- Rise in Distressed Sales Signals New Chapter in Beleaguered Office Market “Property owners are starting to unload troubled office buildings at fire-sale prices, a sign that the office market slump is moving into a new phase where more landlords are ready to capitulate. In recent weeks, Blackstone sold the Griffin Towers office complex in Santa Ana for $82 million, or about 36% less than the firm paid in 2014, say people familiar with the matter. Principal Financial Group sold a Parsippany, N.J., office building for $14.3 million, down from the $52 million it paid in 2008, according to participants in the sale.” (The Wall Street Journal)
- Expanding Federal and State Restrictions on Foreign Investment in U.S. Real Estate “Alaska, Arkansas, Illinois, Iowa, Kansas, Maine, Missouri, and Ohio all currently require foreign investors to disclose acquisitions of certain real estate, much like the U.S. Federal Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA). In fact, Illinois, Maine, and Wisconsin, allow acquirers to fulfill their reporting requirements by submitting a copy of applicable federal AFIDA reports. Ohio, Pennsylvania, South Carolina, South Dakota, and Wisconsin limit foreign investment in real estate based on the number of acres, while Iowa, Minnesota, Missouri, Nebraska, North Dakota, and Oklahoma ban foreign ownership of certain land completely.” (JDSupra.com)
- Can These Recent Private Equity Deals Actually Save Commercial Real Estate? “It’s become trite, even if accurate, to repeat the Warren Buffett quote that it’s only after the tide goes out that you see who’s been swimming au naturel. With banks feeling pain (and some going out of business), lending tighter than ever, and commercial real estate owners and investors facing coming waves of painful refinancing at rates they may not be able to afford, there’s been an assumption that private equity could save the day.” (GlobeSt.com)
- SVB and Signature CEOs Blame Federal Gov’t, Media for Bank Failures “The ghosts of Dick Fuld’s glare appeared on the furrowed brows of financiers Tuesday during a quarrelsome Senate hearing on what sparked the ongoing regional banking crisis of 2023. Executive leadership at Silicon Valley Bank (SIVBQ) and Signature Bank (SBNY) avoided taking accountability for the failure of their banks throughout a combative Senate hearing, repeatedly sidestepping accusations of failed risk management policies and insisting that federal monetary and regulatory policies fed into a crisis that eventually consumed their banking houses.” (Commercial Observer)
- Despite Turmoil in Commercial Real Estate, Several Subsectors Are Still Attractive “‘Today, the fundamentals within specific sectors remain pretty stable, and in some sectors, they’re even stronger than you would expect,’ said Sara Cassidy, managing director at AEW Capital Management, a real estate investment subsidiary of Natixis. For example, in the industrials sector, which includes manufacturing, distribution, and storage facilities, rising rent hasn’t been reflected in many of the long-term leases yet. The next wave of lease renewals will probably increase the valuations of such assets, according to Cassidy.” (Institutional Investor)
- The Politicians Shaping—Or Trying to Shape—CRE-Related Policy “Sustainability and clean energy are a major focus locally and nationally. On the federal level, one person is in charge of dispensing funding and tax credits for wind farms, electric vehicle charging, solar panel installations, hydropower projects — you name it: White House adviser John Podesta. Since President Biden appointed Podesta clean energy czar last fall, he has been tasked with distributing $1 trillion in subsidies from the Inflation Reduction and Bipartisan Infrastructure Act.” (Commercial Observer)
- ‘Capital of Capital:’ Miami Keeps Attracting Investors “During the pandemic, Miami emerged as a major destination for real estate investors. Now that the global health crisis has faded and the U.S. economy faces headwinds, South Florida’s property market is doing the unexpected: Continuing to boom. In a prominent example, a waterfront site in Miami is under contract after receiving multiple bids above $1 billion. That high-profile deal was just one of the reasons for optimism at Commercial Observer’s South Florida Leadership Reception, hosted Thursday night at Starwood Capital Group’s new headquarters at 2340 Collins Avenue in Miami Beach.” (Commercial Observer)
- In This Uber-Riche City, 70% of Newly Sold Homes Aren’t Owned Directly by People. Here’s Why. “Trusts, corporations and LLCs were behind more than 70% of home purchases in this Bay Area city last year.” (San Francisco Chronicle)
- Ghost Kitchens Are Dying and Nobody Noticed “There are a few pandemic habits we’ve embraced IRL: Zoom meetings, QR codes, hand sanitizer. Not so much the ghost kitchen, an innovation that promised to change the world, but has shaken out to be more a thing of quarantine folklore than a reliable business. Ghost kitchens, which are restaurant kitchens that only offer delivery, became a popular and affordable way for fledgling restaurants to launch on a shoestring budget and for existing companies to bring in additional revenue during the pandemic.” (Bloomberg)
- The Return to the Office Has Stalled “When average city office-occupancy rates at the start of the year surpassed 50% for the first time during the pandemic, many landlords viewed this milestone as a sign that employees were finally resuming their former work habits. Those office-usage rates have barely budged as most companies have settled into a hybrid work strategy that shows little sign of fading. About 58% of companies allow employees to work a portion of their week from home, according to Scoop Technologies, a software firm that developed an index monitoring workplace strategies of close to 4,500 companies.” (The Wall Street Journal)
- A Crumbling New York Garage Collapsed. Dozens More Have Similar Problems. “Three weeks after the fatal collapse, city officials have revealed little about what they found in their sweep. They have not identified the more than 170 parking structures they rushed to inspect or divulged what conditions they discovered within them. But a New York Times examination of the city’s garages has found that serious structural problems are widespread — and in many cases have been allowed to persist uncorrected for years.” (The New York Times)
- In Chinatowns Across the U.S., Tradition and History Collide with Luxury Development “In major Chinatown neighborhoods, luxury development and public-use projects have altered the fabric of these historic communities, according to more than two dozen activists, residents and restaurant owners. While some argue these developments accelerate local economies, many interviewed by CNBC say they destroy the neighborhoods’ character and push out longtime residents.” (CNBC)
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