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The Personal Consumption Expenditures Index (PCE) was Down Slightly in May Month over Month in Positive Sign in Fight Against Inflation
Among other recent economic updates:
- Core CPI was up 3.3% year over year in June, a decline of 10 basis points from May;
- Industrial production climbed slightly in May to 100, an increase of 0.6% from the previous month;
- The Warehouse Utilization Logistics Managers’ Index fell 11.4 points in June to 52.6, indicating a logistics contraction;
- The consumer sentiment index fell 2.2 index points in July from June, continuing a 4-month downward trend.
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Lineage Inc., the World’s Largest Cold Storage Warehouse REIT, is 2024’s Largest IPO
Lineage, Inc., with locations in North America, Asia, and Europe, raised $4.4 billion on July 24 by selling 57 million shares at $78 each, surpassing their planned 47 million shares. According to MarketWatch, the REIT’s owned or leased warehouses are concentrated in Washington (9%), California (8%), Texas (6%) and Illinois (6%). CompStak data shows that California’s Inland Empire, Los Angeles County, and Chicago are strong in cold storage activity. In 2023, average cold storage rents in these areas exceed other industrial properties by 18.0%, 25.3%, and 46.0%, respectively. Recent major deals completed in Lineage’s top markets include leases from Fresh Catch at The Blackstone Group’s 3060 East Washington Boulevard in Los Angeles and from Wellington Foods at 1550 Magnolia Avenue, also owned by The Blackstone Group and LBA Realty in the Inland Empire.
Law Firms Are a Bright Spot in the Office Leasing Market
Law firms are one of the few industries leasing more office space now than they did pre-pandemic, according to research from Cushman & Wakefield. CompStak data confirms this, especially in New York City’s office market, where legal services have accounted for an increasing share of new leasing activity from 2022 through 2024 year-to-date. As such, legal services also account for a robust share of the top deals by total value (or consideration). Last year, four of Manhattan’s top ten office deals by total value were in the legal industry. So far this year, Covington & Burling, a Washington, D.C.-headquartered firm, ranks second with its direct extension of a sublease at 30 Hudson Yards. Moreover, the effective rents being inked by law firms outpace the average for all other deals by 8.9% according to transactions signed from Q3 2023 through Q2 2024 in CompStak’s data.
Atlanta’s Industrial Vacancy Reaches 10-Year High and CompStak Data Shows Slowing Year over Year Starting Rent Growth
Atlanta warehouse demand continues to weaken due to a glut of industrial inventory, resulting in the highest vacancy rates in a decade, per a new Savills report. With over 63.5 million square feet available, vacancy rates rose to 9% last month, up from 5.5% a year ago. CompStak’s data shows the impact of this supply jump—Atlanta’s average industrial starting rent increased 15.5% year over year in Q2 2024 to $7.51 per square foot, but this represented the fourth consecutive quarter of slowing year-over-year growth. In addition, the average number of days between execution and lease ccommencement increased to 105.2 days in Q2 2024, continuing a steady rise over the past six quarters, except Q4 2023.
San Francisco Office Vacancy Rate Surges to 34.9%, a New Record High Despite Leasing Bump from
AI Firms
San Francisco’s office vacancy rates are up 640 basis points year-over-year in Cushman & Wakefield’s statistics despite sizeable leases from AI firms, Open AI and Anthropic in 2023 and a 170,000-square-foot commitment from Scale AI in May 2024 in a sublease from Airbnb. Despite this substantial increase in vacancy, there are early signs that San Francisco’s previously sharp drop in effective rents is now stabilizing. After falling by 27.2% from 2019 to 2023, the average effective rent is now up 4.6% from 2023 as of 2024 leasing deals year to date. A similar uptick is illustrated by lease term trends: the average lease term is up 11.7% from 2023’s recent low.
Second-Largest Houston Industrial Sale Ever Included USPS, Texas AirSystems Among Tenants at Time of Sale
Canadian-based REIT Artis has closed on what is reported to be the second-largest industrial transaction ever tracked in the Houston area, per Globe Street. Park 8Ninety, a 12-building, 1.8 million-square-foot industrial park sold to KKR for $234 million, or nearly $130 per square foot. The property was reportedly fully leased at the time of sale, with USPS holding the largest lease at 440,014 square feet, according to CompStak data. Although USPS is the largest tenant at Park 8Ninety, Texas AirSystems pays the highest current rent at $14.83 per square foot. This is considerably higher than the current rent (weighted) of all active tenants at Park 8Ninety in CompStak data, which averages $7.97 per square foot.
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