US office lease renewals pick up in H1 2024; NY hotel sells for at least $300M

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The US office market recorded more lease renewals but smaller lease sizes in the first half of 2024 compared with pre-pandemic levels, according to a report from CBRE Group Inc.

Renewals made up 42% of all office lease transactions in the first half, higher than the 31% share recorded prior to the pandemic.

The average size for all office leases with at least 10,000 square feet declined 27% in the first half of the year compared with the average in 2018 and 2019. The decline in the average lease size was steeper in new leases, at 32%, while renewals had a 21% drop.

"With a higher share of lease renewals and less downsizing among renewals, occupiers are cautiously leveraging existing landlord relationships while adapting to new work patterns," CBRE said in the report.

CHART OF THE WEEK: 11 US, Canadian REITs hike dividends in August

⮞ Nine publicly traded real estate investment trusts in the US and two Canadian REITs reported increases to their regular dividend payments in August.

⮞ Hotel REIT RLJ Lodging Trust announced the largest dividend increase, raising its quarterly cash distribution by 50% to 15 cents per share Aug. 1.

⮞ In the first eight months of 2024, a total of 59 US REITs and six Canadian REITs declared higher dividends.

PROPERTY DEALS

– Gencom Group acquired Thompson Central Park New York, a 588-key hotel at 119 W. 56th St. in New York City's Midtown Manhattan neighborhood, from a joint venture between Elliott Management Corp. and GFI Hospitality LLC for at least $300 million, the Commercial Observer reported, citing sources familiar with the matter.

– Bushburg Properties completed its acquisition of the 1.2 million-square-foot office building at 80 Pine St. in New York City from the Rudin family for $160 million, The Real Deal reported. The property is likely to be converted into a residential building.

– Unibail-Rodamco-Westfield SE sold the Westfield Annapolis in Annapolis, Md., for $160 million to a group of investors including Centennial Real Estate Co., Atlas Hill RE founder Sandeep Mathrani, Waterfall Asset Management LLC and Lincoln Property Co.

– Brookfield Corp. sold Potomac Tower, a 242,000-leasable-square-foot office building, at 1001 19th St. N. in Arlington, Va., to Venture Global LNG for $143 million, the Washington Business Journal reported.

REAL ESTATE FUNDS

– Ares Management Corp. raised more than $3.3 billion for Ares US Real Estate Opportunity Fund IV LP. The fund aims to acquire distressed real estate assets, reposition undermanaged assets and pursue risk-mitigated property development and redevelopment in desirable submarkets.

– Real estate private equity firm Waterton Associates LLC closed its 15th multifamily value-add fund, Waterton Residential Property Venture XV LP, at $1.73 billion, the Commercial Observer reported.

US HOTEL PERFORMANCE

US hotel performance was down year over year across two key metrics during the week ended Sept. 14, STR reported, citing data from CoStar, which provides information and analytics on property markets.

Revenue per available room (RevPAR) was $107.86, down 1.4% from the comparable week in 2023, while occupancy fell 1.7% to 66.6%. Average daily rate (ADR) increased 0.2% to $162.05.

Among the top 25 markets, San Diego reported the biggest year-over-year gain in occupancy, while Chicago logged the highest increase in ADR. San Francisco reported the steepest drop in RevPAR.

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