Migration driving Sun Belt retail rent growth; Welltower in $1B portfolio deal

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

Retail rents across the Sun Belt are expected to continue to grow driven by in-migration in recent years, JLL said in a report.

On average, there is 13% less space available in the Sun Belt compared with the national average.

"The top eight markets seeing the highest population growth between mid-2022 and mid-2023 were all located in the Sun Belt, including in Texas, Florida, North Carolina and Georgia," JLL said in its fourth-quarter 2023 United States Retail Outlook.

In 2024, new retail space delivery is expected at over 63 million square feet, although much of the space is already preleased and comprises freestanding built-to-suit retail.

Around 5.7 million square feet of available shopping space is expected for delivery in 2024, with more than a third comprising neighborhood centers.

CHART OF THE WEEK: US REITs capital offerings up in January

⮞ US equity real estate investment trusts secured a total of $7.10 billion in capital in January, up 6.8% from a year earlier.

⮞ A chunk of the offerings were from debt offerings, at $6.99 billion, while common equity offerings accounted for the remaining $115.6 million.

⮞ Industrial REIT Prologis Inc. and retail REIT Realty Income Corp. each brought in $1.25 billion, the highest among the REITs in January.

Top transactions

– Welltower Inc. agreed to pay $969 million to acquire 25 purpose-built active adult communities as part of a long-term strategic partnership with Affinity Living Communities. The portfolio comprises nearly 3,900 units mainly concentrated in the Pacific Northwest. Affinity will continue to manage the assets after the sale closes.

– Marriott International Inc. exercised its option to purchase the Sheraton Grand Chicago hotel for approximately $500 million. The deal is expected to close in the fourth quarter. Tishman Realty is the seller, according to The Real Deal.

Office focus

– Facebook's parent Meta Platforms Inc. will reduce its space at Vornado Realty Trust's 770 Broadway property in New York City. It will not renew its lease for 275,000 square feet, which is set to expire in June. Meta's remaining space comprises 500,000 square feet leased long term.

– Pinterest is close to sealing a deal to sublease its former offices at 505 Brannan St. in San Francisco to Adyen, a Dutch fintech company, the San Francisco Business Times reported, citing market sources with knowledge of the transaction. The building spans 150,000 square feet.

– CoStar Group Inc. acquired the 552,000-square-foot, class A office property at 1201 Wilson Boulevard in Arlington, Va., where it plans to relocate from Washington, DC.

US hotel performance

Occupancy of US hotels was at 56.2% during the week ended Feb. 10, down 2.7% from the comparable week in 2023, STR reported, citing data from CoStar, which provides information and analytics on property markets.

Average daily rate went up 6.8% to $160.96. Revenue per available room, meanwhile, climbed 3.9% to $90.40.

Among the top 25 markets, Las Vegas saw the highest jumps in ADR and RevPAR during its Super Bowl host week.

Oahu Island had the highest increase in occupancy.

See key people moves in North America real estate.

REIT short interest relatively flat in January

AEW Capital adds 5 new positions in Q4'23, including Safehold and Copt Defense

Regional construction outlooks for 2024