We are sometimes a little cheeky in “Sunday Summary” to take stock of the week’s commercial real estate news with a wink and (we hope) with humor. But reading the news this week, we didn’t feel very funny. Or casual. Or self-satisfied.
On the contrary, the emotions we feel this week are fear, sadness and shock.
It is impossible not to be heartbroken realizing that the most serious ground war in many, many years is raging on the European continent. Lives are extinguished. The territory is seized. The treasure is being lost. The reasons for this are incomprehensible from where we are sitting.
And even if it’s a little ridiculous to think real estate implications of a war in Eastern Europe, it should not be expected to leave this world untouched.
There were immediate consequences. For one, the Dow Jones Industrial Average plunged Thursday morning, the first full day of fighting (recovering somewhat in the afternoon) with trading real estate stocks for companies like CBRE taking a hit.
But the stock market decline is not the biggest problem; commercial real estate has been impacted over the past two months by inflation and supply chain issues. The industry had already braced for a horrendous rate hike from the Fed; a protracted economic dispute with the third-largest oil producer and second-largest natural gas producer on earth is not something the industry particularly wants right now.
Granted, real estate is better covered than many other industries for some of the supply chain issues heading our way; As Jonathan Morris pointed out to Commercial Observer, most real estate companies pre-order supplies, so any price changes might not be relevant. But an inherently unstable situation like a war should make everyone sit up and take notice.
Everybody’s had kind of a terrible week
CoStar certainly did.
The multi-billion dollar company’s woes began with a shocking report in Insider that the corporate workplace was a toxic hell. The employees were monitored… at home! Surprise inspections took place… at their place! Dress codes have been enforced…on Zoom?!
These types of tactics led to a 37% exodus from the company in 2021, or some 1,546 people.
Company CEO Andrew Florance castigated to one of Insider’s reporters, Alex Nicoll, who recounted the initial story (along with former CO Daniel Geiger) calling him a “fringe reporter” who wrote a “sensational story that grossly misrepresents the experience employees” and also singled out Nate Peterson, a former CoStar employee who led the charge against the company on Instagram. CO said CoStar subsequently tightened security around the company’s headquarters.
This last move turned out to be prescient because the next day two cars were set on fire in the firm’s parking lot in Richmond, Virginia! A suspect (not Peterson, it should be noted) has been arrested.
Maybe there’s just a lot of acrimony in the air. This week, Bloomberg Wealth reported that Goldman Sachs is apparently try to collect the bonuses executives leaving the company for another job, in the form of forfeiture of vested shares – a tactic normally reserved for employees who commit serious misconduct. (We hope other businesses reading this don’t have any ideas!)
the city seized 1214 Dean Street in Crown Heights, Brooklyn after the Attorney General’s office moved in with the “eco-yogi sleep lordsGennaro Brooks-Church and Loretta Gendville, when an investigation found they evicted tenants during the eviction moratorium and staged a short-term rental racket on Airbnb. Brooks-Church and Gendville were also heavily fined $225,000.
And Crain’s New York Business reports that Joseph Chetrit decided to go to court against Michael Stern of JDS, claiming that Stern owed him $20 million over the deal they entered into for 9 DeKalb Avenue, Brooklyn’s supertall tower. Stern apparently bought Chetrit out of his share of the building in 2018, but only paid him $10 million of the $24.4 million owed.
Some good news?
Of course there are. Everyone’s favorite coworking guru, Adam Neumann, landed a $108 million construction loan from CIM Group, for the construction of the second phase of Caoba, a multi-family tower in Miami.
Speaking of Neumann, he also paid $17 million for the commercial space on the ground floor at Society Las Olas, a 639-unit apartment building located at 301 SW 1st Avenue in downtown Fort Lauderdale.
It looks like there is good news for Gary Barnett. The Extell head is buy the last portion of the former Walt Disney Company-owned ABC campus on the Upper West Side of Silverstein Properties and Seven Valleys for between $925 million and $930 million.
And after years of viewing Albany as a hopeless swamp where good legislation will die, it looks like there’s a very warm welcome. change in the air. Without the shadow of Andrew Cuomo (remember his nickname, “the Prince of Darkness”!) and some of the other unsavory characters who have left the scene, the city is breathing much, much easier.
“It was like there was a total shift in the behavior and mindset of the people who worked for the government. There was a universal sigh of relief,” the state senator said. from Manhattan, Liz Krueger, to the CO. “I remember walking through the Capitol and thinking, ‘Oh, we all had Stockholm Syndrome and we didn’t even realize it.’
Shvo plug
It could be argued that Neumann is the hottest name in real estate in 2022, but back then that title might have belonged to broker Douglas Elliman Michael Shvo.
He was the guy who made John Legend play at estate parties and turned his condo openings into elaborate pastoral scenes/art displays.
Shvo has been a little more low-key in his antics in recent years, but much more focused in terms of building up a massive multibillion-dollar commercial real estate empire that includes serious properties like the Transamerica Pyramid in San Francisco and the Coke -Cola Building on Fifth Avenue.
chvo spoke to the CO on his dive into commercial real estate, the marriage between style and commercial real estate, and his spat with Keith McNally.
One of the places Shvo is looking for (although it wasn’t included in CO’s interview) is downtown Los Angeles; and he might be too clever to do that.
Despite Downtown LA being littered with vacancy signs on its retail business, the homelessness problem has only gotten worse and the fact that LA businesses have yet to convince their employees to return to the office in figures close to those before 2020, Downtown LA actually has quite a bit to do. It is primed for a slew of new residential buildings, and aside from vacant offices, there has been an increase in population growth.
It’s a good balm to take your mind off Ukraine’s problems — with, perhaps, a steak be followed by a Netflix Frenzy.
Until next week: Peace.
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