Dear folks, brace for an office storm.

• The office market has reached a new high in terms of available space across the country with 1/5th of the country’s inventory available for lease or sublease, which represents a whopping 1.2 billion sq. ft.

• As Jerome Powell reminded investors two weeks ago, interest rates are not ready to decrease, additional data analysis and debate having to take place first, which once again forces companies to cut down costs amid this period of slower growth.

• “There’s just no tenants right now.”, this is what Mark Silverman, partner at Locke Lord said." He added that, although tenants still need space, they simply don’t need as much of it as they used to.

• Return-to-office policies have yet to turn effective, with 68% of employees in the IT sector still working from home last year (Statista).

• On top of that, some tech giants such as Globant are choosing not to adopt such policies, as reported by Bloomberg.

• But… why should you worry? $300B of office loans are set to mature by the end of 2026, and as a real estate professional yourself, you understand that banks and investors (hopefully not you) overexposed to these loans are set to navigate tumultuous waters.

🏬 Retail News

• Unanchored strip centers are making a nationwide comeback, according to this report from Marcus & Millichap.

• NYC’s retail market is now tighter than before the pandemic with a 15.4% availability rate in January-March, compared with 21.0% back in 2018 according to JLL and The Real Deal.

• Restaurateurs can’t find space for their new ventures in Sunbelt cities. Between 2019 and 2023, while most large cities like NYC and L.A. had to cope with fewer diners, Austin and Miami were experiencing a 23.1% and 50.4% traffic increase, respectively.

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🏭 Industrial News

• After years of relentless growth, rents are decreasing in Southern California for the first time since 2009, with L.A. down 9.0% YoY at $1.51/SF/mth on average.

• Private Equity giant KKR just dropped $234M in Houston’s second-largest warehouse deal ever for Park 8Ninety, a whopping 1.8 million-SF industrial complex.

• Amazon is set to double its number of same-day delivery distribution centers, currently owning 58 of these.

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🏘️ Multifamily News

• Student housing keeps increasing in popularity despite high interest rates. Blue Vista just secured a $54-million loan for a new complex near University of Washington in Seattle.

• From West to East, these are the Top 10 Emerging Markets in 2024 according to MHN.

• NY State Governor, Kathy Hochul has finally announced was has been a long-awaited deal to combat the State’s housing crisis.

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🏢 Office News

• M&T sets $200M aside for bad debt, bracing for the growing threat caused by the office sector.

• Blackstone’s $195M loan on Schwab former HQ goes to special servicing.

• WeWork’s SF building’s valuation gets slashed another time. Valued at $349M in 2019, it’s now worth $124M, or a whopping 65% less.

• Amid higher interest rates, it is clearly observable that office pricing levels have tumbled during the past year until now.

• Distressed office sales now represent more than half of the transactions, as reported by JLL, while Core and Core Plus account for just 20%.