For the last few years, we’ve heard over and over and over again about all the dry powder on the sidelines.

Billions of dollars have been just waiting for the right CRE investment — at the right time.

Finally, it appears some of that money is moving. 

This morning, Equity Residential announced it’s purchasing a $964M apartment portfolio from Blackstone. The properties total 3,572 units in Atlanta, Dallas-Fort Worth and Denver, fitting into Equity’s goal to have a larger percentage of income come from “growth” cities.

And TPG, fresh off $1.2B spent on real estate in Q2, said it has $14B more burning a hole in its pocket. CEO Jon Winkelried said on its Q2 earnings call it was “purposely patient” over the last few years, as it anticipated “substantial stress” was on the way.

No more waiting. 

“Since mid-2023, we have seen a significant increase in investment activity, acquiring a number of distinctive high-quality assets from sellers in need of liquidity. … We expect to lean into the growing number of interesting opportunities we are sourcing in our core areas of focus,” Winkelried said.

RMR Group, which announced last year it was moving into apartments, finally made its first acquisition, a $70M deal for a Denver community, and CEO Adam Portnoy said on its earnings call that it has 125 deals “in various stages of review.” The goal: spend $3B on apartments. 

There is a clear emphasis on multifamily deals. The apartment market stabilized in Q2 with absorptions outpacing deliveries, according to CBRE, and investment sales picked up. The $38.3B spent in Q2 was an 82% increase over Q1, though Blackstone’s acquisition of AIR Communities made up more than a quarter of that total.

CBRE said with new starts plummeting and new leases picking up, multifamily has turned a corner and rent growth should start to return. Investors are ready with their pocketbooks to take advantage. 

— Mark F. Bonner, Catie Dixon, Kayla Carmicheal and Jay Rickey

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On Our Radar

• Some people are calling for an emergency rate cut. It’s highly unlikely. Historical data shows that the Fed tends not to make emergency cuts and prefers to follow a more calculated approach, even in acute moments like this, where trillions of dollars were lost in two days. Panicky investors are saying that emergency cuts — plural and right now — are vital to preventing a U.S. recession. However, economists are saying recession is unlikely, and does anyone really think the Fed's cautious and data-driven measures over the last few years indicate it would do something so jolting? Mark your calendars: Cuts will start to come on Sept. 18.

• Meanwhile, global markets have stabilized after a manic Monday. The Bank of Japan pledged to keep interest rates steady, boosting the Nikkei 225 and weakening the yen. U.S. and European stocks continue to rally, and Wall Street's spiking fear gauge eased back down to its everyday anxiety levels. Despite the comeback, volatility will endure for some time.

• Here’s what the Google antitrust battle means for CRE. A suite of tech companies is in the U.S. government’s crosshairs these days. And while companies like Google and Apple can certainly withstand legal pressures and adapt over time, for real estate, the regulatory implications could soon be felt in a variety of ways, from waning office demands to fluctuations in tech hubs in Silicon Valley and Austin, to delays or changes to tech-led development projects around the world (data centers, anyone?) to potential shifts in where tech hires its workforces (or doesn’t).

• Are Deadpool & Wolverine and Twisters the new “Barbenheimer”? Each of the big three movie theater chains saw foot traffic spikes of more than 132% the week of July 22. That’s good news for the theaters, which have been struggling. AMC reported a $33M loss in Q2. One weird little quirk: Traffic for Twisters was particularly high in tornado-prone states. Oklahomans boosted their moviegoing traffic 224.1% on July 19.

• Earnings today: Brookfield Asset Management, Hilton, Nuveen, Hudson Pacific, Equinix, DigitalBridge, LandBridge Co., Marcus & Millichap, Texas Pacific Land Corp., Terreno Realty Corp., Zillow, Icahn, Blue Owl Capital, Blackstone Secured Lending Fund, Global Partners LP, BlackRock TCP Capital, Novo Nordisk, Disney and CVS.

• It's been 112 years since America had two men on the 1,500-meter race podium. We loved watching Cole Hocker stay above the drama between the frontrunners and then surge from behind to take gold and Yared Nuguse take bronze.

Today’s Deep Dive: Pickier Tenants, Longer Timelines And Free Food: The Life Of Today's Office Tenant Rep Broker

Being an office tenant rep is a Dickensian tale of two situations these days — on the one hand, every landlord wants to be in your good graces and you have more power at the negotiating table than ever before. Paying for your own meals? That’s so 2019. 

But on the other, you have tenants who are holding up deals and signing smaller leases with smaller commissions, and what exactly your role is, is shifting under you.

Bisnow’s Patrick Sisson spoke with a half-dozen tenant rep brokers, and it is clear that while office tenants wield a lot more power, they don’t only expect more from their landlords. They want more from their brokers, too. 

Read the full story here.

This Morning's News

BROKERAGE — JLL's Revenue And Office Leasing Jump By Double Digits (Bisnow): JLL’s Q2 earnings showed a 12% YOY increase in revenue, led by a 19% spike in U.S. leasing activity. Global office leasing volume improved by 10% year-over-year, JLL research confirmed. Find out more about the brokerage's performance in the second quarter.

RETAIL — Department Stores Lag In Comeback (WSJ): Amid a retail real estate resurgence, department stores are notably lagging. Discounters, specialty stores and luxury brands opening their own shops have department stores bleeding customers, and landlords no longer see them as essential. Gain more insight about the shifting shopping habits of consumers.

LEGAL — Jon DiPietra Out At BBG Amid Mortgage Scandal (BBG Real Estate and TRD): Jon DiPietra is out at BBG Real Estate Services and the company has promoted two executives to managing director roles. The moves come after Freddie Mac put BBG under review and stopped accepting its loans in May. Discover more about the new hires.

CAPITAL MARKETS — Wall Street Economists Downplay Recession Fears (Yahoo Finance): Wall Street economists argue investor fears about a looming recession are exaggerated. They emphasize strong economic indicators and a resilient market outlook. Here's what the economists are saying.

CAPITAL MARKETS — Goldman CEO: No Emergency Fed Rate Cut, Recession Unlikely (Seeking Alpha): Goldman's CEO predicts no emergency rate cuts from the Federal Reserve and considers a recession unlikely. He believes the market correction fears are overdone. Read more here.

HEALTHCARE — Healthcare Real Estate In ‘Uncharted Waters’ (Bisnow): Steward Health Care’s bankruptcy has put heightened scrutiny on the real estate deals that underpin hospitals and is ripping through the capital markets for healthcare real estate. Learn more about the sector in flux.

INVESTMENT — Barry Sternlicht: CRE Will Benefit When AI Bubble Bursts (Bisnow): The Starwood CEO said on its Q2 earnings call that AI is artificially inflated and that investors will get burned there and come back to real estate for stability. The company lowered its debt-to-equity ratio but missed analyst expectations for revenue. Here's what else you need to know from Starwood's latest earnings call.

HOTELS — Hilton Stock Drops On Soft Outlook (MarketWatch and Seeking Alpha): Hilton's stock has dipped following a softer-than-expected financial outlook and a revised outlook for its full-year profit forecast. Despite a Q2 performance beat, the company cut its full-year profit forecast, causing shares to fall. CEO Christopher J. Nassetta said the company had a “solid quarter” and has a “record” development pipeline. Get background about Hilton's performance and see where the numbers stack up now.

REIT — Vornado Shares Soar, REIT 'On The Foothills Of A Very, Very Good Market' (Bisnow): Vornado's shares have surged as CEO Steve Roth expressed confidence following significant leasing deals, including a mysterious new tenant at 770 Broadway. Get the details about Vornado's recent plays.

ENTERTAINMENT — Disney’s Theme Parks Struggle (NYT): Inflation has stifled growth at Disney theme parks. Just last year, Disney committed to spend about $60B to expand its parks and grow the Disney Cruise Line. Learn about the turbulence at the happiest place on Earth.

RETAIL — Applebee's, IHOP See Sales Decline (Seeking Alpha): Shares in Dine Brands Global were down Wednesday morning after the restaurant company reported negative same-store sales for its Applebee's and IHOP chains Take a look at the company's new game plan.

HOUSING — Bay Area Cities Start Clearing Encampments (Bisnow): Four Bay Area cities are ramping up efforts to clear out clusters of homeless people in public areas, sometimes by arresting residents of these encampments and sometimes by moving them into transitional housing. The sweeps are seen as a move toward increasing the vibrancy and perception of safety in urban cores. Read more about Newsom's order and its effects in California.

LIFE SCIENCES — Alexandria Real Estate Files $50M Lawsuit Against NYC (Bisnow): Alexandria has initiated a $50M lawsuit against New York City, accusing it of causing costly delays to the construction of its Kips Bay tower project. Here's the lowdown about the lawsuit.

HOTELS — Kushner Plans Luxury Hotels At Balkan War Relics (Bloomberg): Jared Kushner plans to spend more than $1B on homes and hotel properties in Albania and Serbia. But as interest grows, so does pushback. Why Albania and Serbia?

HOUSING — U.S. Mortgage Rates See Biggest Drop In Two Years (Bloomberg): U.S. mortgage rates have fallen to 6.55%, marking the biggest drop in two years and triggering a 16% surge in refinancing activity. Economists believe this is a turning point for the housing market.

INDUSTRIAL — Philly’s Industrial Vacancy Rate Has Doubled (Bisnow): Philadelphia’s industrial vacancy has risen for seven straight quarters and is now 10.54%, more than double the 4.61% it clocked a year ago. What's going on with Philly's industrial market?

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The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at firstdraft@bisnow.com.