Nashville Emerges as a Top Choice for Migration Destination

For the first time since 2021, Nashville has entered the list of favored destinations for homebuyers, drawing attention for its affordability and lower cost of living, particularly appealing to those relocating from high-cost coastal cities.

Nashville Emerges as a Top Choice for Migration Destination

For the first time since 2021, Nashville has entered the list of favored destinations for homebuyers, drawing attention for its affordability and lower cost of living, particularly appealing to those relocating from high-cost coastal cities.

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Good morning. Nashville has made its way onto the list of popular migration destinations for homebuyers for the first time since 2021. Office properties showed improvement in October with a high payoff rate, while multifamily weakened. Meanwhile, SL Green has sold the Plaza District office building at 625 Madison Avenue for over $600M.

Today’s issue is brought to you by Pace Loan Group—a national lender offering CRE owners non-recourse, long-term, fixed-rate C-PACE financing.

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Market Snapshot

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*Data as of 12/06/2023 market close.


Nashville Emerges as a Top Choice for Migration Destination, Marks First Entry Since 2021

Nashville has made its way onto the list of popular migration destinations for homebuyers for the first time since 2021, with affordability and lower living costs attracting buyers from expensive coastal cities.

LA to Nashville: Nashville was the ninth-most popular destination for homebuyers looking to relocate in October, with LA being the most common origin. According to Redfin, this popularity is gauged based on the net inflow, which is the difference between those looking to move in and those planning to leave. Between August and October 2023, more users expressed interest in moving to Nashville than leaving it.

Sacramento tops the list: In October, Sacramento topped the list of popular migration destinations, attracting buyers mainly from high-cost areas like San Francisco. The average home price in Sacramento was $578,000, considerably lower than the $1.5 million average in San Francisco. Las Vegas and Orlando were the second and third most popular destinations. That being said, there was an overall decline in the number of homebuyers looking to relocate.

Metro moves: In October, 24.7% of users looked to relocate to different metro areas, a drop from 25.9% the previous month, marking the largest month-over-month decrease yet still above pre-pandemic levels. This shift reflects the impact of housing affordability issues, with people moving to different metros for better value. This data was derived from about 2M users searching for homes across over 100 metro areas from August to October 2023.

The biggest losers: The most significant net outflow of homebuyers, mainly driven by the pursuit of more affordable housing, was observed in prominent gateway cities. Los Angeles, New York City, and San Francisco topped this list. Interestingly, while San Francisco experienced a notable outflow, it was less severe than the previous year, possibly due to declining home prices in the area.


Risk on, risk off: Across the country, the number of homebuyers seeking relocation has decreased compared to last year, largely due to higher mortgage rates and escalating housing prices. However, those who are moving are predominantly shifting from costly coastal cities to more affordable regions in the Sun Belt. The migration trends towards cities like Nashville and Sacramento signal emerging markets ripe for investment, particularly as residential influx boosts demand for various commercial spaces.


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  • Family feud: A new lawsuit exposes the power struggle within NY real estate's secretive Goldman family over control of a $2.6B portfolio.

  • Parking no more: ASAP Holdings will replace the parking lot at NY’s LaGuardia Airport Marriott with residential, including 437 apartments and 98 affordable senior housing units.

  • Snapchat's surprise: Snapchat (SNAP) plans to reduce its office space at Santa Monica Business Park by about 75%, cutting over 300 KSF.

  • Aging america: The percentage of US adults 65 and over rose by 34% from 43M in 2012 to 58M in 2022, highlighting the urgent need for affordable housing and assistance for seniors.

  • Interstate industrial: Boca Raton-based Basis Industrial acquired two industrial sites in Fort Worth, TX, for $81M along with two Florida business complexes, totaling $220M.

  • Toll tech triumph: NYC's MTA plans to collect the first Midtown congestion pricing tolls using high-tech electronics, aiming to overcome the $600M subway fare loss due to turnstile jumpers.

  • Office-to-resi hesi: Office-to-residential conversions in major cities have not materialized due to expensive redesigns, lack of windows, and returning employees.


Moody’s: Multifamily Weakens as Office Improves

Recent CRE loan analyses have shown a surprising shift: multifamily has weakened while the office market has shown signs of improvement, according to a report by Moody's Analytics. 

Office improvement: According to Moody’s, only $366 million of CMBS office debt reached full maturity in October, resulting in a 38.8% payoff rate, the highest since June. This increase boosted the year-to-date (YTD) payoff rate to 31.6%. Despite some loans failing to pay off at maturity, nearly half of these obtained formal extensions from special servicers. One notable case involved a maturing loan liquidated at a 55% loss.

Multifamily weakening: Conversely, the multifamily sector experienced a more significant decline. After maintaining a payoff rate above 90% for most of the year, September saw a drop to 71.7%, followed by a further decline to 48.8% in October. Over half of the loans due in October failed to pay off, contributing to a majority of the year's maturity defaults. Most of these defaults were attributed to a few specific groups, including senior and student housing loans.

Debt yield and lease rollover: Moody’s analysis also delved into debt yield and lease rollover. For loans with a debt yield below 8% and limited lease roll, the YTD payoff rate remained stable at 40.9%, with no loans meeting this criterion in October. Loans with over 8% debt yield and significant lease rollover saw a slight increase in payoff rates, from 48.5% to 49.2%.


Payoff probability: A key insight from Moody’s report is the correlation between loan size and payoff likelihood. Smaller loans, under $10 million, had a higher payoff rate (83%) compared to larger loans over $100 million, which had a payoff rate of just 26%. This pattern suggests that financing and managing smaller properties is more manageable, making them a more reliable option in terms of loan maturity handling.


SL Green Sells Prominent Midtown Tower for $632.5M in Major Office Deal of the Year

SL Green closes 625 Madison Ave saga with $630M deal

(Getty, SL Green, LoopNet)

SL Green has negotiated the sale of the Plaza District office building at 625 Madison Avenue for over $600 million, marking the end of a high-stakes saga that included a high-profile battle with investor Ben Ashkenazy.

Some background: The journey of 625 Madison Avenue has been eventful, with SL Green acquiring the leasehold in 2004 and operating the approximately 550,000-square-foot building since then. A critical moment came a decade later when Ben Ashkenazy purchased the land beneath the building for $400 million, indicating potential for a substantial rent increase. However, after Ashkenazy defaulted on a $195 million mezzanine loan, SL Green seized the opportunity to buy the debt, gaining a strategic advantage.

The turning point: An arbitrator's decision earlier this year set the new rent at $20.5 million. In August, SL Green overtook Ashkenazy’s position via a UCC mezzanine foreclosure auction, where it faced no competition. This move paved the way for the current transaction, valuing the property at over $1,100 per square foot, a significant figure given the challenges faced by the office sales market in the post-pandemic era.


Surprising success: Remarkable Achievement: Sources have confirmed Related Companies as the buyer in one of this year's biggest office transactions, a market with limited major sales. Amidst challenging conditions like increasing interest rates and a post-pandemic hesitation towards office spaces, SL Green has impressively closed two of the most significant real estate deals in NYC this year.


📖 READ: A new green real estate startup called EnergRe raised $12.2B from real estate execs for transmission projects that aim to bring more clean energy to big cities.

🎧 LISTEN: The TreppWire Podcast discusses cautious optimism for the CRE market, delve into CMBS delinquency rates, take a look at ‘green shoots and crab grass,’ and analyze the latest issuance data.


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Are REITs equity’s ‘diamond in the rough’? That’s certainly what one BofA analyst thinks. In fact, real estate wound up being the 2nd-best performer in the S&P 500 in November, after information technology (read: AI). For reference, the S&P 500 grew 9% last month.

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