New self-storage supply expected to fall; NYC to end lease at Clipper property

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

New self-storage supply is expected to drop in the years leading to 2029 as the industry matures, Yardi Matrix said in a report.

In its first-quarter forecast, the commercial real estate data company expects new self-storage supply of 38 million in net rentable square feet in 2026 and 2027, then a further reduction to 29 million square feet in 2028 and 2029.

Yardi Matrix said the self-storage real estate sector has matured into an institutional-quality asset in the 15 years since the 2008 financial crisis.

"We remain optimistic about self-storage's long-term prospects but no longer feel this level of long-term growth is appropriate. In the second half of 2023, the number of abandoned and deferred projects in our database noticeably increased, while growth in both the planned and prospective pipelines stalled," the company's analysts said.

For its near-term forecast, Yardi Matrix expects 54 million square feet in new supply in 2024 and almost 48 million square feet in 2025.

"Both construction starts and the under-construction pipeline increased to close out 2023. As a result, the near-term forecast has been increased by 10.9% and 12.5% for 2024 and 2025, respectively," according to the report.

CHART OF THE WEEK: US home prices up in December 2023

⮞ US home prices grew 5.5% year over year in December 2023, faster than the 5.1% annual growth in November 2023, based on the S&P CoreLogic Case-Shiller US National Home Price NSA Index, which covers all nine US census divisions.

⮞ The 10-city Composite index grew 7.0% year over year in December 2023, up from a 6.3% annual gain in the previous month.

⮞ San Diego recorded the highest year-over-year gain among the 20 cities on the index, at 8.8% in December 2023.

Office updates

– Clipper Realty Inc. warned that its cash flow may be adversely affected if it is unable to find a replacement tenant for the space leased by The City of New York at 240-250 Livingston Street in Brooklyn, NY. The municipal corporation intends to terminate its lease, effective Aug. 23, 2025. The lease spans 342,496 square feet of office space and provides annual rent of $15.4 million, according to Clipper's filing.

– Sterling Bay is expected to put up for sale the roughly 1.6 million-square-foot office building at 600 West Chicago in Chicago, CoStar News reported, citing people familiar with the situation. Eastdil Secured was hired to sell the property, according to the report. The building is less than 62% leased.

– Telecommunications company AT&T signed a full-building lease at Menlo Equities' Stonecroft IV office building in Chantilly, Va., Commercial Observer reported. The property spans 111,000 square feet across five stories.

Hotel transactions

– Ashford Hospitality Trust Inc. agreed to sell the 390-room Hilton-Boston Back Bay in Boston for $171 million. The sale is expected to close in March, subject to normal closing conditions.

– RLJ Lodging Trust completed the acquisition of the Wyndham-Boston-Beacon Hill hotel for $125 million.

US hotel performance

US hotels logged year-over-year declines in occupancy and revenue per available room during the week ended Feb. 24, STR reported, citing data from CoStar, which provides information and analytics on property markets.

Occupancy was at 62.0% during the week, down 3.3% from the comparable week in 2023. RevPAR fell 2.9% to $97.12.

Average daily rate was 0.3% higher year over year at $156.62.

Among the top 25 markets, Minneapolis reported the largest annual occupancy increase. Las Vegas and Oahu Island saw the highest improvement in ADR.

See key people moves in North America real estate.

Data Dispatch: US banks' CRE loan delinquencies climb to new peak

SEC eyes commercial real estate exposure, questions 4 banks

REIT Replay: REIT share prices tick up in week ended Feb. 23