S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.
Suburban office properties are performing better than those in downtown areas amid the rise of hybrid and remote work, The Wall Street Journal reported.
Valuations of offices in city centers have halved from their peak in early 2022, while suburban offices' valuations are down by only 18%, according to the publication, citing data from MSCI Real Assets.
Colliers data also shows downtown offices have been emptier than suburban offices for eight consecutive quarters for the first time since at least the late 1990s, the Journal wrote.
Following the COVID-19 pandemic, office workers in downtown areas have held on to remote working to avoid commuting on mass public transport. Workers in suburban offices tend to drive to work and returned to the office sooner after the pandemic.
CHART OF THE WEEK: US REIT stocks underperform S&P 500
⮞ Share prices of US real estate investment trusts underperformed the broader market in the second quarter, with the Dow Jones Equity All REIT Index generating a negative 0.9% total return, versus a 4.3% return for the S&P 500.
⮞ The industrial REIT index recorded a return of negative 10% during the period, the biggest fall among the property sectors.
⮞ Apartment and healthcare REITs generated strong returns of 11.8% and 11.5%, respectively.
New York City bets
– JDS Development Group LLC sold the Brooklyn Tower in New York City to Silverstein Properties Inc.'s Silverstein Capital Partners unit for $672 million, The Real Deal reported, citing property records. The property at 9 DeKalb Ave. offers 130,000 square feet of retail space along with 417 rental units and 143 residential condominiums.
– Ikea franchisee Ingka, through its investment arm, acquired a stake in Extell Development Co.'s office and retail tower development at 570 Fifth Ave. in New York City. Ingka spent between $300 million to $500 million for a one-third stake in the project and plans to open a small-format Ikea store at the base of the tower, Commercial Observer reported, citing a source with knowledge of the deal.
– Breaking Ground Housing Development Fund Corp. purchased a migrant shelter at 1760 Third Ave. in New York City for $172 million, the New York Business Journal reported, citing property records. The group aims to convert the 250,000-square-foot building into affordable housing totaling 435 units.
Property transactions
– EQT Exeter acquired six warehouses in Middle River, Md., for $140.5 million, the Baltimore Business Journal reported. The six industrial buildings span approximately 900,000 square feet in the Baltimore Crossroads complex and are 97% leased.
– The Milestone Group LLC bought the Axis Delray Beach apartment property in Delray Beach, Fla., from an affiliate of The Bainbridge Cos. LLC for $111.6 million, the South Florida Business Journal reported. The property spans 594,674 square feet and has 488 units.
US hotel performance
US hotel performance was up year over year across all three key metrics during the week ended June 29, STR reported, citing data from CoStar, which provides information and analytics on property markets.
Revenue per available room (RevPAR) was $117.13, up 6.9% from the comparable week in 2023. Occupancy rose 3.2% to 71.9%, while average daily rate (ADR) climbed 3.6% to $162.81.
Among the top 25 markets, Minneapolis posted the highest year-over-year gains in ADR, RevPAR and occupancy. New Orleans, Denver and Philadelphia reported the steepest declines in RevPAR.
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