month earlier, PCCP formed a joint venture with CRG to develop The Cubes at Alpha, a 575,900-square-foot industrial park in Alpha, N.J.

Invesco industrial activity

Invesco has been active in both developing and acquiring industrial assets across the country. In August, Invesco and IndiCap completed the first phase of Virgin Industrial Park, three facilities totaling about 1 million square feet in Glendale, Ariz. Two more buildings are planned, bringing the park’s total space to 1.5 million square feet.

The firm paid $55 million for a 216,000-square-foot building in South Brunswick Township, N.J., last February. At the time of the sale, the property was fully leased to a third-party logistics company. That same month, Invesco and four partners who own Currwood Logistics Center, a 1.5 million-square-foot Hagerstown, Md., industrial campus, inked a full-building, 1.2 million-square-foot lease with an online restaurant supply company.

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Additionally, the metro logged $599 million in office sales last year. This figure represents a considerable increase, nearly doubling the amount registered in 2023, but still the lowest investment volume among gateway markets.

The city also strengthened its position as one of the most active life sciences markets across the country, ranking seventh by its construction activity in the sector. Between 2019 and October 2024, more than 1.8 million square feet of life science space across nine projects broke ground in the metro.

More office projects to come online

Last year, Seattle’s office sector saw the delivery of 11 properties, accounting for 4 million square feet—about 2.2 percent of the metro’s total inventory. Compared to 2023, this figure increased by more than a third.

Among gateway markets, Boston took the lead with almost 6.4 million square feet completed, while Seattle was close behind. Chicago (1.0 million square feet) and Los Angeles (955,510 square feet) were at the opposite pole.

In the second quarter of last year, Office Properties Income Trust completed the renovations of Unison Elliott Bay, a three-building, 300,000-square-foot life science lab, R&D and office space. The project began in March 2022.

In terms of pipeline, more than 5.1 million square feet of office space across 10 projects were under construction at the end of December, which will add about 2.8 percent to the market’s stock. Of them, two developments totaling 691,700 square feet broke ground in 2024.

One of the largest projects under construction that is scheduled to come online this year is Amazon’s Tower 1 at Bellevue 600. The 43-story building will comprise more than 1.1 million square feet and is the first phase of a development that is set to also include a 31-story high-rise.

Government agencies focus on office-to-residential conversions

With the trend of converting office spaces into residential units gaining momentum, CommercialEdge has launched a tool designed to evaluate the feasibility of repurposing properties across different markets. According to its Conversion Feasibility Index, Seattle ranks high, with around 4.7 million square feet of office space demonstrating strong potential for conversion.

Last summer, the Seattle City Council enacted a legislation aimed at removing regulatory obstacles by granting extensive exemptions from dimensional and design development standards. This initiative is intended to address the issue of vacant office spaces across the city, with a particular focus on the downtown area.

In August, Orton Development proposed a conversion plan for the almost 100-year-old Joseph Vance Building. If approved, the project would generate about 155 residential units. The building’s CFI score stands at 92, according to CommercialEdge, making it a strong candidate for repurposing.

Office sales register new heights

Seattle reached $599 million in office investment volume last year, almost double the figure registered in 2023. Although assets traded at an average of $260.45 per square foot, significantly surpassing the national average of $175.97, the market experienced the lowest transaction volume among gateway metros.

Manhattan registered the highest sales nationally, with $3.9 billion in assets changing hands. Washington, D.C. ($2.6 billion) and Los Angeles ($1.9 billion) trailed behind.

In September, Alexandria Real Estate Equities sold 1165 Eastlake Ave. E, a 100,086-square-foot life science building for $150 million. Fred Hutch Cancer Center acquired the asset completed in 2021. The developer also formed a joint venture with the buyer for two adjacent buildings, where it will maintain a 30 percent ownership.

A month earlier, the first skyscraper in Seattle, The Smith Tower, changed hands. A group of local investors led by GT Capital bought the 42-story property from Goldman Sachs. The 268,700-square-foot tower dates from the 1910s and was renovated in 1990s and 2010s.

Completions lead to surge in vacancy rates

Seattle’s office vacancy rate at the end of December clocked in at 26.3 percent, rising 380 basis points year-over-year. During the same month, the national average was 19.8 percent.

Among gateway markets, only San Francisco posted a higher rate, reaching 28.8 percent. Miami (15.2 percent) and Los Angeles (16.0 percent) were at the opposite end.

In one of the largest office leases in the area in recent years, Pokémon signed a 374,000-square-foot lease at Skanska’s The Eight, a 26-story mixed-use development in Bellevue, Wash. The building totals about 729,000 square feet, out of which 541,000 are destined for office use.

In June, TikTok decided to expand its office presence in the market and signed an additional 150,000-square-foot lease in downtown Bellevue, Wash. The tenant will occupy seven floors at Kemper Development’s Lincoln Square North Tower, where it had already committed to 132,000 square feet across six floors in January.

Coworking sector remains on par with national trends

As of December, Seattle’s coworking sector consisted of more than 3 million square feet, accounting for 1.9 percent of the market’s office stock. Among gateway metros, only Boston (1.8 percent) and Washington, D.C. (1.6 percent) had a smaller percentage of shared space out of total inventory, while Miami (3.8 percent) took the spotlight.

In the first quarter of last year, CENTRL Office took over the former WeWork shared space at the Kelly-Springfield Building in Seattle. The firm will operate the 53,365-square-foot space under a management contract with landlord Legacy Cos., after WeWork vacated the offices in February, filing for Chapter 11 bankruptcy.

Regus (445,380 square feet) became the largest flex office provider in the Emerald City as of December, followed by WeWork with 339,476 square feet. These operators were followed by extraSlice (296,437 square feet) and Industrious (189,675 square feet).

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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.

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This shift is primarily due to an oversupply from record-setting development activity in 2021 and 2022, which have surpassed tenant demand, according to CommericalEdge data.

Leveraging its strategic location and well-developed rail and airport infrastructure, Chicago’s industrial market continues to demonstrate resilience and flexibility. Even with the pipeline shrinking to half of the previous year’s volume, the metro area remains a key player in industrial development. The Windy City delivered almost 14.9 million square feet of logistics space last year, while the investment volume reached roughly $2.7 billion.

Sales volume increases

Last year, Chicago’s industrial investment volume totaled approximately $2.7 billion, surpassing the $2.2 billion recorded in 2023. Despite this increase, assets traded at an average of $92 per square foot, up slightly from $89 the previous year. A total of 242 properties—amounting to approximately 32.6 million square feet—changed hands in the metro in 2024.

Only Kansas City ($42 per square foot) and Indianapolis ($73 per square foot) recorded lower numbers. Meanwhile, New Jersey ($213 per square foot), Dallas ($173 per square foot) and Phoenix ($162 per square foot) continued post high prices.

In one of the larger transactions of last year, Stonepeak purchased a three-building, 1.7 million-square-foot rail-served logistics portfolio for $125 million. The fully leased assets are part of CenterPoint Intermodal Center–Joliet/Elwood—the largest inland port in North America. The properties are in Elwood, Ill., at 26318-26634 S. Walton Drive, 21561 Mississippi Ave. and 26634 Mississippi Ave.

Industrial development still active

At the end of December, Chicago’s industrial sector had 7.6 million square feet under construction, according to CommercialEdge data. The pipeline represented 0.7 percent of total stock, below the 1.7 percent national average and other peer markets such as Phoenix (5.3 percent), Kansas City (3.9 percent) and Dallas (1.9 percent).

Near the end of last year, Trammell Crow Co. broke ground on the first building of Plainfield Business Center, an industrial campus to total more than 8 million square feet in Plainfield, Ill. Taking shape on approximately 52 acres at 26220 W. 143rd St., the property will feature 40-foot clear heights, 80 dock doors expandable to 160 and 211 trailer parking stalls. 

One month prior, CyrusOne also commenced construction on its second data center campus in Aurora, Ill. The project comprises two buildings totaling 446,000 square feet and will deliver an initial IT capacity of 40 MW with scalable capacity to meet future growth needs. The development is taking shape at 2725 Bilter Road.

Deliveries slow down

Last year, The Windy City delivered 41 properties totaling almost 14.9 million square feet—accounting for 1.4 percent of the metro’s total inventory, slightly lower than the national average of 1.8 percent. This amount was notably less than the 29.4 million square feet completed in 2023.

Among its peer markets, only Phoenix (32.7 million square feet) and Dallas (29.1 million square feet) recorded more completed space, CommercialEdge data shows.

HSA Commercial Real Estate delivered Highland Commerce Center of Somers, one of the largest speculative industrial buildings in Wisconsin. Located at 2655 113th Ave., the 918,884-square-foot distribution facility is directly off Interstate 94 at the Burlington Road Interchange in Kenosha.

Bridge Industrial also completed the 669,914-square-foot Building 2 and the 707,953-square-foot Building 3 of Bridge Point Melrose Park, a cutting-edge industrial campus that will exceed 1.5 million square feet in the coveted O’Hare submarket in Melrose Park, Ill.

Vacancy rate higher than the national average

At the end of December, the metro’s vacancy rate clocked in at 9.7 percent—above the 8 percent national average—climbing 570 basis points year-over-year and being the fifth-highest rate across top U.S. markets. Among peer markets, Indianapolis (9.8 percent) and Dallas (9 percent) recorded similar numbers.

In one of the largest recent industrial deals in Greater Chicago, Crow Holdings has signed a full-building lease at 9850 Mississippi St. in Merrillville, Ind. The more than 1 million-square-foot industrial facility is part of the 195-acre Silos at Sanders Farm master plan.

W. P. Carey also inked a 1.6 million-square-foot industrial lease at 701 Central Ave. in University Park, Ill. A global tech and logistics company occupies the entire building, marking it as one of the largest deals in the market.

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New York Life Real Estate Investors has sold 515 Post Oak, a 274,583-square-foot, Class A office building in Houston, to Dallas-based EY Ventures LLC. JLL worked on behalf of the seller and procured the buyer. 

New York Life REI came into possession of 515 Post Oak in 2022, according to CommercialEdge information. The previous owner, Spear Street Capital, had defaulted on the $44.5 million loan provided by the lender in 2019.

The property covers a 3-acre site at 515 Post Oak Blvd., east of Houston’s 610 West Loop. The location is also near interstates 10 and 69. Downtown Houston is some 8 miles east away.

Completed in the 1980s, the 12-story building has since undergone renovations worth more than $1 million. Improvements included upgrades to the fitness center, tenant lounge, onsite cafe, conference areas and parking. The mid-rise was awarded the LEED-Silver certification 10 times, most recently in 2023. 

The tenant roster features TopSpot, Greater Houston Community Foundation, Luxe Portfolio, Edge Realty Partners and Shale-Inland Holdings LLC. The building was 74 percent leased at the time of sale.

Senior Managing Director Jeff Hollinden and Managing Director Kevin McConn led the JLL Capital Markets Investment Sales and Advisory team representing the seller. 

Houston’s office investment volume reached $940 million year-to-date as of November 2024. Assets traded at $107 per square foot, below the national average of $179, a recent CommercialEdge report shows.

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In fact, JLL predicts, manufacturing-related demand will reach 25 percent of U.S. industrial demand by 2028, up from less than 19 percent last year.

Manufacturing demand for space has already expanded in a major way, the report notes. In 2019, such demand represented only 4.3 percent of total industrial space demand. By 2024, that share was 18.8 percent, well over a three-fold increase.

This is a complete turnaround from before 2020. From 2018 to that year, manufacturing requirements decreased 1.9 percent each year, on average. Since 2020, those requirements have increased by 50 percent each year, on average.

Reasons for the change

“A confluence of economic, technological, and geopolitical factors is compelling manufacturers to reassess their operational strategies and locations,” Greg Matter, JLL’s executive managing director of industrial leasing told Commercial Property Executive.

The resurgence has come from a number of different industries, but the prime driver has been in such industries as batteries and electric vehicles, clean energy and semiconductors. The automotive industry, led by EVs and autonomous tech, is expanding, and so are aerospace, defense and AI.

READ ALSO: Sector Transitions as Supply Shrinks

The demand has been in a lot of places, but major markets such as Chicago, Dallas-Fort Worth and Phoenix are benefiting the most.

A number of factors are at play in pushing up demand for manufacturing space, including reshoring, which is at least in part a reaction to supply chain issues during the pandemic, as businesses seek more resilient and stable supply chains.

“As companies seek to optimize their production processes and bring operations closer to end markets, the demand for modern, technologically advanced manufacturing spaces is likely to continue its upward trajectory,” the report noted.

Political support

Political considerations are also important, and the political will seems to be there to support manufacturing growth.

“Amid the ongoing discourse surrounding tariffs, it is evident that there exists bipartisan support for the ‘reindustrialization’ of American manufacturing,” Matter said. “Our data projections indicate that this trend will persist over the coming decade.”

The new administration is pushing protectionist policies that will likely encourage domestic manufacturing, the report explained. Also, the former administration oversaw policies spurring domestic chip manufacturing and sustainable energy manufacturing, which has momentum that is unlikely to be undone.

New development is in the cards

Satisfying the surge in demand for manufacturing space will be more than a matter of retooling or expanding existing facilities, because the average age of existing manufacturing space in the U.S. is 51 years, with more than half between 30 and 60 years old. That is, they are leftovers from the previous golden age of U.S. manufacturing—before the 1980s.

The bulk of the older facilities are in such traditional manufacturing markets as Chicago, Detroit and New Jersey, which will see both new development and updating facilities to use the latest technologies. Markets such as Savannah, Ga., and Phoenix are leading the way in new facility development.

Besides the age of the building stock, other challenges for manufacturing will include finding suitable land, enough power and enough skilled labor, JLL reported.

In terms of land acquisition, a lot of the suitable brownfield sites have already been taken, the result of a “gold rush” for such sites between 2020 and ‘23, the report explained. Much of what is left is functionally obsolete, with the expense of redevelopment enough that greenfield options are also being considered.

As for power, manufacturers will be competing with data centers in the future for access to robust and cost-effective sources of electricity. 

Labor challenges

Manufacturers will also be competing against each other for relatively scarce skilled labor, especially as manufacturing processes become more advanced.

“The most significant challenge facing companies as they seek to scale up operations in the U.S. will be the long-term availability of skilled manufacturing talent,” Matter said.

When considering the establishment of new facilities, decision-making criteria are evolving beyond traditional metrics such as job creation, growth potential and industry concentration, Matter noted. Companies are now incorporating quality of life factors to enhance their ability to attract and retain a high-caliber workforce. 

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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.”

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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.”

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As vacancy rates climbed, loan delinquencies rose, and property values dropped through the year, landlords have increasingly been disposing of their underperforming office assets. Other alternative solutions, such as repositioning or converting, continue to remain popular choices.

Slow construction activity

As of December, D.C.’s office pipeline comprised 1.1 million square feet of space across seven properties, representing 0.3 percent of existing stock—below the national average of 0.8 percent. Among gateway markets, Boston led with 3.4 percent, followed by San Francisco’s 2.3 percent. When adding projects in the planning stages, the figure reached 3.1 percent—exceeding the national average of 2.9 percent and outperforming Chicago’s 2 percent, as well as Manhattan’s and Los Angeles’ 3 percent.

By comparison, at the end of 2023, a total of 3.5 million square feet of office space was under construction in D.C. In December 2024, Boston was the gateway city with the largest under-construction stock (8.7 million square feet), followed by San Francisco (3.8 million square feet). Only Chicago’s pipeline was smaller than the U.S. capital’s, with 870,344 square feet underway.

The largest office project currently underway remains the 420,000-square-foot 600 Fifth St. NW. Developed by Rockefeller Group and Stonebridge, the $375 million development topped out in May, with completion expected by 2026.

Construction starts included 964,674 square feet across three properties, accounting for 0.2 percent of existing stock, while developers completed 2.4 million square feet across 11 properties, representing 0.6 percent of total stock. Among significant completions in D.C. is Dulles Discovery 5, a 514,000-square-foot office building completed in early 2024 in Herndon, Va. Developed by Peterson Cos., the property is within the company’s Dulles Discovery, a 2.4 million-square-foot mission-critical development.

D.C.’s sales volume second in the nation

At the end of 2024, the metro’s office transactions totaled $2.6 billion, with 104 properties comprising 12.3 million square feet changing hands. Last year’s investment volume rose 19.8 percent year-over-year, propelling the metro to second place among gateway markets, behind Manhattan’s $3.9 billion.

The first quarter of last year was the busiest in terms of deals, ending with $947.4 million trading, point after which the sales volume decreased until December. Despite this downward trend, Washington, D.C.’s investment activity in 2024 picked up, compared to 2023, when 9.9 million square feet traded for $1.9 billion.

Significant transactions include CoStar Group’s $373 million acquisition of CEB Tower at Central place, a 560,000-square-foot office building in Arlington, Va. A joint venture between PGIM Real Estate and JBG Smith sold the Class A+ property at 1201 Wilson Blvd. in February.

Another notable deal was MRP Realty’s $225.7 million purchase of Gallery Place at 616 H. St. NW, a 297,002-square-foot property in D.C.’s Seventh Street Corridor submarket. In joint venture with Global Fund Investments, MRP bought the asset after its previous owner defaulted on a $179 million loan backed by the mid-rise building.

Office properties traded at an average sale price of $211 per square foot—above the national figure of $175 per square foot. Across similar markets, Miami emerged as the priciest metro, with $400 per square foot, while the lowest sale prices were recorded in Chicago ($85 per square foot).

Vacancy rate continued to climb

Washington, D.C.’s office vacancy rate clocked in at 18.5 percent as of December—slightly below the national figure of 19.8 percent and marking a 60-basis-point increase year-over-year. The metro’s rate was higher than in Miami (15 percent), Manhattan (16.6 percent) and Boston (17 percent). The highest vacancy rate was recorded in San Francisco, at 28.8 percent.

Significant leases in 2024 include Washington Post’s 300,000-square-foot extension at One Franklin Square. The property totals 612,189 square feet and is owned by Hines and General Motors Pension Fund.

Additionally, Fannie Mae signed a long-term commitment of 340,000 square feet at Midtown Center in downtown D.C. Carr Properties and IGIS Asset Management are the owners of the 867,000-square-foot building.

High potential for office-to-residential makeovers

As vacancies increased in most markets, office-to-residential conversions remained an attractive option for property owners. CommercialEdge launched the Conversion Feasibility Index, a new tool that highlights markets with strong office-to-residential repositioning potential, using a set of property-level scores. Powered by Yardi, the CFI score has three tiers, with Tier I assets being the most suitable candidates.

Washington, D.C. has 72 properties totaling 6.4 million square feet in the Tier I category. Additionally, there are 421 office buildings in the Tier II category, totaling approximately 53.8 million square feet.

Developer Penzance has filed plans for an office-to-residential conversion that includes two buildings in Arlington, Va., within the Rosslyn submarket. The pair of properties are at 1901 N. Fort Myer Drive and at 1911 N. Fort Myer Drive and total 249,684 square feet. The proposed project is set to include two residential towers with 862 apartment units and a condominium tower with 82 units. The 1960s buildings hold CFI scores of 95 and 91 points, respectively.

Coworking gains ground at affordable rates

Washington, D.C.’s coworking sector comprised 6.4 million square feet across 277 locations as of December. Manhattan was the gateway market with the largest flex office footprint (11.3 million square feet), while D.C. outperformed Boston’s 4.9 million square feet. The metro continued to emerge as a hotspot for virtual office providers due to its affordable rates, which last year dropped as low as $80 per month, according to CoworkingCafe.

The metro’s share of flex space as percentage of total leasable office space reached 1.6 percent—lower than the national average of 1.9 percent and than its peer markets. Miami led the ranking with a 3.8 percent figure.

WeWork was the flex office provider with the largest footprint in D.C., with locations totaling 566,182 square feet. The company was followed by Regus (528,779 square feet), Industrious (508,332 square feet, Spaces (453,864 square feet) and Local Works (400,997 square feet).

The post DC Office Investment Picked Up Steam in 2024 appeared first on Commercial Property Executive.

The collection includes warehouse, laboratory and open office spaces on four parcels. A fifth parcel, of about 2.6 acres, provides additional parking. The location has immediate access to Interstate 64 and thereby easy connections to the port and nearby military bases and shipyards.

The assets were 84 percent leased by a total of 37 companies at the time of sale. About 60 percent of the roster is made up of medical and government-related tenants, including Sentara Healthcare and Chugach Government Solutions, Eric B. Robison, executive vice president of Capital Markets at Thalhimer, told Commercial Property Executive.

READ ALSO: Industrial Sector Transitions as Supply Shrinks

Robison added that more than three-quarters of the occupied GLA has executed new leases or renewals since August 2020, showing the tenant roster’s resilience through the COVID-19 pandemic.

The buildings in the portfolio are:

•  Battlefield Corporate Center, at 535 Independence Parkway (one story, 96,720 square feet);

•  Greenbrier Technology Center I, at 814 Greenbrier Circle (one story, 97,194 square feet);

•  Greenbrier Technology Center II, at 816 Greenbrier Circle (two stories, 82,229 square feet); and

•  Greenbrier Circle Corporate Center, at 825 Greenbrier Circle (two stories, 126,874 square feet) and 1801 Sara Drive (105,797 square feet).

The Class B properties were completed between 1981 and 1987, according to information provided by CommercialEdge.

Robison and Bo McKown of Thalhimer’s Capital Markets Group, together with Eric Berkman and Kevin Sidney with Cushman & Wakefield’s Capital Markets team in Washington, D.C., represented the seller. Financing was sourced by the Cushman & Wakefield debt team of Michael Zelin, Marshall Scallan and Ryan McMahon.

Temporary lull

The Hampton Roads industrial space market is benefitting from clean energy and rail infrastructure improvements at the Port of Virginia, even as market activity moderated toward year’s end, in part of over labor concerns at the port, according to a fourth-quarter report from Cushman & Wakefield.

Industrial vacancy was up slightly, to 4.4 percent in December, but Cushman & Wakefield anticipates absorption gains this year.

In September, a joint venture of Rockefeller Group, Matan Cos, Mitsubishi Estate New York, Chuo Nittochi and Taisei USA LLC started construction on the first phase of Port 460 Logistics Center in Suffolk, Va. Upon completion, the property will comprise about 5 million square feet.

The post Heritage Capital Buys Hampton Roads Industrial/Flex Portfolio appeared first on Commercial Property Executive.

Retail Opportunity Investments Corp.’s shareholders have approved the proposed merger with Blackstone Real Estate Partners X. The all-cash deal, valued at about $4 billion, is expected to close this week.

ROIC and Blackstone affiliates had entered the merger agreement back in November, under which Blackstone would acquire all outstanding shares of ROIC’s common stock at $17.50 per share. The transaction represents a 34 percent premium over ROIC’s closing share price in July 2024.

The retail REIT‘s portfolio included 93 grocery-anchored properties totaling around 10.5 million square feet across Los Angeles, San Francisco, Seattle and Portland, Ore., at the end of September.

Blackstone’s interest in ROIC underscores the positive outlook of necessity-based, grocery-anchored retail. This type of assets will continue to draw attention from both investors and developers, according to Commercial Property Executive‘s 2025 retail outlook.

The Blackstone-ROIC merger, up close

Following the merger’s completion, ROIC will become a privately held entity under Blackstone’s management.

The deal will involve a two-phase process. First, Montana Merger Sub II LLC will merge with ROIC’s operating partnership, Retail Opportunity Investments Partnership LP, according to the Trading Calendar. Then, Montana Merger Sub I Inc. will merge with ROIC, which will remain under Blackstone’s control.

The agreement also includes measures for handling ROIC’s restricted stock awards and long-term incentive program units, ensuring that eligible employees receive fair compensation as the company undergoes a change in ownership.

However, the transaction might still be subject to change, the same source shows. Should a superior offer emerge, ROIC’s board has the right to accept the new proposal and pay Blackstone a $78 million termination fee. On the other hand, Blackstone has guaranteed a $239 million reverse termination fee if it fails to complete the deal under the terms of the agreement.

The post Blackstone’s $4B Retail Deal Gets Green Light appeared first on Commercial Property Executive.

An affiliate of Melrose Solomon Enterprises has acquired Tavern Square, a 171,738-square-foot office building in Alexandria, Va.

The property traded for $38.9 million, Washington Business Journal reported. Westport Capital Partners previously owned the asset, according to CommercialEdge information.

JLL Capital Markets worked on behalf of the seller and procured the buyer.

Tavern Square had been under Westport Capital Partners’ ownership since 2018, when the company purchased the property from The Pyne Cos. for $50.4 million, the same source shows.

READ ALSO: What’s Defining Office in 2025?

Tavern Square occupies an entire city block, enclosing 421 King, 123 N. Pitt, and 110 and 132 N. Royal St., in Old Town Alexandria and some 8 miles from Washington, D.C. The low-rise is also across the street from Courthouse Square, a 120,031-square-foot office building Melrose Solomon Enterprises bought in 2023.

The office national vacancy surged last year and despite some predictions for an uptick in sales volume, the prices are expected to stagnate, a recent CommercialEdge report shows. An initiative such as D.C.’s Office-to-Anything initiative aim to encourage adaptive reuse, with growing interest in converting offices to data centers, industrial spaces and coworking hubs alongside residential projects.

Fully renovated office building

Built in 1967, Tavern Square underwent a full renovation in 2019, adding new features such as a fitness center and a conference center with tenant lounge. The five-story office building includes approximately 40,000 square feet of ground floor retail space, six passenger elevators and 330 car parking spots.

The property has 23 tenants, including CB Design Group, MODE4 Architecture and Johnson/Citronberg, among others, CommercialEdge shows. The asset was 84 percent leased at the time of the sale.

The JLL Capital Markets team included Senior Managing Director Matt Nicholson, Directors Kevin Byrd and Daniel Naughton, Senior Managing Directors Andrew Weir and Jim Meisel, Senior Director Dave Baker, and Managing Directors Jordan Lex and Dean Sands.

The post Melrose Solomon Pays $39M for DC-Area Office Building appeared first on Commercial Property Executive.

Pinkard’s 2 million square feet of office, flex/office, warehouse/industrial and retail space in the Maryland region have been added to MCB’s nationwide portfolio of operating assets totaling about 15 million square feet.

Pinkard co-founder Katharine Pinkard has been named senior managing director of property management for MCB Real Estate. MCB noted that its current property management division leader, Marty Lastner, recently announced plans to retire.

The acquisition boosts the number of MCB personnel in asset and property management from about 36 to about 50, an MCB spokesperson told Commercial Property Executive.

READ ALSO: CRE Compensation, Hiring Trends

MCB noted that it has in recent months acquired several varied assets that are widely separated geographically.

For example, this past September the company purchased a 368,000-square-foot Class A industrial facility in Howell Township, N.J., for $69.9 million. The seller of the newly completed Howell 1 was Active Acquisitions. MCB also signed a 15-year, full-building lease with a third-party logistics company.

The same month, a joint venture of MCB and a fund managed by DRA Advisors acquired Falcon Ridge Town Center, a fully leased 273,424-square-foot retail center in Fontana, Calif., for $64.7 million.

Given this steady growth, MCB President Gina Baker Chambers emphasized in a prepared statement the Pinkard acquisition’s importance in beefing up the company’s internal team.

Last June, Baker Chambers spoke at length with CPE about the challenges of development projects that are financially sound, environmentally sustainable and responsive to community needs.

Family history

Interestingly, the acquisition represents a kind of marriage between notable families with a historical connection. The Pinkard tradition began in 1922 with one W.C. Pinkard, whose grandson Walter Pinkard Jr. was in charge by the 1970s. Katherine Pinkard and her father, Greg Pinkard, founded Pinkard Properties in 2012, continuing the multi-generational tradition.

But here’s the twist. One of Greg’s brothers, Peter Pinkard, in 2007 was a co-founder of MCB Real Estate; he remains there as a managing partner.

Pinkard Properties’ Greg Pinkard meanwhile will serve MCB Real Estate in an advisory role.

Jarnell Swecker, managing director/marketing at MCB Real Estate, told CPE that while there hasn’t been any formal collaboration between the two companies (until now), “Baltimore is a close-knit market where everyone knows everyone … and Pinkard Partners, with their breadth of experience, matched up as the perfect partner for what MCB wanted to accomplish.”

The post MCB Real Estate Acquires Pinkard Properties appeared first on Commercial Property Executive.

Dubbed Chicago Shallow-Bay, the portfolio comprises more than 390,781 square feet of space in four key submarkets, including North DuPage County and the I-55 corridor. These submarkets continue to outperform the Greater Chicago industrial market, according to a company statement.

Twenty-eight industries are represented in the spaces. Cumulatively, the properties are 91 percent leased to 37 tenants. Westmount would not disclose the price or specifics about the assets.

In 2022, Westmount divested an industrial portfolio consisting of 21 buildings near O’Hare International Airport, according to the same source. Its current footprint in the market totals 4.8 million square feet.

That same year, the company also sold a 709,652-square-foot industrial asset in metro Nashville, Tenn. Located at 245 Couchville Industrial Blvd. in Mt. Juliet, in the Wilson County submarket, 840 Logistics Center was fully leased at the time of sale.

Chicago’s industrial strength

JLL calls the Chicago MSA the second-largest industrial market in the U.S. and the market to watch in 2025. Recent activity reflects that reputation.

T2 Capital Management is currently financing the construction of two industrial buildings in the Chicago area, according to John Felker, its co-CIO.

“Chicago’s industrial market has fared better than other major industrial markets,” he told Commercial Property Executive. “Vacancy rates in Chicago are below the national average, and development of new space slowed considerably in 2024. This has kept supply more in check with demand growth.”

READ ALSO: Why Light Industrial Properties Will Continue to Shine

Chicago is a prime location for industrial assets for multiple reasons, according to Felker. Nearly 50 percent of Americans live within a one-day drive of Chicago; however, other midwestern cities share that characteristic. Chicago’s workforce and transportation infrastructure set it apart from other midwestern industrial hubs, Felker added.

Chicago-based developers Range Group and HSA Commercial Real Estate plan to develop a pair of 35,000-square-foot small-bay warehouses on Chicago’s Near West Side—at 2519 W. Fulton Ave. and 2520 W. Lake St.

The goal is to capitalize on the growing demand for Class A infill industrial facilities in established population centers, according to Robert Smietana, president & CEO of HSA Commercial.

Developed on a speculative basis, the warehouses can accommodate multiple tenants or a single user. They will offer 28-foot clear heights, individual drive-in doors, drive-in docks capable of accommodating 40-foot trucks, and secured automobile parking. Demolition of existing structures on the parcels is expected to begin this spring, with the new buildings being completed by early next year.

“Downtown Chicago and its surrounding neighborhoods are some of the nation’s fastest-growing areas yet are drastically underserved in new warehouse supply, particularly for smaller users,” Smietana told CPE. “Growth industries such as e-commerce and manufacturing will drive competition for urban industrial space in the near future.”

In December, there was ground-breaking for the final phase of Pullman Crossings with Ryan Cos.’ 160,000-square-foot development in the South Side that is expected to come online in August.

Not so boom and bust in Chicago

“Boom and bust cycles in the sector have been more muted throughout Chicago versus the coasts, as deliveries and a construction pipeline support Chicago’s below market vacancy rates, with the national average at 7 percent and Chicago at 5.5 percent,” said Laura Dietzel, real estate senior analyst with RSM based in Chicago.

Deliveries over the last 12 months comprise just 1 percent of Chicago’s total inventory while the national figure is about 2 percent or double that, she added.

“Landlords in Chicago are well positioned to face less supply-side competition than in other markets through the near term,” Dietzel said.

Chicago’s central location also makes it a critical logistics hub in the U.S., with proximity to major airports, railways and highways allowing for effective distribution.

“Lastly, there’s an underlying macro-trend related to re-shoring of critical manufacturing to the U.S., which the current administration’s focus will bolster.”

The post Westmount Realty Buys Chicago Portfolio appeared first on Commercial Property Executive.

James Campbell Co. has acquired the 663,882-square-foot Beltway Crossing Northwest industrial park in Houston. The deal also included a 7.4-acre land parcel, which may be developed into a 150,000-square-foot project. BGO previously owned the fully leased campus, CommercialEdge data shows.

In 2019, Sun Life Financial acquired a majority stake in both Bentall Kennedy and GreenOak Real Estate, merging the two entities into BGO. The resulting company assumed ownership of all existing assets throughout the U.S., including Beltway Crossing Northwest.

The property last traded in 2016, when Panattoni Development sold the park, according to CommercialEdge. That same year, the campus became subject to an acquisition loan of $30.1 million held by State Farm with a maturity date set for 2028.

READ ALSO: 5 Promising Opportunities in an Uncertain Market

Located at 11710, 11720 and 11810 N. Gessner Road, the campus is about 17 miles southwest of the George Bush Intercontinental Airport and about 30 miles northwest of the port of Houston.

The three-facility industrial park debuted between 2015 and 2016. The rear-load, 67,200-square-foot shallow-bay warehouse includes a 24-foot headway, while the two cross-dock facilities spanning 155,682 and 441,000 square feet feature 32-foot clear heights. The campus comprises a total of 174 dock doors and 10 drive-in doors.

The tenant roster includes Amazon, Wärtsilä North America—an operator in the marine and energy industries—and Advance Auto Parts.

Hawaii-based James Campbell Co. owns 93 industrial, office and retail assets throughout mainland U.S. The company recently closed another deal in Houston with the acquisition of the 2013-completed, 240,000-square-foot Point North Sort Center.

Industrial deals in metro Houston

Greater Houston’s industrial sale volume landed at $724 million in 2024, according to a report by Partners Real Estate. A total of 719 industrial and flex assets changed hands last year for an average of $115 per square foot. The average cap rate stood at 7.9 percent.

A significant metro Houston deal closed in December when Stonepeak acquired a 2.3 million-square-foot logistics collection from Starwood Capital Group. The six-asset portfolio in La Porte, Texas, traded for $244 million.

Two months earlier, MDH Partners purchased Link Logistics’ Cedar Port IKEA in Baytown, Texas. The 996,482-square-foot industrial park comprises two facilities that came online in 2017.

The post James Campbell Snaps Up 664 KSF Houston Industrial Asset appeared first on Commercial Property Executive.

Rockpoint continues to grow its industrial portfolio with the acquisition of Uxbridge Distribution Center, a cross-dock facility of more than 607,000 square feet in Uxbridge, Mass.

Scannell Properties sold the asset for $120 million, according to the Worcester Business Journal. The publication stated it was the largest property sale in Central Massachusetts since 2020.

Completed in 2023, the distribution center occupies 70 acres at 40 Lackey Dam Road in the Worcester, Mass., submarket. While most of the property is in Uxbridge, some of it lies in the towns of Sutton and Douglas, Mass.

READ ALSO: Industrial Sector Transitions as Supply Shrinks

The warehouse has a 36-foot maximum clear height and 127 docks. The property also includes adjacent industrial outdoor storage space and a parking field. Rockhill Management, Rockpoint’s dedicated property services affiliate, will be the property manager.

McKesson Corp. occupies approximately 73 percent of the facility, having signed a 15-year lease in December 2023 for 444,413 square feet. A Lincoln Property Co. report for the Greater Boston market noted it was the largest industrial deal closed in Massachusetts in the fourth quarter of that year.

Rockpoint industrial growth

Rockpoint has made 13 industrial investments with more than 12 million square feet since 2020. Since 1994, Rockpoint has invested in or committed to invest in 503 transactions with a total peak capitalization of about $80 billion. The firm’s co-founders have also sponsored 19 investment vehicles and related co-investment vehicles through Rockpoint and a predecessor firm.

In January 2024, Rockpoint raised $5.1 billion in aggregate equity capital commitments, including the close of Rockpoint Real Estate Fund VII at $2.7 billion. Fund VII targets opportunities in the U.S. across real estate sectors including industrial, multifamily, single-family rental, hospitality and select office investments.

More recently, Rockpoint formed a strategic partnership with Greystar to continue the development of Gateway Logistics Center in St. Petersburg, Fla. The project is the largest industrial development in Pinellas County in more than two decades.

The firm is also developing Race Track Logistics, a trophy industrial park in Pompano Beach, Fla., that will total about 1.5 million square feet at full build-out. The first phase, comprising four buildings totaling 621,243 square feet, is slated for completion in the summer.

The post Rockpoint Pays $120M for MA Industrial Asset appeared first on Commercial Property Executive.

An affiliate of Northside Hospital has purchased Glenridge Point, a 184,912-square-foot office complex in Sandy Springs, Ga. Richmond Honan Development & Acquisitions sold the two-building property for $14.2 million, according to CommercialEdge information.

Colliers Senior Vice President Tom Davenport and Vice President Dany Koe worked on behalf of the receiver, B. Riley Advisory Services.

The office complex last traded in 2018, when Richmond Honan acquired the asset for $44.5 million in a portfolio transaction from Pope & Land Enterprises, the same source shows.

Office complex on Pill Hill

Located at 100 & 200 Glenridge Point Parkway, the property is at the intersection of Interstate 285 and Georgia Highway 400. The office complex is nearby the Pill Hill medical hub and some 14 miles from downtown Atlanta.

Completed in 1970 on 3.6 acres, the five-story Glenridge Point incorporates floorplates ranging between 18,417 and 18,771 square feet, four passenger elevators and a total of 670 car parking spaces. The low-rise property underwent renovations between 1999 and 2016. Amenities feature outdoor space with seating area and EV parking spots.

The tenant roster includes eVestment and Keller Williams Realty First Atlanta, among others, according to CommercialEdge.

In the last quarter of 2024, office sales in the U.S. totaled $9.1 billion across 365 transactions, covering 46.9 million square feet. This marks a significant decline compared to the previous quarter, with a 37.1 percent drop in sales count and a 25.3 percent decrease in square footage.

Year-over-year comparisons also show a decline in office investment activity, with the last quarter of 2023 ending with $11.2 billion across 612 office sales.

The post Atlanta Office Complex Trades for $14M appeared first on Commercial Property Executive.

Milbrook Properties has acquired Westend Square, a 152,335-square-foot shopping center in Tallahassee, Fla., from a private individual. The property changed hands for $24 million.

Institutional Property Advisors Executive Managing Director Douglas Mandel worked on behalf of the seller and procured the buyer.

Shadow-anchored by an Aldi supermarket, Westend Square is at 2020 W. Pensacola St. The 13-acre property is currently subject to a $13.5 million CMBS loan originated by Wilmington Trust in 2015, CommercialEdge data shows. The note is expected to mature this year.

Shopping center in a student housing hub

Completed in 1978, Westend Square underwent a complete renovation in 2022, which coincided with Aldi’s opening. Its roster currently features Five Below, Planet Fitness, Pet Supermarket, Aaron’s Rents, Little Caesar’s, the U.S. Post Office and Citi Trends. The asset was 98 percent leased at the time of sale.

The retail center is near U.S. Route 90 and 3 miles east of downtown Tallahassee. Florida State University’s main campus and its two student housing communities, as well as Florida A&M University and Tallahassee Community College, are within a 3-mile radius. In 2024, there were some 157,000 people living in the 5-mile area surrounding the property.

The retail real estate sector continues to experience notable growth, despite challenges like bankruptcies and closures of legacy chain stores. The demand for physical retail space remains high, with vacancy rates at their lowest in 20 years, PwC Partner Andrew Alperstein told Commercial Property Executive in a recent interview.

The post Milbrook Properties Buys Tallahassee Shopping Center appeared first on Commercial Property Executive.

Reich Brothers has expanded its Mid-Atlantic industrial portfolio with its first acquisition in the metro Washington, D.C., market. The 539,691-square-foot warehouse with cold storage capabilities in Landover, Md., is described as one of the largest infill distribution centers in the region.

Nuveen Real Estate was listed as the most recent owner of the property at 6304 Sheriff Road, according to CommercialEdge data. Nuveen had acquired it from Link Logistics in September 2019 as part of a 100-property portfolio transaction totaling 29 million square feet.

JLL Capital Markets and JLL Metro DC Industrial Leasing represented the buyer in the Landover deal.

A value-add industrial property near Washington, D.C.

Situated less than 2 miles from the DC line and minutes from the Capital Beltway, the 21.7-acre property also includes 4 acres of industrial outdoor storage space. Downtown Washington, D.C., is some 10 miles west.

Completed in 1963, the cross-dock facility features 15 docks, 24-foot maximum clear heights and 10,000 square feet of office space. The building also is one of the East Coast’s largest freezer/cooler assets with tri-temp capabilities, JLL noted.

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

Bill Prutting, Craig Childs and Chris Dale from JLL’s Mid-Atlantic Industrial Capital Markets team were the sole advisors on the sale transaction. They partnered with John Dettleff, Dan Coats, Abbot Wallenborn and Sam Haas of JLL’s Metro DC Industrial Leasing team, which will lease the property on behalf of the new owner.

Reich plans to implement a multi-million dollar capital investment program. Improvements are slated to include installing a new roof, enhancing cold storage elements, upgrading the entrance and loading docks and completing interior and exterior painting.

More Reich Brothers moves

Reich Brothers, a 30-year-old firm focused on acquiring large-scale manufacturing, distribution and freezer/cold storage assets, has owned and operated more than 50 million square feet of industrial space across the U.S. The current deal expands its Mid-Atlantic portfolio to more than 2 million square feet, with additional purchases planned.

In another recent transaction, the firm acquired an industrial complex at 100-200 Sea Ray Drive in Merritt Island, Fla., from AAEA Investments LLC, for $27.7 million. Arnott Industries is the sole tenant of the Brevard County property.

In November 2023, Reich Brothers purchased a 309,968-square-foot industrial facility in Toledo, Ohio, from Stellantis in a sale-leaseback transaction. It was the firm’s first acquisition in the Toledo market.

The post Reich Brothers Enters DC Industrial Market 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.

A joint venture of GTIS Partners and Hopewell Development has sold Champions Circle Business Park, a 361,040-square-foot industrial campus in Fort Worth, Texas. Stonelake Capital Partners acquired the asset, according to CommercialEdge data.

The duo kicked off the industrial park’s development in 2021, benefitting from a $23.4 million construction loan, the same source shows. Champions Circle was completed a year later.

The park consists of three buildings—two 82,240-square-foot facilities and a third measuring 196,560 square feet. The shallow-bay light industrial structures feature 32-foot clear heights, 190-foot truck courts and building depths ranging from 160 to 210 feet.

READ ALSO: 5 Promising Opportunities in an Uncertain Market

Located on 21 acres at 15860 Championship Parkway, the industrial campus is less than 1 mile from Highway 114 and Interstate 35W. The Dallas Fort Worth Airport operates roughly 19 miles southeast.

Champions Circle Business Park is part of the 27,000-acre Alliance Texas master-planned development, which encompasses 60 million square feet of built space including office, industrial, retail and residential.

The tenant roster includes Optimas, an industrial fastener distributor and manufacturer, and Elliott Electric Supply, as well as Lab Supply, a provider of products for research facilities.

Dallas investment barrels through despite national slump

Investors slammed on the brakes on industrial deals throughout 2024. Last year, the sector made up just 12 percent of sales, down from 21 percent in 2023, DLA Piper’s annual survey shows. However, Dallas industrial investment kept a solid pace throughout 2024, and the market’s momentum lingered well into the new year.

A two-building, light industrial campus traded last month in the Metroplex. Rosewood Property Co. purchased the 200,765-square-foot asset from Provident Realty Advisors. The Plano, Texas, property was 71.1 percent leased at closing.

In January, Alterra IOS expanded its industrial outdoor storage footprint with four more assets. Spanning 35 acres, the collection brought the company’s IOS portfolio to 10 properties in the market.

The post Hopewell and GTIS Sell Metroplex Industrial Asset appeared first on Commercial Property Executive.

Phoenix Investors has acquired three industrial properties totaling approximately 3.1 million square feet.

The company bought a nine-building, 750,000-square-foot campus in Milwaukee from Regal Rexnord. The asset changed hands for $9 million, according to Milwaukee Business Journal. The other two properties were sold by a subsidiary of Stellantis and are in Milwaukee and Marysville, Mich.

Cushman & Wakefield brokered the Stellantis transaction, while First Financial Bank provided acquisition financing for the Regal Rexnord sale. These purchases brought Phoenix Investors’ national portfolio to more than 80 million square feet.

READ ALSO: Top 5 Emerging Industrial Markets in 2024

The 56-acre Rexnord property is at 4701 W. Greenfield Ave. Its buildings were completed between 1920 and 1973. Features include clear heights ranging from 12 to 47 feet, crane bays and heavy power infrastructure. Floorplans allow for a minimum divisible configuration of 12,741 square feet. The asset was fully vacant at the time of sale.

The two Stellantis assets are at 3280 S. Clement Ave. in Milwaukee and 840 Huron Blvd. in Marysville. The first encompasses 1.1 million square feet, has clear heights up to 21 feet, 40 dock doors and six drive-in doors. The three-building Marysville property measures 1.2 million square feet, clear heights up to 36 feet, 64 dock and 13 grade doors, along with 9,800 square feet of office space. Both properties also have access to rail and are used by Stellantis’ Mopar division.

The Milwaukee properties are within 10 miles of each other. They are close to interstates 94 and 41 and within 13 miles of Milwaukee Mitchell International Airport. The 840 Huron Blvd. asset is close to St. Clair County International Airport and provides easy access to interstates 94 and 69.

Executive Director Tony Avendt and Senior Director Jeff Hoffman with Cushman & Wakefield brokered the Stellantis deal. First Financial Bank Senior Vice President & Regional Manager Jeff Cartwright provided the senior financing for the former Regal Rexnord campus acquisition.

Big purchases in the Midwest

Another large industrial acquisition in the Midwest region closed last month. SL Industrial Partners picked up a 17-building portfolio in Chicago’s suburbs. The assets were 92 percent leased at the time of closing.

In November, Industrial Realty Group purchased a 965,134-square-foot campus in the Minneapolis-St. Paul metro. The company plans to redevelop the property.

A month earlier, InSite Real Estate sold a 1.1 million-square-foot property in Monroe, Mich., for $139.5 million. The asset was fully leased to Ford Motor Co.

The post Phoenix Investors Buys 3.1 MSF of Industrial Assets appeared first on Commercial Property Executive.

Globe Life plans to move its corporate headquarters to 7677 Henneman Way in McKinney, Texas. The company intends to buy the 200,000-square-foot office building from SouthState Bank.

The deal also involves the purchase of two adjacent parcels of developable land—8 acres north of the building and 1.3 acres to the east.

Cushman & Wakefield represented both parties in the transaction. Bradley Arant Boult Cummings LLP also worked on behalf of Globe Life.

Globe Life will relocate its corporate offices from 3700 S. Stonebridge Drive, where it occupies roughly 150,000 square feet, according to CommercialEdge information. That building is some 4 miles north of the future headquarters where the firm will also gain exterior building signage rights.

The future Globe Life headquarters

KDC developed the six-story building at 7677 Henneman Way as the second component of Independent Financial’s headquarters. The development team also included Smith Group, Corgan and Kimley-Horn, among others. The bank was later on acquired by SouthState.

Completed in 2022, the low-rise has a LEED Silver certification. Amenities feature parking, a fitness center and conference space for 350 people, as well as food and beverage areas.

The property is 30 miles north of downtown Dallas and has access to the Sam Rayburn Tollway. Dallas-Fort Worth International Airport is some 27 miles away.

Cushman & Wakefield Executive Directors Campbell Puckett and Zach Bean, Executive Managing Directors Bill McClung, Chris Taylor and Ryan Hoopes, together with Associate Tucker Hume brokered the transaction. In addition, Senior Attorney Krishan Patel and Partner Lauren Smyth with Bradley Arant Boult Cummings LLP represented Globe Life.

The office investment volume may experience a modest increase in 2025, but prices are likely to remain steady, a recent CommercialEdge report shows. Maturing loans on properties facing occupancy issues and ongoing inflation pressures will lead to a market dominated by distressed property sales.

The post Globe Life Eyes New HQ Near Dallas appeared first on Commercial Property Executive.

Westwood Financial has purchased Eastway Square, a 130,156-square-foot shopping center in Charlotte, N.C., from New Forum Partners. Berkley Capital Advisors arranged the sale.

The property has been under New Forum Partners’ ownership since 2020, when the company acquired Eastway Square from BC Wood Properties for $12.5 million. Atlantic Union Bank originated a $9.3 million permanent acquisition loan for that transaction, according to CommercialEdge information.

Completed in 1991, Eastway Square is anchored by regional supermarket chain Food Lion. The 14.7-acre property is located at 3211 Eastway Drive, at the traffic intersection with Central Avenue and less than 5 miles southeast of downtown Charlotte. The tenant roster includes Ross, America’s Best, Papa Johns, Subway, WingStop, Dental Works and Hibbett Sports.

Eastway Square serves more than 311,000 residents on a 5-mile radius, with an average household income above $112,000. It is one of several grocery-anchored retail properties Los Angeles-based Westwood Financial owns in Charlotte. These include Prosperity Village Square, Steele Creek Crossing, Steelecroft Shopping Center and The Arbors at Mallard Creek.

In today’s retail landscape, developers are increasingly focusing on leveraging location analytics and understanding consumer patterns, so as to create shopping centers that are not only profitable but also integral to the community’s lifestyle.

The post Westwood Financial Buys Charlotte Shopping Center appeared first on Commercial Property Executive.

CBL Properties has sold Monroeville Mall and its Annex in Monroeville, Pa., for $34 million. Walmart bought the retail assets totaling 1.2 million square feet, according to CBS News. JLL worked on behalf of the seller, while CBRE Senior Vice President Tom Flynn represented the buyer.

CBL used approximately $7.1 million of the net proceeds to lower the outstanding principal of its outparcel and open-air center loan to $333 million. The deal enabled the release of a collateral parcel.

The retail center traded at an 86 percent discount from its previous sale. CBL had acquired the shopping mall in 2004 for $231.2 million and the transaction included the assumption of a $134 million fixed-rate, non-recourse loan, The Chattanoogan reported at the time.

Redeveloping Monroeville Mall

Monroeville Mall and the adjacent Annex cover an 185-acre site at 200 Mall Circle Drive, just off U.S. Route 22 and close to Interstate 376. Downtown Pittsburgh is less than 13 miles west.

The mall’s roster includes Barnes & Noble, Claire’s, Forever 21, Macy’s, H&M and JD Sports, among others. The Annex has Going Going Gone, Guitar Center, Full Throttle Adrenaline Park and several other retailers as tenants.

Walmart has selected Cypress Equities to manage the property and spearhead its redevelopment into a new retail and commercial destination adapted to the shoppers’ 21 century needs. The last time Monroeville Mall underwent renovations was in 2003, when $10 million contributed to upgrading its decor, as well as installing air chillers.

In 2025, the retail sector is expected to continue the transformation brought about by last years’ trends. Experiential retail and high-quality real estate remain the main drivers for enhancing in-person shopping, as well as reducing vacancies.

The post Walmart Acquires Pittsburgh Mall appeared first on Commercial Property Executive.

The Miami office sector posted strong fundamentals throughout 2024, according to the latest CommercialEdge data. The metro marked a more than 41 percent jump in investment volume year-over-year, recording the busiest period in the last quarter.

Last year, high prices in the Magic City placed it fourth in the nation, the market also emerging as the most expensive gateway city for office deals, with assets trading at higher prices than even in Manhattan. Additionally, Miami’s end-of-2024 vacancy rate was the lowest in the U.S.

Significant projects boost Miami’s pipeline

As of December, the metro had 1.8 million square feet of space underway across 18 properties, accounting for 2.6 percent of existing stock—way above than the national average of 0.8 percent. Among gateway markets, Boston led the rankings with 3.4 percent, while Miami outperformed San Francisco (2.3 percent), Seattle (1.2 percent), Los Angeles (0.7 percent) and Washington, D.C. (0.3 percent). When adding projects in planning stages, Miami’s share reached 9.6 percent, second after Austin (12.6 percent).

The list of the largest projects under construction in the metro saw no changes as of December. Royal Caribbean’s new headquarters remains the largest development, scheduled to come online in early 2026. The 380,000-square-foot project is rising at 1050 Caribbean Way in Miami’s central business district.

The second-largest project underway is UHealth Medical Center at SoLé Mia, a 363,000-square-foot medical office development in North Miami. Turnberry and LeFrak Organization are the developers, with the completion date pushed to September 2025.

Projects that started going vertical last year added up to nearly 1.4 million square feet across 10 properties, representing 1.7 percent of the existing stock. Additionally, developers completed 1.2 million square feet across nine properties—accounting for 1.5 percent of total stock.

The largest office project underway for years, the 640,000-square-foot 830 Brickell tower by OKO Group and Cain International came online in October 2024. The project was the first Class A tower to be constructed in Miami’s urban core in more than a decade, and currently includes top-tier tenants such as Microsoft, Blackstone, WeWork and CI Financial Corp.

A top market for residential makeovers

Office-to-residential conversions emerged as an attractive option in recent years. As a response to this trend, CommercialEdge launched a tool that measures a building’s potential for residential conversion and highlights which markets post strong repurposing fundamentals. The Conversion Feasibility Index scores include three tiers, with Tier I properties being the most attractive candidates for such makeovers.

At the end of 2024, Miami had 21 office properties totaling nearly 2.9 million square feet within the Tier I category, while the Tier II included 138 buildings totaling 11.5 million square feet. The metro has a notable amount of office space posting high potential for residential conversions, with 3.7 percent of its office assets in Tier I and 12.4 percent in Tier II—emerging above the national averages 2.7 percent and 12.1 percent, respectively.

Ending the year as the priciest office market

Last year, Miami’s office sector saw in $1.4 billion in deals, with 46 properties totaling 3.5 million square feet changing hands—marking a 41.3 percent increase over the year. The volume reached $159.8 million at the end of the first quarter, while investment activity picked up during the second and third quarters. The last quarter ended with $668.7 million in deals—representing a 70.1 percent year-over-year growth.

In terms of total sales volume, Miami ranked fourth in the nation, after Los Angeles ($1.2 billion), while Manhattan led the rankings with $3.9 billion. The metro outperformed Chicago ($1.1 million), San Francisco ($786.6 million) and Seattle ($598.8 million).

Notable deals included the $443 million acquisition of 701 Brickell, a 685,215-square-foot high-rise. Nuveen Real Estate sold the 33-story property in one of the largest office transactions in Florida.

In 2024, Miami assets changed hands at an average sale price of $400 per square foot—above the national average of $175 per square foot. The Magic City emerged as the most expensive office metro in the nation, outpacing Manhattan ($369 per square foot), San Francisco ($350 per square foot) and Los Angeles ($281 per square foot). Chicago recorded the lowest figure among gateway markets, with an average sale price of $85 per square foot.

Mami’s vacancy rate lowest in the U.S.

Miami’s office vacancy rate stood at 15.2 percent as of December—below the national average of 19.8 percent and marking a 30-basis-point raise. The metro’s rate increased through 2024, from the 12.4 percent recorded in January.

The Magic City’s vacancy was the lowest across the nation. Miami was followed by Manhattan (16.6 percent), Boston (17 percent) and Chicago (18.8 percent), while San Francisco posted the highest U.S. rate at 28.8 percent.

Notable office leases that closed last year in Miami include DigitalBridge’s headquarters relocation agreement: a 79,141-square-foot deal in Delray Beach Fla. Later on, in September, MetLife Real Estate Management secured a 128,450-square-foot renewal at Wells Fargo Center in downtown Miami. The lease represented the largest office commitment in the city’s central business district in recent years.

Coworking share the highest in Miami

The coworking sector in Miami comprised approximately 3 million square feet across 144 locations as of December, slightly less than in Seattle (3 million square feet). Manhattan led the rankings with 11.3 million square feet, followed by Chicago (7.7 million square feet) and Los Angeles (6.5 million square feet).

Miami’s share of flex office space as percentage of total leasable office space reached 3.8 percent, the highest across gateway markets and above the national average of 1.9 percent. The coworking provider with the largest footprint in the metro remained Regus, with operations totaling 379,211 square feet. The companies that followed were WeWork (268,578 square feet), Spaces (226,223 square feet), Quest Workspaces (221,749 square feet) and Industrious (215,000 square feet).

In early December, Regus signed a 45,789-square-foot full-building lease in Miami Beach, Fla. The deal came after WeWork closed its location at Azora Exan’s 429 Lenox in May.

The post Miami’s Office Market Topped the Charts in 2024 appeared first on Commercial Property Executive.

The seller was Diversified Healthcare Trust, which reported that at the time of sale, the property was 49 percent leased, with a weighted average lease term of more than eight years. The seller stated that it plans to use the transaction proceeds to pay down its senior secured notes due in January 2026.

DHC is managed by leading U.S. alternative asset management company The RMR Group.

MUSE consists of three buildings totaling 186,000 square feet in the heart of Torrey Pines. The campus was recently repositioned with a new exterior glass façade and enhanced amenities, including a new fitness center, indoor/outdoor conference center, landscaping with outdoor seating and games, as well as a full-service café.

Two of the buildings were recently upgraded to modern labs and are fully leased on a long-term basis, Breakthrough stated. One vacant building will be repositioned to provide flexible wet lab space to accommodate a variety of life science research.

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

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

The Class A buildings are at 3030, 3040 and 3050 Science Park Road and are, respectively, three stories, 94,456 square feet, occupied by Surgalign; two stories, 36,418 square feet; and two stories, 55,102 square feet, tenanted by Prometheus Biosciences, according to information provided by CommercialEdge. All three were completed in 1985 and 1986 and completely redeveloped in 2021.

San Diego’s life science market performance

The San Diego life science market has seen direct vacancy rise steadily from a low of about 6 percent in mid-2022 to nearly 18 percent currently, according to a January report from Savills USA. Meanwhile, the construction pipeline has fallen to 4.5 million square feet, Savills reported, “as developers hold off on new projects amid limited preleasing and ongoing tepid demand.”

Torrey Pines and Sorrento Mesa have been the two most active submarkets for leasing activity recently.

In October, Breakthrough Properties opened Torrey Heights (renamed), a 520,000-square-foot life science campus in San Diego’s Del Mar Heights submarket. The 10-acre, three-building property is fully preleased, largely to Pfizer’s oncology division and Becton, Dickinson and Co.

The post Breakthrough Properties Buys Life Science Campus for $159M appeared first on Commercial Property Executive.

The coworking sector is set for a dynamic 2025 due to further adoption of hybrid work models and more businesses embracing in-person work. But this doesn’t mean there won’t be any bumps along the way as the sector cannot operate in a vacuum.

“The worst of commercial office real estate is not past us, so while coworking may offer an opportunity, the underlying headwinds that commercial office real estate faces—expensive capital and stagnant physical occupancy—persist,” said CommercialEdge Associate Director Peter Kolaczynski.

To adapt to these unceasing challenges, office operators have been right-sizing their portfolios to include more flex offerings. This has not only transformed the physical environment of traditional offices, but also altered lease terms, as tenants today expect more flexibility in how and when they use their space.

Key trends in the coworking space

High demand for flexible offerings and mounting return-to-office mandates are two of the most prominent trends in the sector today. A recent WeWork survey found that 59 percent of companies plan to adopt flexible solutions over traditional offices to expand their workspaces over the next two years. Notably, 95 percent of remote companies looking to increase their office space favor flexible options.

LISTEN TO: Step Into My Office: CBRE’s Take on Rethinking Office Space and the Future of Flexibility

“We are continuing to see very strong demand off the back of this shift toward flexibility and that’s why we’re seeing our network grow at its fastest-ever rates,” said Mark Dixon, CEO of International Workplace Group. Over the past year, the company added nearly 900 new locations globally under its Regus, Spaces, HQ and Signature brands. Most expansions were in suburban and community-focused markets such as the Red Bank borough in New Jersey, but also in Milwaukee, and Boca Raton, Fla.

Until now, although 80 percent of organizations have return-to-office policies put in place, only 17 percent of them really enforce them, CBRE’s research found. But that number is anticipated to increase going forward.

“The biggest shift I expect to see is companies following the lead of recent RTO mandates and deciding to increase the amount of time they spend in-office, with more opting to go full-time,” said WeWork Vice President & Head of USC Sales Luke Robinson. “This will require flexible space providers to offer an ample variety of workspaces that can accommodate employees up to five days a week.”

More employees in the office means more conference rooms, communal areas and private phone booths, among others. Operators are already making changes to their office layouts as the focus rapidly shifts from where employees work to how they work.

“In 2025, we anticipate an evolution of business priorities with the conversation moving beyond the physical location of employees with companies requiring everyone to be in a single building to the productivity of workers and retention of talent instead,” said Dixon.

To respond to the increased demand for specific amenities and services that support teamwork and collaboration, operators are increasingly adding spaces that foster connection.

“(Employers) want workspaces that bring people together and they need amenities like technology-powered meeting rooms, flexible spaces designed to support diverse workstyles and event programming to help achieve that goal,” Robinson said.

Private offices, smaller conference rooms and virtual mailboxes are also increasingly popular, catering to businesses that seek professional environments without long-term commitments, according to Jason Anderson, president of Vast Coworking Group. Additionally, assistant services such as customizable call answering services allow business owners to focus less on admin work and more on their growth and customers, all while keeping that human element.

Shifting business models

To cater to the increasing number of clients, coworking operators have also been adapting their business models while keeping their focus on providing flexible, scalable and customer-centric solutions. Over the past few years, they have been more open to collaboration and networking. WeWork launched Coworking Partner Network, a partnership with Vast Coworking Group that allows tenants to access spaces across both brands.

“Our partnership with WeWork has been an industry first,” said Anderson. “I look at it as the beginning of a change in global coworking operations, modeled like the Oneworld Alliance in the airline industry.”

This strategic approach further reinforces the idea that operators need to leverage each other’s strengths to provide members with access to a broader number of locations and services. By combining suburban-focused partners with WeWork’s urban stronghold, these networks create more opportunities for hybrid and distributed teams, reflecting the sector’s pivot toward greater accessibility and choice.

“Franchising is the vehicle driving our expansion and we have always focused our growth on underserved suburban markets instead of hyper-growth CBDs, which complemented WeWork’s portfolio and solidified our partnership,” Anderson added.

Another way coworking operators have been catering to members’ latest needs is by adapting their membership options. For example, WeWork launched two digital products: WeWork All Access and WeWork On Demand. The first one provides access to 450 locations worldwide, whereas the second one has a pay-as-you-go model that allows tenants to book spaces and meeting rooms at 300 locations instantly.

On the leasing side, coworking operators have been embracing non-traditional agreements to provide companies with more control over their office footprint. From shorter lease terms to flexible capacity models, these changes are helping businesses remain agile in uncertain times.

“We had a tech company who designed their workplace strategy with 100 All Access passes and WeWork Workplace instead of a traditional private office, supporting their commitment to flexible work while giving employees the ability to access in-person space as they need it,” Robinson said.

As of November, Manhattan, Chicago and Los Angeles were the top metros for coworking space, with the latter emerging as the largest market for locations, with 277 spaces, CommercialEdge data shows. International Workplace Group’s Regus and HQ brands were the top operators, followed by WeWork, Industrious and Spaces.

Vast Coworking Group was one of the companies that expanded significantly in 2024. After acquiring Intelligent Office and adding 54 locations across the U.S. and Canada, Vast later opened 19 new locations across its franchise brands. International Workplace Group also added to its network, signing 200 new locations across the country. Industrious—which was recently acquired by CBRE—expanded its portfolio in major markets, adding two locations in Los Angeles: a 19,000-square-foot space in Century City, Calif., and a 20,752-square-foot space in Westwood, Calif. The company also doubled its lease at 860 Broadway in Manhattan.

What’s next?

Collaborations, portfolio expansions and the wider adoption of hybrid work models reflect the coworking sector’s resilience. Last year, most operators saw improvements across several metrics. After emerging from bankruptcy, WeWork registered a 9 percent annual increase for on-demand bookings as of October, while International Workplace Group recorded the highest revenue in the company’s 35-year history.

As operators continue to prioritize bringing offices closer to employees, particularly in high-demand suburban markets, Kolaczynski expects continued coworking growth in these areas. Meanwhile, traditional office owners in business districts will look to adopt more flexible options, either by creating their in-house coworking brands or by entering into partnerships with experienced operators.

READ ALSO: Elevating the Coworking Experience

“I predict that flexibility will remain key in 2025,” Robinson said. “This year’s return-to-office mandates have shown that companies see the office as critical to their success, but they have not made final decisions on how many days they will be in person.”

Besides partnering with each other more often, coworking providers must keep innovating to support evolving workstyles, and offer solutions that cater to both individual employees and large teams.

“Occupancy should increase given the recent consolidation by operators,” said JLL Head of Property Sectors Research for the Americas Scott Homa. “Management agreements will remain popular given capital constraints and the high cost of interior construction. We could see continued M&A activity and more franchising.”

The post Where’s the Coworking Sector Headed? 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.

The post Heitman Raises $800M for Latest Debt Fund appeared first on Commercial Property Executive.

A joint venture between Cross Ocean Partners and Palisade Group has acquired 4500 Park Granada, a 222,667-square-foot office building in Calabasas, Calif. Gemdale USA sold the fully-leased asset for $69.4 million or about $312 per square foot, in a deal brokered by Newmark.

The property previously changed hands in 2021 for $79 million when it was acquired from Rising Realty Partners, according to CommercialEdge information. The asset currently traded at a 12 percent discount compared to its last sale price.

The three-story building sits on a 20-acre site located less than a mile from downtown Calabasas. Downtown Los Angeles is some 27 miles away, while the Los Angeles International Airport is 30 miles southeast.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

Completed in 1986, the property also known as The Park Calabasas underwent cosmetic renovations in 2019. Initially, the low-rise served as the corporate headquarters of Lockheed Martin and later as headquarters for Countrywide, operating as a single-tenant building for nearly 20 years. It now houses seven tenants across various industries.

The building features floorplates ranging between 16,670 and 93,170 square feet, six passenger elevators and almost 700 parking spaces. Amenities include an on-site cafeteria and jogging trail, as well as an open space for corporate events and outdoor meetings.

The Newmark team representing the seller included Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairmen Ken White, Rob Hannan, Michael Moll and Laura Stumm, along with Director Alex Beaton.

Los Angeles office sector remains steady

Greater Los Angeles’ office investment volume in the fourth quarter of 2024 reached $870 million, according to a CBRE market report. Additionally, the metro’s overall vacancy rate as of December clocked in at 23.9 percent.

At the end of last year, Los Angeles County acquired The Gas Company Tower, a 1.3 million-square-foot office building in the city’s downtown, for $200 million. Wilmington Trust sold the asset after having foreclosed in September on a $350 million CMBS loan.

Another notable deal in the area was Drawbridge Realty’s $185 million purchase of Arboretum Gateway, a 225,773-square-foot building in Santa Monica, Calif. Clarion Partners sold the property, which is 100 percent triple-net leased to Universal Music Group.

The post Cross Ocean JV Buys LA Asset for $69M appeared first on Commercial Property Executive.

Sometimes the most accomplished investors and developers thrive while keeping a relatively low public profile. That’s clearly true of The Fallon Company. For nearly 20 years, the Boston-based firm has been the driving force behind Fan Pier, the three million-square-foot development on Boston Harbor that ranks among the most significant urban placemaking initiatives of the past couple of decades.

My guest for this episode is Michael Fallon, the firm’s CEO and the successor to Joe Fallon, the company’s founder and Mike’s dad.

In a way, this conversation brings me full circle. When I started covering real estate, the reinvention of Fan Pier was in its earliest stages, and Joe Fallon was one of the first industry CEOs I had the opportunity to sit down with. Two decades later, Joe has moved into a new role as chairman, his son Mike has taken on CEO responsibilities and the epic redevelopment of Fan Pier is nearing completion.

In this conversation, you’ll also hear about the pivotal experience Mike gained from working in another industry, the new markets that he views as promising, and the company initiative that opens doors for young people to real estate careers. Take a listen.

Episode highlights:

Origin story of a Boston landmark (2:56)

The life science lease that became a turning point (7:20)

Boosting resilience with a U.S. first (10:45)

Where The Fallon Co. sees the next big opportunities (15:39)

Growing a footprint in the South (20:54)

Early influences: getting the flavor of the business (24:49)

Takeaways from construction industry experience (28:38)

Tips for aspiring professionals (31:22)

An innovative, “wildly impactful” program for young people (34:29)

How to revitalize U.S. downtowns (39:41)

Mike Fallon off the clock (44:53)

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

The post Investment Matters: Boston’s Quiet Powerhouse appeared first on Commercial Property Executive.

In the Viewpoint 2025 survey, IRR shared viewpoints from its nearly 600 valuation advisors across the U.S. and the Caribbean.

“In this market, fundamental value isn’t about speculation but real cash flow, strong locations and realistic tenant demand,” Anthony Graziano, CEO of IRR, told Commercial Property Executive.

Investors need to rely less on the cost of money and more on effective management to maximize operations by focusing on sustainable rent levels and assets with lasting economic function, Graziano advised.

“Long-term value lies in markets with strong job growth, economic drivers and favorable migration trends,” he said. “Fundamental value is not a definition—it is a recognition that investors need to get back to basics and study fundamental drivers that create long-term value.”

In the meantime, private investors have shifted capital allocations to alternatives such as senior housing, self storage, build-to-rent single-family and data centers.

Create a lasting impact

Graziano said the best real estate investments go beyond returns—they create lasting impact.

“Today’s most successful projects are mixed-use developments that integrate housing, retail and community spaces, especially in high-growth metros,” he said. “Developers are embracing adaptive reuse, transforming vacant malls, offices and hotels into vibrant mixed-income housing and health-care facilities, addressing market demand and community needs.”

Graziano pointed out that projects such as Nashville Yards and Richmond’s Diamond District showcase this transformation, seamlessly blending commercial space with housing, entertainment and public gathering areas.

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

Additionally, four developers are proposing a redevelopment of Boca Raton City Center in Boca Raton, Fla., incorporating these principles.

“These developments demonstrate that reimagining underutilized spaces isn’t just good urban planning; it’s a blueprint for sustainable, community-driven growth,” he added.

Trump policy points to ‘America’ first

As an over-arching theme, national economic policy action can have impacts (intended and unintended) on the economy, which nearly always affects the direction of real estate values, Graziano said.

“President Trump’s general thesis has always been clear: America First, which will generally be good for real estate and real estate investment in growth. He’s an expansionary president who focuses on investing in America’s economic strength, and disinvesting in activities that do not tie to American growth.”

The challenge on the real estate front will be balancing the America First growth focus with potential dislocations associated with abandoning prior administration policy, Graziano warned. Some examples include stated reductions in the federal workforce through DOGE, cuts to major programs that could have industry-specific impacts and significant divestiture of federal assets (land, buildings, leases, etc.).

Office determinant on federal workers

For the first time in years, Graziano said he is seeing a real policy push that could bring federal workers back to the office.

READ ALSO: Trump’s Gift to the Office Market

“If private employers follow the lead, it could finally stabilize the sector, especially for well-located Class A buildings,” he said. “Not every office building will make a comeback. Older Class B and C buildings continue to face an uphill battle, and many must be repurposed to stay viable. This is especially true of aging government buildings.”

Industrial shifts to domestic

Graziano said industrial remains the strongest asset class, but after years of rapid expansion, it’s shifting into a more measured growth phase.

He added there’s been a shift toward domestic production following the post-Covid reshoring trends.

“As President Trump implements the threatened tariffs and provides reshoring incentives, the industrial sector could see another wave of demand—especially in border states and major logistics hubs,” he said.

Labor shortages and high development costs remain real barriers, Graziano cautioned. Even with strong demand, constructing the next generation of industrial facilities won’t be easy or cheap, he anticipates. Port cities could see a fall-off in container throughput as imports directly correlate with port industrial demand.

Retail relies on confidence

Retail’s success is tied to consumer confidence.

“If President Trump’s tax policies put more money in people’s pockets, we could see a boost in spending—especially in restaurants, entertainment and service-based retail,” according to Graziano. “But there’s a flip side: if trade policies make imports more expensive, big-box stores and fast fashion retailers could take a hit if there is a consumer backlash on pricing.”

Graziano anticipates that this will also appear in the inflation stats, which could impact the Fed funds’ rate policy. “Expect strong performance from grocery-anchored centers and necessity-driven retail, which tend to weather economic volatility better than most.”

Multifamily remains steady

Multifamily has been one of the steadiest asset classes, but policy shifts could shake things up, according to Graziano.

“Multifamily is stabilizing, though affordability concerns are keeping investors cautious,” he said. “Some pockets of multifamily distress have been building in markets with high inventory deliveries.”

If President Trump extends tax cuts or eases regulations, more investment could flow into new development, Graziano anticipated.

But immigration policies and potential rent controls in some states could impact demand and operating costs. According to Graziano, housing is also a significant component of inflation statistics, so there will be competing interests to keep rent and housing growth strong, but not too strong, which will undermine inflation protections. “Investors must stay flexible and focus on markets with strong job growth and steady population gains to mitigate risks,” Graziano cautioned.

The post What Defines the Best CRE Investments Today? appeared first on Commercial Property Executive.

Stonelake Capital Partners has purchased a 123,140-square-foot industrial building in Charlotte, N.C. Albany, N.Y.-based Steins Fiber sold the property for $13.5 million, Mecklenburg County public records show.

Avison Young arranged the transaction on behalf of the buyer, while Piedmont Properties represented the seller.

The deal marks Stonelake Capital Partners’ second off-market industrial purchase in the metro. The company entered the Charlotte industrial market in late 2024, with the acquisition of a fully occupied, 402,390-square-foot facility. At the time, Stonelake Capital Partners paid $51 million for the property, which is situated within the Concord Airport Business Park. That transaction was also arranged by Avison Young.

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

The property is at 6000 Old Concord Road and it’s fully leased to Foundation Building Materials and Dixie Plywood & Lumber Co., CommercialEdge shows. The asset allows easy access to interstates 485, 85 and 277. Charlotte Douglas International Airport is within 13 miles, while Concord, N.C., is 22 miles away.

The building features 22-foot clear heights, 13 dock high doors, one grade level door, LED lights, skylights, a fenced truck court and potential for as much as 2 acres of outdoor storage space. Avison Young’s Principals Chris Skibinski, Henry Lobb, Vice president Abby Rights and Associate Broker Jewell Gentry worked on behalf of the buyer. Partner Will Jenkins, Director of Investments Marc Hedrick and Investment Associate Jack Harvey with Stonelake Capital Partners also assisted. The seller was represented by Piedmont Properties’ President Scott Hensley.

Strong industrial activity

Industrial properties traded at one of the lowest average sale prices in the South region, of $79 per square foot, a recent CommercialEdge report shows. Charlotte’s industrial sales volume stood at $781 million, outperforming Baltimore ($486 million) and Memphis ($362 million). The metro maintained its position as one of the South’s tightest markets, with an industrial vacancy rate of 5.4 percent, below the 7.5 percent national average.

In December, INDUS Realty Trust acquired a majority stake in a 21-building industrial portfolio with assets in Charlotte and Charleston, N.C. Dubbed The Carolinas Portfolio, the 4.3 million-square-foot collection is valued at $575 million. Earlier last year, LM Real Estate Partners paid $97 million for an approximately 1.4 million-square-foot industrial property in the area, in a deal brokered by Avison Young.

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Moreover, the market had 8.2 million square feet under development during the same period, significantly surpassing the 3.3 million square feet recorded in December 2023.

Despite this growth, the metro’s vacancy rate increased 310 basis points year-over-year, as the influx in new supply put a dent in the metro-level average. Throughout the year, 9.3 million square feet of industrial space was delivered.

However, recent major projects underscore the market’s resilience and robustness. In January, Hines and Aubrey Corp. announced plans for a 10 million-square-foot mixed-use development, encompassing more than 2,390 acres. The industrial segment of this project will occupy more than 1,200 acres across two campuses, with the rest of the space being used for data center, retail, hotel and residential purposes.

Development pipeline grows, still below national average

At the end of December, Atlanta’s industrial sector had 8.2 million square feet under construction, more than double the 3.3 million square feet registered in December 2023. The 26 projects in the pipeline are expected to account for 1.4 percent of the metro’s total inventory.

The market’s development index was below the 1.7 percent national average, but above peer markets such as Chicago (0.5 percent), Indianapolis (1.2 percent) and New Jersey (1.0 percent). Phoenix (4.5 percent) continued to lead nationally.

At the end of the year, The Broe Group acquired a 14-acre site in Georgia’s Fulton County Industrial District for the construction of a 225,000-square-foot build-to-suit facility. The building will have rail service, with pad-ready construction expected this February.

Additionally, 18 projects totaling almost 4.9 million square feet broke ground last year. One of them is Stonemont Financial Group’s Stonemont Park 75 South, a 903,701-square-foot industrial development in Locust Grove, Ga. In June, the firm obtained a $42.5 million construction loan for the three-facility campus.

Industrial completions remain steady

Last year, Atlanta’s industrial market saw 26 properties coming online, totaling almost 9.3 million square feet—about 1.6 percent of the metro’s total inventory. This figure was slightly lower than the 9.7 million square feet completed in 2023.

Compared to peer markets, only Indianapolis (6.1 million square feet) and Kansas City (4.5 million square feet) saw less space delivered. Phoenix (32.7 million square feet) saw the most completions, followed by Dallas (29.1 million square feet) and Chicago (14.9 million square feet).

Last year, Panattoni Development completed the almost 1.4 million-square-foot Building 6 within Speedway Commerce Center, a 546-acre industrial campus in Hampton, Ga. Target agreed to prelease the distribution center in October 2023.

Assets trade for less, investment volume grows

Atlanta’s industrial investment volume reached roughly $2 billion last year, about $100 million higher than in 2023. However, assets traded on average for $108 per square foot, a slight year-over-year decrease from $116.

Among peer markets, New Jersey ($213 per square foot) and Phoenix ($162 per square foot) remained in the spotlight, while Chicago ($92 per square foot) and Indianapolis ($73 per square foot) were at the opposite end of the spectrum.

In one of the largest deals in the metro from last year, ATCAP Partners purchased Gwinnett Park, a 12-building, 753,700-square-foot light industrial park. Dogwood Industrial Properties, an investment platform of TPG Real Estate, sold the campus completed between 1973 and 1986.

Atlanta’s vacancy rate among the lowest nationally

At the end of December, Atlanta’s industrial vacancy rate clocked in at 6.8 percent, 310 basis points higher year-over-year. However, the figure is still 1.2 percent below the national average. Among peer markets, the metro had one of the lowest vacancy rates, while Indianapolis (9.8 percent) and Chicago (9.7 percent) had the most available space.

In November, Samaritan’s Purse signed a 172,000-square-foot, full-building lease at a warehouse at 1347 Highway 92 in Acworth, Ga. The charitable organization will use the space to process Christmas gifts for children. Prologis acquired the facility in 2023 from Link Logistics.

Other notable leases in the area include Souto Foods’ commitment to 200,000 square feet at Sugarloaf Logistics Hub, a 2.2 million-square-foot master-planned industrial development in Lawrenceville, Ga. Foxfield and AEW Capital Management are the owners of the property that also includes a cold storage element.

The post Atlanta’s Industrial Sector Among the Busiest in 2024 appeared first on Commercial Property Executive.

NVIDIA is expanding its Silicon Valley office holdings. The firm intends to buy from The Sobrato Organization a 500,000-square-foot campus located across the road from its headquarters, according to SiliconValley.com.

NVIDIA has leased the four buildings at 2701, 2711, 2721 and 2731 San Tomas Expressway in Santa Clara since April 2010. The tech company agreed to acquire the assets along with a parking garage at 2741 San Tomas Expressway. The price to be paid was not reported and a closing date was not disclosed.

READ ALSO: Top California Markets for Office Transactions

Completed in 2010, the 19.2-acre campus comprises three-story, 125,000-square-foot buildings with 41,667-square-foot floorplates, according to CommercialEdge. NVIDIA was the sole tenant at the property that’s across from its 2788 San Tomas Expressway corporate offices.

NVIDIA keeps expanding

In May, NVIDIA paid former landlord Preylock Holdings nearly $375 million for several sites also located near its headquarters, according to media reports. That deal included six parcels of land, eight buildings, two parking structures and 2 million square feet of future development rights, the San Francisco Standard reported. Data centers and lab facilities were part of that transaction as well.

In more recent expansion news, the firm leased an office and research building in north San Jose, Calif., from Menlo Equities in December. The 101,600-square-foot property is at 300 Holger Way.

Office sales in the Bay Area

The Bay Area ranked third in the U.S. for office sales volume last year, after Manhattan and Washington, D.C., according to a CommercialEdge report. The market witnessed more than $2.1 billion in transactions year-to-date as of November, with assets changing hands, on average, for $293 per square foot.

In one of the largest deals of the period, Microsoft paid $330 million for a five-building campus in Mountain View, Calif. The sale price equated to $513.2 per square foot.

The post NVIDIA Eyes Bay Area Expansion appeared first on Commercial Property Executive.

In preparing the report, the law firm analyzed more than 950 purchase and sale agreements and over 500 property management agreements—data from the volume of transactions that DLA Piper handles in major U.S. markets. Overall, the company noted, deal volume in acquisitions and dispositions, including joint ventures, was robust in 2024, despite the still-elevated cost of capital.

Investors were particularly interested in downtown and metro areas in major markets such as Washington, D.C., New York City and Chicago. Among the states, there was “significant transaction volume” in urban and suburban areas across California and Texas, DLA Piper found.

Among non-residential property types, industrial still represented the highest percentage of 2024 investment deals in the data set analyzed in the report, but just barely at 12 percent, down sharply from 21 percent in 2023 and 20 percent in 2022. Office investment ticked up from 8 percent in 2023 to 11 percent in 2024, showing that the sector isn’t completely kaput.

Investment in retail assets was stable at 9 percent of the total in 2024, the same as the year before, and hotels dropped from 4 percent to 1 percent over the same period, the report found.

The steepest year-over-year rise in investment, however, was in data centers. As recently as 2020 and ’21, none of DLA Piper clients were acquiring data centers, and only 1 percent were in 2022. By 2023, 4 percent of the deals involved data centers, and by 2024 the volume had swelled to 9 percent.

READ ALSO: CBRE Survey Indicates Optimism by Investors

Despite these movements in investor interest, the fact of the matter is that residential properties totaled the most: 40 percent of all the 2024 transactions studied by the report, a figure that hasn’t changed much since the pandemic (though only 15 percent of investors acquired multifamily in 2019).

Financial contingencies up slightly

The report also covered financial contingencies among the universe of transactions handled by the company, finding a slight increase in the total percentage of transactions in which financing contingencies were present, up from 10.71 percent in 2023 to 11.11 percent in 2024.

“We saw a more noticeable shift between contingencies for loan assumptions versus contingencies for new loans,” the report explained.

Of the 11.11 percent of transactions where a financing contingency was part of the deal, the percentage of loan assumption contingencies rose from 7.14 to 8.64 percent between 2023 and ’24, while the percentage of new financing contingencies dropped from 3.57 percent to 2.47 percent over the same period.

The report chalked up those movements to the fact that, while interest rates dropped somewhat in 2024, in many cases a buyer can still obtain a better rate by assuming existing financing, which tends to date from the period before the anti-inflation hike in rates.

The report also found that the most common survival period for representations and warranties continued to be 270 days, a period common to 46 percent of the transactions DLA Piper handled in 2024. The number-two most popular survival period was 180 days, which had a 28 percent frequency.

Penalties for breach of representations and warranties didn’t change much between 2023 and ’24, the report noted, especially those deals with purchase prices below $125 million. Larger deals saw more movement to increase average liability caps, especially those of more than $300 million.

Property management trends

Property management fees continued to be toward the middle of the range, the DLA Piper report found, with most coming in between 2 percent and 5 percent of rent, with an increase in fixed fee arrangements.

The clustering of property management fees in the middle range was especially noticeable in the residential sector, where (for example) about two-thirds of fees for apartments came in between 3 percent and 4 percent, with a similar range for student housing and manufactured housing. Senior housing fees were higher, however, three-quarters of which were above 5 percent.

Among non-residential property types, fees were more widely spread. For industrial, 35.9 percent of managers charged 5 percent or more, while the rest charged anything from less than 1 percent to as much as 5 percent. Office and data centers likewise were scattered across the range of fees.

Construction management fees across property types didn’t change much in 2024, the report noted. Most residential management fees are higher than 5 percent, with senior housing an exception at between 2 percent and 3 percent. For industrial, 41.8 percent of construction fees totaled 5 percent or more, but nearly a third of such fees came in between 2 percent and 3 percent.

The post Which Asset Classes Stole the Spotlight in 2024? appeared first on Commercial Property Executive.

Onward Investors has acquired Ameriprise Financial Center, a 960,000-square-foot office building in Minneapolis.

The high-rise traded for $6.3 million, representing a nearly 97 percent discount from its previous open-market sale price of $200 million in 2016, The Minneapolis/St. Paul Business Journal reported. GHR Foundation sold the asset after assuming control of the building in 2023, following the previous owner’s execution of a deed in lieu of foreclosure.

Morning Calm Management acquired the asset in 2016, according to CommercialEdge. The firm took out a $137.8 million loan financed by the seller, The Opus Group.

Located at 707 Second Ave. S., the property is in the city’s business district and less than 10 miles from the Minneapolis-Saint Paul International Airport.

READ ALSO: What’s Defining Office in 2025?

Constructed in 2000, the 31-story high-rise has floorplates averaging 35,000 square feet and an adjacent four-story parking ramp with 300 spots. Onward Investors is considering various possibilities for the property, including repurposing all or part of the building for non-office uses. Ameriprise Financial, which had its headquarters at the building since its completion, announced in late 2022 that it will vacate the space.

Last year, the Minneapolis Council passed the Office to Residential Conversions Amendment, which streamlines review processes, eliminates public hearing requirements and temporarily exempts converted buildings from the affordable housing policy for five years.

Minneapolis office activity

In December, Onward Investors formed a joint venture with Cross Ocean Partners and Neuberger Berman Special Situations client funds for the acquisition of Wells Fargo Center, the third-tallest building in Minneapolis. Starwood Capital Group sold the 57-story, 1.2 million-square-foot asset.

Last year, Minneapolis’ office investment volume totaled more than $735 million, an 181 percent increase from 2023, according to a CBRE report. Additionally, the market’s vacancy rate as of December clocked in at 24.1 percent, a 10-basis-point decrease quarter-over-quarter. Nevertheless, the city’s central business submarket recorded one of the highest rates at 27.6 percent, the same report shows.

The post Onward Investors Acquires 960 KSF Minneapolis Building appeared first on Commercial Property Executive.

However, the general sentiment remains the same: approaching workspaces with a hospitality-centered perspective by supporting a better work-life balance. “Our latest findings reveal that nine out of 10 CEOs agree that hybrid work represents the future of employment, as it gives employees the work-life balance they are looking for while increasing profitability for employers through lower real estate costs,” said Mark Dixon, founder & CEO of International Workplace Group. He also added that professionals have a desire to work within their local communities, close to where they live, making convenience one of the most important factors when it comes to coworking locations.

As of November, there were 7,628 locations across the U.S., totaling 136.3 million square feet, CommercialEdge data shows. Manhattan, Chicago and Washington, D.C., have emerged as the top three markets for square footage, whereas Los Angeles remained the market with the largest number of locations in the country with 293 spaces. Atlanta and Denver, which are some of the most affordable cities for remote workers according to CoworkingCafe research, have also made it to the top 10.

By leveraging CommercialEdge data and insights from some industry experts in the field, we’ve analyzed some specifics for each market and the factors that have contributed to these markets’ growth when it comes to coworking. Here are the top 10 markets for coworking space by total square footage in the U.S.:

1. Manhattan

Manhattan gained the top spot for coworking spaces, with 273 locations totaling 11.3 million square feet in the market. WeWork’s Vice President & Head of USC Sales Luke Robinson believes that the sector’s growth in New York and Manhattan, implicitly, reflects the trend of finance and technology companies opting for return-to-office strategies and bringing workers back into high-quality spaces with top-tier amenities to encourage attendance.

WeWork was the top coworking operator in the market, with 31 locations adding up to 2.4 million square feet. In 2024, the company expanded its location at 575 Lexington Ave. with 15,000 square feet of additional space and converted the 14th floor into a flexible work lounge. More recently, WeWork also partnered with Amazon, which will occupy 304,000 square feet at 330 W. 34th St., which marks one of the largest deals in Manhattan last year.

Industrious took the second spot with a 1.3 million-square-foot inventory and kept expanding its market presence. The company’s Regional Director Kevin Jung views NYC as a significant market due to high membership growth and revealed that it plans to expand its locations, especially in higher-demand areas such as Midtown and Union Square. Industrious recently opened City Hall, a new location in the Financial District, and plans to open NoMad, another space at 776 Sixth Ave. this February, mirroring the “commitment to serving the city's growing flexible workspace need,” as Jung mentioned.

Regus follows in with a 727,600-square-foot portfolio. In October, the firm signed a lease renewal for a 37,031-square-foot space in the Financial District. Boutique and design-centric coworking spaces are also on the rise in the city. Convene continued to expand their presence by adding 22,519 square feet to its 360 Madison Ave. location and opening a 30,000-square-foot meeting and event space in Midtown Manhattan, whereas The Malin recently announced another 32,700-square-foot space in the Flatiron District.

2. Chicago

Chicago is second for coworking space with 6.8 million square feet spanning 261 locations, CommercialEdge data shows. Shifting workplace dynamics, enterprise growth and strong neighborhood demand have been the main factors influencing the sector’s growth in the metro. Robinson attributed WeWork’s 10 percent increase in footfall to companies that focus on in-person collaboration and hospitality-focused amenities.

Industrious has seen a surge in interest, with neighborhood locations like Wicker Park and Fulton Market attracting small businesses, while the Loop caters to a growing enterprise clientele. According to Kelsey Emery, the company's regional director, most large-format suites in Chicago are sold out, prompting plans to expand offerings in the Loop and introduce new units for small businesses in areas like Lincoln Park.

The hybrid work model further accelerates demand for coworking, as employees seek flexibility to work closer to home. Dixon notes that suburban growth remains strong, with areas like Naperville experiencing "explosive growth" as part of this trend, further underlining Chicago’s dynamic coworking landscape. Thus, the company focuses on smaller towns and suburbs for 80 percent of the new center signings. Regus, part of International Workplace Group, remained the top coworking operator in the market and the network recently announced that it will add nine new locations in Illinois, primarily in the Libertyville, Naperville and Orland Park suburbs. In September, the firm vacated the 35th floor at 180 N. Stetson Ave., which Expansive now occupies.

3. Washington, D.C.

The nation’s capital has made the top three for coworking space, with 275 locations covering 6.7 million square feet, mainly due to the city’s professional density and a high demand for flexibility. Proximity to government agencies paired with hybrid work models and the capital’s entrepreneurial ecosystem further contribute to the sector’s growth.

Washington, D.C., remains the most affordable metro for virtual office memberships with rates as low as $80, compared to Chicago and New Jersey with $210 and $205 membership prices, respectively. However, the metro has some of the highest rates for open workspaces, $99 higher than the $150 national median.

Regus remains among the top operators in the market with a footprint of 45 locations. Industrious currently operates 14 locations in the city and its surrounding areas, doubling its space since February 2023, whereas WeWork manages nine locations in the metro. More recently, Carr Workspaces opened a new 26,331-square-foot space in Arlington, Va., while Workbox entered the market with a 29,000-square-foot location within a mile of the White House, scheduled to open soon.

4. Los Angeles

Although Los Angeles is not the national leader for coworking inventory, the metro leads the U.S. for sheer number of coworking locations, with a footprint of 293 spaces, totaling 6.6 million square feet. Its diverse creative industries, including entertainment and media, as well as freelance opportunities, call for flexibility. Another rising trend in the market is the growth of spaces that cater to creative industries, offering niche amenities, such as podcasts, media and design studios.

Convenience has also emerged as a determining factor in the market’s coworking scene, Robinson pointed out. “In Los Angeles, more than anywhere else, the office has to be worth the commute, which has solidified a preference for coworking locations close to workers' homes”, he added. The company has a portfolio of 10 locations, including surrounding areas such as Glendale and Pasadena.

International Workplace Group currently operates 48 spaces and is actively expanding its portfolio, planning to add 25 more locations shortly, Dixon confirmed. Other operators, such as Industrious, are actively increasing their footprint. Last year, the company opened a new 20,752-square-foot location in Westwood, Calif., and signed a 19,000-square-foot lease at the North Tower of Watt Plaza. The company has also unveiled plans for two new locations in West Hollywood and Beverly Hills, set to open next month and in the fall, respectively.

5. Dallas-Fort Worth

The Dallas-Fort Worth area has emerged as a major player in the coworking sector and is the runner-up in terms of spaces with 284 locations spanning 5.2 million square feet. Proximity to key business districts such as Dallas Downtown Historic District, Uptown Dallas and Fort Worth’s Sundance Square is a key factor when it comes to coworking. In terms of affordability, open workspace prices in the metro saw a $48 reduction from $198 in the second quarter of last year, bringing the membership cost in the area in line with the national median.

In Dallas, Regus was the largest operator and plans to expand its portfolio in the Metroplex by 20 to 30 percent next year, Dixon said. Lucid Workspaces and Cado are also among the top operators. The first operates seven locations in Dallas and two in Fort Worth and recently expanded its portfolio with a 35,234-square-foot coworking space. New entrants such as Workbox are also capitalizing on the market’s potential. In June last year, the company opened a 50,000-square-foot space at Victory Park, a $3 billion master-planned development in Dallas.

6. Boston

Boston’s 204 coworking spaces, totaling 4.6 million square feet, are concentrated in popular neighborhoods among young professionals and enterprises. Accessibility and high-end amenities are among the factors contributing to the sector’s growth in the metro. “Boston companies are focused on ease of transportation and nearby access to excellent amenities—resulting in strong demand for Back Bay and Seaport, both desirable areas for the key 24- to 40-year-old professional demographic,” pointed out Robinson.

As of October, Regus had the largest footprint, with 32 locations spanning 588,565 square feet, followed by WeWork, which currently operates seven locations in the city. Recently, the company extended its stay at State Street Financial Center, by entering a revenue-sharing agreement for a three-floor coworking space comprising 64,323 square feet.

Industrious is also expanding its portfolio in Boston and reached a 90 percent occupancy rate at Back Bay/Copley Square and Dedham locations. In October, the company opened a 31,500-square-foot location across from South Station, formerly occupied by WeWork, and plans to add three new spaces next year, Jung confirmed. “In particular, we anticipate increased interest from larger enterprise clients that are balancing calls to return workers to the office with flexible solutions that best meet their employees' needs,” he added.

7. Atlanta

Atlanta’s coworking landscape consists of 238 locations covering 4.4 million square feet, thriving in areas with walkable amenities and mixed-use developments. “Live-work-play areas are outperforming other business areas. Walkable amenities and centrally located properties are key. Larger corporate occupiers have continued to move away from fixed to flex and hybrid models to encourage more collaboration with their teams,” said Rhonda Johnson, Serendipity Labs’ regional vice president for the Southeast.

She also pointed out that amenities and flexibility on terms are determining factors in the market’s coworking scene, on par with the general trend of a growing demand for more dynamic workspaces. Downtown and Midtown Atlanta, including Peachtree Center, are among the neighborhoods that have become hotspots for coworking. However, many flexible workspaces are also located in suburban areas, in submarkets such as Alpharetta and Cumberland/Galleria.

Regus is among the top operators in the market, currently operating 28 locations in the metro, followed by WeWork and Industrious. Other companies, such as Serendipity Labs, focus on suburban and secondary markets, managing four locations in the metro. New providers are also entering Atlanta’s coworking scene. In November, e|spaces signed a 32,030-square-foot lease at 1600 Parkwood Circle, offering private offices suitable for individuals and teams of up to 10 members, meeting rooms and collaborative workspaces.

8. Houston

Houston’s 229 coworking locations, comprising 4.4 million square feet of space reflect the city’s adaptability to reinventing its office landscape through cost-effective and flexible solutions. Business-centric areas such as Greater Uptown, Downtown Houston and The Heights are catering to a range of companies and professionals. The metro’s affordable rates for dedicated desks which are below the $300 national average also push for the sector’s growth.

Regus is leading the metro’s coworking market with a 574,106-square-foot footprint, followed by The Cannon and Workstyle Flexible Offices, with 444,341 square feet and 372,169 square feet, respectively. International Workplace Group expanded its portfolio in September with a 65,000-square-foot lease in downtown Houston. In May last year, The Cannon also opened its seventh location in the city at Two Memorial Plaza, offering 38 private offices alongside seven meeting rooms and collaborative areas.

9. Denver

Although Denver registered a slight decrease in coworking footprint, the 234 locations in the market total 3.6 million square feet, mirroring the city’s return-to-office policy adoption and the need for networking. However, some of the defining criteria when it comes to coworking in the market have changed, Serendipity Labs’ Director of Sales in Denver Morgan Hafner pointed out.

“We are seeing requirements come through for large teams in smaller private offices vs large team rooms. Teams looking for opportunities to collaborate, so we’re seeing an increasing use of common areas such as coworking and have created additional networking opportunities and events to enhance this feeling of community,” she explained. Convenience has also become an important requirement for professionals, as they seek shorter distances to transportation and commute. The company currently operates a 25,181-square-foot location in the Union Station neighborhood, which accommodates those requests, Hafner added.

Regus remains the top operator in the city with 33 locations totaling more than 600,000 square feet, followed by WeWork with five locations comprising almost 277,000 square feet. Vast Coworking Group is also an active operator in the market, managing nine locations under its Venture X, Intelligent Office and Office Evolution brands, totaling roughly 116,000 square feet.

10. San Francisco

San Francisco made it to the top 10 coworking markets with a footprint of 3.7 million square feet across 130 locations, driven by a highly dynamic and innovative workforce, paired with the highest office prices in the country. In terms of affordability, open workspace memberships saw a $74 price reduction at the end of the third quarter, with dedicated desks being the total opposite and standing at $450, highly above the $300 national average.

WeWork has the largest portfolio in the city, operating seven locations spanning 736,795 square feet, followed by Gateway Labs by Lilly and Regus, with 438,339 square feet and 337,544 square feet, respectively. The latest operates 84 locations in Northern California, seven of which are in San Francisco, but is eyeing more opportunities in the region and planning to add 30 new locations through the market and the Bay Area, Dixon said.

Another active provider is Industrious, which in January last year partnered with Ingka Centres, a subsidiary of IKEA, to open a distinctive coworking location based on a holistic approach. The 46,470-square-foot space acts as both a collaborative environment and an IKEA furniture showroom. The company is also planning to open The Cove, another 29,000-square-foot space next month.

The post Top 10 Metros for Coworking Space appeared first on Commercial Property Executive.

On the heels of outsized development that started in the pandemic and trailed off last year, industrial real estate investors and owners must now position themselves for the next stage of growth, challenged by high vacancies and growing tenant expectations.

Most of the issues that industrial owners and developers need to deal with today stem from a few years ago. From 2022 to 2023, more than 1.1 billion square feet of industrial space came online in the U.S. To put into perspective how enormous this volume was, the 330.7 million square feet completed in 2024 through November was still more than every year over the past 100 years prior to 2020, the latest CommercialEdge report shows.

This supply boom is what’s keeping vacancy rates elevated today. Overall, vacancy stood at 7.5 percent in November, way above the 4 to 2 percent range from three years ago, the same source shows.

On the plus side, tenants have much more high-quality product to choose from and this isn’t expected to change anytime soon due to the ongoing success of e-commerce, as well as reshoring and manufacturing.

Industrial sector’s tenant-favorable start to 2025

Decision-making around leasing is taking longer due to macroeconomic uncertainties, while maximizing logistics efficiency is resulting in footprint consolidations, leaving even more space empty as new supply outstrips net absorption. This focus on logistics efficiency will likely be a major trend for the industrial sector in 2025 and beyond. Businesses are prioritizing the efficiency of their transportation networks, access to infrastructure and proximity to consumers over securing lower rates in strategic locations, Executive Vice President & Head of Leasing and Customer Solutions at Link Logistics, Brandon Page, told Commercial Property Executive.

Nationwide, rents grew just 6.9 percent over a 12-month basis through November, the same CommercialEdge report shows, and industrial owners are expecting lower levels of construction this year to eventually lead to further rental stabilization, especially in the second half of 2025 as more space becomes absorbed. Page believes that users will continue to seek high-quality, well-located assets in infill locations as they continue to focus on optimizing their supply chains.

READ ALSO: Industrial Demand Slips, But Avoids a Slump

Several markets across the U.S. are poised for success, albeit for different reasons, given this context. Continued population growth across the Sun Belt, for example, will benefit markets like Dallas-Fort Worth, Atlanta, Nashville, Tenn., along with South Florida. On the other hand, regions like Chicago, Austin, Texas, and the Carolinas are bright spots that will benefit from the increase in domestic manufacturing.

With so much supply on the market, speculative development is expected to taper off. Speculative industrial development accounted for more than 80 percent of all deliveries through the first three quarters of 2023, with a similar trend occurring last year as well, according to Cushman & Wakefield Senior Director for Americas & Head of Logistics and Industrial Research Jason Price. The upward pressure on vacancy, coupled with the higher cost of capital, led to 2024 being the tail end of this outsized activity, as new starts fell sharply.

Despite all this, speculative development is not totally out of the cards for Prologis, the company’s Global Head of Research Melinda McLaughlin said. Nevertheless, activity will remain selective, targeting high-demand locations with minimal availabilities and competition. Companies that have significant land bank positions will be able to capitalize most on this, as economic conditions improve.

Reshoring, manufacturing growth will be a net positive

Flex industrial, manufacturing and R&D spaces are the most sought-after asset types by investors, according to surveys published by PwC and ULI in their Emerging Trends in Real Estate 2025 report. Although land availability and operational cost challenges led to a slower pace of onshoring, this will continue to be a main driver for industrial in 2025 and beyond.

In the Sun Belt and Midwest, clean energy manufacturing projects are expected to continue to grow. Proximity to key infrastructure—ports, rail and other major transportation hubs—along with access to essential materials, skilled workforces and suppliers are what attract manufacturers to these regions. The nature of production makes it more likely that these facilities are owner-occupied and thus removed from the competitive stack, noted McLaughlin. However, these create a spillover effect, spurring the growth of supplier networks that need to be nearby.

After location, the second-most important consideration in both leasing and development will be power availability, especially in the case of manufacturing, the PwC/ULI report highlighted. In this aspect, industrial real estate will increasingly compete with the data center sector, especially in regions like California, Nevada and Phoenix, where access to power is a growing barrier to entry.

Investments in automation, sustainability to ramp up

Electricity and water requirements are also tied to the growing popularity of automation, robotics and supply chain visualization technologies. Automation remains a significant capital improvement, but only a few groups are able to leverage it within their facilities. Over time, costs associated with this are expected to decrease, while operational efficiency will grow, making automation more accessible for warehouse users, according to Page.

Growing power requirements make it imperative for the sector to continue investing in renewables and sustainable building practices. At least 40 percent of industrial users are implementing net-zero goals, McLaughlin said.

Innovations like net-zero-ready facilities, rooftop solar and the electrification of logistics fleets—which in turn creates more demand for EV battery production—will play central roles going forward. The financial returns on sustainability, from direct investment and energy cost savings to indirect ones like customer retention and alignment with investor expectations, will far outweigh the short-term challenges.

As the industrial sector grows and evolves, developers and providers that can foster collaborative relationships with customers will stay ahead of the competition. The inevitable recovery in leasing activity will depend on smart growth, with sustainability and digitization as key differentiators in navigating global supply chain dynamics.

The post Industrial Real Estate’s Future Depends on Adaptability appeared first on Commercial Property Executive.

The index rose 5 percent to 126.6 from its all-time high reading of 121.1 in the third quarter of 2024.

The BOG comprises more than 50 senior executives in commercial real estate finance. They represent all lending and mortgage-related debt investing sectors, including balance sheet and securitized lenders, loan and bond investors, mortgage bankers, private equity firms, loan servicers, rating agencies, attorneys, accountants and others.

Some 95 percent of respondents expect transaction volume to increase by at least 10 percent in 2025, with multifamily (30 percent) and office (23 percent) offering the best risk-adjusted opportunities. A majority (51 percent) said the “higher-for-longer” forecast for interest rates is a concern.

The index measures seven key categories, as follows.

Economic outlook

CREFC found that optimism continues to grow, with 42 percent of respondents expecting improved economic performance over the next 12 months, compared to 32 percent in the third quarter.

“Optimism in the commercial real estate market continues to grow, reflecting increasing confidence in economic stability and future growth,” Mario Saldana, vice president of investments at Tricera Capital, told Commercial Property Executive.

Investors and industry participants anticipate stronger market performance driven by resilient demand, steady employment levels and easing inflation concerns, he added.

“While economic uncertainties persist, sentiment suggests a positive trajectory for investment, leasing activity and overall market expansion. There could be heightened transaction volumes and capital deployment if this momentum continues, reinforcing long-term confidence in the sector.”

READ ALSO: How Geopolitics Will Shape CRE Investment in 2025

However, the economy isn’t healthy, and the overall cost of capital will continue to be high throughout the year, warns Dave Sobelman, founder & CEO of publicly traded REIT Generation Income Properties.

“Despite a 10 percent increase in optimism, roughly 60 percent of real estate professionals still do not see material improvement,” he said. “CRE professionals are somewhat resigned to another year of uncertainty.”

Federal policy

CREFC showed that 74 percent expect a positive impact on CRE finance-related businesses, up from 17 percent last quarter.

“One can see the trend that started in November and includes a more considerable sentiment around economic growth in the U.S., given the new administration,” Jeff Holzmann, COO of RREAF Holdings, told CPE. “Regardless of political preferences, the stock market has indicated more substantial stock prices due to the expected changes indicated by the incoming administration.”

Reduced spending, added pressure on the Fed to lower rates, more favorable tax cuts and lax regulations should lead to stronger economic activity, he added.

Rate impact

CREFC found that 58 percent are now neutral on rates, and those having positive expectations sank.

“As we exited the third quarter, we saw the first rate cut in years [by 50 basis points],” said Robert Martinek, director at EisnerAmper. “Inflation had moderated, and another two cuts totaling 75 basis points soon followed. Consumers were anticipating an additional four to five cuts in 2025. After the election, most people considered Trump to be pro-business. However, many view his policies as inflationary, and the 10-year treasury rate surged. Market participants are now hoping, not expecting additional rate cuts.”

READ ALSO: Fed Leaves Interest Rates Alone

Saldana added that uncertainty about interest rates continues to shape industry sentiment, with market participants adjusting expectations for borrowing costs and capital markets activity. “While higher rates initially slowed transaction volumes, the market has stabilized as investors and borrowers adapt.”

CRE fundamentals

CREFC found that 65 percent expect improvement, and 12 percent expect worsening.

Melanie French, CEO of RR Living, told CPE that multifamily owners, investors and managers are seeing a recent resurgence of distressed assets in the market.

“While it is not good for the former owners, these units returning to trading spur job growth through increased value-add renovations,” French said. “I love seeing this influx returning as it freshens the look and longevity of those communities.”

Transaction activity and financing demand

CREFC found that 86 percent of investors and 91 percent of financiers see higher activity.

“Activity started to recover in 2024, with a notable acceleration in the latter half of the year, particularly in lending markets,” said Trey Morsbach, executive managing director & co-lead of JLL Capital Market’s Debt Advisory & Corporate Finance.

“We’re observing a marked increase in the number of investors going on offense, with aggregate bidding activity on transactions rising by more than 40 percent in the fourth quarter of 2024 on a year-over-year basis.”

Institutional capital is increasingly prominent in acquisitions and transactions of +$100 million. ODCE redemption queues are easing, and valuation marks are nearing parity with market values, allowing more core capital to return, Morsbach added.

Market liquidity

CREFC found that 81 percent expect improved conditions, slightly higher than the previous quarter.

Sobelman told CPE he equates 2025 to 2011.

“Cap rates have stabilized to a realistic and higher level, and lenders are seemingly more comfortable re-entering the market due to proper valuations congruent with the debt rates and terms available,” he said.

Overall sentiment

CREFC found that 77 percent express positive sentiment, up from 57 percent last quarter.

“I just left an industry conference, and sentiment amongst everyone was higher than it’s been for years,” said Pierre Debbas, Romer Debbas LLP.

He added that moving past the election, optimism is growing with President Trump’s economic agenda, the inevitable reduction in interest rates, and the reduction in government spending and inflation, which should bring down the 10-year U.S. Treasury and, subsequently, interest rates.

“Multifamily is still strong as demand for rents has been consistent given the inability of most people to afford a home, and investors are still targeting this asset class.”

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Goldman Sachs Alternatives and Dalfen Industrial are expanding their nearly five-year-old partnership. In an off-market transaction, the joint venture has acquired a 21-building, 2.1 million-square-foot last-mile logistics portfolio from Blackstone for $293 million.

The partnership first teamed up on industrial transactions in July 2020, with the purchase of 46 last-mile industrial facilities valued at nearly $500 million. With this latest acquisition, Dallas-based Dalfen and Goldman Sachs now own 94 buildings totaling 19 million square feet in major U.S. markets.

READ ALSO: Industrial Sector Settles After Supply Surge

The Blackstone portfolio adds assets in Dallas, Philadelphia, Pennsylvania’s Lehigh Valley, Cincinnati and Las Vegas. The buildings range from about 34,000 square feet to 260,000 square feet, with an average of about 125,000 square feet, and their vintage varies from 1995 to 2023 with an average of 2003.

The portfolio was 92 percent leased at closing to 68 tenants including Amazon, Red Bull and Packaging Corp. of America. Sean Dalfen, president & CEO of Dalfen Industrial, said in prepared remarks the collection was acquired at well below replacement cost.

Blackstone sold another last-mile industrial portfolio in recent months when Longpoint Partners acquired a 26-building, 1.4 million-square-foot portfolio of infill, last-mile facilities in South Florida for $331.3 million. The collection had properties in Miami-Date, Broward and Palm Beach counties and an average occupancy rate of 97 percent.

Last-mile focus

Dalfen, one of the largest privately held industrial real estate firms in the U.S., specializes in strategically located infill warehouses and distribution centers with a portfolio of more than 50 million square feet.

The partnership between Dalfen and Goldman Sachs has centered on last-mile properties. In December 2020, the joint venture purchased 10 last-mile properties located in Denver; West Palm Beach, Fla.; Charlotte, N.C.; San Antonio and Fort Worth, Texas, ending its first year with more than 8 million square feet of infill industrial acquisitions.

Sean Dalfen told Commercial Property Executive the firm will continue its investment strategy with a focus on last-mile properties in the nation’s top markets that are close to consumers and strategically located to meet the growing e-commerce and logistics demand.

“Last-mile properties are important as an investment because if you aren’t close to the customer, you simply won’t profit,” Dalfen said.

Asked about strategy, he mentioned, “We build our portfolio one asset at a time using a proprietary data-based last-mile scoring methodology and boots-on-the-ground experts to determine opportunities with optimal location and value.”

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In its first meeting of 2025, the Federal Reserve Open Markets Committee voted to pause on changes to its interest rate policy, keeping the current target range at 4.25 to 4.5 percent.

Announced on Wednesday afternoon, the widely expected decision comes as the Fed continues to revise its monetary policy amid both a new presidential administration and an inflation rate that has proven to be a tougher nut to crack than anticipated. In December, the Consumer Price Index rose by 40 basis points to a 2.9 percent year-over-year increase.

At last month’s meeting, participants anticipated making two rate cuts this year. Currently, the Fed forecasts the next rate cut to be in June. Goldman Sachs Research anticipates that the first cuts could come this quarter, followed by restraint later in the year.

Fed Chair Powell shied away from decisive predictions around policy shifts, but pointed to the economy’s relative health as a cause for confidence. “We don’t feel like we need to be in a hurry to make any adjustments,” Powell said at a press conference following the announcement.

Has the Fed misplayed its hand?

Ryan Severino, chief economist & head of U.S. research at BGO, believes that the Fed’s messaging and reads on the economy are contributing to less-than-optimal outcomes for commercial real estate investors. Following the initial 50-basis-point cut in September, he said, “We thought the Fed would be better off cutting slowly and leaving more in reserve for when needed, (and) we ultimately thought they’d cut by roughly 150 basis points by the end of this year.”

READ ALSO: CBRE Survey Indicates Optimism by Investors

A different approach could have been taken, Severino suggested. “Based on their current guidance, that’s where they will get us. But the path to get there now looks front-loaded, with the Fed walking back previous guidance,” he said. “Some of this could be in response to potential changes in inflation expectations post-election. But it fundamentally looks like a misreading of the economy and labor market last year.”

Still, the Fed has good reason to bide its time and assess the impacts of strong employment growth, as well as Trump administration economic policies. Proposed tariffs on imports could have inflationary effects, while tax cuts may further increase demand for consumer goods. As Powell noted: “(There is) some elevated uncertainty because of significant policy shifts.”

The post Fed Leaves Interest Rates Alone appeared first on Commercial Property Executive.

DLC has obtained $41.7 million in acquisition financing from Webster Bank for Danada Square West, a 314,819-square-foot grocery-anchored shopping center in Wheaton, Ill.

The firm had purchased the asset from PGIM Real Estate for $61.7 million earlier this month, in a joint venture with Crow Holdings Capital and Temerity Strategic Partners. JLL represented the borrower in arranging the five-year, fixed-rate note.

Completed in 1988, Danada Square West was 92.7 percent leased at closing. The property is part of a major retail cluster at Butterfield Road and Naperville Road in west suburban DuPage County, roughly 30 miles from downtown Chicago.

A Jewel-Osco grocery store, which has been a tenant since the property opened, anchors the shopping center. The roster also features a mix of national retailers, including TJ Maxx, HomeGoods, Burlington, The Paper Store, Ulta and Five Below.

The new owner is focusing on filling the nearly 23,000 square feet that are vacant, with letters of intent already under review. In addition, recent upgrades and leasing momentum from national tenants have set the stage for the property’s further appreciation.

JLL Senior Managing Director Scott Aiese, Managing Director Christopher Knight and Director Alex Staikos led the Capital Markets’ Debt Advisory team representing DLC.

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

The acquisition of Danada Square West was DLC’s first deal with Crow Holdings Capital and its 10th with Temerity Strategic Partners. The firm has acquired more than $400 million in open-air shopping centers in the last 12 months.

In one of the more recent purchases, DLC paid $76.3 million for a shopping center portfolio in metro Columbus, Ohio, in partnership with Principal Asset Management. The two properties total 622,000 square feet.

Chicago retail development soft, rents are up

Chicago has a tight retail market, despite sluggish population and income growth recently in the metro area. By mid-2024, the vacancy rate dropped to a new record low of 5.1 percent, the result of seven consecutive quarters of decline, according to a Marcus & Millichap report. The lowest vacancy rate previously was 5.9 percent in 2018.

The reason for the current market climate, according to the brokerage, is that developers put the brakes on during the pandemic, combined with the higher cost of construction and construction financing in the years immediately after the pandemic. 

Strong net absorption in recent quarters has driven up single-tenant asking rents for Chicago retail, reaching an average of $20.13 per square foot, Marcus & Millichap reported.

The post DLC Locks In Loan for Chicagoland Retail Buy appeared first on Commercial Property Executive.

Office deals in Denver posted a 31.3 percent year-over-year drop, but the metro’s total office investment placed it among the top-performing U.S. markets, outpacing San Francisco. Meanwhile, even if the metro’s vacancy rate became one of the highest ones in the nation, Denver still closed some significant leasing agreements since the start of the year.

As of November, there were 680,961 square feet of office space under construction across seven properties, accounting for 0.4 percent of total stock—below the national rate of 0.8 percent. The figure was on par with that of Detroit’s and Phoenix’s, while it outpaced that of Portland’s (0.1 percent). When adding projects in prospective and planning stages, Denver’s rate reached 2.8 percent of existing stock—still below the national rate of 3.0 percent.

Notable office projects came online

In terms of office supply, Denver’s pipeline outpaced that of Phoenix’s (529,050 square feet), Charlotte (524,657 square feet), while Atlanta led across similar markets, with 1.7 million square feet. One of the largest office developments currently underway in the metro is Beacon Capital Partners’ Steel House, a 309,308-square-foot project in Denver’s Five Points submarkets. Construction on the 12-story project started in February 2023, with $100.2 million in construction financing by Bank OZK. The project is designed to received LEED Gold and WELL certifications.

Another notable development nearing completion is the 134,393-square-foot CV Innovation Campus, a life science project in Louisville, Colo. Developed by Koelbel & Co., the project is an adaptive reuse development of a former 1996-built Lowe’s store into life science and R&D space aimed for biotech and pharmaceutical companies.

Year-to-date through November, developers had broken ground in 690,666 square feet across six properties, while deliveries totaled nearly 1.3 million square feet across seven properties—accounting for 0.7 percent of existing stock and marking a 19.8 percent year-over-year growth.

A recently delivered project is the 726,450-square-foot 1900 Lawrence, a Class A+ high-rise in Denver’s central business district. Completed in August, the 30-story office tower was developed by Riverside Investment & Development and financed by a $242 million loan by Bank OZK. Currently marketed for lease by JLL, the property is considered the largest skyscraper delivered in Denver in four decades.

Denver’s potential for office-to-residential makeovers

As vacancies continue to increase in most markets, office-to-residential conversion emerged as a trend for office owners across the U.S. CommercialEdge launched The Conversion Feasibility Index, a new tool that evaluates which markets show strong office-to-residential repurposing fundamentals, based on a set of property-level scores.

Denver had 18 properties totaling 1.7 million square feet in the Tier I category, with CFI scores between 90 and 100 points. Meanwhile, 212 properties accounting for 22.1million square feet of space made up the Tier II category, with CFI scores between 75 and 89 points.

One example of an office-to-residential project currently underway is the 124,000-square-foot building at 4340 S. Monaco St., that was purchased by Shea Properties. The company started the adaptive reuse project, with plans to add 143 affordable residential units. Originally completed in 2001, the Class A four-story property has been vacant for the past five years.

A drop in office sales

Year-to-date through November, Denver investors traded $768 million in office assets, with 60 properties totaling 8.2 million square feet of space that changed hands at an average sale price of $119 per square foot—below the national average of $179 per square foot. Among similar markets, deals were pricier in Phoenix ($164 per square foot), Portland ($164 per square foot), Atlanta ($148 per square foot), while Denver prices per square foot outpaced the ones from Houston ($107 per square foot) and Dallas ($115 per square foot).

The total sales volume in the metro was 31.3 percent lower on a year-over-year basis and placed Denver 13th among the top 25 U.S. office markets, outpacing San Francisco ($747 million), Seattle ($687 million) and San Diego ($651 million). Among notable deals in Denver is the $45.5 million sale of TeleTech Headquarters, a 271,678-square-foot property in Englewood, Colo. CommonSpirit Health, a Catholic hospital chain, acquired the property at 9197 S. Peoria St. from TeleTech Services, with plans to turn it into a medical campus.

Another significant deal is the $31.2 million sale of Sisters Grove Pavilion, a 116,367-square-foot medical office building in Colorado Springs, Colo. Harrison Street and MedCraft Investment Partners bought the property from CommonSpirit Health in October.

Office vacancy continues to rise

As of November, Denver’s office sector had a 24.6 percent average vacancy rate, one of the highest rates in the nation, and marking a 320-basis-point increase over the same period of last year. While the national rate was set at 19.4 percent, Atlanta and Phoenix were the similar markets with lower vacancy rates, with 17.8 percent and 18.4 percent, respectively.

Significant deals in the metro include Bet365’s 120,000-square-foot lease at One Platte, a 250,000-square-foot building owned by Nichols Partnership and Shorenstein. The U.K.-based sports betting firm opened its new U.S. corporate headquarters at the property in October, with the move expected to bring nearly 1,000 jobs in the area.

In May, Brookfield Properties signed a 121,000-square-foot renewal agreement at 717 17th St., a 693,565-square-foot property in downtown Denver. The tenant is Johns Manville, a Berkshire Hathaway subsidiary that will continue to use the space as its global headquarters through at least 2035.

A high share of flex office space

As of November, Denver’s coworking sector reached 3.7 million square feet of space, representing 2.2 percent of total leasable office space—above the national figure of 1.9 percent.

The largest flex office provider in Denver remained Regus, with operations totaling 694,250 square feet of space. The company was followed by WeWork (307,846 square feet), Expansive (229,867 square feet), Spaces (180,252 square feet) and Office Evolution (155,916 square feet).

The post Denver’s Office Sales Slow as Deliveries Tick Up appeared first on Commercial Property Executive.

The seller was represented by Cushman & Wakefield’s National Industrial Advisory Group, which includes Jeff Chiate, Rick Ellison, Matt Leupold and Aubrie Monahan of the firm’s National IAG—West team, in collaboration with Will Strong, Michael Matchett, Jack Stamets, Molly Hunt and Madeline Warren of the firm’s National IAG—Mountain West team.

Limited industrial inventory in Reno helps to give Nuveen an edge.

The five freestanding buildings at 4681 and 4689 Aircenter Circle and 4745, 4855 and 4980 Longley Lane cover 27 acres. Suites range in size from 19,000 to 153,000 square feet. Features include 24-to-25-foot clear heights, extensive loading capabilities with 68 dock-high and 11 grade-level doors, as well as power to support wide-ranging operational needs.

Nevada’s fast-growing industrial market

Reno’s strong labor pool, industrial demographics and diverse transportation options have made it one of the fastest-growing industrial markets.

“Over the past decade, Tesla and other major companies have transformed Northern Nevada into a hub for e-commerce, logistics and manufacturing,” Bryce Clutts, president & CEO of Reno-based Metcalf Builders, told Commercial Property Executive.

“With large corporations such as Walmart, Google, Apple and Microsoft establishing key operations at the Tahoe Regional Industrial Center—and the many supporting businesses they attract—the demand for industrial and manufacturing development has grown significantly.”

This has become a primary focus for the Economic Development Authority of Western Nevada, as the region works to diversify its economy, he said.

READ ALSO: Industrial Report: Sector Settles After Supply Surge

General contractor Metcalf Builder will break ground next month on its latest industrial development at the Tahoe Regional Industrial Center.

Clutts also highlighted Nevada’s business-friendly economy as a key factor driving companies to relocate or expand to Northern Nevada, particularly in comparison to California.

“The quality of life for employees and the excellent options available in Nevada have been compelling reasons for businesses moving here,” he added.

In July, Barings supplied a $114 million loan to finance Airway Commerce Center, a recently completed warehouse/distribution property in Reno.

Approximately 900,000 square feet, the asset was developed by Tolles Development and its equity partners. Of the four buildings, the largest stands at 435,500 square feet.

Also that month, Clarion Partners acquired the 322,400-square-foot industrial building at 500 Denmark Drive in McCarran, Nev. Pure Development sold the asset for $41.7 million.

The post Nuveen Pays $90M for Industrial Portfolio appeared first on Commercial Property Executive.

Harrison Street has raised roughly $600 million across its HS Digital Fund and associated vehicles. This marks the company’s first dedicated pool of capital for data center investment.

The firm expanded its digital assets platform due to the surging data consumption, according to prepared remarks by Michael Hochanadel, managing director at Harrison Street.

Over the past seven years, the firm has committed more than $5.6 billion to powered shells, carrier hotels and colocation sites, as well as dark fiber assets. Harrison Street invested in more than 24 digital assets encompassing about 6.5 million square feet of data centers and north of 2.1 gigawatts of capacity.

Last May, the company acquired a 50-acre site in Irving, Texas, in partnership with PowerHouse. Plans call for the construction of a roughly 1 million-square-foot data center campus with a capacity of 200 megawatts at full build-out.

Five months earlier, the same joint venture closed on another site for a data center campus, this time in Reno, Nev. The stated goal was to construct a 900,000-square-foot facility estimated at $400 million.

Data center development grows despite energy shortage

The U.S. data center capacity is set to grow from 22 gigawatts in 2024 to 26 gigawatts in 2025, according to JLL’s Global Data Center Outlook. This year, the company forecasts 4.4 gigawatts of new construction to break ground across the nation.  

The strained power grid remains among the largest roadblocks for new data center developments. In Virginia alone, data centers represent more than 25 percent of the energy demand. A solution that gained traction is the implementation of nuclear energy for data centers.

The Stargate Project, which aims to invest $500 billion over the next four years to build new OpenAI infrastructure across the U.S., could also use nuclear energy, according to Bloomberg. Of the investment pool, $100 billion is slated for immediate deployment.

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