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Silverstein nears $440M tower deal; retailers turn to 'on-demand warehousing'

Editor's note: The North America Daily Dose will not be published Dec. 25 and will resume publication Dec. 26.

Commercial real estate

* Silverstein Properties Inc. is looking to buy the 54-story BNY Mellon Bank Center in Philadelphia for roughly $440 million, the Philadelphia Business Journal reported, citing unnamed sources. The 1.3 million-square-foot tower at 1735 Market St. was placed on the market by Equity Commonwealth in October. The property was 91%-occupied when it was placed on sale, and HFF investment broker Doug Rodio expected it to sell for about $500 million.

The deal, if completed, would mark Silverstein's first acquisition in the city. The publication added that the estimated $440 million sale price could not be confirmed and that the price "could yet reach" the $500 million threshold.

* The Wall Street Journal featured a report on retailers' use of "on-demand warehousing" to secure temporary warehouse space for increased demand during the holiday season. Walmart Inc. has secured roughly 1.5 million square feet of such temporary space through flexible warehousing startup Flexe Inc.

According to the publication, while such startups usually cater to midsize retailers by offering means to compete with the likes of Inc. without needing to develop or acquire their own distribution network, they are also seeing increased interest from big-name companies that already have established logistics operations.

Increasingly shifting consumer demand is making retailers wary of committing to multiyear leases for warehouse space, the Journal reported.

* RFR Holdings sold the office portion of the 160 Fifth Ave. building in Manhattan, N.Y., for roughly $180.8 million to nonprofit Simons Foundation, The Real Deal reported, citing a source close to the transaction. RFR paid roughly $34.3 million for the 150,000-square-foot Flatiron District building in 2005 and plans to retain the retail portion. The property carries $149 million in debt, the publication added, citing the original loan prospectus.

Simons Foundation occupies almost 67,500 square feet at the property, according to the report.

* Durst Organization received $360 million in financing from M&T Bank for its Queens Plaza Park, which is expected to be one of the tallest towers in Queens, N.Y., The Real Deal reported, citing city filings. The financing comprises a $220 million building loan, a refinanced $90 million acquisition loan and a $50 million project loan.

The mixed-use project at 29-37 41st Ave. will span 978,000 square feet with 958 residential units, of which 300 are set aside as affordable. Durst bought the property for roughly $175 million in 2016.

* Citing PIX11, The Real Deal reported that a fire broke out at Vornado Realty Trust's 40-story 330 Madison Ave. office building in Manhattan on the morning of Dec. 21. No injuries were reported.

* Bloomberg News featured a report on the increased prevalence of short-term leases, or pop-up stores, as malls and retailers adapt to changing customer preferences. Landlords Macerich Co. and Kimco Realty Corp. have begun offering short-term leases at the properties and real estate services firm Jones Lang LaSalle Inc. has formed a specialty leasing team focused on short-term store rentals.

* The Journal reported that investors and analysts are worried about the prospect of an overbuilt self-storage sector, which has been enjoying positive market trends and investment activity for most of the past decade. On a total-return basis, shares of Public Storage, CubeSmart, Life Storage Inc. and Extra Space Storage Inc. have each surpassed the S&P 500 over the last decades, the publication added.

Now, with private developers jumping into the fray with new projects, worries are mounting that operators would not be able to raise rents at previous paces. Citing Poppy Behrens, the publisher of Mini-Storage Messenger, the report noted that the self-storage sector has added roughly 110 million square feet of new space over the past two years and is set to see another roughly 60 million added in 2019.

* Saul Centers Inc. is planning a 25-story residential and retail tower in Bethesda, Md., the Washington Business Journal reported, citing a statement of justification. A commercial building at 7316 Wisconsin Ave. in the city's central business district would be replaced with a 390-unit multifamily building with 11,000 square feet of ground-floor commercial space.

The land was acquired for $35.5 million by a Saul Centers affiliate, the publication added, citing the company's first-quarter earnings supplement.

* East SDG CitTower LLC landed a $70.5 million facility to refinance a construction loan for a 25-story apartment building in downtown Orlando, Fla., The Real Deal reported. The 233-unit CitiTower was completed in August 2017 at 101 Lake Ave. The three-year bridge loan was provided by Asia Capital Real Estate. The property is 97%-occupied.

* State of Michigan Investment Board, which is responsible for the investments of Michigan Retirement Systems, approved a $144.4 million capital investment into real estate and infrastructure strategies, IPE Real Assets reported. A $44.4 million commitment was approved for a Principal Real Estate Investors separate account, which would be used to fund the construction of a 125,000-square-foot office building in Sunnyvale, Calif.

A $50 million commitment was approved for a TPG Real Estate opportunity fund and another $50 million was approved for a Ridgewood Infrastructure fund, according to the report.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng decreased 0.40% to 25,651.38, while the Nikkei 225 decreased 1.11% to 20,166.19.

In Europe, around midday, the FTSE 100 decreased 0.60% to 6,680.60, and the Euronext 100 decreased 1.08% to 899.85.

On the macro front

The Chicago Fed national activity index is due out today.

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