S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.
Vacant office space is piling up in California's Silicon Valley as technology companies reassess their workspace needs, The Wall Street Journal reported.
Office vacancies in San Jose, Palo Alto and Sunnyvale rose to 17% in June from the prepandemic level of 11% in 2019, according to the publication, which cited data firm CoStar. Subleased office space in Silicon Valley stands at a record 7.6 million square feet, compared to 2.7 million square feet in 2019.
Demand for office space in the area has been waning at a faster pace due to layoffs and lower-than-expected return-to-office rates.
Recently, Meta Platforms Inc. put on the market 700,000 square feet of its office space in Silicon Valley, in line with the closing of its offices in Sunnyvale. Google LLC also placed 1.3 million square feet of its office space in Mountain View and Moffett Park for sublease.
CHART OF THE WEEK: Office REIT financial performance mostly down in Q1 2023
⮞ Most US office real estate investment trusts posted weaker quarterly operating metrics in the first quarter.
⮞ Operating funds from operations for 12 office REITs were down sequentially, while eight REITs recorded quarterly gains.
⮞ Recurring EBITDA across all office REITs improved when compared to 2022 and prepandemic levels.
Collapsed deals
– Investment group Terra's $1.2 billion acquisition deal for Genting Group's 15.5-acre assemblage at 1431 N. Bayshore Drive in Miami's Arts & Entertainment District was scrapped, The Real Deal reported. Genting is expected to renegotiate with one of the other prospective buyers that bid over $1 billion for the property, the report said.
– NorthWest Healthcare Properties REIT abandoned its plan to establish a UK joint venture with an institutional investor. The REIT said it will continue to look for an alternative partner to recapitalize its UK portfolio.
Property transactions
– Canada-based Allied Properties Real Estate Investment Trust agreed to sell an urban datacenter portfolio in Downtown Toronto to Japanese telecom company KDDI Corp. for C$1.35 billion. The cash deal is slated to close before the third quarter ends.
– TPG Real Estate Partners affiliates Anchor Line Partners LLC and Alloy Properties recently acquired five life sciences properties in Cambridge and Waltham, Mass., from Alexandria Real Estate Equities Inc. for $365 million. The assets, which are in the Boston area, span more than 428,000 rentable square feet.
– Preylock Real Estate Holdings LLC purchased the six-story office property at 3333 Scott Blvd. in Santa Clara, Calif., for $182.5 million. CBRE Global Investors Inc. and California State Teachers' Retirement System were the sellers of the 244,906-square-foot asset, Commercial Property Executive reported.
– A China Oceanwide Holdings Ltd. subsidiary is selling parcels of land in Honolulu, totaling roughly 17.28 acres, to Tower Luxury Hotels LLC for $134 million.
Construction loans
– Tishman Speyer Properties LP obtained a construction loan worth $750 million for the first phase of the Enterprise Research Campus near Harvard University in Allston, Mass. Otera Capital led the financing, which was arranged by JLL.
– BLDG Management Co. Inc. secured a $425 million loan for the development of The Orchard, a 69-story residential project in the Long Island City neighborhood of New York City that will feature 824 apartment units, retail space, parking space and amenities. M&T Bank led the financing, which was arranged by Greystone.
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