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Good morning. Homeownership isn’t the only path to luxury living anymore. A rising number of millionaires are trading mortgages for high-end leases, especially in Southern cities.

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Market Snapshot

*Data as of 06/02/2025 market close.

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• Development window: With construction starts plunging and future supply set to dry up, developers who break ground now could deliver into a tighter market by 2026–2027. (sponsored)

• Persistent losses: Despite recent rate cuts, US banks continue to face $481B in unrealized securities losses, driven by long-dated MBS.

• Storm exposure: Hurricane risk is expanding beyond Florida into less-prepared markets like the Carolinas and Virginia, impacting property values, insurance costs, and migration patterns.

• Price recovery: High-value CRE sales, especially in multifamily, are picking up, hinting at a market bottom and renewed investor interest.

• Industrial plateau: Vacancy rates are leveling off as new construction slows, but weak e-commerce growth and softer leasing premiums are tempering momentum.

• Court backlog: A constitutional cap on judges is clogging NY courts and delaying real estate cases, but political pushback is stalling reform.

• Disaster premiums: Rents near LA wildfire areas jumped over 5% as displaced residents drove demand and some landlords defied emergency caps.

• Expense easing: Multifamily operating costs are rising at their slowest pace since 2021, though they're still 39% above pre-pandemic levels.

• Can it convert? Developers are seeking an $850 million loan to transform Manhattan’s 111 Wall Street into over 1,500 apartments, marking one of the city’s most ambitious office-to-residential conversions.

• Renting wins: Renting now costs less than owning in all major US metros, with more high earners choosing to rent for flexibility, lifestyle, and financial freedom.

• Wynwood workforce: LivWrk has proposed a 1,363-unit, three-tower project in Wynwood under Florida’s Live Local Act, with over 500 units designated as workforce housing.

• Rent control: Colorado Gov. Polis rejected a ban on rent-setting algorithms, warning of unintended impacts despite concerns over inflated housing costs.

• AI powerhouse: Amazon is rapidly scaling its global data center footprint, including new sites in Mexico, Chile, and Saudi Arabia.

• Lowered valuation: Blackstone cut its offer for Warehouse REIT to $633M after due diligence raised concerns, particularly over a Radway Green asset.

• Last mile logistics: As AI usage shifts from training to inference, demand is surging for smaller, last-mile data centers near major metros and secondary markets.

• Clean build: Site remediation for industrial reuse is complex but critical, turning contaminated land into productive assets while supporting sustainability, public health, and urban redevelopment.

• Anchor reimagined: In 2025, mall success hinges less on massive tenants and more on visit-driven anchors proven to attract steady, diverse foot traffic.

• Grocery growth: Facing a major supply shortage, Regency Centers is capitalizing on strong tenant demand and limited new retail development to expand grocery-anchored shopping centers.

• AI doubts: Small businesses say AI adoption has brought some wins, but most are still waiting on the game-changing impact they expected.

• Financing win: Orion Real Estate Group has landed $45M in acquisition financing for a major retail center in the Orlando metro.

• Tower transformation: Developers are pursuing an $850M loan to convert Manhattan’s 111 Wall Street into 1,500+ apartments, making it one of NYC’s largest-ever office-to-resi conversions.

• Trophy rebound: Top-tier office towers in major US cities are seeing peak-day usage near 2019 levels, with Class A+ buildings hitting 94% occupancy on Tuesdays.

• Dallas divestment: Union Investment is listing Texas Capital Center to capitalize on strong Uptown demand while shifting its US focus to multifamily and retail.

• Big bonus: Hudson Pacific CEO Victor Coleman's compensation tripled to $24.8M in 2024 despite the company posting a $364M net loss.

• Asset takeover: CP Group is poised to take control of Piedmont Center as lender Bawag moves in post-default.

• Hotel headwinds: Rising upgrade costs and maturing debt threaten US hotel recovery despite strong tourism demand.

• Venture backing: Wander raised $50M from Fifth Wall, Starwood, and others to scale its AI-driven platform and expand its portfolio of high-end vacation rentals.

📈 CHART OF THE DAY