Power Finance and Roe v. Wade – Trade Observer
Well, no one will ever say that it wasn’t a week full of news.
The bomb, of course, was the opinion disclosed of the Supreme Court of the United States revealing that Judge Samuel Alito had apparently collected five votes to annul Roe vs. Wade.
It’s a decision that will upend five decades of established law, plunge health care and women’s rights into crisis, and likely scramble political calculations nationwide.
But don’t think there won’t be real estate offshoots as well.
Companies have long kept the considerations and values of their employees in mind when deciding where to locate. One of the reasons New York still manages to find premium tenants, despite skyrocketing taxes, is because it’s the city where the talent pool wants to be.
Over the past few years, states like Florida have done their best to compete by increasingly improving incentives to attract blue-chip companies and their employees. But will a tax incentive be enough if Florida suddenly decides to ban reproductive freedom?
Cultural issues play a real and documentable role in tenants’ real estate decisions. North Carolina’s controversial House Bill 2, aka the toilet bill, it seems removed Charlotte from competition when Costar was deciding on the location of its headquarters in 2016.
The complicating factor is how much the office culture has changed over the past two years. Will remote work make corporate headquarters and incorporation decisions less important to a talent pool if employees live in a state with reproductive rights? (The fact that a company requires employees to work in the office and on a strict schedule is a major determinant of their personal happinessremote and hybrid workers reporting much higher levels of job satisfaction.)
Short answer: who knows? But don’t expect this problem to go away anytime soon.
In the news a little less political…
For Commercial Observer, the big news of the week was undoubtedly the fact that our Removed Power Finance listing.
This is our annual ranking of the 50 most important people and companies that finance commercial real estate, and for the first time ever a woman – Wells Fargo’s Kara McShane – took the top spot solo. With $84.8 billion in deals, it wasn’t hard to see how McShane rose to the top of the pecking order.
But beyond #1, it’s worth delving into all the names on the list. Given how fragile sectors of the real estate landscape are, it is surprising to delve into the numbers achieved by the crème de la crème over the past 12 months.
“If this wasn’t a banner year for you, “Starwood’s Jeff DiModica warned“you should probably reconsider what you do for a living, because the number of transactions was off the charts.”
Financing brokers have been occupied in almost all asset classesbut the two big winners were industrial and multi-family.
CO found that life insurers were spend a lot of money for this growth spurt, and that most financiers emerged from last year’s crisis with smarter ideas on how to lend in any environment. Plus, we unpacked one of the industry’s big deals from last year: Greystone’s $500 million deal with Cushman & Wakefield. to build the latter’s debt platform.
All in all, this paints a fascinating portrait of the world of finance in 2022. While it’s worth noting that there was a bit more chill in the air late last month at the St. Regis in CO Financial Forum, which included a number of Power Finance winners. The panelists were a little more sober – maybe it had something to do with the fact that it was the same day the government figures showing the US economy were released. decreased by 1.4%.
In the Florida news…
Yes, there could be backlash and ramifications pending deer decision, but until we know more, there’s no doubt that South Florida continues to draw the crowds.
The latest tenant is particularly eye-catching, as far as foodies go: Jon Shook and Vinny Dotolo, who cut their teeth in Los Angeles over the past decade with big, crazy restaurants like Little Three, At Jon & Vinny’s and the big but (hopefully temporarily) is gone Animalsuccumbed to the charms of Miami Beach: they are open another Jon & Vinny’s at the Goodtime Hotel by Pharrell Williams and David Grutman. (Hey, Jon and Vinny: you know New York is always bigger than Miami, right?)
And they’re not alone: milk + honey spa, fitness studio F45, eyewear supplier Vintage Frames and clothing retailers Vilebrequin and Vault also come to Goodtime. Oh, and the same goes for Binske, the marijuana retailer – which should allow every fit customer to feast on Jon & Vinny.
Stephen Ross definitely isn’t worried about South Florida’s future: Super Developer scored $140 million from Wells Fargo for its proposed 22-storey apartment building, 575 Rosemary. Oh, and speaking of gastronomic concerns, Ross has also locked in a beautiful tower with name recognition for some of the retail spaces: Tacombi.
This is remarkable; retail is one of those hot topics that many gray barons of industry (including at CO Retail Forum at the end of last month). And for good reason – on Wednesday it was revealed that the 3.5 million square foot American Dream mall lost $60 million more last year. (Bad, but silly change from his current obligations.) However, as the rest of the country tries to shake off retail, South Florida continues to pour more money into the problem. Electra America lost over $100 million last week on Southland Shopping Center, which has been in foreclosure for over a year. They plan to modernize and reposition the property.
And last week, Miami Beach city commissioners put forward a plan to convert parking lots near Lincoln Road into a Pair of mixed-use office towers over 200,000 square feetwhich will be developed by Starwood Property Group and Peebles Corp.
“It’s a very compelling project,” Miami Beach Commissioner Ricky Arriola told CO. “It’s not another hotel. It’s not another high-rise condominium. It’s something we don’t have enough of in Miami Beach, which is Class A office space.”
Finally, although not in Miami, a joint venture between Leste Group, The Bascom Group and East Hill Capital Partners obtained financing for the acquisition for Chatham Square, a 448-unit multifamily development near Disney World, thanks to a debt package from KKR.
Remember what we said a few paragraphs ago about the importance of e-commerce? Amazon continues to prove this case!
Despite recent low incomes and a strong sale in stock Amazon last week, the giant announced a few monster office leases in Southern California, occupying approximately 439,000 square feet of space, which will also mean the creation of 2,500 technology and business jobs. (I guess they feel good knowing that some of their employees are avoid unionization.)
Amazon’s industrial real estate is still extremely valuable to others; Center Point Properties just paid $170.1 million for a 700,000 square foot industrial complex leased by Amazon located on 44 acres in Miramar, Florida.
Indeed, in the heart of Southern California’s Inland Empire, investors certainly see the value in all this valuable industrial property. For example, Texas-based MAG Capital Partners comes invested $23.9 million for Charlmont Village, a 55-unit townhouse community, which equates to approximately $434,545 per unit, more than double the median price per unit in the area.
Let’s talk about leases
The Empire State Realty Trust did approximately 20,000 square feet of leases at 1359 Broadway, placing tenants such as Italian retailer Calzedonia, Canadian IT provider Converge Technology Solutions and green energy developer BMR Energy in the building.
At 7 Penn Plaza, Mulligan Security swept 9,087 square feet.
Giorgetti, the Italian furniture company, has leased 12,000 square feet at 349 Fifth Avenue for its first Atelier Giorgetti Manhattan showroom.
Framework, the real estate investment platform, took 17,050 square feet at 315 Park Avenue South in Midtown South.
And the big jeweler, Tiffany & Co., apparently cuts more than diamonds – it loses part of its offices at 200 Fifth Avenue to L&L, but still renewed for 10 years at the building.
But the big daddy of the week was HSBC 265,000 square foot lease at the spiral designed by Bjarke Ingles at Hudson Yards.
something to think about
Of course, seeing activity like the HSBC lease would make any New York developer breathe a sigh of relief. But the fact remains that most tenants aren’t HSBC, and most buildings aren’t The Spiral.
There’s still a ton of supplies left. At CO Status of CRE event last week, Michael Cohen of Colliers (not the other Michael Cohen) gave audience members a harsh speech: The vacancy rate has nearly doubled since the pandemic hit. “We’re not going to praise our exit from this,” Cohen told the audience.
Could all that excess space be… used for child care?
Mayor Eric Adams apparently wants to transform New York empty offices in nurseries.
It’s definitely something to think about. (Spoiler alert: there is at least one major problem.) But we can think about this solution after calling his mother.
Happy Mother’s Day!