Editors’ Weekly News Roundup August 26 – August 30
Broad national trends and a couple of regional transactions that drew attention outside their regions comprised the five most read Connect CRE stories for the unofficial last week of summer. At the top of the roster was a CBRE study that likely came as welcome news for office landlords.
That study, which we reported as Survey: Office Users Moving Back to Expansion After Post-Pandemic Contraction, discerned a shift in tenants’ outlook for their space requirements. Whereas a year ago, those who expected to decrease their office footprints constituted a small majority, this year they’re in the minority.
On a percentage basis, they’re slightly outnumbered by survey respondents who anticipate needing more space, with one-quarter of respondents expecting to neither increase nor decrease square footage.
One sector of commercial real estate that is in no danger of declining usage is data centers. As reported in U.S. Data Center Demand Appears to Have “No Ceiling”, the vacancy rate for these properties is trending toward zero.
That being said, the JLL report on which the week’s second most read story was based does raise a question about capacity. Namely, whether the U.S. power grid can accommodate the enormous requirements of large numbers of additional data centers.
In contrast, the third most read story for the week ending August 31 was about a segment of CRE that has experienced ebbing, rather than rising, demand lately. Commercial Mortgage REITs Face Declines in Credit Quality, Loan Volume derived from a Fitch Ratings Report which found that earnings declined amid smaller balance sheets, compressed net interest margins and higher provisions. These REITs have been making fewer mortgage loans compared to two or three years ago, in keeping with the lower volume of CRE transactions in 2024.
Ranking fourth among the week’s most read stories was news from the Bay Area. Readers in California and elsewhere clicked on 49ers Investing $200M in Levi’s Stadium Upgrades.
The impetus for the NFL franchise’s outlay for improvements to a 10-year-old facility is a pair of upcoming events. The stadium will host its second Super Bowl in 2026 and will also be the venue for multiple matches during the FIFA World Cup series later that same year.
Moving from the West Coast to the East Coast, a multifamily sale in the nation’s capital rounded out Connect CRE’s top five stories for the week. In a way, buyer and seller were one and the same in Sekisui House Selling DC Apartment Complex to REIT for $279M. The REIT acquiring the four-building complex, part of the redevelopment of the former headquarters of Fannie Mae, was Sekisui House’s sponsored vehicle, which had acquired a property in Seattle from its sponsor earlier this year.
Although Connect CRE will be off Monday in observance of Labor Day, we’ll return on Tuesday with daily news content. That will include the latest installment of this year’s Leadership Series. You can read, or reread, previous installments in the series here.