The mantra heading into 2024 was simple: “Survive ‘till ’25.” 

While many in CRE clung to hopes of interest rate relief and market recovery in 2024, some just couldn’t defy the pressures of higher-for-longer rates, lofty construction costs and the intrinsic economic and political chaos that defined the year.

Among the casualties was Common Living, once a co-living powerhouse, which filed for Chapter 7 bankruptcy after growing its portfolio to 7,000 units. Equity Commonwealth, founded by real estate legend Sam Zell, dissolved following a lack of acquisition targets amid a 75% drop in office transaction values. 99 Cents Only Stores shuttered all 371 locations, opting for liquidation instead of bankruptcy.

Other high-profile failures included the collapse of Tyler Perry's $800M Atlanta studio, a plan derailed by AI-driven disorder in the entertainment industry, and the termination of the SEC's $1.4B D.C. HQ deal, which faltered due to financing problems. The Kroger-Albertsons merger, valued at $25B, fell apart under regulatory pressure, with Albertsons filing suit against its former partner.

“We’re looking at a perfect storm,” said representatives from Neighborhood Development Co., a D.C.-based affordable housing developer that ceased operations after 25 years, citing insurmountable costs and market conditions.

Even cities faced setbacks. Chicago's property transfer tax hike, aimed at generating $100M to combat homelessness, was rejected by voters. San Francisco Mayor London Breed lost her reelection bid as the city struggled to recover from the pandemic’s economic toll — including the exodus of X's headquarters.

Despite these challenges, CRE leaders — you know, the ones who actually survived — remain hopeful going into 2025. 

“This is a period of transition, not a final chapter,” one industry insider told Bisnow, reflecting the broader sentiment that the road to recovery remains possible in 2025.

Possible. Yes, even if some couldn’t make it this far.

'Survive 'Till '25' Was About Weathering The Storm. Here Are 20 Things That Didn't Make It

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

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On Our Radar

• Canyon Partners just raised $1.2B for its real estate debt fund. That surpasses its $1B target and nearly doubles the size of its predecessor. The fund, Canyon's largest to date, has already deployed 44% of its capital on senior and subordinate debt across multifamily and defensive asset classes. "We believe this is a generational opportunity for real estate debt investing," said CIO Robin Potts, emphasizing the firm's disciplined approach amid a "higher for longer" rate environment. CRED III has attracted global investors, including sovereign wealth funds, pensions and family offices.

• For the fourth time in 2024, the ECB cut rates. This time, the central bank chopped them by 25 basis points to 3%. Inflation forecasts were slightly trimmed, with 2024 and 2025 expectations revised to 2.4% and 2.1%, respectively. Growth projections also fell, with eurozone GDP growth now forecasted at 0.7% for 2024 and 1.1% for 2025. ECB President Christine Lagarde cited persistent service inflation and wage pressures as key factors, though some had pushed for a larger cut. While more cuts are now expected, Lagarde noted potential inflationary impacts from U.S. trade tariffs. 

• Mariah Carey’s All I Want For Christmas Is You is melting like a snowflake. During October and November, the beloved holiday anthem’s listenership fell 35% and 22%, respectively, compared to 2023. Despite its enduring popularity since its 1994 release, we have to wonder if all America really wants for Christmas is a new hit? Send all wrong answers to firstdraft@bisnow.com.

So, Tell Us The Future

Many Americans have postponed big projects and purchases — such as house moves and home renovations — as they wait for economic conditions to improve. As interest rates decrease, home transactions should rise. Meanwhile, the shift back toward in-person work will push employees to adjust their living situations, possibly moving closer to work, leading to an increased need for storage. With these drivers combined, I expect to see a strong spring lease-up season in 2025 as the housing market and economy begin to rebound. In addition, publicly traded self-storage REITs were somewhat undervalued in 2024. As rates fall, we could witness a surge in acquisitions among these groups, driving up demand and pricing for storage.

Ryan Gibson
Co-Founder and Chief Investment Officer
Spartan Investment Group
Seattle

What's your bold 2025 prediction for real estate? The First Draft team wants to hear from the biggest players in CRE. Give us any and all takes in 150 or fewer words, and they may be published in future editions: firstdraft@bisnow.com.

This Morning's News

PEOPLE — David Bonderman Remembered As Visionary Leader (Bloomberg): TPG Capital co-founder David Bonderman has died at age 82. Bonderman helped save Grand Central Terminal in Manhattan and also helped create the NHL’s Seattle Kraken. Colony Capital co-founder Tom Barrack called Bonderman a “friend, brother, partner, teacher, mentor, psychologist, rock star.” Goldman Sachs CEO David Solomon said he was "a great friend and personal mentor of mine.” Read more here.  

DATA CENTERS — Exxon Will Supply Electricity To Data Centers (NYT): Exxon says its design for a massive natural-gas-fueled plant to directly supply electricity to data centers will be fitted with technology to capture over 90% of the complex’s carbon dioxide emissions, the leading cause of climate change. Read more here.

LEGAL — Prominent Real Estate Agents Face Sex Charges (NYT): The Alexander brothers, well-known real estate agents, have been charged with sex trafficking and other offenses. Read more here.

LEGAL — $25B Kroger, Albertsons Merger Crumbles (Bisnow): The long battle of the mega-grocery merger is finally over after a Wednesday lawsuit by Albertsons to Kroger. The grocery store announced that it was terminating its agreement with the grocer and suing for breach of contract. Albertsons is asking for billions in damages and a $600M termination fee Albertsons says was part of the merger negotiations. Read more here. 

DATA CENTERS — Prologis Continues Push Into Sector (Bisnow): The logistics giant is becoming a player in data center development and this sale to HMC Capital is one of its earliest plays. The former Chicago-area warehouse is a 189K SF asset Prologis and Skybox Datacenters are converting into a 176K SF turnkey and fully commissioned data center. Read more here.

INVESTMENT — Multifamily Is Top Investment For 2025 (CBRE): Multifamily assets are poised to remain the most attractive CRE investment class in 2025, according to CBRE’s outlook report. The average multifamily vacancy rate is expected to end 2025 at 4.9% and average annual rent growth at 2.6%. Read more here.

LEGAL — Yardi Ruling Sets New Legal Precedent (Holland & Knight): A ruling against Yardi for alleged algorithmic collusion introduces new complexities to antitrust case law. The case could have significant implications for pricing software across industries. Read more here.

MULITFAMILY — Do Investors Undervalue Parking? (Neighbor): A new report from Neighbor, which claims to contain the largest dataset of multifamily parking prices ever compiled, says mispricing represents an opportunity to boost multifamily NOI without increasing resident rents. Read more here.

FINANCE — Sentral Secures $525M Refi For Flexible Living (Newmark): Sentral has refinanced a portfolio of flexible living apartments for $525M, facilitated by Newmark. The transaction is tied to a portfolio of six apartment properties with 1,790 units, 25% of which are "flexible living" – where units are fully furnished and made available for short- or mid-length stays. Read more here.

REITs — Public REITs Show 14% Annual Growth (CO): Publicly traded REITs have risen 14% year-over-year and have outperformed private REITs for seven of the last eight quarters. Read more here.

ECONOMY — A CRE Transformation In 2025? (Colliers): 2025 is expected to show continued economic resilience fueled by consumer spending and easing inflation. But policy-driven headwinds could drive up inflation and tighten labor market conditions in the following years, according to Colliers. Read more here.

MULTIFAMILY — 'Time on Market' Offers New Insights (Apartment List): Apartment List has introduced a "Time on Market" metric to analyze rental trends, saying there is a strong relationship between time on market and price. The median time on market for units leased in November 2024 was 34 days, longer than any other November going back to 2019. Read more here.

MULTIFAMILY — Renters Defy Suburban Exodus Predictions (CoStar): While suburban areas have gained much of the new housing added in the past five years, urban submarkets have defied predictions of a mass exodus. Read more here.

OZs — HUD’s Future May Include The Return Of OZs (Bisnow): Texas lawmaker and QOZ supporter Scott Turner is being eyed to lead the HUD at a time when the U.S. is in a global housing crisis. If confirmed, Turner’s early days as secretary are likely to be a balancing act. Read more here.

RETAIL — Gen Z Loves Malls (CNBC): 63% of Gen Z respondents plan to make holiday purchases at physical stores. Gen Z, generally thought to span ages 13 to 28, makes up about 20% of the U.S. population, or roughly 69 million people. Read more here.

REPORT — Hines Predicts Recovery, Opportunity In 2025 (Hines): “We will likely look back on 2025 as a pivotal moment of recovery in many areas of the commercial real estate sector,” said David Steinbach, global chief investment officer of Hines. "Now is the time for investors to put capital to work and reposition their portfolios.” Read more here.

PEOPLE — Barings Names New U.S. Debt Lead (Barings): Joel Pecoy has joined Barings where he will be responsible for managing a $25B real estate debt portfolio covering nearly 380 assets in the U.S. Pecoy most recently served as Head of Real Estate Debt Asset Management at Ares. Read more here.

INVESTMENT — Kite Realty Partners With Fifth Wall (Fifth Wall and Kite): Kite Realty Group has invested in and partnered with Fifth Wall to enhance its portfolio through tech solutions and sustainability practices. Read more here.

REPORT — Optimism Amid Change In 2025 (JLL): "On balance we believe the real estate cycle has turned a corner ... our recent Global Real Estate Sentiment survey is indicative of this shift. As of November 2024, we saw the strongest result in nearly three years. A majority of respondents are indicating they think conditions will improve further over the next six months." Read more here.

INVESTMENT — Record Real Estate Investment In Japan (Blackstone): Blackstone has agreed to acquire Tokyo Garden Terrace Kioicho, a 2.4M SF mixed-use asset, from affiliates of Seibu Holdings, for $2.6B. Read more here.

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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 AI. We’d love your feedback! Email us at firstdraft@bisnow.com.