Mixed Signals: Walmart's Downbeat Outlook & DOGE Federal Lease Cuts Against Positive Office Momentum

Martha, Manus, and Dianne break down a short, yet jam-packed week in the markets, from the Fed’s “status quo” minutes and weak housing data to Walmart’s downbeat retail outlook and a major shake-up in government office leases. They dissect the 2.3 million square feet of leases on the chopping block—half in D.C.—and the ripple effects for landlords, small-town economies, and lenders. While CRE sentiment is cautiously optimistic, no one’s popping the champagne just yet. The team also unpacks lodging sector trends, San Diego’s red-hot multifamily market, and growing office leasing momentum in some unexpected markets. On the retail front, the team discusses store closures, expansion plans, and newly listed properties. And in a final twist, KFC is taking the “K” out of KFC—well, sort of.

00:30 Market Reactions to Retail Sales and Walmart Earnings 

04:08 Fed Minutes and Interest Rate Speculations 

07:08 CRE Market Sentiments and Trends 

09:51 Housing Market Challenges 

12:54 Government Lease Terminations 

17:58 Lodging Sector Developments 

21:38 Positive Signs in the Office Market 

29:49 Retail Sector Updates 

33:23 Multifamily Market Insights

Have question for the pod team? Send them to podcast@lightboxre.com.

www.lightboxre.com

Transcript

The CRE Weekly Digest: Episode 34 – Mixed Signals: Walmart's Downbeat Outlook, DOGE Federal Lease Cuts Against Positive Office Momentum

[00:00:00] Martha Coacher: 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. It was a short week for the markets with Monday marking President's Day, still investors had enough to digest with Fed minutes, housing data, earnings, and more Trump policy news including the big reveal of the Doge government lease terminations.

[00:00:30] Martha Coacher: Manus, it's seen that the Walmart earnings outlook spooked to the markets more than any other data point this week. 

[00:00:36] Manus Clancy: Really two big headlines in the last couple of days. The first one came last Friday when retail sales came in cooler than expected. The news of disappointing retail sales sent treasury yields sinking.

[00:00:53] Manus Clancy: We CPI, a retreat after PPI, [00:01:00] and then on Friday, we saw a bigger retreat. As the retail sales number gave people the sense that maybe the U S economy isn't running as hot as some had thought. Fast forward to Thursday, Walmart came out Thursday morning with disappointing guidance. Their earnings were fine.

[00:01:19] Manus Clancy: They beat expectations, but their forward looking guidance warned that these tariffs would damper sales in the future. That should come as no surprise. Anytime you push up prices, uh, which is what tariffs do, You expect customers to pull back. Walmart said so in their earnings report that sent their stock down about six or 7 percent and took the major indices lower with it on Thursday.

[00:01:48] Manus Clancy: So retail, a big part of the narrative this week, both Walmart and the retail sales numbers pointing to a cooling off of the U S consumer, whether or not. That is indeed [00:02:00] tariff driven, or is that part of the cycle? Time will tell. But that was a big narrative over the last couple days. 

[00:02:07] Dianne Crocker: You know, it's interesting to me, Manis, the headline that investors weren't expecting such a cautious outlook from Walmart kind of made me furrow my brow a little bit because clearly the specter of potential tariffs hangs over the whole retail sector.

[00:02:21] Dianne Crocker: Walmart is a leader. So, there were a lot of eyes, you know, on their financial reports and wondering what they were going to say. And had they not struck such a cautious outlook, I think they would have been perceived as a little bit tone deaf, you know? So, I think they did the smart thing. I think they did what they should have done and maybe they were a little too cautious, but I think they're being conservative just given the uncertainty about tariffs and where things will land.

[00:02:44] Manus Clancy: I think the operative word there, you just nailed it, was conservative. There is so little visibility on where tariffs are going. What their impact will be, we know that in the housing market, I know Martha's going to have us talk about this a little bit later, that's leading to [00:03:00] concern too, that materials prices will move higher, that this will provide a damper.

[00:03:06] Manus Clancy: I think every CEO in the world that has exposure to supply chain has to be out there saying, we don't really know. We want to be cautious with our outlook and there will be more surprises like this in the future. I believe, I think it's the responsible thing to do for CFOs and CEOs and Walmart did that today.

[00:03:28] Manus Clancy: The other side of the coin, I would say, however, is if anybody's going to navigate this well, it's going to be Walmart. They have enough size, enough bandwidth, a real incredibly tight supply chain. An incredibly tight inventory management process that they can't get this right. We'll have bigger issues down the road.

[00:03:49] Manus Clancy: My expectation is that this was a warning to keep people from over expecting results in the next couple of quarters. I don't expect it to [00:04:00] flatline Walmart sales or future results too much. They're just too big to not be able to navigate this. 

[00:04:08] Martha Coacher: Of course, investors were parsing through the Fed minutes, looking for any insight into the outlook based on comments around inflation and other things, and there wasn't really a whole lot that was surprising there.

[00:04:20] Manus Clancy: No, I think that the Fed is, is on a glide path right now and probably will be for several months. They don't dare cut rates because they have no insight into how tariffs will affect things. They certainly don't know how far tariffs will go because the direction of the White House changes from day to day.

[00:04:44] Manus Clancy: They, they could arguably raise rates at some point in the future, but. I'm sure that there's a lot of people in that room that know that that would really spook the market. So what are they left with? They're left with a say nothing narrative, which I think may continue [00:05:00] between now and June or July. It's probably what we should expect.

[00:05:07] Manus Clancy: No rate hikes, no rate cuts, absent a big market moving event, a geopolitical event. And we should be used to or prepared for pretty boring Fed minutes for the foreseeable future. 

[00:05:23] Dianne Crocker: I'll take boring after last year, for sure. You know, and I think the market is really kind of recalibrating to rates staying where they are, you know, rather than Last year, where everybody was hanging their hopes on, you know, three, four or five rate cuts for the year, we wound up with three that didn't even happen until late in the year.

[00:05:42] Dianne Crocker: And I think a lot of the optimism after New Year's, albeit cautious optimism, was really kind of predicated on the realization that rates aren't moving and the market is going to move forward in a way that makes sense, but they're certainly not planning to spend this year sitting around waiting for a [00:06:00] fourth rate cut.

[00:06:00] Manus Clancy: I think the comments that Spencer Levy had made a month or two ago saying we should be expecting higher for longer really seems to be the case. We've been very range bound with that 10 year for quite a while now, 445 up to about 475, that's a pretty narrow range. But I would add that that narrow range and the inability for the market to see any progress lower than about a 440, 445, Is keeping a lid on enthusiasm at the moment for CRE.

[00:06:33] Manus Clancy: I think people are dying to be more enthusiastic. I think they're dying to deploy money. I think they're hopeful that 2025 is the year that we really see progress in terms of economic velocity, in terms of recovery of property values. But as long as that treasury band for the 10 year stays. Where it is, and it's been there now for a good two months.

[00:06:59] Manus Clancy: I think there's a lid [00:07:00] on any potential enthusiasm from brokers, lenders, property buyers, landlords. What do you think, Diane? 

[00:07:09] Dianne Crocker: I think you're right. I feel like we're in this overhyped news cycle, so folks are a little afraid to get too optimistic or a little reluctant to be too optimistic. But it's almost like the market is marching forward.

[00:07:23] Dianne Crocker: Against this backdrop or despite this backdrop of just a rapid pace of news coming out of DC that I think is really kind of pulling back on the optimism a little bit because they don't know what's going to happen next, you know, and how bad it might be, but the, the market is moving forward, you know, debt capital is becoming more available fundamentals across most asset classes as we've talked about every week, um, For a number of weeks, this is still very attractive.

[00:07:49] Dianne Crocker: And I think the more deals that happen, the more it will fuel this. Um, kind of FOMO sense on the part of investors that if, you know, if it's time to strike, they don't want to miss out [00:08:00] on deals. 

[00:08:01] Manus Clancy: It's an interesting thing. I would say that the CRE industry by and large, I would say for most of the time, enthusiasm outpaces the reality on the ground.

[00:08:17] Manus Clancy: And I'm not talking about the last six months. I'm talking about my 20 year career, right? The people in the industry think the next big deal is coming. They tend to see things glass half full. Things like the great financial crisis or COVID can change that for periods of time. But generally speaking, I find CRE types to be optimistic.

[00:08:38] Manus Clancy: At the current moment, I would have to say, and I'd love both of your thoughts on this, that it feels like the actual data looks better than the level of enthusiasm. People are a little afraid after the last two years to say, things are getting better. We're starting to see more deals. The deals aren't coming in with the same kind of [00:09:00] discounts we saw.

[00:09:01] Manus Clancy: Six months ago, there's a more diverse buyer group. That's what I'm seeing on the ground with all the transactions we're seeing. Yet, there's that nervous laughter that, yeah, things are better, but there's nobody popping corks or, or high fiving each other just yet. 

[00:09:17] Dianne Crocker: Agreed. I, I definitely felt that sentiment.

[00:09:20] Dianne Crocker: It was palpable when I was at the Environmental Bankers Association conference in early February, and maybe you sensed it at the MBA CREF conference as well. It was, They were feeling good. I mean, I, the first question I asked everybody there was, are you busier this year? And universally people said yes, but they didn't seem that happy about it.

[00:09:39] Dianne Crocker: And I think they're just afraid, like you said, 

[00:09:42] Martha Coacher: to pop the quirks yet. We're going to cover a lot of data points and some of them are actually very positive to the point you just made, Manis. One that wasn't so positive is. A lot of data coming out about the housing market and we saw the home builder sentiment that [00:10:00] hit a five month low in February and actually dropped the biggest decline since early months of COVID.

[00:10:08] Martha Coacher: So builders aren't feeling so great about the housing market right now. 

[00:10:12] Manus Clancy: Well, I'm not sure there was any industry more slammed than the housing industry by the supply chain problems we had in 2021 and 2022. Yes, if they had inventory, they were getting great prices. Yes, there was an influx of buyers, but the people I know that are in the home building industry had to beg, borrow, and steal to find things like glue to complete windows, roofing material, lumber.

[00:10:43] Manus Clancy: They had to really scour the country. And when they did find materials, they had to pay through the nose to get these materials. So I do think there's that recency bias that. All of this is, is still kind of fresh in their [00:11:00] memories that when the supply chain broke, they broke. And if, if tariffs have the same impact to any degree that we saw when COVID crushed the supply chain, so this is going to be a problem.

[00:11:14] Manus Clancy: And so I do think that their proximity to. Tariffs and the influence of potentially a higher lumber cost from Canada and so forth. I think that's real. 

[00:11:24] Dianne Crocker: Yeah. You know, I agree, man. It's in the sales expectations in the housing market over the next six months really took a huge hit and the National Association of Home Builders Housing Market Index, the incentives are becoming less effective at attracting buyers.

[00:11:40] Dianne Crocker: Prices are so high, interest rates are high. So what does that do? It, it really reduced the pool of buyers for whom these benefits would, would move the needle. So home builder sentiment had been gaining steadily since August, and that was on the expectation of lower mortgage rates, you know, and as the builders noted potential pro development [00:12:00] policies.

[00:12:00] Dianne Crocker: But, you know, we'll see what happens. I think it's the construction sector is, is definitely going to feel a lot of the pain and it's affecting the home builder market for sure. And I think that that's what these latest numbers reflect. 

[00:12:13] Manus Clancy: And there could be a labor element behind this as well, that over the last four years, labor has been plentiful with the immigration policies we've had in place.

[00:12:23] Manus Clancy: There may be an underlying unease here that labor availability may not be as plentiful depending on how the new administration, how aggressive they become in terms of certainly the new administration has been aggressive on shutting down the border from all reports that have come out. If that same follow through comes with reducing the labor force by discouraging people from staying here, that, uh, that too could influence the sentiment down the road.

[00:12:54] Martha Coacher: And a couple of weeks ago, we talked about the DOJ office led by Elon [00:13:00] Musk that was announcing their lease terminations. This week, they revealed their first round of cuts that included contracts with various organizations and real estate lease terminations. They had about a hundred government leases that they are canceling.

[00:13:20] Martha Coacher: It totaled 2. 3 million square feet nationwide. About half of that comes from the D. C. area, with the Department of Labor office being 845, 000 square feet, being the largest office cut. And, according to the website, Doge. gov savings, their listing, their wall of receipts, which includes a savings they say that's a total of 144.

[00:13:44] Martha Coacher: 6 million. 

[00:13:47] Manus Clancy: Yes, that's going to get people's attention when you start canceling these leases in earnest, especially when one has over 800, 000 square feet. That's going to get people's attention. I think a couple of [00:14:00] thoughts here, one, we talked about this two weeks ago and I admitted that I was not an expert on.

[00:14:06] Manus Clancy: GSA leases, when I heard the news that Doge was going to cancel leases dozens a day with maybe as many as 7, 000 leases in their crosshairs, I openly questioned, could that be done if you had 10 years remaining on your lease? How did it fit in with things like allocations and appropriations and so forth?

[00:14:27] Manus Clancy: We had two listeners come back to us and I'm grateful that they did. And one was Oz up in Boston, and one is Matt C out in California. Both of them. Had the same story and that is that the text of GSA leases allow them to have termination rights in very short order. Often it's year to year, but sometimes it could be quarter to quarter or even month to month that this is part of the standard GSA lease.

[00:14:57] Manus Clancy: It is something that others have told me has led them to not want to [00:15:00] underwrite loans on properties where GSA is the tenant, that uncertainty of future appropriations. Made it kind of hands off for many of these things. So it does seems like doge can come in, announce the lease termination, and be done with this, washed their hands of it very quickly.

[00:15:16] Manus Clancy: SO, I both learned something from Matt and Oz, and also, um, was disappointed to learn that these 5 and 10 year leases can be rejected with so much ease. 

[00:15:28] Dianne Crocker: Wow. You know, and one other thing that jumped out at me, Mannish. Martha, you had mentioned that nearly half of the square footage comes from The DC area, the leases that are impacted, I read also span about a dozen states.

[00:15:41] Dianne Crocker: Most of the leases listed are smaller than 10, 000 square feet, but there are 10 that are totaling more than 50, 000 square feet and four of more than a hundred thousand square feet. And, you know, it got me thinking like outside of the Beltway, these leases, especially if they're in smaller rural towns, you know, [00:16:00] where there are federal government tenants, you know, if you have a small Virginia town or upstate New York, or.

[00:16:05] Dianne Crocker: rural North Carolina that had a federal tenant paying the rent and, and suddenly they're gone. That's, you know, that could be a big hit to the owner's NOI and it could even be a potentially big economic blow to the, the, a small town's economy, you know, and I think those are some of the chips that have to fall in addition to the, the lending impact that you just talked about, Manis.

[00:16:27] Manus Clancy: And let's not lose sight of the fact that. There may be a handful of borrowers, REITs or otherwise that really get caught in this downdraft. If you are a commercial real estate operator, if your core property type is office, if your major tenant type is GSA and you're levered, that is a recipe for a big problem.

[00:16:52] Manus Clancy: It would not surprise me if we see issues down the road for a couple of these problems. Big [00:17:00] GSA based operators. That is definitely the potential thinking more broadly. Maybe you saw this. Uh, I saw this on social media over the last couple of days. Of course, I have to caveat this with you're never sure on social media, what's true and what's false.

[00:17:17] Manus Clancy: So let me start there. But people were saying that the uptick in the number of houses listed for sale in that Washington MSA over the last. Month, ever since these layoffs and terminations and buyouts were started has been astronomical. And that too can weigh on a local economy. If you see houses drop in value by 15 percent because supply just takes off.

[00:17:46] Manus Clancy: And that's what would happen in places like Bethesda and Arlington and Falls Church and other places that too could lead to problems in Virginia, Maryland, and other nearby suburbs. 

[00:17:57] Martha Coacher: And a couple more data points. We don't normally talk [00:18:00] about the lodging sector, but there were a couple of items that caught our eye.

[00:18:05] Martha Coacher: One was the global hotel development pipeline hit a record high in terms of project count in the fourth quarter of 2024 according to lodging econometrics. 

[00:18:17] Manus Clancy: That data point surprises me a little bit and I'll tell you why. I do think that when you look at the velocity of sales in hotels, or I should say in all property types, in all CRE property types over the last one to two years, hotels have been the huge laggard.

[00:18:36] Manus Clancy: We've seen only a modest uptick in values. We see hotels linger on the market for months and months and months. There doesn't seem to be a lot of desire for people to pick these up as they are offices trying to pick them up on the cheap. So I'd love to know what the thought process is behind developers who are [00:19:00] putting shovels in the ground now.

[00:19:01] Manus Clancy: It seems counterintuitive. We have listeners out there that want to weigh in on this. I'd love to hear your point of view because it does seem to be quite counterintuitive to me. 

[00:19:11] Dianne Crocker: But if you look, Manis, at the metros that really kind of rose to the top, it does make sense. Dallas and Atlanta were the top two cities globally, not just in the U.

[00:19:21] Dianne Crocker: S. They were the top two cities for project counts. Dallas and Atlanta had 204 and 168 projects in their respective pipelines, and one of my favorite cities, Nashville, had the fifth highest project count globally. You know, it caused you to scratch your head a little bit for the points you just made. Um, those, you know, those cities driving most of the growth make sense.

[00:19:42] Dianne Crocker: Those are high population centers. Those are, um, tech centers. They have healthy economies. Uh, corporations are moving headquarters there. So I, I can see the demand drivers there. So at least that part of it makes sense. 

[00:19:56] Manus Clancy: That does make a lot of sense when you think about it. Nashville has been a real magnet [00:20:00] for young people.

[00:20:01] Manus Clancy: It has been. What is it, Bachelor Party and Bachelorette Party? The epicenter for both for, for several years. And Dallas and Atlanta have been real. Magnets for company relocations for several years now. So I suppose that, that, that does make sense. 

[00:20:18] Dianne Crocker: I live in a suburb of New Haven and it seems like the past four or five development construction projects that I drive by end up being hotels.

[00:20:29] Dianne Crocker: I mean, Dallas, Atlanta, Nashville, that's one thing, but Hamden, Connecticut, outside of New Haven, is there that much demand that we need a residence in, you know, every two miles. Little curious about how those perform over time. 

[00:20:44] Martha Coacher: Well, you know, Manis, last week Wyndham had their earnings call. It might provide a little bit of insight into what you're commenting on.

[00:20:52] Martha Coacher: And they commented during their earnings call that despite a soft REVPAR environment in 2024, they [00:21:00] expect its openings to fuel further REVPAR growth in the U. S., particularly as properties near infrastructure projects like data centers. Our things that they lean into. So it may account for some of the growth that we're talking about, even as their Rev par numbers are flat.

[00:21:18] Manus Clancy: Let's hope so. To me again. I'll use the word counterintuitive. It doesn't seem like it adds up to me, but there's a lot of smarter people out there that have been developing hotels for a long period of time. I would love to hear from them and and find out what the thought process. Is behind leaning in at this moment.

[00:21:38] Martha Coacher: All right, let's shift into office. There were a couple of data points. It is the season where Q4 numbers are coming out, earnings calls. There were a couple of positive points. One from CBRE, their US office leasing delivered 28 percent revenue growth, according to their CFO, Emma Gia Martino during their call, said office [00:22:00] occupiers are increasingly comfortable making long term decisions.

[00:22:03] Martha Coacher: Give an improved return to office momentum and a healthy economic outlook. And I, I caution that because obviously we've just talked about a lot of questions around our outlook in the coming months. And then the Savills Q4 report said that office availability ended the year at 24. 8 percent marking the first major decrease since the pandemic.

[00:22:25] Manus Clancy: It was a really amazing week for office headlines. Uh, I want to take this first qualitatively and then I'll do it. With a few data points, but I'll go through a few things that caught my eye qualitatively. Uh, the first one came from JLL, uh, yesterday, Wednesday of this week, of President's Week. They reported better than expected earnings in the Q4 2024.

[00:22:54] Manus Clancy: Uh, quote here, thanks to revenue growth largely due to a boost in office leasing. Who [00:23:00] had that on their bingo card for this year? That's a terrific sign that JLL is seeing this. Obviously one of the big players in the leasing market for them to come out and say, not that they are expecting more leases, but that it's already happened, that they've already seen this momentum that it's showing up in their earnings was quite bullish.

[00:23:19] Manus Clancy: It went on to say that in the U S stricter return to office mandates create a greater demand for office space. So again, that from the JLL earnings report in San Francisco. There was a report this week, 86 AI office leases were signed last year in the Bay Area. A similar thing, this came from Doug Sams of the San Francisco Biz Times, quoting Kilroy, who's a developer out West, AI demand is real, quote unquote.

[00:23:49] Manus Clancy: It could lead to 1 million to a million and a half square feet of absorption this year in the Bay Area. So we're starting to see stories like this. I'm going to go through one or two [00:24:00] more. Before I get into the real data behind this, this was from a Crain's article by Aaron Elstein. Here's the headline, Vornado declares work from home threat is over.

[00:24:11] Manus Clancy: Vornado is declaring victory. And this comes on the heels of, um, last week, Jamie Dimon leaning in and saying, I am not backing down on this in office five days a week that we're going for in March. A D E It took a lot of arrows from his staff, probably junior staff. I'm sure the people sitting in office with him were probably not questioning him to his face, but there was a petition trying to get this to be waylaid to make sure that this didn't happen.

[00:24:44] Manus Clancy: And he said, not a chance. We have to be in the office. We have to be leaning in and this is going to happen. So some real momentum in the office space. And what I liked about these headlines is for about two or three months. [00:25:00] Almost all the good news was coming from New York in the office space this week.

[00:25:04] Manus Clancy: It seemed to kind of expand to other markets that we're starting to see other places where the headlines are tiptoeing from starkly negative, deep discount lender losses to vacancy is dropping. Leases are getting assigned and some of these leases are of size. What do you guys think? 

[00:25:29] Dianne Crocker: Right. Yeah. And I mean, in addition to the record high leasing.

[00:25:33] Dianne Crocker: Um, 2025 took off with a notable increase in office sales, according to the CBRE report that Martha referenced. You know, they're seeing a notable increase in office sales just in 2025. And notably, you know, it was from a low base of activity, but still it's, it's existing sales are happening. Manis, it's really great to see not just the gateway markets like New York, like San Francisco.

[00:25:58] Dianne Crocker: I mean, San Francisco [00:26:00] was the. Poster child for skyrocketing office vacancies. And now, now they're on a list of metros growing along with LA, Chicago, Boston, and DC, Dallas, and Seattle grew even faster. And interestingly, others in the Midwest, you know, secondary markets, Cleveland, Pittsburgh. Minneapolis, those all picked up considerably.

[00:26:21] Dianne Crocker: And as I hear your stories, Manis, and I read stories like what came out of CBRE and Savills this week, at the back of my mind is the fact that we're facing. Maybe just the tip of the iceberg with the federal layoffs that could increase, you know, and what happens to office occupancy and, and how will it all play out?

[00:26:42] Manus Clancy: Let's jump into a couple of data points. I want to break this into two separate parts. First, I'll talk about leasing. One headline, this came from commercial observers, Nicholas Ritzy, trading firm, Jane Street Capital has signed on for a lease extension at Brookfield [00:27:00] place. This is in lower Manhattan. They will double their footprint at that property to nearly 1 million square feet.

[00:27:07] Manus Clancy: So if you do the math, that's a new 500, 000 square feet in new leasing in lower Manhattan. Why did this get my attention? Certainly the size of it for one reason. The secondary reason is lower Manhattan is not exactly hot right now. People want to be near hubs, near grand central terminal, near the port authority, near Penn station.

[00:27:31] Manus Clancy: Lower Manhattan has been a little bit left behind when it comes to velocity of leasing as things have rebounded. To see Jane Street double their footprint to a million square feet, uh, just a terrific headline. Uh, two others I'll headline in, in no particular order. Here, this one comes from Noor Adashia of the Dallas Business Journal.

[00:27:54] Manus Clancy: Lockton, who is an insurance broker in the Dallas area, they signed a [00:28:00] 100, 000 square foot Lease with Hillwood Urban in the Victory Park area of Dallas. So a hundred and K square feet there in the Philadelphia sub market. FS Investments has signed on for 120, 000 square feet in Skykill Yards. Martha may have to correct my pronunciation of that.

[00:28:20] Manus Clancy: She's a Philly denizen. That's a mixed use development in Philadelphia. FS is moving from. The Navy yard area where they have 80, 000 square feet. So this is a 50 percent uptick in the amount of space that they have in the Philly area. So what you're seeing here, three positive leasing stories in three different markets, and it does start to feel like things are slowly but surely turning the corner in office.

[00:28:50] Martha Coacher: Man, as you said, you had two points. What's the other one? 

[00:28:53] Manus Clancy: The other was, we saw a big number of nine digit sales in the office. Market over the [00:29:00] last 14 days in Florida, two in the Fort Lauderdale market. The Bank of America Plaza, 220 million. Right next to it is the Los Alos Center, one and two that went for $208 million.

[00:29:14] Manus Clancy: The second one was really notable. Why that $208 million was a 2% appreciation over the 2014 sales price? We have almost never seen this in the last two years. A nine digit sale where the 2024 or 2025 sale price was above the value of five or 10 years ago. Terrific news out of South Florida. 

[00:29:42] Martha Coacher: Okay, so let's finish up with some retail news.

[00:29:45] Dianne Crocker: There were a lot of headlines about store closures. Joanne's Fabric is closing 500 stores nationwide in bankruptcy, and right now it has 800 stores across the U. S., so that's over half of its locations. [00:30:00] Party City was another one that was making headlines. They're closing 700 stores, big lots. And, you know, clearly retail is in the midst of a dramatic evolution and certain stores that couldn't survive post pandemic and were underperforming will shut their doors.

[00:30:18] Dianne Crocker: The ones that are jumping in are Dollar General, Dollar Tree. Those two have by far the largest expansion plans for this year with 1300 stores in the works. Discount is the name of the game. Target, Costco, TJ Maxx, Marshalls, HomeGoods, those are retailers that have long term expansion plans. And Aldi, Martha, your favorite, plans to open 225 new stores across the U.

[00:30:44] Dianne Crocker: S. this year. So, that's a lot of assets changing hands. And the headlines, I think, mostly focus on the store closings, but there are store openings happening as well. 

[00:30:53] Manus Clancy: For Joann's, that's a sad story. That's the second bankruptcy filing for them in under a year. [00:31:00] But I have to say, I never got the Joann's thing.

[00:31:02] Manus Clancy: I just think, you know, how much knitting material does America need? There are some things that I just, just don't get. Joann's is one of them. Pickleball, Butterfinger candy bars, you know, things like that. There's just some things that may never resonate with me. 

[00:31:18] Martha Coacher: And in our LightBox Data Dive, we had some projects that we wanted to highlight.

[00:31:23] Martha Coacher: We did, we talked a lot about 

[00:31:24] Dianne Crocker: retail today in addition to office, um, for retail in particular, property listings on our RCM platform, specifically for retail property listings put up for sale in January was 126, and that's about level with 138 last January. And in all of Q1 last year, there were 351. So that averaged about 117 per month.

[00:31:49] Dianne Crocker: So with January listing 126, we're off to a pretty strong start. And two of the largest public retail deals in January, [00:32:00] one was, uh, campus marketplace, which is a strip mall in San Marcos, California. It is near Cal State San Marco campus, and they have CVS, Ralph's grocery, orange theory. You know, you could get your coffee, work out, get a haircut, get something for dinner.

[00:32:17] Dianne Crocker: It's got a little bit of everything. So that one's on the market if anybody listening wants to buy a shopping center near Cal State. It's there for you. And the second was a Miami shopping center, which was very similar with a CVS, a health club, a Goodwill. So it's the start of a year where a lot of shopping centers will go on the market just to really meet an investor's demand for shopping centers, especially if they have a discount element, because clearly the cost conscious shopper is the one that will drive retail sales this year.

[00:32:47] Martha Coacher: Our Did You Know of the Week is a sales transaction, Manis, that I know you were looking at. 

[00:32:53] Manus Clancy: Yes, this was in the San Diego market, the Park 12 collection of 718 [00:33:00] units, multifamily units was acquired by MG Properties for over 300 million. Why did that catch my attention? It caught my attention for several reasons.

[00:33:09] Manus Clancy: One is it was the largest property sale in San Diego in five years in the multifamily segment and the third highest of all time. It led me down this rabbit hole of trying to see how the San Diego market has been doing. And it's been quite active. The San Diego market has seen six sales in the last six months of a hundred million dollars or up.

[00:33:34] Manus Clancy: That's if you limit yourself to the, uh, San Diego proper market. If you expand that to the San Diego MSA, it's about double the number. So, uh, a really hot market joining Denver and a few other markets west of the Mississippi that have seen. An abundance of sales over the last couple of months, a real uptick in velocity.

[00:33:56] Manus Clancy: The seller in this case of the part 12 was Graystar and in [00:34:00] terms of price per unit, 430, 000 bucks per unit. 

[00:34:03] Martha Coacher: And a program note, we have a webinar February 25th at 2 PM with Manis Diane and Tina Lichens on market trends and 2025 outlook, if you're interested in that, give us a shout on our email podcast@lightboxre.com.

[00:34:17] Martha Coacher: com and we'll send you the registration information. In closing, KFC has taken the K out of KFC guys. The fast food chain, which is part of Yum Brands, is moving their headquarters to Texas. And an interesting footnote in Kentucky, there are more KFCs per million Kentuckians than any other state. About 25 in Texas, there's only 10 per million people.

[00:34:46] Martha Coacher: So weird 

[00:34:47] Manus Clancy: when you teed that up. The way I heard it was we were losing the Kentucky at a Kentucky fried chicken. And where I thought you were going with that is it was just going to say fried chicken. And I thought that every [00:35:00] store was just going to have the FC up there. And I thought that is a terrible idea.

[00:35:04] Manus Clancy: That might be the worst idea since new Coke that, because everybody sells fried chicken, right? How is everybody going to distinguish KFC from anybody else if you take out the K? But now that I understand as a corporate headquarters move. And I'm less confused. 

[00:35:20] Dianne Crocker: Maybe they'll be TFC now. 

[00:35:22] Manus Clancy: Remember there used to be Kansas fried chicken?

[00:35:24] Manus Clancy: They used to try to rip off the name. Every now and then you'd see that across the country and you'd say, God, that's really slimy. 

[00:35:32] Martha Coacher: Nobody's fooled. With that, we'll close. Thanks to our producer Josh Bruning. Please join us every week as our LightBox team shares Siri 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.

[00:35:47] Martha Coacher: com. Thank you for listening and have a great week. 

[00:35:51] Manus Clancy: Let's go!