Editors’ Weekly News Roundup June 24 – June 28
Multifamily was the leading sector over the past week as far as Connect CRE readers were concerned. Apartment investment, development and hurdles in completing development served as subject matter for three of the five most-read articles for the week ending June 29.
The top story focused on an investment firm that has made numerous substantial forays into commercial real estate. When it comes to multifamily, this was the biggest deal yet for KKR, an acquisition reported as KKR Makes Massive $2.1 Billion Bet on U.S. Apartment Market.
With properties concentrated in major coastal and Sunbelt markets, the acquisition from Lennar’s Quarterra Multifamily development platform added more than 5,200 recently delivered apartment units to KKR’s portfolio. “We believe this is a great moment to invest in real estate, as transaction activity starts to pick up on the heels of two-years of dislocation in commercial real estate markets,” said Justin Pattner, partner at KKR and head of real estate equity in the Americas.
Chicago wasn’t among the markets covered by the KKR/Quarterra deal, but multifamily in that city was the basis for the past week’s second most-read story. Sterling Bay’s Lincoln Park Housing Project Advances summed up the progress the two-tower apartment project has made in getting the necessary zoning approvals.
However, the project at 1840 N. Marcey St., on a former industrial site near the developer’s $6-billion Lincoln Yards megaproject, is also facing a hurdle in the form of opposition from the alderman who represents the district in which the development would be built.
The past week’s third most-read story focused on another property type and a different local market, albeit covering a larger area than Greater Chicagoland. In the first of a new series we’re calling Market Focus, we tapped into the insights of leaders in Southern California’s industrial market for SoCal Industrial Leasing Normalizes from Hot Streak.
As the headline suggests, the market is cooling down from a period of elevated leasing demand that logically led to a development boom. However, experts told Connect CRE the market can rely on strong fundamentals, not least of which are the Ports of Los Angeles and Long Beach. You can read the second part of our SoCal industrial Market Focus here.
Returning to the apartment sector, our fourth most-read story last week reported the results of the latest quarterly development survey conducted by the National Multifamily Housing Council. NMHC Survey Charts Continued Delays in Construction informed readers that although a majority of survey respondents have encountered delays in getting their projects built, the majority is smaller than in prior quarters.
Citing a sentiment that the team behind Sterling Bay’s latest project would likely share, 77% of respondents who reported delays attributed them to the permitting process. That being said, the latest survey saw a higher share of respondents expecting overall development conditions to improve in the medium and long term.
The past week’s fifth most-read story concerned a small piece of another property type, office. Nationwide, about 830 “prime” properties representing 8% of the U.S. office market by square footage and 2% by building count are outperforming the sector overall, according to a CBRE study.
Handful of Prime Office Buildings Thrive as Broader Sector Strugglesexamined the growing advantage these elite assets enjoy compared to the rest of the market. “The widening gap between prime office space and commodity office space reflects commercial and societal shifts of recent years,” said Mike Watts, CBRE president of Americas investor leasing.