Editors’ Weekly News Roundup June 17 – June 21
It wasn’t the first time a high-profile commercial real estate owner has turned in the keys to a major property, and in the current cycle it likely won’t be the last. Nonetheless, Macerich Turns Over Santa Monica Place to Lenderwas big news as far as Connect CRE readers were concerned. The story was the most read for the week ending June 22, drawing plenty of attention nationally as well as in California.
Hit hard by tenant departures, Santa Monica Place was grouped in the lowest rung of Macerich properties in an assessment by new CEO Jackson Hsieh. It’s currently valued at about $264.5 million, a lower sum than the outstanding mortgage on the property.
Roughly midway between his scheduled quarterly appearances on the Walker Webcast, real estate economist Peter Linneman appeared on the June 19 installment, where he and Walker & Dunlop CEO Willy Walker discussed takeaways from the Bennett Zell Classic Roundtable that they attended in Chicago. Their conversations with others at the roundtable revealed that “most of them have bought into the notion of higher rates for longer,” said Linneman. “I disagree with that. I believe the rates come down this year.”
The week’s second most-read story overall, and the one with the highest readership from a single newsletter, Walker Webcast: Guest Peter Linneman Chats About Capital, Asset Types – and Yes, Fed Cuts summed up the Linneman Associates founder’s takes on a variety of topics. Among them was the consensus of roundtable attendees that capital exists for deals—it’s just that lenders and equity partners are sitting on the sidelines.
Focusing squarely on the multifamily sector was the week’s third most-read story, derived from a new report by Yardi Matrix. The latest from the analytics wings of Yardi Systems is summed up in Connect CRE’s headline, Apartment Rent Growth Expected to Decelerate Further in Second Half of 2024.
“Demand and absorption remain robust, but rent growth is restrained by increased supply and affordability,” according to Yardi Matrix. The (over) supply issue will be with us for a while, since more than 500,000 new units are expected for delivery by the end of this year.
Two regional stories involving nationally active players rounded out the past week’s top five. In Chicago, Related Midwest is moving dirt on a parcel with a notorious past. The former site of the Chicago Spire, a development that aspired to be the tallest building in the Western Hemisphere before shutting down in the global financial crisis, will now support a pair of apartment towers.
Related Midwest Starts on Towers at Former Chicago Spire Sitedetailed what will now be built at 400 Lake Shore Dr. The site had been a massive hole in the ground for years before Related Midwest stepped in.
On the subject of building at sites that once were occupied by other projects, casino magnate Steve Wynn now has approved plans in place for another tower along Las Vegas Boulevard. As reported in Wynn Teeing Up Third Strip Tower, Connect CRE’s fifth most-read story last week, the project would include an 1,100-room resort with a 28,000-square-foot casino and 85,000 square feet of convention space, across the street from Wynn’s main campus.
In this case, the former occupant of the site for Wynn’s new project wasn’t a never-completed skyscraper, but rather a casino resort that operated in one form or another for more than 75 years before being demolished in 2007.