For all the talk last year about falling property values, pricing for CRE actually rose 4.8% over the year. 

But … 

“The outlook for this year is not as bright,” said Peter Rothemund, Green Street’s co-head of strategic research. “The run-up in Treasury yields over the past few months is likely to cause property prices to stagnate.”

The trajectory is already clear. The last quarter clocked only a 1% increase in pricing, according to Green Street, and December was flat over the month before.

The sector breakdown may surprise you. The gains were mostly driven by a 17% annual increase in mall pricing, followed by a 14% jump for apartments. And while office pricing indeed fell over the year, it was only by 1%, compared to a 3% decline for hotels and a 2% drop for self-storage. Those were the only three property types in the red last year.

Property prices are still nearly 18% below their 2022 peak, and no property type is in the black over that time frame. Offices are a whopping 36% down. Going even further back in time, Green Street shows only half of CRE asset classes are above where they were in 2017: industrial, manufactured housing, self-storage, apartments and strip retail. 

With pricing stagnant, property sales may dwindle again. Nearly 47% of respondents to a year-end Bisnow survey said they intend to hold property this year, compared to 43% who intend to buy and 11% who want to sell. 

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

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On Our Radar

• Private sector companies added 122,000 jobs in December. That’s the smallest increase since August and below expectations of 136,000. Wages grew at 4.6% year-over-year, the slowest since July 2021. Job growth was led by education and health services (57,000) and construction (27,000), while manufacturing saw 11,000 job losses. Unemployment claims dropped to 201,000, the fewest since February. 

• Los Angeles wildfires ravage communities amid record winds. The Palisades Fire has burned 3,000 acres, driven by 99 mph winds, forcing 30,000 evacuations and destroying homes, businesses and landmarks like the Getty Villa grounds. Fires in Pasadena and Sylmar have added to the crisis, with over 10,000 households displaced and 300,000 without power. High winds have grounded firefighting aircraft, hindering containment. Gov. Gavin Newsom declared a state of emergency as officials brace for worsening conditions. Billionaire real estate developer Rick Caruso made his feelings about the situation plain: “There’s no water coming out of the fire hydrants. This is an absolute mismanagement by the city.”

• Anti-DEI shareholder proposals at Russell 3000 firms have more than tripled since 2020. According to the Conference Board, that rose from four to 13 in 2024, and pro-DEI proposals declined from 92 to 38. These measures, targeting companies like Alphabet, Apple and Coca-Cola, demand scrutiny of DEI policies for legal or financial risks. Critics link DEI initiatives to hiring inefficiencies and cite the Supreme Court’s 2023 affirmative action ruling as fueling lawsuits against alleged bias in corporate hiring. While rarely passing, these proposals aim to amplify opposition, and firms like McDonald’s are scaling back DEI efforts amid mounting pressure. CRE is likewise adjusting its DEI approaches.

• The 2024 holiday season saw online spending hit $241.4B — up 8.7% from 2023. According to Adobe, smartphones drove 54.5% of purchases, making this season the “most mobile of all time.” Flexible payment options like “buy now, pay later” contributed $18.2B in transactions, 79% via mobile. Discounts of up to 30% on electronics and toys spurred sales, alongside generative AI tools, which boosted retail site traffic by 1,300%.

• On this day in 1835, the U.S. national debt reached $0 for the first (and only) time. 190 years later, the national debt is $36.2T — the highest in American history. Debt will likely become an ever larger, graver issue in 2025, and it could imperil America’s economic muscularity.

Today’s Deep Dive: 6 Major Landlords Accused Of Anticompetitive Behavior In DOJ’s Reinvigorated RealPage Investigation

The Department of Justice expanded its antitrust case against RealPage to include six major landlords it alleges colluded to fix rents for more than a million apartments. 

The update to the case first filed in August ensnares some of commercial real estate’s biggest names in a civil suit that alleges RealPage’s algorithmic rent-setting tool was anticompetitive and allowed landlords to illegally coordinate rents.

“DOJ is clearly sending a signal that they're trying to shut this thing down,” said Joe Hernandez, a partner at Bilzin Sumberg’s real estate practice in Miami. “Now, anybody who’s thinking of using this service has got a very strong incentive not to do so.”

Greystar Real Estate Partners, Blackstone’s LivCor asset management firm, Camden Property Trust, Cushman & Wakefield, Willow Bridge Property Co. and Cortland Management were added to the amended complaint filed by the DOJ in the U.S. District Court for the Middle District of North Carolina. 

Read the full story here.

This Morning’s News

ECONOMY — Tariffs Unlikely To Drive Long-Term Inflation (Seeking Alpha): Federal Reserve Governor Christopher Waller says tariffs will likely have a minimal lasting impact on inflation, suggesting a potential for further rate cuts if price stability continues. Read more here.

LEGAL — Equinix Must Face Suit Over Alleged Fraud (Bloomberg Law): A federal judge has ruled that data center REIT Equinix will have to defend itself on accusations it misclassified recurring capital expenditures, misleading shareholders. Read more here.

DEVELOPMENT — Trump Eyes Greenland As Real Estate (World Property Journal): Home to more than 56,000 people, the world's largest island is an autonomous area of Denmark. Some of Trump's advisers believe a sale is unlikely, but expansion of U.S. presence there through economic investments and military footprint is possible. Read more here.

PEOPLE — QB Colt McCoy Launches CRE Branch For HPI (Bisnow): The former University of Texas quarterback and 13-year NFL veteran is launching a Fort Worth office for HPI, a Texas-based full-service real estate firm. The branch will initially focus on industrial properties but is expected to expand to include third-party leasing and management, development and acquisition across property types. Read more here.

LEGAL — Lender Sued Over Allegedly Unaffordable Mortgages (Bisnow): The Consumer Financial Protection Bureau sued Vanderbilt Mortgage & Finance for alleged predatory loan practices. The federal government is accusing the Berkshire Hathaway-owned mortgage underwriter of knowingly giving borrowers loans they couldn’t afford and ignoring obvious red flags in its due diligence. Read more here.

FINANCE — Could Mortgage Rates Decline? (WSJ): The unusually wide gap between mortgage rates and Treasury yields could help rates move lower. Read more here.

INVESTMENT — Trump-Aligned Middle East Firms Announce U.S. Expansions (Bisnow): The two Persian Gulf state firms are setting their sights stateside, starting with a string of luxury developments and data center investments. Dar Global intends to build residences in “key international cities” in the U.S. and Greece, while Damac Properties is dropping $20B in data centers nationwide. Read more here.

INFRASTRUCTURE — Trump's Plans Could Reshape Construction (Construction Dive): “The Biden administration still leaves the Trump administration with $294B to award, including $87.2B in competitive grantmaking, where Trump’s agency staff will personally determine the winners,” according to Brookings. Read more here.

HOUSING — Can Co-Living Solve Loneliness? (WaPo): Brussels-based Cohabs is buying properties to convert into co-living spaces with as many as 36 housemates — which it says is a cure for urban loneliness. Read more here.

INDUSTRIAL — AWS Unveils $11B Investment For Georgia Expansion (Amazon): Amazon Web Services plans a $11B expansion in Georgia to bolster its AI and cloud infrastructure. The investments in Butts and Douglas counties are expected to create hundreds of jobs. Read more here.

AI — AI Revolution Reshapes Real Estate Horizons (CoStar): The U.S. colocation data center market has doubled in size in four years, but vacancy was at 3% and falling fast in mid-2024. Construction of new facilities has increased sevenfold in two years. Read more here.

INVESTMENT — Ackman Eyes 1,200% Gains On Trump-Era GSE Trade (Bloomberg): Since Trump's election, Fannie Mae has soared 227% – in large part due to one man: Bill Ackman. Read more here.

FINANCE — SASB CMBS Loan Market Poised To Hit $85B (Bloomberg): Analysts predict a robust year for the single asset single borrower CMBS market, which started this week with a $2.7B refi of NYC’s Spiral Tower. Read more here.

LEGAL — Amid Steward Saga, Curbing PE In Health Care (BNN Bloomberg): The fallout from Steward Health Care's financial troubles prompts legislation in Massachusetts that subjects private equity investors and REITs to financial reporting requirements. Read more here.

REITs — U.S. Equity REITs End 2024 At 12.8% NAV Discount (S&P Global): REITs closed 2024 with a median discount to NAV of 12.8%. The timber sector traded at the steepest median discount to net asset value at 27.8%. Self-storage recorded the largest valuation drop in December. Read more here.

ENTERTAINMENT — Developers, Producers Call Cut On UK Studio Expansion (Bisnow): After a few blockbuster years of studio construction in the UK in which 1M SF was delivered, projects are on pause in the face of slowing film and television production. Read more here.

DEVELOPMENT — Defaults Loom For Chinese Developers (Bloomberg): Five Chinese developers have been put on JPMorgan's potential default list, including Dalian Wanda, which has asked creditors for an extension on the maturity of its bonds due for repayment this month by one year. 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.