Brokers finished major deals during the second quarter, a period marked by a pickup in office leasing and steady demand for retail space, even as high interest rates continue to weigh on property markets.
The sale and lease deals recognized in the latest CoStar Power Broker Quarterly Deal Awards reached the finish line at a time when many businesses are starting to make decisions again about their real estate after putting plans on hold due to uncertainty about the economy.
The transactions that closed offer a window into the state of the market.
A $2.1 billion deal for a string of multifamily properties across the United States, for instance, was viewed as a vote of confidence in national apartment investments during the tail end of a construction boom that has slowed rent growth.
The renewal of a massive lease in New York's Plaza District provided a shot in the arm to the sluggish office recovery in the nation's largest commercial real estate market. And a big warehouse lease by Amazon in Southern California's Inland Empire highlighted the steady demand for industrial space nationally, especially for the biggest warehouses.
Here's a look at other major deals during the three months ending June 30, according to CoStar data:
Top Sale
KKR Buys 18 Apartment Properties Across US for $2.1 Billion
Investment firm KKR in June bought 18 apartment complexes across the United States in a $2.1 billion deal that reflected investor confidence that activity will pick up after multifamily valuations took a hit from a surge in construction that added thousands of new units in some big cities.
KKR, also known as Kohlberg Kravis Roberts & Co., made its biggest investment in the multifamily sector by purchasing the portfolio from Quarterra, the apartment development arm of Lennar, one of the largest homebuilders in the United States.
The properties include high-rise and mid-rise complexes in California, Washington, Florida, Texas, Georgia, North Carolina, Colorado and New Jersey. KKR plans to work with multifamily operators Carter-Haston, MG Properties and Dalan Real Estate to manage the properties.
Apartment developers finished construction of a record 565,000 units in 2023, according to a report from Apartments.com. That supply has threatened apartment valuations and pushed down rent growth in the past year.
The deal is proof that despite the construction wave of the past few years, KKR likes the fundamentals in the multifamily sector, KKR Managing Director Daniel Rudin said in a statement following the Quarterra deal.
“This portfolio serves high-growth metropolitan areas across the country, where new supply will slow down significantly looking out beyond the next couple years," Rudin said.
KKR was advised by Gibson Dunn & Crutcher LLP on the transaction. Quarterra was advised by law firm Troutman Pepper Hamilton Sanders LLP and real estate advisor JLL.
Top Office Lease
Bloomberg Renews Nearly 1 Million-Square-Foot New York HQ Lease
Bloomberg renewed its New York headquarters lease in a second-quarter deal that could rank as the nation's largest office lease this year as heightened activity returned to the nation's largest office market.
The media and financial data giant extended its agreement for 946,815 square feet in the Bloomberg Tower at 731 Lexington Ave. through 2040 after it was set to expire in 2029 at the tower owned by real estate investment trusts Alexander’s and Vornado Realty.
New York saw its office vacancy rate rise to a record of 14.2% earlier this year before activity started picking up last spring, nudging the rate below 14%, CoStar data shows.
Half-year leasing volume easily eclipsed totals from a year ago, spurred by improved deal activity in the second quarter from the first three months of 2024, CoStar data shows. About 270 new office leases for more than 10,000 square feet had been signed in Manhattan in the first six months, accounting for more than 7.3 million square feet.
Bloomberg has more than tripled its New York real estate footprint to more than 2.1 million square feet across three buildings since moving into the 1.3 million-square-foot 731 Lexington, a 56-story tower that is known for its elliptical courtyard and luminous crown.
The tower also houses the One Beacon Court luxury condo residences and about 250,000 square feet of ground-level retail space.
CBRE and Glen Weiss of Vornado Realty represented the landlord in the lease renewal.
Top Industrial Lease
Amazon Inks Another Big Fulfillment Center Deal in Southern California
Amazon expanded again in Southern California's Inland Empire, leasing a massive new warehouse during the second quarter in another sign that the slowdown in U.S. industrial demand may be easing.
Seattle-based Amazon signed a deal for nearly 1.2 million square feet at the I-15 Logistics Center developed by CapRock Partners near Interstate 15 in Fontana in the inland Southern California region, where the e-commerce giant has among its largest concentrations of warehouse space in the country.
The lease is among several deals across the nation by North America’s largest warehouse tenant for buildings larger than 1 million square feet. The company spent the first half of 2024 re-accelerating its distribution capacity by leasing some of the biggest industrial spaces available on the market.
The uptick in Amazon's activity this year — which matches the number of leases for spaces 1 million square feet or larger signed by the company in all of 2023 — is a sign that U.S. tenant appetite for warehouses is potentially on the cusp of another upswing, CoStar data shows.
The big warehouse leases come as Amazon continues to close some of its small and mid-sized facilities, part of a plan to streamline the company's sprawling warehouse and delivery network to help drive drive strong sales and profit. More than 100 Amazon-occupied spaces have become available for direct lease or sublease since the beginning of 2022, CoStar data shows.
Paul Earnhart, Ryan Earnhart and Brian Pharris of the Ontario, California office of Lee & Associates represented CapRock in negotiating the lease.
Top Retail Lease
Target Signs Deal To Anchor New Lifestyle Center Near Orlando, Florida
Target signed a deal for a 150,000-square-foot store planned to anchor a proposed lifestyle retail center in a suburb south of Orlando, Florida.
The lease signed by the retail chain prior to the start of construction of the planned 405,000-square-foot Lake Nona West reflects the lack of high-quality shopping space available in Orlando and across the country for retailers looking to expand, CoStar data shows.
The Lake Nona project comes as robust consumer spending has supported brisk retail real estate demand in Orlando, where the availability rate hovers near an all-time low of 3.9%, the data shows.
Retail tenants and real estate developers are chasing strong population growth in such Sun Belt cities as Orlando, where locally based Tavistock Development has been an active builder of shopping centers and other commercial real estate projects.
Target, one of the largest retail chains in the United States with about 2,000 stores, is the first tenant signed at the mixed-use project on 54 acres near the Brightline Station on the north side of Lake Nona Boulevard at Boggy Creek Road. Tavistock expects to break ground on Lake Nona West this year and open the center in fall of 2025.
Tavistock Development Co.'s leasing representative Joanne Ling negotiated the lease with Minneapolis, Minnesota-based Target.