Editors’ Weekly News Round Up March 18 – March 22
With commercial property sale prices ticking downward when compared to their post-pandemic high-water mark, it stands to reason that sellers would be more likely to incur losses. That was the cause-and-effect implied in a new Trepp report that served as the basis of the most-read Connect CRE story for the week ending March 23.
InTrepp: More Properties Selling at a Loss, the analytics firm reported that although still in the minority, the percentage of paired sales representing losses is on the rise for each of the four major property types. The percentage is higher for office and retail sales than it is for multifamily and industrial, but all are increasing compared to a year earlier.
With readership both in California and nationally, our second most-read story last week illustrated the point that well-positioned sponsors can still line up mammoth construction loans. The sponsors here were CBRE Investment Management and Hillwood Investment Properties, and their story was told in CBRE IM, Hillwood Secure $756M Financing for Fontana Industrial.
The industrial project in question is the first phase of Speedway Commerce Center, a Class A logistics complex that’s entitled for up to 6.6 million square feet. “We designed the Speedway Commerce Center to specifically meet the critical need for well-located, modern logistics properties in this high-demand region,” said CBRE IM’s Mary Lang.
Although in a way it represents a sale at a loss—the property cost $171 million to build—the deal for the 47-story Paragon apartment tower in the South Loop is the largest multifamily trade in Chicago thus far in 2024. It also represents Connect CRE’s third most-read story last week, South Loop Apartment Tower Sells for $144M.
The buyer of this 500-unit property was FPA Multifamily, which has also made headlines on Connect CRE recently with acquisitions in other parts of the U.S. Over the past five months, we have reported on seven FPA deals in Southern California, Seattle and the Twin Cities. The most recent of those purchases, for a Downtown Los Angeles tower, involved the same seller as the Chicago sale, CIM Group.
For readers of our fourth most-read story, the main point of interest wasn’t the sale price, which wasn’t disclosed. Instead, the focus of Group Buys Dallas Rental Community, Converts it to Workforce Unitswas on the new owners’ strategy for the property.
Waterford Property Company, The Vistria Group and Northern Liberties came together to acquire the 395-unit Domain at Midtown Park Blvd. As part of an agreement with the Dallas Housing Finance Corporation, the new owners will immediately restrict rents for new qualified residents to create stable workforce housing. In exchange, they will have a 100% tax abatement on the property for 99 years.
The top five for last week was rounded out by a story with a mix of good and not-so-good forecasts. That dichotomy is summed up in the headline, CNBC Survey Lowers Risk of Recession but Sees Fewer Rate Cuts.
On the plus side, the latest CNBC Fed Survey found a small majority of respondents expecting a soft landing for the economy, the first time this response has climbed above 50% since the question was introduced last summer. On the minus side, with that forecast comes an expectation that the Federal Reserve could be less aggressive in reversing its series of increases in the federal funds rate.
The CNBC survey was reported as the central bank’s Federal Open Market Committee was convening for its regularly scheduled March 19-20 meeting. For a report on what came out of that meeting, Connect CRE’s sister publication Connect Money posted a breaking news story within minutes of Fed Chair Jerome Powell’s announcement.