Office markets show signs of recovery; group to acquire Cominar for C$5.7B

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

The U.S. commercial real estate markets gained momentum in the third quarter, with the office market joining other recovering sectors. Rising demand for office space pushed net absorption to 8 million square feet during the period, according to a report by Nareit, the U.S.-based trade association for real estate investment trusts and publicly traded real estate companies.

Leased office space increased for the first time since the first quarter of 2020, and rents rose 0.1%, the first positive move since the start of the COVID-19 pandemic, according to the report. Vacancy rates inched up by 10 basis points, the smallest rise since 2019.

Overall, vacancy rates continued to decline and rents trended upward across the commercial real estate space. Industrial markets saw their lowest recorded vacancy rates at 4.6% in the quarter, while apartment markets had the second-highest demand ever with net absorption of 195,000 units, following a record-high of 261,000 net absorption in the second quarter. Demand for retail properties continued to soar, with net absorption of 32 million square feet, the strongest since 2017.

New direction

* Canada's Cominar Real Estate Investment Trust is being acquired by a group of investors led by Canderel Real Estate Property at C$11.75 per unit, reflecting an enterprise value of C$5.7 billion and an equity value of roughly C$2.2 billion. The acquiring group also includes FrontFour Capital Group LLC, Artis Real Estate Investment Trust and partnerships managed by Sandpiper Group Holdings Inc.

As part of the transaction, Cominar will sell certain office and retail assets to Group Mach Acquisition Inc. and its entire industrial portfolio to Blackstone Inc.

* Kite Realty Group Trust and Retail Properties of America Inc. completed their $7.5 billion merger after receiving approvals from their respective shareholders.

* Homebuilder Lennar Corp. partnered with construction technologies provider Icon to build the world's largest community of 3D-printed homes. The 100-unit project is expected to break ground in 2022.

* Kimco Realty Corp. created a 50-50 joint venture with Blackstone's Blackstone Real Estate Income Trust Inc. for a portfolio of six Publix Super Markets Inc.-anchored shopping centers in the U.S. Sunbelt region.

* Diversified REIT H&R Real Estate Investment Trust will spin off its enclosed mall portfolio in Canada into a stand-alone REIT and sell certain office and retail assets as part of plans to broaden exposure to multi-residential and industrial properties.

Property alley

* American investor Bill Ackman and The Georgetown Co. LLC are seeking a buyer for their office building at 787 11th Ave. in New York City, Bloomberg Markets reported, citing people familiar with the matter. The owners are seeking about $630 million for the fully leased 10-story building.

* Brookfield Asset Management Inc. is looking to sell a pair of net-leased office buildings in Brooklyn, N.Y., Greenstreet's Real Estate Alert reported. The buildings could fetch a combined price of up to $300 million, according to the report.

* Office landlord SL Green Realty Corp. sold its 590 Fifth Ave. office property in Manhattan, N.Y., for $103.0 million gross price. The 19-story tower offers 103,000 square feet, with prime retail space at the base.

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