In the News—Week of September 9, 2024
Deal of the Week
Vaulter Real Estate Investments recently sold 114 lots to Century Communities in Pinal County, Arizona for $4.3 Million. The transaction was handled by Joel Montemayor, Senior Escrow Officer in our Scottsdale, Arizona office.
National
Companies invest in office space in Florida as CRE boom continues
Florida’s commercial real estate market is booming, with major companies investing heavily in new office spaces, Inc. reports. Citadel, led by Florida’s richest man Ken Griffin, is planning a luxurious 54-story headquarters in Miami, joining other significant developments in the area. Tech giants such as Microsoft, Apple and Amazon are also establishing or expanding their presence in the region. Beyond Miami, other Florida cities, including Boca Raton, Lakeland and Tampa, are seeing substantial commercial real estate activity.
National
24-story tower on Madison Avenue is marked for the wrecking ball
A significant change is coming to Manhattan’s iconic skyline as Williams Equities prepares to demolish a 24-story office tower at 655 Madison Avenue, the New York Post reports. This mid-century structure, standing 310 feet tall with 200,000 square feet of space, will make way for a new development, though specific plans remain undisclosed. The decision reflects a broader trend in New York City, where the pandemic has led to an abundance of vacant office spaces and a pressing need for residential housing. While the state offers tax incentives for office-to-residential conversions, some developers, like Williams Equities, are opting for complete demolition as a potentially faster and more cost-effective solution.
National
Struggling Hertz Properties Group hires a chief restructuring officer
Hertz Properties Group, a major U.S. office landlord, has expressed serious concerns about its future viability, CoStar reports. The company is grappling with challenges stemming from the declining office leasing market, high operational costs and high interest rates. Hertz Properties has hired a chief restructuring officer to oversee its financial reorganization. The firm’s struggles are exemplified by recent setbacks, including the failed sale of a Houston office park and the loss of control over properties in St. Louis and New Orleans.
National
Historic office building in Portland goes for 13% of its 2019 selling price
Montgomery Park, a historic office building in northwest Portland, Oregon, has been purchased by Menashe Properties for a fraction of what it sold for five years ago, KOIN reports. Menashe will pay $33 million, an 87% discount from its previous sale price of $255 million in 2019. The 18-acre property, originally opened as a Montgomery Ward in 1921, is listed on the National Register of Historic Places. Despite high office vacancy rates in downtown Portland, the Menashe family expresses confidence in the city’s recovery and plans to revitalize the building. The new owners, a family-run commercial real estate firm that is headquartered in Portland, aim to honor the building’s history while making improvements, including the addition of a gym facility and new food and beverage options by the end of the year.
Arizona
Phoenix ranks 4th in data center capacity, overtakes Silicon Valley
The Phoenix metro area shot past the Silicon Valley to become the fourth largest North American market for data centers, AZ Big Media reports. Figures from CBRE show the Valley’s total inventory grew to 510.0 MW in the first half of 2024, representing a 44% year-over-year increase. This growth is driven by strong demand, particularly from major tech companies investing in cloud services and AI capabilities. The market’s vacancy rate slightly decreased to 3.3%, while rental rates remained firm, with lease renewal rates increasing by up to 20%. With 334.3 MW of product currently under construction, Phoenix’s data center market shows no signs of slowing down. Northern Virginia is the top market with 2,611.1 MW, followed by Dallas/Fort Worth (591.0 MW) and Chicago (589.6 MW). Silicon Valley ranks fifth with 459.2 MW.
Arizona
Valley of the Sun tops nation for industrial space under construction
The Phoenix area has more industrial space currently under construction than any other metro area, AZ Big Media reports. Figures from CommercialSearch show that the Valley has 39.1 million square feet being built. This figure represents a potential 10% expansion of the Phoenix market. Savannah, Georgia, is a distant second with 26.2 million square feet. The Valley’s industrial pipeline includes significant projects such as Lucid’s electric vehicle plant expansion and distribution centers in Buckeye and Goodyear. Overall U.S. industrial construction has seen a decline, dropping by 19% in the first half of 2024 due to high borrowing costs and decreased demand for logistics space.
