The Fed Soothes Market Madness Plus Retail Sales, Housing, Big CRE Deals, and Leaps of Faith

A round of mixed economic data took a back seat to the investor focus on the Federal Reserve meeting. With the expected no change on interest rates, the focus was on Chairman Powell’s outlook, inflation forecasts – (yes, he said transitory again), and how the stock market corrections are shaping investor sentiment. The team also unpacks new data about the impact of tariffs, especially on consumer confidence and housing. In the commercial real estate sector, it's a dive into the good, bad, and ugly covering major office lease renewals, office-to-residential conversions, and even federal land development proposals. But with all the recent market madness, CRE investors seem to stay the course with February’s CRE big deals and new development projects in the LightBox Data Dive, highlighting the CRE market’s liquidity. Listen to the end to hear the team’s own March Madness picks!

00:24 Fed Comforter and Chief? 

02:44 Market Volatility and Investor Sentiment 

04:51 Impact of Tariffs and Economic Uncertainty 

12:15 Housing Market & Affordability Trends 

19:15 LightBox Data Dive: Big Deal Monitor  

21:55 Office: The Good, Bad and Ugly  

37:08 NCAA March Madness Picks 

Have questions for the pod team? Send them to Podcast@LightBoxRE.com.

www.lightboxre.com

Transcript

The CRE Weekly Digest by LightBox

Episode 38: The Fed Soothes Market Madness Plus Retail Sales, Housing, Big CRE Deals, and Leaps of Faith

March 21, 2025

This is the CRE Weekly Digest by LightBox, a firm transforming the commercial real estate landscape by connecting every step of the CRE process with comprehensive tools and data. I'm Martha Coacher with our experts, Manus Clancy, and Dianne Crocker. For the week, from March 17th through the 21st, with another round of mixed economic data to chew on, including retail sales.

Consumer confidence, housing and manufacturing investors were most focused on the Fed meeting this week and the comments of Chairman Powell on the state of the economy. Manus, it was no surprise that we didn't get any action on the Fed funds rate, but the markets were soothed to see two interest rate cuts forecast this year with Powell's assessment of the economy for now.

I usually don't give Fed chair Powell credit for being warm and fuzzy, but he was kind of warm and fuzzy this week, wasn't he? And the markets reacted accordingly. He came out and said that the labor market remains pretty solid. He did mention that the employment market, the labor market remains quite steady.

And that's a good sign. He did say that they are moving closer and closer, albeit at a slow pace towards their 2 percent inflation goal. And the market took that and ran with it. We saw that the markets were slightly up before his remarks started, and then they surged later in the day, later on Wednesday as he was talking, and I think.

That was great to hear. I think there's a lot of uncertainty right now. The markets have been very volatile. I want to get back to that a little bit later. It's exactly what people wanted to hear that. We're not going to a five and a half percent unemployment rate. We're not seeing a surge in inflation at this point.

And he feels pretty good. And if he feels good, I feel good. 

I agree, man. That's, you know, I think the rate holds Wednesday surprised nobody. I think the fed is kind of hinting that their strategy is shifting. The fact that they marked up. Their forecast for inflation, but not a lot. They did revise down their outlook for growth and employment.

But I think, you know, you have to think that investors were heartened that he didn't hint at a more aggressive stance toward potential tariff related price hikes. I think the number for inflation rising this year was 2.7 up from 2.5 in January. So that's. That's fairly modest and the quote that I saw from him that jumped out was we think it's a good time for us to await for further clarity.

And I think he probably spoke for the CEO of pretty much every major company in the U. S. that's, that's waiting for clarity. So it was, you know, it was interesting, and I think the markets, as you said, responded favorably. So that was good news. 

I'm not sure about you, Dianne, or you, Martha, how you react to these selloffs, but every time they come, and they come every six to 12 months, we see the markets fall 5, 7, 10%.

The question becomes, is the sky falling? Is the end coming? Or is this just a natural correction that we're seeing? And it's not. It's not. I'm really gauging these remarks towards newer listeners, younger listeners who haven't been through many cycles before, but when you see the NASDAQ down 12 percent like it has been over the last six or eight weeks, when you see the S&P 500 down 10%.

You ask yourself, is this the beginning of a real, real painful correction like we saw in 2000 or 2008? Or is this just the market letting off a little bit of steam? And my go to reaction in almost every case is it's the market. Letting off some steam. We saw heading into this period earnings PE earnings ratios were at historic highs that the market was priced for perfection and we were due for a time out now that we're down 12 or 13 percent on the NASDAQ, what we've seen is those PE ratios have dropped about three or four percentage points, which is a healthy thing.

I think a lot of this was triggered by this. Inflation tariff driven uncertainty. That was kind of the trigger, but I'm definitely not in the camp. Of the end is near here. I do think these tariffs will eventually come off. I do think that while it will hurt certain industries more than others, it will not be this anvil on the back of industry at this point.

And I do feel like this is a healthy bloodletting. I'd love to hear your responses to this because maybe I'm being too pie in the sky. 

You know, I think I'm kind of landing where you are, Manus, in the terms of not feeling like tariffs are going to be, to use your word, this big anvil on the back of businesses.

But I, I think those, those kinds of dramatic shifts and, and sell offs and, and the, in terms of. How it reflects the general sentiment. It's almost like the market's getting comfortable with the fact that the only certainty this year will be uncertainty, you know, so, so there's not, I don't think this sense of panic necessarily, but that they're reacting and clearly we're going to see the tariff wars play out.

We're going to see impacts trickle through the market, through pricing, through spending levels. But there was a quote that jumped out at me in a Wall Street Journal article this week and, and I think it speaks to the point that you just made. It was by Frank Sorrentino, Chairman and CEO of ConnectOne Bank in New Jersey.

And he was speaking specifically in terms of their loan demand, which appears to have slowed as a result of uncertainty. But the quote was this, it was people can't decide whether to start or stop, whether to slow down or speed up. And the point that we're in right now just makes it really, really difficult for businesses to function in an effective way.

So, you know, it's, it's stating the obvious, but I think the sooner we know where tariffs are headed, the better it's going to be across the market. And I think it's, it just leaves people right now in a very uncertain time. And we're seeing that impact in terms of market sentiment, I think, across the board I agree. 

There were two sentiment numbers that we looked at in the last week, and we look at these frequently, and that's consumer sentiment, which fell to a record low in the last two years and the builder confidence number, which continues to tick downward. And again, these are, you know, soft data points.

They don't really necessarily reflect harder data that's still Making its way through the process, so we'll have to wait and see the other thing that was interesting was looking at earnings calls. There was a record number of CEOs that used the word tariff or tariffs. In their earnings commentary, it was mentioned at least 255 times, which is way above the most recent high, which was back in 2018, where they mentioned it about 185 times.

So, it is setting the expectation that Something is going to impact the health of revenue projections and sales for a number of these companies. 

That's an impressive number, 255. Did you have one of those little counter devices as you were listening to these things? Like in the old days when people would try to count traffic coming into a shopping mall, they'd have the little clicker in their hand, or did you have something more modern than that as you were running up those numbers?

It's a very, very complex A. I. program, Anas. 

That's hilarious. I will say that there's no doubt that tariffs and the uncertainty they bring to your point, Dianne. Is sand in the gears right now? There is uncertainty being driven here. We may see inflation take up. Things are making people nervous and there will be losers out of this, right?

And home builders, maybe one of them refined my point from the open a little bit more. I just don't see this becoming cataclysmic. The data out of the U. S. when you're getting to the real meat and potatoes of it, when you're looking at inflation, when you're looking at earnings growth, when you're looking at unemployment, the numbers are too good right now to see this 2008 or 2000 level sell off when we saw some of the indices fall more than 50%.

I'm putting this out there because for younger people who have never been through a cycle like this before. These things come and go, and trying to separate the data from the noise can be challenging. And this is just one guy's opinion, right? There are other people on the other side that think this will be very, very painful, but I'm not in that camp.

By the way, I do want to give proper credit to FactSet for the analysis of the earnings call transcripts. 

We got to find the guy at FactSet who has the clicker. 

Martha, you know, on your point of the softer indicators, one that I saw was the U. S. Policy Uncertainty Index. It's a 28-day rolling average of news articles.

Someone's there counting how many news articles mention the topics of the economy, uncertainty and legislation or policy. And just in the past two months, that Uncertainty index has spiked up to 400 when it usually averages around 150. And the only time it was higher was in the early days of the COVID pandemic.

So, I mean, clearly our market hates uncertainty, but these are soft indicators. And to your point, Manus, you know, the hard data is, is really what will tell the story. So, you know, one indicator is how do consumers feel? Consumer sentiment, I think, is, is slumping in a palpable way. But the real question is, When does that start to affect consumer spending in a, in a material way?

And we're seeing more people shopping at discount retailers, which we've talked about on the pod a number of times in the past week, there are anecdotal stories right now that stores like target and Walmart consumers are starting to buy smaller pack sizes at the end of the month when their money is running out.

And I'll give you one other kind of fun indicator of lower consumer spending is that tiny bottles of liquor. are apparently flying off the shelves. So whiskey and tequila makers are saying that their sales of those little nips are way up, which is not only a sign of a pinched consumer, but a price conscious one.

And I would say maybe one that's getting increasingly stressed out too. 

Are people being squeezed? Or do they think they will be squeezed, right? This 24-hour news cycle of tariffs are going to be the end of us. Prices are going to go up. Here comes inflation again. Is that causing people to be conservative or is their wallet just a little bit lighter than it was three months ago?

That's the hardest thing to gauge at times like this. I, I've never found the perfect metric for this consumer confidence. It's partly. How your pocketbook is doing, but it's partially how you feel the future will be. And I don't know if you have any better. Insights into this, but this is what I struggle with the most.

I saw a really interesting quote and I wish I could remember who it was that said bull markets don't die of old age; they die of fright. And we walked into 2025 with a lot of bullish sentiment and any fear of a recession or a slowdown in the economy is what's going to slow down investment and consumer spending.

That's spot on. And it's made worse by the fact that the things we're dealing with right now, whether it's government layoffs, reducing of the government footprint in offices or the length of time the tariffs will be in place, they're all really unknowns. They're things we haven't dealt with in a long time.

And I think that leads to some of that future uncertainty that people may be carrying into the Walmart or the target week after week. 

Right, and the fear that, that this noise will just kind of allow us to talk ourselves into a recession in advance of the data actually showing that that's the case.

There were a couple interesting things in the news this week on the housing market too that I wanted to mention. One was builder confidence in the market for newly built single-family homes. That was 39 in March, which was down three points from February, and it was the lowest level in seven months. So, there's a, a downturn in confidence coming from home builders.

They're also sitting on a large number of finished homes that have yet to sell. So, construction of new homes rose 11.2 percent in February, coming off of a harsh winter, but they're expected to pull back, which could certainly worsen the housing affordability crisis. And then in terms of existing home sales, sales of previously owned homes, those rose in February with the national gain powered entirely by a jump in transactions in the South and West.

But it was interesting because some 1.2 million unsold homes were reported at the end of February, which was up 5.1 percent from the prior month and up 17 percent from a year ago. So, you know, that really suggests to me that homebuyers are getting more cautious that they're only slowly entering the market, so there could be kind of some signs of a slowdown on the home front.

We were talking specifically about tariffs and the impact to tariffs on home building was given a projection by the National Association of Home Builders where they're saying that the average cost that goes into building a single family home in the U.S. will go up by 7,500 to 10,000 based on.

Increased costs. Now they've been stockpiling some of the Canadian lumber and other things they need knowing full well that the tariffs may be long term. So that's interesting. We'll have to see how long they last. To me, that was a surprisingly muted number. Honestly, when you think that the average new home can cost anywhere from maybe 200,000, if you're taking the low end of that, You're saying that inflation, if you're saying that 7,500 is the low end, you're talking about three to 5%, which to me, it was surprising that it wasn't higher when you're talking about a four or 500, 000 home.

Now you're talking about 2 percent and. I guess it didn't square up for me that those numbers would not be higher, given how negative the sentiment has been with the homebuilders. I would have thought if you said, guess what this number is going to be, I would have said 15, 20, 25, 000. It seems like. That is something, given how much prices have gone up over the last five years in housing, it's not much for a buyer to absorb.

And the other side of the coin, which it comes back to this yin and yang about how confident, underconfident we should be, how Real is the data. How real is just the perception that on the one hand, yes, new housing sales are going up in terms of costs, right? What that could be because of tariffs on the other side, what we're seeing in some markets are markets being flooded with inventory because the potential for layoffs of federal workers.

So that would put downward pressure. On existing home prices. So you have a lot going on in the housing market. I can understand why home builders would be negative right now. If you have higher costs and the threat of existing supply overwhelming the market, that could bury your sentiment, no doubt about it, but for the home buyer, I think there's two sides of the coin.

Yes. Maybe new stuff could be going up, but you may have a lot more choices than you did six months ago. It's a very, very complicated time in so many parts of the economy. 

Yeah, certainly lots of moving pieces. Maness, I had the same reaction to that seven to 10,000 number. It, it reminded me of the estimate I saw in terms of how much higher an SUV could cost in response to tariffs.

And that, that was seven to 10,000, which added to a price of a car seemed very, very high. But as you said, to a house, you know, it's a much smaller percentage and lower than I would have guessed. I want to throw out one other thing that was on the home building news front this week that you may or may not have seen.

And that was that Trump is proposing to use federal land for new affordable housing development. This was an article that was in the Wall Street Journal. And 650 million acres of federal land to where the housing shortage was most acute, so obviously the affordable housing crisis is most significant and densely populated MSA's – only 7.3 percent of all federal land falls within the MSA's that need more homes. So, they're starting a study to look at where they can open up federal lands for housing developments. Areas where it could have the most impact in terms of the housing crisis are states like Nevada, Utah, Southern California, and Arizona, where federal land is more abundant.

But, you know, I think the success of this policy, if it does move forward, as the article pointed out, would really hinge on releasing federal land in the right places. And there's no clear path forward because clearly they'd be dealing with infrastructure issues. Zoning laws in some cases might have to change to allow for home building.

And then there are logistical issues with. Infrastructure, environmental challenges, and then the things we just talked about, labor shortages and high material costs. So that's something else to watch and something that could increase the supply of housing on the market, which you just talked about, Manus.

Wow. There's so much going on with that. The last couple of sentences you gave us there, there must be people in the world right now whose heads are about to explode, right? That. If you take somebody, you know, a young person who probably has incredible amount of passion for improving the supply of affordable housing, but they also have incredible passion for the amount of green space we have on the planet, right?

It's these things that run right into each other at a hundred miles an hour, and it forces people to make really hard choices. You can make the same claim about AI, which that could. Be a game changer for us in terms of worker productivity and our quality of life, but it also eats up enormous amounts of energy.

I think there are a lot of real tough decisions for people that are deep thinkers on the future of our planet for what has to take a higher priority. Martha knows for me for the last couple of years, I'm not a deep thinker, so I'm glad I don't have to worry about that, but there are a lot of deep thinkers out there and some real paradoxes in terms of how we pursue improving the quality of life for people in this country.

Let's pivot to the LightBox Data Dive. This week, we're going to do the big deals tally for February. 

That's right. The big deals in February that we've been tracking totaled thirty-one. So, these are deals, we call them the nine digit deals, so they're in excess of 100 million. We tracked another forty-nine deals that were in the category of 50 to 100 million.

So, since last June on the big deal front, The ones we tracked averaged about 42 deals per month. The high was 64 in October. January was forty-three, you know, February was a relatively short month. So, 31, I don't think was that disappointing. And of course, as I said, there were another forty-nine in the next. category down.

And what's also really nice is that we're not seeing a lot of repeat buyers. So that tells us that the universe of investors is expanding as more property listings come onto the market. So I think that that deal tally each month will be definitely important to watch in March and April to see if there are any early signs of a pivot, especially if all of the things that we've been talking about thus far today Really starts to shift investor sentiment in any material way.

I think the numbers are incredibly encouraging when you pair this with your information last week of the light box CRE activity index, which showed a big jump in February. We've mentioned this endlessly since we started doing this podcast in June, that volatility and uncertainty and higher interest rates are the enemy of CRE.

Right. They are the trio of enemies that. We'll work together to slow down economic activity, and we've had a lot of volatility, and we've had higher interest rates during the last two months. We have seen a stock market sell off and yet the CRE activity index shot up last month and we saw a very respectable number of high eight digit and nine-digit sales.

And that tells me that. The CRE market has yet to be rattled by the broader things happening with tariffs, federal layoffs, federal lease terminations, policy uncertainty, and so forth. And that's a very good sign. And to your second point, the depth of buyers speaks to a very, very liquid market right now.

And maybe that goes back to what I said in the first couple minutes of the pod. Maybe that's what's underscoring my belief that what we're just seeing is a healthy bloodletting in the equity markets and not something bigger. 

There was a story that talked about return to office, potentially stalling and office visits across the country remain at 36 percent lower than pre pandemic levels.

And obviously, city by city, the numbers are different. New York and Miami are doing better than many of the other locations. Cities like San Francisco are actually outperforming Chicago, which might surprise some people, and others like Boston, L.A. and Denver have five-year office gaps that are above 40 percent from levels in 2019.

I did see that San Francisco in the headline, they have bounced off of last place. I don't know what you call this. This is kind of like you know, the Cleveland Browns will never aspire to win a Super Bowl. Success for them is when they finish third in their division, not fourth. San Francisco had been the laggard for a long time, and now they've moved from 10th to ninth, or 20th to 19th, moving ahead of Chicago.

Good on San Francisco. I think what you're going to see in the return to office is big regional differences. And I do think it will be a function of the broader economy and the backbone of CEOs that are forcing people to come back to office. I think New York, it will become the leader soon because it is finance based.

It is bank based; accounting firm based. They want people in the office. We've heard it from Jamie Dimon and other. CEOs in the area, its time, it's time to come back where that becomes the operative narrative. You're going to see better numbers in tech centric places like San Francisco. It will probably lag tech workers can work from anywhere.

They've shown a real ease of working with zoom and programming remotely. It may continue to lag places with high quality of life problems like Chicago. It may be a slog for a long period of time. So I do think in some places, the trajectory will continue to be upward, New York being one of them, probably Charlotte, Atlanta.

Other places where financial institutions are dominant players in the, in the industry and other places will lag. You really have to look market by market. 

Beyond return to office, Manus, what else are you seeing in terms of activity in this sector? 

That is a great segue, Martha, because it folds in both the liquidity remark I made to Dianne a moment ago, as well as the return to office in New York City.

This comes from The Real Deal. Elizabeth Cryan is the author and the headline I thought was terrific. It starts with quoting what office meltdown question mark. And the gist of the story is in recent weeks, there have been three billion plus ten figure CMBS loans made on the office market since the beginning of February.

And what we're talking about here is. The MetLife building owned by Irving company. They got a 1.5 billion loan issued by B of A and Wells Fargo. RFR got 1.2 billion on the Seagram building, which is kind of Midtown East, 56th Street, Madison Avenue around there. And Ivanhoe Cambridge got 1.1 billion in CMBS debt on Three Bryant Park, which is right by Times Square.

What does this tell you when you see things of this size? Number one, it says that. Office is not monolithic in the way people look at it. They're looking at BNC as a disaster. They're looking at trophy offices as desirable. When you talk about this kind of number, one billion and up. You're talking about a very diverse lender pool in the CMBS market.

You're talking about a lot of people that these banks had to go to, to place the debt. You're talking about a big part of the market that is comfortable lending a billion dollars in up on trophy New York city offices. And it just goes to show that liquidity is there. If there was no liquidity, if there wasn't this deep lender pool, you wouldn't see loans of this size.

You would see extend and pretend on existing debt. Not in the case of these three. So really good reporting by Elizabeth Cryan with the Real Deal. 

You know, Manus, I'm thinking as I listen to you, that if more people listen to the podcast every week, we might see some positive movement in the sentiment index, because every time I listen to you, I feel better about where we are in the market.

I'm not sure I'm the most optimistic person in life. When I watch the NCAA basketball, and we'll talk more about that later, I always go into it thinking, you know, my team is going to lose in the first round or You know, with the Mets, my best pitcher is going to get injured or the Giants. My quarterback's going to get hurt, but with CRE and the U S economy, I just always believe in it, and I think that comes through on the podcast.

I didn't want to talk about one other story in the office segment. Harkens back to things we talked about last week. I did notice. And I think this was in commercial observer that the 525 million loan on the mobile building, which is 42nd street, I think second Avenue. A couple blocks from grand central, the owner there, the owners, David Warner being one of them landed a three-year extension on that particular debt.

What we're gradually seeing in the office market in waves is on the BNC area. Things are selling. They're selling in big numbers in terms of the number of sales we're seeing, but at puny prices. So the market is transitioning. There is a process by which this market is clearing. In the a, we're seeing more comfort in people lending on trophy assets, and we're still seeing workouts taking place, especially on the good stuff.

Buyers will fight for their properties in terms of trying to eke out an extension, some kind of accommodation to keep the good property. So a lot going on there. Very, very nuanced market by market and last by class. 

Manus, playing off of what you just said, talking about office being a very market by market, class by class type of deal, due diligence required by the investor.

We have stories that are good, bad, and ugly. Let's tackle them in these specific buckets because there's some lease stories, some office to resi conversions, and some losses. 

Do you want the good first or the bad first? The good news or the bad news? 

Let's start with bad. 

Let's start with bad. Okay I think there's slightly more bad than good.

So we will run through those. In New York, Brookfield took a 100 plus million-dollar loss on a Penn station area office. They sold 333 West 34th street for 150 million. They bought it in 2018 for 255 million. That story by Cranes, I guess the silver lining on that one right there is that Even in the sale, they still managed to get a nine-figure number.

Uh, we've seen so many of these sales where it's been two 50, 250 million down to fifty million. Uh, Brookfield is, is claiming victory on that one. Uh, RXR lost a Midtown office property to its lender. That again was a story from cranes, another negative one, which talks about. Folds in both government policy, the new government administration, trying to reduce office space in Washington, D.

C. The Wall Street Journal, I'm sorry, the Washington Business Journal reported that Voice of America abruptly canceled its lease in Washington, D. C. Voice of America is, you know, the institution that puts out radio for Europe and other things that promote. America throughout the world. They had 350, 000 square feet on Pennsylvania Avenue in D.

C. That lease was abruptly canceled, and it speaks to some of the event risk that landlords are taking as the federal government tries to institute layoffs and lease terminations in large quantities. With that, I'll let you us Way in Dianne, and then I'll turn to my positive office stories. 

Well, I think first of all, in the Voice of America story, there was another stat that I found really interesting, which was that their offices were just 2 percent full between January and September of 2023.

And the large office space that they're vacating has a capacity of something like 3,400 workers. But on average, they saw jus seventy-two people actually using it each day. So you know, for all the conversations we're having about federal lease terminations, at least in this case, this was a building that was largely vacant anyway.

And I think, you know, to the other point with the office stories that it really harkens back to the point you made that, that the stories are very, very nuanced and some segments of office in particular markets or sub markets are driving healthier deals at prices that have in fact appreciated. And there are others where folks are having to take a haircut, but the market is seeing deals on both sides of the spectrum, all kind of converging at once as distress slowly trickles in and has more kind of traditional deals also come up on the selling block. So, you know, that does give me hope for the future of the, the big deal monitor that we just talked about.

There are simply a lot of assets. that are changing hands, but the importance is just making sure that you're looking at the data behind it to really understand the property because making generalizations in this, this type of market is just not, not a wise way to go. 

For any listener who's thinking about a career pivot, I have to say that that 2 percent occupancy sounds to me like a horror movie waiting to be made.

Right. A bunch of millennials just out of school, right out of Georgetown show up at the office one day. There's only eight people in a 24-story building that's made for 4,000 people. And all of a sudden, a guy in a hockey goalie mask shows up or something like that. There's a, there's a movie in there waiting to be green lit.

That's, that's what I know. Uh, going back to some good news, not a hundred percent will be the office, but I'll run through these quickly. On the leasing front, Horizon Media signed a 17-year lease extension for almost 400,000 square feet at 75 Varick. That's kind of lower West side, Manhattan, not so far from the, what you would call Soho down there. That story from Commercial Observer.

We saw figure AI, at least 99,000 square feet for new headquarters in San Jose. They're a humanoid robotics firm. They're quadrupling their space as they move from Sunnyvale. That story comes from The Real Deal.

And on the new development front, right? New development is the greatest sign of faith, the greatest leap of faith for both developers and lenders. If you're putting a shovel into a piece of land, if you're taking office and converting it to a hotel or residential, that is the biggest leap of faith. It is capital intensive. If you're a buyer, you're putting a lot of equity into these deals. If you're a lender, it's the riskiest way to put out debt. And we saw three big stories this week that I'll run through very quickly.

In Dumbo, which is for those that don't know New York, the district under the Manhattan bridge overpass, this is kind of Lower East side. Watermark Capital got a 125 million loan for an office to residential conversion. Integritas Capital and Bravo Property provided the financing there. So a leap of faith from Watermark Capital and those two lenders, that story comes from the real deal. 

Out in Bishop Ranch, KB Home paying fifty-eight million to also get into the office redevelopment. I'm sorry, this is in San Ramon, the developer there KB Home is going to raise a 276,000 square foot office to make way for 190 townhomes. This will be single family.

And then lastly, got one more for you here. In Midtown West, the High Wind Group bought a vacant lot at 8 West 45th Street. This comes from Commercial Observer where they expect to put up new multifamily housing. So this doesn't happen when lenders are panicked. This doesn't happen when developers are panicked.

We're seeing this around the country. Office to resi development, new shovels being put in the ground for hotels in Nashville, multifamily property in the Southeast and Southwest. Midnight in America is not here as far as commercial real estate is concerned. 

One thing that jumped out at me, Manus, in the examples that you just gave, and I'll agree that any time you see a story or several stories that you just mentioned where folks are taking a leap of faith, it certainly makes you feel better about the future.

And we have a piece that's coming out soon. soon in terms of adaptive reuse, and you just gave a couple great examples of that trend that's taking root as properties that are struggling with high vacancy and poor markets are getting reimagined into uses that, that are very much in demand, in these cases, residential.

But specifically on the watermark capital story that you mentioned, I also wanted to add that the rental portion of that building will qualify for the city's 467M program. And that essentially gives Landau a tax abatement for 35 years in exchange for 25 percent of the apartments being earmarked for affordable housing.

And we're starting to see more and more projects that kind of have a carve out for affordable housing. And I think for developers that that will be an important trend, um, moving forward as more of these. Adaptive reuse stories start to break ground are did, you know, for the week takes us to loan sales.

It does. You know, one of the stories that we've been talking about in recent weeks is that we're starting to see banks unload portfolios of non-performing loans, and that's one of the things that we do track with data from LightBox's broker and investment platforms is note sales. Our data did show a spike in loan sales, particularly in office and multifamily back in 2023.

Since then, it's really been kind of more of a steady drip, which I expect will continue this year as more loans change hands. So that's a trend that we'll be watching on our platforms in the coming months. And if you aren't watching, March Madness is definitely upon us. What's your final four picks? 

I will say, full disclosure, that when I entered the LightBox NCAA pool last year, I think I came in dead last, and we have hundreds of employees in the company, so this year my goal was to not be dead last, and so I turned to AI to help me with my NCAA picks.

I don't remember the final four, but I do have the Gators going to the, finish. I went with Houston, Auburn, St. John's in Alabama. 

This was a very tough year for me. I have two teams very close to my heart who have had very good years. St. John's. I have been going to games since the early seventies with my dad to see that team play.

So my whole family, in fact, I'm wearing my St. John's baseball cap right now. And having had a couple of kids go to Clemson, having lectured there and taught there a lot of affinity for Clemson. So in my pool where we do it for the office, I do have St. John's over Clemson going completely with my heart.

If my wallet had been the thing, I would probably have gone Duke, Maryland, Creighton, and Gonzaga. So that would be my. Final four with Duke winning it all had money come into my focus. 

I wish you guys luck. And before we sign off, I want to give a shout out to Travis B. Says he's a listener of the podcast and says it's one of the best out there. Thank you, Travis, for that very kind shout out.

And with that, we'll close thanks to our producer, Josh Bruning. Please join us every week as our LightBox team shares CRE news and data in context. You can listen on any of your favorite podcast channels and send your comments or questions to podcast@lightboxre.com. Thank you for listening and have a great week. 

Let's go St. John's.