What’s Happening in Retail Markets?

Today’s metrics will tell you the retail sector is in shambles. However, a nuanced examination of recent performance reveals a mixed picture. While sales volume and investment activity in April 2023 are down 75% compared to the same period last year, it’s important to remember that the exceptional rebound experienced in 2022 was fueled by pandemic revenge spending. Consumers who had been shut in were eager to spend, and the cashflow revival proved to investors that their worst fears of 2020 weren’t realized. Demand had not disappeared; it had simply been repressed.

Another propellant of last year’s investment rebound was the cushy 500 basis point spread between cap and interest rates. As of April this year, that spread has reduced to 295 basis points as the 10-year treasury has risen considerably. It’s harder for investors today to be as excited as they were not long ago.

Underwritten deals must show steady or above-average income growth. Herein lies the primary concern for retail: predicting income stability moving forward as the rebound from the pandemic has played out to some extent. In a time when the economy’s next steps are uncertain, underwriters are going to be especially conservative.

Across the various classes, distressed assets seem to be a hot commodity for current investors. The retail industry’s response to the 2008 crisis, characterized by finding distressed cash-flowing assets, acquiring them at low prices, and benefiting from value recovery, does not necessarily translate well to the current retail landscape.

Many of the distressed assets today are suburban retail centers that were overbuilt across America in the boom period of the 70s and 80s. Successful navigation of this challenging environment requires a deep understanding of the local economy and zoning regulations. There isn’t a one-size-fits-all approach.

Amidst these challenges, there are still opportunities to be found in the retail market. Areas with strong local income growth, constrained new supply and/or high barriers to entry offer potential avenues for success. Identifying these opportunities and adopting a tailored approach can help overcome the stress and uncertainties of the retail markets.

  • Richter, J. (2019, September 25). Real Estate Daily Beat. Daily Beat NY. Retrieved June 2, 2023, from
  • Bull, M., & Costello, J. (2023, May 24). Retail Cap Rates Today. Spotify. Retrieved June 2, 2023, from




New Opportunities Caused by the Industrial Boom

Over the past few years, there has been an explosion of demand for industrial commercial real estate. This trend can be attributed to online shopping emerging as a convenient alternative to traditional retail. The pandemic and national lockdowns crippled retail and brought industrial demand to a new level entirely.

In addition, shipping costs and supply chain issues are compelling American companies to re-onshore their facilities to avoid issues abroad out of their control. For these reasons, and the simple fact that Americans love online shopping, industrial real estate has been the hottest asset class around. However, developers may have built in excess of demand and are now dialing back to realistic numbers.

In 2020, Amazon leased 284,000,000 square feet across the nation, up more than 100,000,000 square feet from the year before. The stellar tenant and its increased appetite for space was music to landlord’s ears. That is, until Amazon began changing its approach in late 2021.

The retail giant wanted to take advantage of its own success, stop leasing and develop its own real estate. It now appears that Amazon may have bit off too much, as the company has closed, canceled or delayed 89 facilities around the world. Developers will be just fine because the sub-leasing demand is still very strong, but if Amazon’s overreach is soon reflected across the entire asset class, there will be a serious over-saturation of warehouse space.

The southern Californian Inland Empire, eastern Pennsylvania and northern New Jersey have traditionally been the strongest industrial areas due to their access to ports and densely populated areas. Recently, the centrally located triangular area between Chicago, Texas and Florida has seen the biggest growth.

Plymouth Industrial REIT believes this area will continue to see great growth and may even provide a solution to over-saturation. CIO Pen White believes manufacturers will begin to onshore their companies into this triangle for its central location, affordability and abundance of land. Newly built warehouses, plus all pipeline deals, could serve American companies looking to come home and avoid the complexity and uncertainty of international markets and increasing costs. Domestic manufacturers will be able to avoid tariffs and retake control of their supply chain. Industrial CRE will have to pave the way for our companies to return.


Baschuk, B. (2022, November 2). US manufacturers ‘pumped up’ about supply-chain reshoring trend. Retrieved April 28, 2023, from

Carroll, T. (2023, March 16). Industrial Real Estate Market’s new demand driver changing space requirements. Bisnow. Retrieved April 28, 2023, from



Current Commercial Real Estate Market Conditions

Any historian worth their salt will tell you that history repeats. Patterns of similar thought and behavior can be identified throughout human history across cultural and generational boundaries. The same applies from an economic standpoint. Markets are cyclical, and there is much to learn from the past. Luckily for us, in 2023, we can observe the current market turmoil through the lens of the global financial crisis.

The recent failures of Silicon Valley Bank (SVB) and Signature Bank are reminiscent of the start of 2008. Their failures created downstream issues and halted lending from smaller regional banks. This time, however, the contagion is largely controlled. Finance professionals realized SVB and Signature had unique balance sheets responsible for their collapse. Other large banks are mostly protected by conservative underwriting and continue to lend. Banks account for $1.7 trillion of the $4.5 trillion in commercial debt – about 38 percent. Roughly two-thirds are large banks, meaning regional bank-halts only account for about 13 percent of the CRE lending pie.

The overall default rate during the global financial crisis was around 10 percent. Today’s market slowdown is also going to lead to some defaults. It’s part of the market cycle, given CRE’s boom-or-bust nature.

The main difference now is healthier loan and pricing metrics and better credit conditions. The risk premium on cap rates (spread over treasury) has been a healthy 250 basis points on average across property types. Unlike in 2008, we haven’t seen that spread narrow and cause serious overpayment. This means recent outstanding loans originated based on healthy cap rate values. Additionally, the market has seen steady rent growths.

One big issue that remains is current interest rates. The Fed has been hiking rates to fight inflation and trillions of dollars in loans are set to mature. Loans that were issued with much lower interest rates – some were practically zero. These assets have experienced significant value growth and will need to refinance at today’s higher rates. It’s important to remember that real estate values have benefitted from the inflation that is now knocking on their door.

Ultimately, these downturns reshape the markets and force its players to change their strategies. The global financial crisis saw a 30 to40 percent price correction across assets. We will likely see a similar repricing and retooling of office assets today. Banks will take hold of defaulted office spaces and sell them at a discount. As is the case with other troubled assets.

Although resistant, multifamily is not impervious to market cycles. Fortunately, for this asset class, there is a floor because the demand is always so high. Even in the face of rising interest rates, the 2022 Q4 multifamily cap rates were still going down.

It’s important to acknowledge that commercial real estate is a physical manifestation of the economy – an indication of its health. Daunting headlines and anecdotal defaults can overshadow key metrics that give hope for a less gloomy outcome. It may be a day of reckoning for a small percentage of players, but the markets will eventually right themselves, and there will be new opportunities ahead.

Hall, Miriam, Producer and Host of “Bisnow Reports: A CRE News Podcast.” Episode 46:

Moody’s Analytics’ head of CRE economic forecasting Kevin Fagan, March 27, 2023

Press Releases

BayBridge Real Estate Capital Arranges $131.72 Million For Florida College Campus

NEW YORK, March 20, 2023 – BayBridge Real Estate Capital secured a $131 million loan for Everglades College, the parent entity of Keiser University, to purchase nine suburban office properties in South Florida.

The loan enabled the institution to acquire approximately 543,000 square feet of space that it occupies for classrooms, labs and administration offices.

Amerant Bank, Ameris Bank, Locality Bank, SouthState Bank and TD Bank provided the financing for the transaction, which closed in early March.

About BayBridge Real Estate Capital

A specialty firm focusing on responsive execution and creative financing, BayBridge Real Estate Capital helps developers and investors source funding for a broad range of commercial real estate projects. With an emphasis on structured finance, the team brings decades of experience to markets across the country from its offices in New York, Miami, Fort Lauderdale, Boca Raton and West Palm Beach, Fla.

For more information, visit or call (646) 213-7561.


Is Your Bank Running? You Better Go Catch It…

It’s bidding day! The FDIC is selling Silicon Valley Bank and Signature Bank, and the bids are due today. Only bidders with existing bank charters (and a little luck o’ the Irish) will be given access to the bank’s financials, when deciding whether to make an offer. This gives existing lenders the upper hand on private equity firms. If whole sales do not materialize, the banks will be sold in parts.

SVB and Signature were first to be run under water. Other banks, including First Republic and Credit Suisse, were headed for the same fate before being tossed an expensive lifeline. First Republic will receive a $70 billion rescue package pooled together by 11 other banks and the Federal Reserve. Republic’s share price dropped more than 60%, before receiving additional funding. Credit Suisse received a similar $54 billion lifeline on Thursday from Switzerland’s Central Bank, after its stock dropped 24% on Wednesday. Moody’s rating agency is currently reviewing Zions Bancorporation, Western Alliance, Comerica, UMB and Intrust, as well.

How might credit doubt and bank runs affect commercial real estate investors? Up until last week, our biggest challenge had been navigating the complications of increasing interest rates. Now there is new uncertainty in real estate finance as lenders are likely to tighten their underwriting. Debt will get more expensive and harder to come by. The entire situation is reminiscent of the Great Recession and guaranteed to constrain credit. Luckily, the panic is not as bad as that moment in history and the Federal Reserve’s response was swift and organized. Also, the Fed will likely cease rate hikes for the time being.

If we can help you navigate these challenging times, please don’t hesitate to reach out.

Works Cited

Richter, Joseph, et al. “Daily Beat – Commercial Real Estate News.” Daily Beat, 25 Sept. 2019,

Young, Celia. “First Republic Scores $30 Billion Rescue Deal from Lending Rivals.” Commercial Observer, Commercial Observer, 16 Mar. 2023,

Schenke, Jarred, et al. “National Commercial Real Estate News & Trends.” Bisnow,



BayBridge Real Estate Capital Sources $85 million For South Florida Luxury Apartments

NEW YORK, Sept. 12, 2022 – BayBridge Real Estate Capital today announced it secured an $85 million loan to help Invesca Development Group complete construction on PIXL Plantation, a 330-unit luxury apartment building located five miles west of downtown Ft. Lauderdale, Fla.

Located in the Sunrise Boulevard corridor between Florida’s Turnpike and State Road 7, PIXL Plantation is a part of a larger 6.7 acre planned community that, once completed, will include 147 townhomes, office and retail space, and a vast network of green space featuring walking paths, parks, picnic areas, an outdoor movie theater and a resort-style pool.

Jay Miller, AJ Felberbaum and Spencer Miller with BayBridge Real Estate Capital arranged the financing that was provided by Madison Realty Capital based in New York, NY.

About BayBridge Real Estate Capital

A specialty firm focusing on responsive execution and creative financing, BayBridge Real Estate Capital helps developers and investors source funding for a broad range of commercial real estate projects. With an emphasis on structured finance, the team brings decades of experience to markets across the country from its offices in New York, Miami, Fort Lauderdale, Boca Raton and West Palm Beach, Fla. For more information, visit or call (646) 213-7561.

Press Releases

BayBridge Real Estate Capital and Las Olas Capital Source $40MM Acquisition Loan for Everglades College

NEW YORK, August 4, 2022 – BayBridge Real Estate Capital today announced it worked with Las Olas Capital to source financing for Everglades College, Inc., to purchase two office buildings.

Everglades College is the parent company of Keiser University. The office buildings are located at 1900 W. Commercial Boulevard and 1500 NW 49 Street in Ft. Lauderdale, FL. The locations were previously leased as academic campuses for Keiser University.

TD Bank provided $40.3 million of the financing.

Paul Tanner of Las Olas Capital served as financial advisor to Everglades College, Inc.  Jay Miller, AJ Felberbaum and Spencer Miller of BayBridge Real Estate Capital sourced and structured the financing package.

Keiser University is a private, non-profit university in Ft. Lauderdale. Everglades College purchased Keiser University in 2011.

About Las Olas Capital

Las Olas Capital provides wealth management, advisory services and investment solutions, including capital market transactions and impact investing.

About BayBridge Real Estate Capital

A specialty firm focusing on responsive execution and creative financing, BayBridge Real Estate Capital helps developers and investors source funding for a broad range of commercial real estate projects. With an emphasis on structured finance, the team brings decades of experience to markets across the country from its offices in New York, Miami, Fort Lauderdale, Boca Raton and West Palm Beach, Fla. For more information, visit or call (646) 213-7561.


BayBridge Real Estate Capital Arranges Financing for an MC Hotel in Montclair, NJ


BayBridge Real Estate Capital’s Jay Miller, AJ Felberbaum and Spencer Miller arranged financing for a hotel property in Montclair, New Jersey.

  • Loan profile: Refinance
  • Property: The MC Hotel, located at 690 Bloomfield Ave, Montclair, NJ. The hotel is a part of Marriott’s Autograph Collection.
  • Sponsorship: The Hampshire Companies is a privately held, fully integrated real estate firm, real estate investment fund manager and Registered Investment Advisor based in Morristown, N.J. The Hampshire Companies has a diversified investment platform and derives results from its broad experience in multiple commercial real estate asset classes. Hampshire prides itself on its vertically integrated business platform. Having an in-house team of dedicated professionals helps to streamline all aspects of a project from acquisition to financing to development and construction to marketing and leasing. An integrated business model enables Hampshire to be nimble and act quickly, actively manage the project ensuring exclusive control, and provide the highest level of service to its investors.
  • Sponsorship: The Pinnacle Companies is a privately held, regional real estate development firm based in Montclair, N.J. The Pinnacle Companies focuses its core competencies on transformational residential, commercial and retail properties with a concentration on redevelopment, mixed-use and transit-oriented projects.
  • Lender: Hall Structured Finance based in Dallas, TX. The loan was originated by Hall’s Vice President Matt Mitchell.


Media Coverage

BayBridge Real Estate Capital Arranges the Refinancing of New Jersey Hotel

Article from The Commercial Observer:



Hall Structured Finance Closes Loan to Refinance The MC Hotel in Montclair, NJ, Financing Sourced by BayBridge Real Estate Capital

Article from

Hall Structured Finance closes loan to refinance The MC Hotel in Montclair, NJ
Dallas-based Hall Structured Finance (HSF) has closed a first mortgage bridge loan to refinance the MC Hotel, an Autograph Collection by Marriott property located in Montclair, NJ. The MC Hotel was developed by a joint venture between The Hampshire Companies and The Pinnacle Companies and opened in August 2019. Aparium Hotel Group manages the property. In connection with the closing of the loan, an adjacent restaurant site has been acquired for which a new upscale restaurant is being designed, adding to the hotel’s existing signature food and beverage venues.

Located in downtown Montclair, the 159-room boutique hotel is in a business and entertainment center known for its restaurants, retailers, and arts and entertainment venues. The hotel features multiple meeting and event spaces, including a 3,000-sq.-ft. ballroom that can accommodate up to 200 guests. The hotel features its signature restaurant Allegory, and Alto, the only rooftop indoor/outdoor bar and lounge in Montclair, located on the ninth floor. In addition, the hotel features an art collection on display throughout the property, showcasing both local and international artists.

Hampshire and Pinnacle are also partners on the MC Residences, currently under construction on the same block. The future MC Residences will include 40 high-end multi-family rental units, a 3,500-sq.-ft. food hall and a 4,000-sq.-ft. streetside outdoor plaza.

Jay Miller, AJ Felberbaum and Spencer Miller from BayBridge Real Estate Capital, sourced the financing for the project.