The TreppWire Podcast: A Commercial Real Estate Show

Episode 367 – Year-End CRE Plot Twists: Fed Dots and Drama, Warner Bros. Sale & Their CRE Footprint, and Office & Multifamily Transactions
Date: December 12, 2025
Host: Hayley Keen
Panelists: Lonnie Hendry (Chief Product Officer), Steven Bushbaum (Research Director)

Episode Overview

This episode delivers an in-depth analysis of the week's big stories in commercial real estate (CRE) and the broader economic landscape, focusing on a dramatic Fed rate cut, competing bids for Warner Bros. and their CRE implications, and a pulse-check on key office and multifamily transactions. Leveraging Trepp’s proprietary data and market expertise, the team dissects macro policy, streaming industry megadeals, and property-level trends to close out 2025.

Key Discussion Points & Insights

1. The Fed's Rate Cut and Policy Tension

(00:05 – 10:43)

• Fed Moves and Drama:

  • The Federal Reserve delivered a 25 basis-point cut, lowering the target rate to 3.5–3.75%, with a 9:3 split vote—the most dissent since 2019. This reflects growing tension among members over labor softness versus inflation risks.
    • Steven: “They did go ahead with that 25 basis point cut, but it came with a lot more drama than we’ve seen in a while.” (01:36)
  • Notably, the Fed’s statement references reserve balances at “ample levels” and intent to buy short-term Treasuries to maintain that, introducing a quiet but meaningful liquidity support.
    • “This isn’t like a full-blown QE 2.0 in the pandemic sense, but it is a quiet shift towards a more supportive liquidity backdrop.” (02:31)

• Economic Projections and What They Signal:

  • The Fed’s Summary of Economic Projections (SEP) reflects a soft-landing playbook:
    • Growth for 2026 nudged up (2.3% projected vs. 1.8% in Sept), 2025 at 1.7%.
    • Unemployment steady in the mid-4% range.
    • PCE inflation above 2% through 2025.
  • The policy outlook ("dot plot") is stable, painting the cut as “recalibration” vs. real easing.
    • Lonnie: “Today’s cut is really more like a recalibration than what I would suggest is an aggressive easing cycle … This doesn’t magically fix the refi math that we’re still underwritten or executed on at a 3% handle.” (04:24)

• Rates & Credit Markets:

  • Short-term, this is favorable for CRE borrowers, especially those with floating-rate debt (e.g., SOFR-based), though it doesn’t fix all challenges.
    • Steven: “There is a little bit more stress—or certainly stronger liquidity demand—than what we’ve seen over the past couple of months.” (05:41)

• Fed Leadership & Market Reactions:

  • With Powell as a potential “lame duck,” consensus-building becomes crucial for the next chair—and for market stability.
    • Lonnie: “Every day we're hearing more and more talk about his replacement... I think there's been enough disruption.” (07:02)
  • Real-time, the market saw a “bull steepener” with both equities and bonds rallying—an encouraging year-end signal.

2. Streaming Giants and the Warner Bros. Acquisition Saga

(10:43 – 21:30)

• Headline Drama:

  • Netflix’s $72B bid for Warner Bros. sparked CRE buzz, given their focus on acquiring not just content rights but 100M SF of studio/office space. Days later, Paramount upped the ante with a $108B all-in bid.
    • Steven: “Netflix offered to purchase Warner Brothers for $72 billion... Paramount is trying to one-up them by offering more money and offering to buy the entire business.” (11:28)

• CRE Implications:

  • Netflix would shift from leasing ~5M SF to ownership of 100M SF overnight:
    • “Transitioning from tenant to owner is a very good play for them... This is not too dissimilar from what we’ve seen with just vertical integration across other large scale players.” – Lonnie (12:51)
    • Q: How will digital production and the rise of AI change demand for physical studio space?
      • Steven: “AI is only as smart as what it’s been trained on. So at some level, we’ll still need to have some of that organic real material make its way into the training system.” (18:47)
  • Potential for select asset retention vs. sale-leasebacks. Institutional opportunity in premium markets (Burbank, London), no matter who wins.
    • “If Netflix does win, I’d expect them to be very selective about what they actually keep on the balance sheet... For Netflix, they’re going to want to free up cash given how large this is.” – Steven (15:50)
  • State-level incentives (Texas, Georgia, NJ) could spark geographic shifts in media production hubs.

• Notable Quote:

  • Lonnie: “In the age of AI, with all of this digital production, it’s a pretty dramatic shift to be going all in on the tangible real asset, real estate part of the business.” (17:49)

• CMBS Spotlight:

  • 2024 SASB deal: Warner Bros. HQ in Burbank, 810k SF, 100% leased, 14.4 years weighted average lease term—investors will be closely monitoring. (20:40)

3. Office and Multifamily Transactions: New Signals in the Market

(22:12 – 34:53)

A. Office – Major Recent Sales

• Sovereign Partners Buys 2 Grand Central Tower (NYC):

  • Paid $273M ($409/SF) for a Midtown tower—over a 30% drop from the seller’s 2011 basis ($401M) and a 65% haircut from the 2008 price ($705M).
    • Lonnie: “Pretty significant reduction in transaction price. It’ll be interesting to see if they have a value add or reposition or what the story is here.” (23:55)
    • Steven: “We’ve effectively found where the bottom is in core markets, top-tier markets, even when trading down to... Class B assets.” (25:02)

• Crescent Acquires Coral Gables Office (FL):

  • 206k SF, $70.4M ($340/SF); strong office player, actively acquiring in multiple markets.

• SL Green Increases Stake in 800 3rd Ave (NYC):

  • $5.1M to buy out JV partners, now 100% owner. Mortgage modification extended maturity to 2031, interest fixed at 5.03% from 2026–29.
    • Quote (SL Green CIO): “These strategic transactions exemplify SL Green’s long term outlook on well located Midtown Manhattan assets and demonstrate our ability to execute loan modifications that extend our maturity profile while maintaining accretive terms.” (26:35)
  • Hayley/Steven/Lonnie: Point to residential conversions as tightening office supply and reviving Midtown.
    • Lonnie: “SL Green is saying without saying that they definitely think the bottom has, has passed for office.” (27:55)

B. Multifamily – Key Deals & Regional Analysis

• Pembroke Pines, FL (Ventura Point Apartments):

  • 206 units, sold for $52.5M ($255k/unit); sale price slightly below 2019’s $55.6M, buyer assumed a $38.6M loan.

• Seattle Area (Dupont, WA, Tracks at Dupont Station):

  • 179 units, $48M ($268k/unit); prior valuation $44M in 2021.
  • Lonnie: “Seattle is one of those interesting markets to watch in 2026. If office comes back... Seattle could be really hot again.” (33:52)

• Friends’ Apartment Building Sells for $32.7M:

  • Iconic exterior (90 Bedford St.), off-market flip after renovation; bought for $18.25M in 2024.
    • Steven (Joking): “I’m hoping that part of the capital that went into this asset was widening the stairways so you can bring a couch in. Anybody?” (37:04)
    • Lonnie: “This is literally the definition of a real estate home run.” (36:44)

4. Data Releases, Listener Q&A, and Closing Industry Notes

(37:30 – End)

• Trepp Releases & Market Data:

  • Special Servicing Rate ticked up slightly in Nov 2025 to a new 12-year high; details available in Trepp’s monthly report.
  • Q3 2025 TRIP Property Price Index: CRE values largely stabilized; office outperformed, lodging weakest, multifamily flat.

• Listener Q&A:

  • Ground lease structures around airports (Tulsa, Texas) allow municipal land to be leased for CRE, especially for parking and logistics.
    • Lonnie: “A lot of times if the land’s owned by municipality or county, there’s no property tax. So it’s kind of a win for everybody.” (42:28)
  • AI, job losses & MF sector: Gradual transition expected; negative impacts regionalized and likely to mirror existing distress patterns.
    • Steven: “The winners and ... laggards in this transition will be very much like ... the office market, where the higher income or the more productive earners... certain areas, certain geographies.” (45:36)

Memorable Quotes & Moments

• On Vertical Integration in Streaming:
  • Lonnie: “Netflix effectively just acquires a portfolio overnight. If you look at Tesla, very similar strategy with their battery plants. They want to control the pipeline. And I think Netflix has the same thing here.” (12:51)
• On New York Real Estate:
  • Lonnie: “If you buy into the notion that people just want to own New York real estate, I think the ... medium to longer term view on office has to be pretty strong when compared to some of these rent controlled multifamily assets.” (30:36)
• On Data:
  • Steven: “People might not know, Stephen, that we track these types of kind of one-off deals. … We have movie studio stuff. We have a lot of different data in the vault.” (21:30)
• On Listener Community:
  • Joel R: “I am finally in a 1% category that I would prefer it to be wealth, but listening to the truck podcast via Spotify is almost as good.” (43:24)
• On AI and CRE:
  • Alex T., listener: “Loves the recent coverage on AI … He wanted to know some information about the long term prospects of AI with the potential for large job losses across the board.” (44:09)

Timestamps for Notable Segments

• Fed rate cut & tensions: 00:05 – 10:43
• Streaming M&A (Netflix/Paramount–Warner Bros): 10:43 – 21:30
• CRE implications, vertical integration, CMBS: 12:51–21:30
• Office transactions & market bottoming: 22:12 – 29:00
• Multifamily deals (FL, Seattle, Friends building): 31:54 – 37:04
• Listener Q&A / Data releases: 37:30 – End

Tone & Style

The tone throughout is both data-driven and conversational, with lively banter, sharp market insights, and practical, boots-on-the-ground CRE knowledge. The team remains analytical, yet never hesitant to insert wit—offering both deep dives and accessible analogies for their business-minded, market-attuned audience.

Summary Takeaways

• Fed uncertainty and staged market relief: The December cut provided relief, but dissent and messaging signal volatility and slow movement in 2026.
• Streaming consolidation is a CRE story: Netflix/Paramount–Warner Bros. drama spotlights massive real estate transitions and vertical integration strategies.
• Signs of stabilization in office and multifamily: Recent sales highlight potential price-bottoming and select buyer optimism in both sectors.
• Data-driven insights are evolving: Trepp’s ongoing research captures shifting market dynamics—special servicing rates, property values, and sector-specific pain points.
• CRE’s future is cross-industry: Whether via ground leases at airports or digital disruption’s fuzzy impact on demand for physical space, the links between finance, technology, and real estate are only tightening.

For further details, data, or specific reports discussed, listeners are encouraged to reach out to podcast@trepp.com or visit Trepp’s LinkedIn page.