Miami office market shows signs of cooling; Hilton buying Graduate Hotels brand

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

The office market in Miami, which has been weathering headwinds better than most cities, is showing signs of cooling as leasing and construction slow down, The Wall Street Journal reported.

Leasing activity in 2023 dropped 25% year-over-year, while construction starts slowed down following a recent peak in the second quarter of 2023, according to the report, citing JLL and CoStar.

The Related Cos.LP and Swire Properties Ltd., developers of the around 1,000-foot One Brickell City Centre office tower, are struggling to find an anchor tenant around a year after the project broke ground. Swire even considered selling the site, according to a document The Wall Street Journal saw.

Prices of single-family homes, rent and property insurance in Miami have been climbing, making it harder for employees to move to the city.

For years, Miami was able to endure challenges in the office market on the back of consistent corporate relocations and limited supply of office buildings.

CHART OF THE WEEK: Most public equity REITs book YOY increase in sustainability score

⮞ A majority of listed US equity real estate investment trusts saw year-over-year improvement in their Global Real Estate Sustainability Benchmark (GRESB) scores in 2023.

⮞ Thirty-nine of the 59 GRESB members scored in 2022 recorded an increase in their GRESB Participant score, while the other 20 saw decreases.

⮞ In terms of property sector, nine residential REITS, eight shopping center REITs, five industrial REITs and four office REITs booked a year-over-year increase in their GRESB Participant Score.

Top transactions

– Hilton Worldwide Holdings Inc. agreed to pay $210 million to acquire the Graduate Hotels brand from Adventurous Journeys Capital Partners LP. The seller will continue to own the real estate of the 37 hotels it either owns or is developing in the portfolio, The Wall Street Journal reported.

– FPA Multifamily LLC acquired the 888 at Grand Hope Park luxury residential tower in Downtown Los Angeles for $186 million, The Real Deal reported, citing a deed filed in Los Angeles County's Registrar's Office. CIM Group LP was the seller.

– SummerHill Apartment Communities Inc. sold the 251-unit Prado Apartments community in Santa Ana, Calif., to PCCP LLC and Alliance Residential Co. for $125 million.

US hotel performance

Three key indicators of US hotel performance went down year over year during the week ended March 9, STR reported, citing data from CoStar, which provides information and analytics on property markets.

Occupancy at the end of the week was 63.2%, a drop of 2.2% from the comparable week in 2023. Average daily rate fell 0.6% to $156.96 and revenue per available room was 2.8% lower at $99.17.

Among the top 25 markets, Minneapolis saw the largest year-over-year improvement in all the three metrics.

See key people moves in North America real estate.

REIT Replay: REIT share prices outperform broader market in week ended March 8