The proliferation of retail bankruptcies and liquidations has resulted in a major increase in available anchor space and a decline in rent, according to CBRE’s Georgia Retail Anchor Report.

Here are some takeaways from the report:

Despite this, the demand for high-end Class A space remains high. The fitness and recreation category was the most active, accounting for 20% of retail anchor deals in 2024.

Georgia’s retail landscape is experiencing a significant shift, with available anchor space jumping by a staggering 57% in 2024. At the end of 2024, 6.8M SF retail was available, up from 4.3M SF in 2023.

As a result, lower quality spaces are flooding the market with a surplus of Class B and C retail anchor spaces. This is driving down rental prices. Currently, the average asking rent is $11.76, and the average rent comp is $12.26. 

These factors are driving what we expect will be a prolonged market slowdown for many owners of retail anchor space, with an average market time exceeding 2 years. 

A recent Kidder Mathews survey reports that Phoenix continues to be a hotspot for industrial development. It has maintained a strong construction pipeline, averaging 8 million square feet in annual deliveries since 2022. This trend will continue well into 2025, with 21.8 million square feet of new projects currently underway. Year-to-date deliveries reach 37.6 million square feet, 19% higher than the total deliveries in 2023, which will continue to intensify the demand-supply imbalance as vacancy rates continue to rise. 

Vacancy increased by 440 basis points (bps) year-over-year (YOY) to 13.1%, while availability rates increased by 140 bps to 15.1%. However, compared to 3Q24, vacancy rates only grew by 140 bps and availability by 20 bps. 

Despite the continued rise in vacancy rates through 2024, driven by new developments, direct net absorption continues to remain positive as logistics and manufacturing tenants expand their footprints. Direct net absorption in 2024 totaled 17.8 million square feet, coupled with 5.7 million square feet in leasing activity. 

Rent growth in the Phoenix industrial market is slowing, with direct asking rents remaining steady quarter-over-quarter (QOQ) to $1.12 /SF NNN. 

Digital Realty completed the purchase of 155 acres at 12899 Moores Chapel Road in Charlotte to build a data center. The company bought the site from The Keith Corp. for $160 million.

Digital Realty is headquartered in Austin, Texas, and owns and operates data centers worldwide. The company has over 300 data centers across more than 55 metro areas globally.

The Charlotte Business Journal reports Digital Realty’s acquisition appears to add to a string of data center investments piling up in North Carolina and the Charlotte region.

Digital Realty’s acquisition appears to add to a string of data center investments piling up in North Carolina and the Charlotte region. PowerHouse Data Centers and Town Lane recently bought 122 acres off University City Boulevard for $45.5 million. That site will be home to a five-building, 2.5 million-square-foot data center campus.

Microsoft Corp. has started construction on three data centers in Catawba County. Those facilities are part of a $1 billion investment the tech giant announced in 2022.

Marcus & Millichap (NYSE: MMI) has published its Midyear 2024 Houston Industrial Market Report.

Highlights include:

• Houston’s industrial inventory expanded by 20% since 2019, adding over 110 million square feet, which increased the vacancy rate to 7.5% by mid-2024.
• A shift in the supply pipeline is helping to stabilize the market, with nearly 75% of the new space already pre-leased as of June 2024.
• The second half of 2024 will see a reduced slate of new deliveries, with about 2.8 million square feet less than the first half, signaling a slowdown in construction.
• Houston’s average asking rent is projected to grow for the fifth consecutive year, reaching $9.07 per square foot by year-end, despite trailing rates in Austin.

“While vacancy pressures have been a challenge, the industrial market is showing promising signs of recovery, particularly in areas like the Southeast and Southwest corridors,” added Marcus & Millichap’s Ford Noe.

1031 Crowdfunding, a real estate investing platform and sponsor of Delaware Statutory Trusts concentrated in the senior housing sector, launched 1031CF Bridge Fund III, a finance fund with a value-add component that targets commercial real estate assets in the senior living space. The fund aims to generate attractive returns for investors while positively impacting communities.

“We are excited to introduce Bridge Fund III as part of our ongoing effort to deliver value and growth opportunities to our investors,” said Edward Fernandez, president and CEO of Irvine-based 1031 Crowdfunding. “The senior housing asset class presents unique opportunities to address the increasing demand for these facilities as the Baby Boomer generation, the second largest in the U.S., continues to age.”

Bridge Fund III will focus on financing value-add, undercapitalized, or otherwise underperforming commercial real estate assets in the senior housing space, and to bridge such assets to their potential through efficient management, improved leasing and occupancy rates, revenue-enhancing expenditures and cost controls.

Broadstone Net Lease (BNL) said it decided to sell its clinically-oriented healthcare properties and had gone under contract for about half of them. The REIT said this would further its focus on core net lease assets in the industrial, retail and restaurant sectors.

“The assets identified for sale are not customarily included in single-tenant net lease portfolios and include clinical, surgical, and traditional MOB properties,” Victor, NY-based BNL said in announcing its fourth-quarter 2023 results.

Such assets “generally have shorter lease durations, greater landlord responsibilities, longer potential downtime upon lease maturity, and in some cases, greater potential challenges with tenants. The characteristics of these assets can make them attractive for a dedicated healthcare property investor and manager, but those same characteristics can make them challenging in the net lease space.”

In all, BNL intends to sell 75 healthcare properties, about 7% of its total portfolio. It has executed contracts on 37 of them, valued at a combined $253 million, with the remainder in varying stages of being sold.

BNL said that following the sales, the remaining assets in its healthcare portfolio will consist of “consumer-centric medical properties that are customary for many publicly-traded net lease REITs, examples of which include plasma, dialysis and veterinary services; assets with real estate fundamentals critical to the tenant’s business and little to no regulatory risk.”

Starwood Real Estate Income Trust and Morningstar Properties have formed a joint venture to invest in the “resilient” self-storage sector, according to a Tuesday release. 

The new entity will recapitalize 25 self-storage assets already owned by Morningstar funds and invest in additional assets to be operated under the Morningstar brand. The joint venture will look to buy both one-off assets and portfolios.

Self-storage is an attractive asset class for investors.

The existing portfolio includes 1.8M SF of storage space located throughout the Sun Belt region, “which is experiencing significant population, employment and income growth,” according to the release. 

“The sector’s stable cash flows fit well with SREIT’s yield and long-term hold objectives,” Starwood Capital Managing Director Ethan Bing said in a statement. “Morningstar is a best-in-class branded operator and this partnership provides immediate scale in a fragmented sector in addition to creating a platform for substantial growth.”

Starwood Capital Group is a Miami Beach-based behemoth private investment firm with $105B of assets under management with several REITS under its umbrella. Not to be confused with Starwood Property Trust — which trades on the New York Stock Exchange — Starwood Real Estate Income Trust is a nontraded NAV REIT whose portfolio, as of November, included $18.2B of assets across 334 properties. 

Not to be confused with Morningstar Inc. — a financial services firm that trades on Nasdaq — Morningstar Properties is a 40-year-old Charlotte, North Carolina-based firm that serves as fund manager, developer, owner and operator, with a focus on specialty properties across a dozen states. With its Morningstar Storage and Morningstar Marinas brands, the company manages 88 storage properties and five marinas, according to its website.

Starwood Real Estate Income Trust in November bought a multifamily housing portfolio consisting of 15,460 units in 62 communities across 10 states from San Diego-based Strata Equity Group. The REIT’s portfolio also includes hotels, industrial, office and other residential properties, as well as loans.