Sunday Summary: No Peeking at Your 401K!

If you decided to check the old stock ticker last week, you were probably (a) softly sobbing or (b) calling pharmacies and assessing their supply of strychnine.

Commercial Observer was in Wynwood, Miami, for our Miami Multifamily & Mixed-Use Forum the day after the Trump administration’s April 2 tariffs announcement, and one attendee put things succinctly:

“Don’t look at your portfolio.”

Real estate has been anything but shielded from the effect of tariffs. Ever since the announcement, nearly everyone in the business has had to gauge how high they’d be, how permanent they’d be, and how damaging they’d be.

“The biggest cost is really uncertainty,” said 13th Floor Investments’ Aaron Stolear at CO’s conference. “As an investor or a capital provider, why would you ever develop a project if you just have this big premium of tariffs?”

“We got a call last week from Kohler [the plumbing fixtures company],” said Andrew Till, chief operating officer and principal at Baron Property Group at CO’s conference. “[We] came to order a whole building by Wednesday. On Friday, they were increasing prices.”

Even more worrying than seeing developers scrambling to make their current plans work, some have been pulling the plug (or at least holding off) on projects entirely. Microsoft announced it was pausing its data center construction plans, including a $1 billion project in Ohio.

President Trump walked back most of these tariff hikes last week, calling for a 90-day pause on most targeted import taxes (except on China). But hours before the administration reversed course, industrial real estate honchos were still nervously chewing their fingernails at CO’s first-ever National Industrial Forum at the Royalton Hotel in New York on April 9.

“A lot of it is posturing,” said Alex Redfearn, founder, president and CEO of Redfearn Capital. “It feels like a lot of it will come off. It’s hard to underwrite that. But uncertainty is tough for tenants. It’s tough for landlords. It’s tough for everybody who’s trying to make a decision.”

Of course, real estate is a famously patient business with long horizons. Even before the administration’s reversal, plenty of players were sanguine about the added costs.

“It’s going to force people to be sharper,” said Daniel Lebensohn, co-CEO and founder of BH3 Management, at CO’s Miami conference. “Better projects will be developed by better people.”

Indeed, some big deals crossed the finish line last week despite the sturm und drang in the stock and bond markets.

Industrial, for one, got a lot of action. (And this is despite the fact that industrial real estate availability has actually gone up, at least in New York.)

Blackstone is laying out $718 million for a 95 percent stake in Crow Holdings’ Texas industrial portfolio.

Amazon doesn’t appear to be slowing down on its target to build 80 new logistics centers around the country, as it’s apparently shopping around for a financing partner for its $15 billion plans.

And Clarion Partners put up $85.5 million to buy the two-building, 300,786-square-foot industrial complex City Logistics, which currently counts PepsiCo as a tenant, from MRP Industrial in Charm City. (Clarion was making the purchase on behalf of an unnamed buyer.)

But it wasn’t all industrial deals that closed last week.

Russell Galbut didn’t mention it when he was in attendance at CO’s Miami forum, but his Crescent Heights shelled out some $240 million to Essex Property Trust for the 350-unit Skyline at MacArthur Place, in Santa Ana, Calif., making it one of the most expensive multifamily deals in Orange County history.

Even WeWork founder Adam Neumann is speeding up, having received $155 million in financing from Invictus Real Estate Partners and Integritas Capital for his 40-story, 466-unit project Flow House at Miami Worldcenter.

Leaning into the ‘vision thing’

There’s multifamily, and then there’s multibillion-dollar multifamily.

Last week Los Angeles-based Stan Kroenke of Kroenke Sports & Entertainment unveiled plans for a 52-acre, mixed-use development in Woodland Hills called Rams Village at Warner Center. (In case you didn’t know, Kroenke owns the Los Angeles Rams.) It should take 10 years to complete and run a jaw-dropping $10 billion.

The Rams are integral to the plan. The design includes a 350,000-square-foot headquarters and training facility, along with a practice field for the football team — but it shouldn’t be mistaken for a mere sports venue. Kroenke is also planning (with designs by Gensler) about 3 million square feet in residential development and another 2 million square feet of office, retail and hospitality.

An equally luxuriant vision that’s been percolating in the minds of the good folks at Related Companies and Wynn Resorts got a boost last week, too.

We’re talking about their $12 billion bid to build a casino along Manhattan’s High Line. On April 9, the city’s Department of City Planning voted for modifications necessary to redevelop Hudson Yards West, where said casino would be erected.

And, while City Planning voted decisively 9 to 4 for the plan, local lawmakers and Borough President Mark Levine have made no secret of their opposition. Still, Related sounded like they felt lucky.

“Today marks a critical milestone for Hudson Yards West,” said Jeff Blau in a statement. “Thanks to the collaborative process with City Planning, we are closer than ever to delivering on this historic investment in our community, which will create thousands of new union jobs, thousands of units of new housing, a huge new public green space park and nearly $200 million of community benefits.”

(Sensing that they were drawing dead, Hudson’s Bay Company mucked its bid to put a casino in the top three floors of Saks Fifth Avenue.)

And down in Florida nobody is holding back. At least David Martin’s Terra isn’t.

Along with Jackie Soffer’s Turnberry, the two companies scored a $392 million construction loan for the development of an 800-key, 17-story Grand Hyatt Miami Beach from Tyko Capital.

But just 24 hours earlier we heard that Terra and Fortune International Group plunked down $205 million for the 56-key Silver Sands Beach Resort in Key Biscayne, which they’re planning to replace with a 56-unit luxury condo. (That’s more than $200 million just for land!)

We’d say that Martin should take a vacation, but the guy already lives in South Florida.

Hire calling

There were some notable hires and promotions last week.

BGO promoted Jonathan Epstein, who had been running its cold-storage and core-plus platforms for the last six years, to lead its U.S. operations.

Likewise, Prologis promoted Read Mortimer to head its New Jersey capital deployments office.

And Newmark snagged Greg Conen to be a vice chairman and part of the firm’s new office devoted to leasing space that’s still under construction. Conen arrives from his former perch at Tishman Speyer, where he was managing director of office leasing.

Banks vs. alternative lenders

One thing we’ve noticed about all the lending that’s been going on recently: It’s an interesting mix of banks and private lenders.

There’s no question that financing through traditional banks was highly onerous (or just plain impossible) in the last couple of years as banks became conservative to the point of frozen with all but the best borrowers. Alternative financing was the only way to go.

But, now that banks have somewhat loosened the purse strings, are all the borrowers ready to go back?

“It has changed a lot,” said Josh Zegen, managing principal and co-founder of Madison Realty Capital, “and part of it is just the fact that the market has adapted to think about private credit not as a last resort, but, in many ways, as a first option.”

Moreover, given that asset volume is expected to dramatically increase, the need for alternative lenders isn’t going anywhere.

CO spoke to a couple of alternative lenders — Jessica Bailey and Alexandra “Ali” Cooley of Nuveen Green Capital, who specialize in Commercial Property Assessed Clean Energy (C-PACE) lending — for their take on the market, green financing, and the fact that New York City is poised for a big new flow of C-PACE loans.

Sunday reading

Of course, there’s always a lot of drama to process in this real estate market, but one voice of sanity and intelligence is that of CBRE’s Mary Ann Tighe.

Tighe sat down to discuss the World Trade Center, the Manhattan office market in general, how she got her start in real estate, and TikTok refusing to move into 4 Times Square until the name of the building was changed.

It should make for some nice Sunday reading.

And, for those observing, have a zissen Pesach!

See you next week.