Sunday Summary: It’s REBNY, Baby!
By The Editors April 23, 2023 9:00 am
reprints
It was a week of drinking, of eating, of shushing, and of ignoring the immensely powerful people trying to talk to you.
It was the Real Estate Board of New York’s annual soiree, which was in full swing on April 20 at the Glasshouses on Manhattan’s Far West Side.
The evening was an interesting mixture of old and new. Unlike last year, where it was strictly a standing cocktail party and where the speeches were much briefer than they were in days past, many of the machers of real estate and politics decided they liked the speeches part of the old REBNY. They didn’t feel shy about raising the volume on the mic and shushing their audience. Plus, there was an actual sit-down dinner like there used to be, but we’d be loath to call it as rubbery and lackluster as it used to be. (It was catered by superchefs Michael Anthony of Gramercy Tavern and Daniel Boulud of Daniel.)
Mayor Eric Adams was on hand, and he openly blasted the fact that Albany had not gotten a deal on housing.
Many insiders are still solidly behind Adams and Gov. Kathy Hochul, but there was a great deal of frustration about the lack of an affordable housing or zoning deal, and that frustration spilled over into the chatter.
But it was also a chance to observe, again, the old rituals. Luminaries like Barry Gosin, Mary Ann Tighe, Dan Doctoroff, Thomas Durels, Frederick Marek, James Nelson, Elly Pateras and John Santora were honored by REBNY.
And the most long-standing ritual is the gossip: People talked about the wobbly office market currently getting hammered, affordable housing, and, of course, food and restaurants.
This talk of real estate is making me hungry
Is Major Food Group, the company behind Torrisi, Carbone, Parm and a million other mouthwatering restaurants, going to open a food hall?!
We’re not 100 percent sure, but we do know that they signed a lease for 25,000 square feet over three buildings at Mayfair in the Grove in South Florida last June, and the scuttlebutt is that they’re looking to turn it into a food hall, similar to Eataly, provided they can get through the permitting process.
Plus, we heard that Mohari Hospitality, a Cyprus-based real estate investment firm, is plunking down hundreds of millions to buy Tao Group from Madison Square Garden Entertainment. (This would include hot spots such as LAVO, Hakkasan Mayfair and Beauty & Essex restaurants.)
And, while it’s not technically food, we thought of food when we learned of yet another deal for a half-dozen pickleball courts in the D.C. area.
Don’t get cocky
There was the requisite bad news, natch.
There was bad news if you are WeWork (WE). The coworking behemoth received a warning from the New York Stock Exchange that because its stock has been below $1 per share for the last month it was in danger of being delisted on the exchange. (At the end of trading on Friday, it was going for 45 cents a share.)
WeWork answered in a press release that it has a six-month “cure period” to avoid getting delisted if it has “a closing share price of at least $1 and an average share price of at least $1 over the 30-trading-day period.”
It wasn’t a great week for Brookfield (BN); a CMBS loan backing nine of its properties (Class B office in the D.C. area, with a couple of properties in Georgia and Florida) has gone into default.
It certainly wasn’t a good week for the 110 employees at Walker & Dunlop (a full 8 percent of their team) who got laid off this week due to what the brokerage and lender described as economic uncertainty.
“We held on to our entire team entering 2023 thinking that commercial real estate transactions would recover once the Federal Reserve stopped raising rates,” Willy Walker, the head of the firm, wrote in a memo to staff. “Unfortunately, with the Fed still raising rates, and the market disruption caused by the recent bank failures, we simply don’t have visibility into when market activity will return to normal and must take action.”
And, if your name is Jacob Garlick, the one-time buyer of the Flatiron Building who left the landmark at the altar after buying it at the auction, any chance of regaining the property got a little more difficult. A new auction date has been set, but a deposit on the winning bid will be expected at the actual sale. (Garlick hadn’t been able to come up with a deposit days after bidding $190 million last month.)
Ending on a positive note….
There’s always something good in the news.
Cap rates for Class A multifamily, which had been growing throughout the pandemic, saw some quarterly deceleration for the first time since the Fed went on its interest rate-raising spree, according to a report from CBRE. (Declining cap rates usually correlate with falling interest rates.)
“We feel more optimistic about the future compared to today,” Matt Vance, head of multifamily research for CBRE Americas, told CO. “The fact that cap rate increases have decelerated is really good news for the industry. It indicates there’s less risk today and the future will look better than it does now.”
Reduction of interest rates is probably most on developers’ minds.
“The implications [of the rate environment] are literally every day is … ‘What’s the bad news today?’ I mean, that’s how our days generally run right now,” LMXD’s David Dishy told CO in the Sit-Down for this week.
Well, David, take the CBRE report as good news.
Have a great week!
