(Credit: Google Maps)

All five of the latest projects proposed with under 50 residential units applied for incentives through the Transit Oriented Communities program. Two of the projects are also in Opportunity Zones, a program created under President Trump’s tax overhaul.

The city of Los Angeles launched the TOC program to provide density bonuses and other incentives for developments with affordable units near transit stops.

Being located in one of the Opportunity Zones can create significant tax benefits by allowing owners to delay capital gains taxes from earlier transactions in economically depressed areas. Former Gov. Jerry Brown designated nearly 900 tracts as Opportunity Zones last year.

All together, the projects this week would add 132 units to the market.

1. 3602 S. Overland Avenue | Palms | 42 units

Santa Monica-based owners Neeta Inc. applied for a 42-unit, mixed-use development at 3602 S. Overland Avenue in the Palms neighborhood. The company purchased the site in 2005 for $1.4 million, records show. A one-unit apartment and a catering shop are currently on the site. The applicants are requesting tier-1 TOC incentives.

2. 11854 W. Vanowen Street | North Hollywood | 35 units

Alan Kleinman with 11854 Vanowen, LLC, applied for a five-story, 35-unit project at 11854 W. Vanowen Street near Tujunga Avenue in North Hollywood. The project is requesting tier-1 TOC incentives, and three of the units will be designated for extremely low-income housing.

The property was purchased for $1 million in 2017, and it is located in an Opportunity Zone in the San Fernando Valley.

3. 1349 N. Hobart Boulevard | East Hollywood | 29 units

Michael Eghbali with 1349 Hobart LLC applied for a project that calls for the demolition of a nine-unit apartment building at 1349 N. Hobart Boulevard to make way for a new 29-unit structure just south of Sunset Boulevard.

The building project is applying for TOC incentives to increase in height by two stories, and it’s also located in an Opportunity Zone.

4. 3117 S. Bagley Avenue | South Robertson | 16 units

Douglas Nili with Aby Holdings, LLC, filed plans to demolish a duplex at 3117 S. Bagley Avenue in South Robertson to construct a 16-unit apartment building with three units set aside for very low-income tenants.

The project is near the Palms neighborhood and both the 10 and 405 Freeways, and it also is seeking TOC incentives to increase the allowed height.

5. 610 N. Harvard Boulevard | Hollywood | 10 units

Hoon Do Hur with BH Main, LLC, filed plans to demolish a duplex at 610 N. Harvard Boulevard in Hollywood to make way for a 10-unit apartment building with one unit set aside for extremely low-income housing. The project is seeking tier-2 TOC incentives to decrease open space.

California Labor Secretary Julie A. Su and the Kenmore, a project that RDV failed to pay wages on (Credit: Google Maps)

California officials have ordered a City of Industry contractor to pay nearly $12 million in back wages and penalties to more than 1,000 employees who were cheated out of pay.

RDV Construction, a framing and drywall contractor, withheld worker pay at 35 construction sites across the Los Angeles area between 2014 and 2017, according to a citation from the Labor Commissioner’s Office. The citation is the largest wage-theft case ever brought against a private company, according to the L.A. Times.

Some of the projects on which RDV was accused of bilking workers include Canfield Development’s Kenmore project in Koreatown and Korda Group’s Mansfield project on Wilshire Boulevard.

The state did not say that the developers of any project that RDV worked on had any knowledge of the misconduct. RDV has appealed the state’s decision.

The state, which started its investigation in January 2017, found that RDV crews worked nine hours a day without proper breaks or overtime, then habitually were denied 10 to 25 percent of their wages. Often the company paid workers with checks that wouldn’t clear.

A large chunk of the $12 million payout — $5.4 million — is for failing to pay employees in a timely manner. There was also $1.6 million in minimum wage violations, $1.7 million for failing to provide breaks, and half a million dollars in lost overtime pay.

The violations took place before a state law passed in January 2018 that holds contractors liable for state violations by subcontractors, according to the Times. [LAT] – Dennis Lynch

Mohamed Hadid (Credit: Getty Images and iStock)

In Mohamed Hadid’s ongoing legal battle over his half-built Bel Air spec mansion, the developer clearly lost this round.

On Monday, the presiding judge in his civil case quashed subpoenas that Hadid had served on various neighbors and ordered him to pay nearly $10,000 in attorneys fees.

Hadid has been at the center of several cases surrounding his Strada Vecchia Road mansion. Separately, the city has already fined him over the 30,000-square-foot project, and in 2015, ordered him to demolish it. Neighbors then sued Hadid, and the city, hoping to speed up that order.

In October, the developer’s lawyers served subpoenas on seven neighbors in the Bel Air Homeowners Alliance and Bel-Air Association. The strategy was to gain access to communications between the groups and the four neighbors suing Hadid. Those four are: John and Judith Bedrosian, and Bibi and Joe Horacek.

But the seven people who were issued the subpoenas are not parties in either of the lawsuits.

During a hearing last month, Judge Craig Karlan said he “didn’t see anything discoverable” in the documents Hadid requested. “I see this as a real problem that would chill people from even speaking out in the future for fear that they would be dragged into litigation,” Karlan said.

In Santa Monica Superior Court on Monday, the judge ruled that Hadid will have to pay $7,060 to those seven individuals in attorneys fees, plus another $2,060 to the two neighborhood associations. In his ruling, Karlan called the subpoenas “overly broad.”

Russell Wolpert, an attorney representing the association members, said in his motion that the subpoenas were “motivated by a vengeful developer” who “wants to exact a toll on local residents whom he perceives were in some way responsible for reporting his illegal activity.”

The civil case against Hadid is still ongoing. As of last week, the dozen lawyers involved in the complex case were deliberating how and when to properly demolish parts of the illegal structure. Another hearing is set for Thursday.

While significant, the fines are about a third of what the neighbors were initially demanding, which was closer to $25,000, court records show.

Jeff Costell, one of Hadid’s attorneys, said he would file a motion requesting the communications directly from the neighbors.

“This is not a significant setback for us,” he said.

Jeff Bezos and the birthplace of Amazon at Bellevue, Washington (Credit: John L. Scott and Getty Images)

Before HQ2 or even HQ1, Amazon was headquartered in a 1,500-square-foot Craftsman home in the tony Seattle suburb of Bellevue. Now that house is for sale.

The owners of the three-bedroom house where Bezos famously started the trillion-dollar company in 1994 are asking $1.5 million for the keys to the landmark, according to the Seattle Times.

Bezos was only renting the home for a few months when he drew up articles of incorporation, and a later owner remodeled the 65-year-old house and attached garage in 2001, but that didn’t stop listing agent Pat Sullivan from shining a spotlight on its history with a fat arrow pointed at the garage door noting “The birthplace of Amazon.”

The last time the house went on the market in 2009, it sold for $620,000, or $720,000 in today’s dollars, according to the Times. Its current $1.5 million asking price is still well below the $2 million median home price in the area, as a surge of Amazon workers has helped boost Seattle-area property values.

Bezos, the world’s wealthiest man with $132 billion to his name, now owns a waterfront estate in nearby Medina valued at $76 million. In 2017, he dropped $13 million on a four-bedroom home adjoining his 12,000-square-foot Spanish-style mansion in Beverly Hills. [Seattle Times] — Alex Nitkin

Alexandria Real Estate purchased the Bristol 61 office campus in Culver City for $30 million. (Credit: The Swig Company)

Alexandria Real Estate Equities has purchased a four-building office campus called Bristol 61 in Culver City for $39.2 million.

The 4.9-acre campus at 6100-6160 Bristol Parkway includes 75,940 square feet of space, the Los Angeles Business Journal reported. Fund management firm Intercontinental Real Estate Corporation and investment firm The Swig Company were the sellers. The two firms spent the past four years renovating the property.

The campus last traded hands for $20.2 million in 2014, and was formerly known as Fox Hills Business Park.

Newmark Knight Frank represented the sellers, and Alexandria Real Estate represented itself in the transaction.

The Swig Company and Intercontinental Real Estate Corporation are also partners in the 407,915 square-foot New York Life building at 6300 Wilshire Boulevard in Miracle Mile. They purchased it for $148.5 million in 2016. Intercontinental also acquired the 338,000 square-foot Connexion Burbank complex for $125 million last year.

From its base in Pasadena, Alexandria Real Estate has secured some major deals on the East Coast. In October, the firm signed a deal to build a 550,000 square-foot life sciences tower in New York, about a week after it purchased a 175,000 square-foot property in Long Island for $75 million. [LABJ] – Gregory Cornfield

(Credit: iStock and Pixabay)

A new wave of inventory is putting a damper on rising U.S. home prices.

Price gains slowed in the fourth quarter amid a market that has created affordability challenges, Bloomberg reported. The median price for an existing single-family home was $257,600, a 4 percent increase from a year earlier, according to the National Association of Realtors. In the third quarter of 2018, the price rose 4.8 percent year over year.

“Home prices continued to rise in the vast majority of markets,” Lawrence Yun, NAR’s chief economist, said in the report. “But with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace.”

Prices rose in 92 percent of markets last quarter — but only 14 of the 178 metropolitan areas in the report had double-digit increases, the report said. That’s down from 18 areas in the third quarter.

Home sales have fallen while rising interest rates have exacerbated affordability concerns. Last year, affordability fell to the lowest since late 2008, as home-price gains continued to outpace wage growth. About 1.55 million homes were for sale at the end of December, which was a 6.2 percent increase from 2017.

Purchases of previously owned homes fell across all regions. The biggest dip was in the West, where sales tumbled 14 percent. Existing home sales in the Northeast were down 5.4 percent from a year ago. The median existing single-family home price in the Northeast was $286,000 in the fourth quarter, up 6.5 percent from a year ago. [Bloomberg] — Meenal Vamburkar

From left: Abraham Zackary, Jacob Zackary, and Shawn Zackary

Zackary Brothers is supersizing its proposed Westwood project.

The local developer has filed for approvals to build 60 units at a vacant lot on Westwood Boulevard, according to documents published with the Department of City Planning.

Earlier filings from 2015 and 2016 show the firm originally was planning on building 30 units, and later, 33 units.

Located at 1855 Westwood Boulevard, the proposed project would rise six stories and include six units dedicated for very low income residents. There would also be two levels of underground parking.

The brothers, acting through an LLC, bought the property for $4.9 million in September 2014, property records show.

It’s unclear from the filing whether the Zackary Brothers, a family-owned firm based in the Fashion District, is seeking to take advantage of the Transit Oriented Communities program. Their proposed project sits about a mile from the Westwood/Rancho Park Expo Line station, meaning it would qualify for Tier 4 incentives.

The firm did not immediately respond to requests for comment.

Last week, two other multifamily developers filed similar proposals to upsize their projects. In Westlake, Safco Capital Group is requesting approvals to build 77 units at 825 South Coronado Street, up from its previously approved 44. Meanwhile, Amoroso Companies bulked up its project in Carthay, adding 24 units to its seven-story development.

Both of the new filings were filed under the TOC umbrella.

Clockwise from top left: The Wharf Phase 2 in Washington D.C., Rainer Square in Seattle, Hudson’s Site  in Detroit, North Wynkoop in Denver, the Independent in Austin, and Winthrop Center in Boston.

What’s driving big — really big — development across the U.S.?

While there remains no single reason, massive projects are transforming skylines and communities in dozens of cities.

The Real Deal takes a look six of the biggest projects rising around the country, in places not named New York, Los Angeles, Chicago or Miami.

In Austin, Texas, which has been home to one of the hottest housing markets, Constructive Ventures, Aspen Heights Partners and CIM Group have teamed up on a 58-story, 370-unit condo tower. The trio is hoping the $300 million Jenga-like high-rise can seize on demand in a city where home sale prices hit all-time highs last year. And where Apple recently announced plans for a $1 billion corporate campus.

And while Seattle’s tech growth spurt has leveled off, it appears Amazon hasn’t gotten the memo. The area has added 55,000 new jobs in the last year alone, according to CNBC, thanks in part to hiring at the Everything Store.

Amazon will have a major role in one of the biggest development projects rising in the city, whose housing market had an impressive run of its own. The company has agreed to occupy all 722,000 square feet of office space in the under constrtuction Rainier Square, a new mixed-use tower being built by Wright Runstad & Company.

Revitalization efforts in growing cities like Denver and Washington, D.C., are also prompting greater investment, and attracting an influx of young professionals. In Detroit, Bedrock’s company’s 1.4 million-square-foot Hudson’s Site mixed-use tower now rising will take advantage of a robust tax incentive program from the city.

A rendering of the second phase of the Wharf redevelopment in Washington, D.C.

The Wharf, Phase 2 | Washington, D.C.

The second phase of Madison Marquette and PN Hoffman’s redevelopment at the southwest wharf will add 1.15 million square feet of mixed-use space to the mile-long waterfront along Washington Channel.

It will add three office buildings, two residential buildings and a hotel, along with retail and restaurant space. Law firm Williams & Connolly has already signed a lease to shift from its downtown headquarters to occupy 300,000 square feet in two of the two office buildings.

The project’s developers are seeking up to $760 million in financing for Phase 2 and will look to break ground this spring, according to Bisnow. Phase 2 is estimated to cost $1.2 billion.

The $2.5 billion first phase added 2.5 million square feet of office, apartment and condominium buildings, along with three hotels, retail space, music venues, a water taxi service and 10 acres of green space, according to Curbed. Together they create 3.5 million square feet of new space to the Wharf.

The latest Wharf redevelopment project is expected to be completed by 2022, as the area readies for Amazon’s new HQ 2 location in nearby Crystal City, Virginia.

A rendering of Winthrop Center in Boston, Massachusetts

Winthrop Center | Boston

At a planned 691 feet, Millennium Partners’ Winthrop Center tower will be the city’s fourth-tallest building. The 1.56 million-square-foot will have 420 luxury condominiums, along with 750,000 square feet of office, retail and dining space. The 53-story tower in Downtown will have an additional 12,000 square feet of public space.

MP Boston broke ground on Winthrop Center in late October with a fireworks-laden ceremony featuring Mayor Marty Walsh. Completion is expected in Spring 2022.

Millennium Partners, through subsidiary MP Boston, calls the $1.35 billion development “the largest private investment for a single project in Boston history.” That’s including the affordable housing component in Chinatown and other investments the firm agreed to undertake as conditions for the city’s $102 million sale of a parking garage to make way for the Winthrop Center. MP Boston will throw another $60 million toward local investments once all the condos sell.

Millennium Partners’ last completed project in Boston was Millennium Tower, which opened in 2016. The penthouse there sold for a Boston record $35 million that year. Developer John Rosenthal is also building a 1 million-square-foot, 300 condo mixed-use development called the Fenway Center, rising next to Fenway Park.

A rendering of the Hudson’s Site tower in Detroit, Michigan

Hudson’s Site | Detroit

The 62-story mixed-use tower known as Hudson’s Site is being developed by commercial real estate firm Bedrock, rising at the former Hudson’s department store. The 1.4 million-square-foot tower will be hotel-heavy, with potentially 500,000 square feet, comprising 1,000 rooms. There will also be a 250-unit residential component, more than 350,000 square feet of office space, a 1,250-seat event hall and 700 spaces for underground parking, according to Crain’s. The tower would be the tallest in Michigan. Construction is expected to take five years.

The development is the largest of four that Bedrock is planning Downtown, which together received $618 million tax incentives from Detroit. The area has seen a flood of new restaurants, bars and retail properties enter the market in the last few years.

Dan Gilbert formed Bedrock shortly after moving his Quicken Loans mortgage company to Detroit in 2010, according to Business Insider.

The project was estimated to cost around $900 million at the time of its groundbreaking in late 2017, but that likely has gone up since.

Local firm Hamilton Anderson Associates and Shop Architects of New York are the designers. The building is meant to evoke some of the Art Deco towers that dot the Motor City skyline.

A rendering of Rainer Square in Seattle, Washington

Rainier Square | Seattle

Wright Runstad & Company’s planned 58-story mixed-use tower could also be named Amazon Tower. The tech giant, already headquartered in the city, will lease the building’s 722,000 square feet of office space — enough for 3,500 employees — when construction is finished sometime next year.

Architecturally, Rainier Square’s sloping exterior designed by Minoru Yamasaki will contrast with the neighborhoring 41-story Rainier Tower. That development, which Yamasaki also designed, is known as the Beaver Building for its inverted cone base.

The $600 million Rainier Square will span 1.7 million square feet, and include 188 residential units on the upper floors, with parking for 1,000 cars. There will be 79,000 square feet of retail and amenity space and a separate 163-room hotel connecting Rainier Square with Rainier Tower.

The project will also include an innovative bit of engineering that uses a composite steel superstructure and a modular system of steel-plate walls, which is expected to significantly speed up construction time.

A rendering of the Independent in Austin, Texas

The Independent | Austin

The 58-story, 685-foot condominium tower is nearing completion, and when it’s done will become the tallest residential tower west of the Mississippi.

Constructive Ventures, Aspen Heights Partners and CIM Group are the developers. Construction cost for the 370-unit project was pegged at $300 million when project was announced in 2015. It was expected to have 950,000 square feet, with 13,000 square feet of ground-floor retail space, according to the Austin Business Journal.

The Independent has been referred to as the Jenga Tower for its distinctive look. Rhode: Partners is the architect firm. The units range in price from $400,000 to more than $3.5 million, according to Curbed.

A rendering of the North Wynkoop development in Denver, Colorado

North Wynkoop | Denver

Local developer Westfield Company’s 14-acre mixed-use megaproject is meant to transform a mostly industrial area in the northeast section with residential units, retail and office space, restaurants and a hotel. The city is already a popular destination for the millennial building their careers.

The low-slung project — encompassing three city blocks — is being billed as a revitalization effort at the entryway to the trendy River North Art District, or RiNo. A portion of the 500 residential units will be set aside as affordable. Works Progress Architecture is the lead firm.

The office space alone will total around 1 million square feet, and there will be artist studio and gallery space as well. The project is anchored by a 4,000-seat music venue.

It is being built in two phases, with the first part expected to wrap up in the fall.

Hanover House in Beverly Hills

A modernist mansion built by spec home developer-to-the-stars Roman James has relisted at a discount roughly six months after first hitting the market, The Real Deal has learned.

The 12,000-square-foot residence on Hanover Drive is now seeking $39 million, down about 13 percent from the original $45 million.

There are also new agents selling the property: Kurt Rappaport and Drew Meyers of Westside Estate Agency. Previously, Josh and Matt Altman of Douglas Elliman had the listing.

Hanover House dining room

Dubbed the “Hanover House,” the 0.6-acre property includes five bedrooms and eight bathrooms. Amenities include two swimming pools, a movie theater, bar, an office, tennis court and a handful of outdoor decks.

Roman James Design Build, the developer, completed the home last year after paying $8.5 million for the property in March 2015, records show.

The Hanover home is the latest project from the upscale builder, who broke a record in the neighborhood when he sold his 23,000-square-foot mansion to the creator of Minecraft for $70 million in 2014. Video game entrepreneur Markus Persson beat out power couple Beyoncé and Jay Z for the pad, which features Bentley pillows and a replica of James Dean’s motorcycle.

Hanover house bedroom balcony

It’s also one of the many relistings dominating the high-end market. In December, the seller of the “Shark house” — which features live sharks — dropped the price of the Beverly Hills spec home from $35 million to $29 million. To sweeten the deal, the seller also threw in a private jet membership.

Buyers in the luxury market have shown signs of hesitation in recent months amid mounting inventory and prices that have remained stubbornly high. In the fourth quarter, the number of sales in the sector closed dropped 7 percent year over year to 66 homes, according to a report from Douglas Elliman. Meanwhile, the median sales price of a home in the high-end market rose 10.6 percent to $9.9 million.

Governor Gavin Newsom

Governor Gavin Newsom wants to build 3.5 million homes across California over the next seven years. But there’s one glaring problem: the state doesn’t have enough land zoned for it.

California municipalities currently have enough land zoned to create 2.8 million new units of housing, according to a UCLA study first reported by the Los Angeles Times.

UCLA said the state would have to double or triple the land zoned for housing to meet the goal. That means Newsom will have to push local governments to create more buildable land by upzoning residential parcels and rezoning non-residential parcels. He said last month he plans to withhold state tax dollars if they don’t meet housing goals.

At his inauguration in January, Newsom touted his housing goals as part of his Marshall Plan for affordable housing, a reference to the $13 billion U.S. aid program that helped rebuild Europe following World War II.

Newsom’s plan includes $2 billion allocated in the state budget for housing and homelessness initiatives.

The new governor got some help from the state legislature and from Jerry Brown, his predecessor. In October, state lawmakers created a new law that requires local governments to zone for 100 percent of housing needs as projected by the state government. The bill built on an existing law that was rarely enforced, so it remains to be seen if it will be effective. [LAT] – Dennis Lynch

JLL CEO Christian Ulbrich (Credit: iStock)

JLL CEO Christian Ulbrich credited his firm’s growing focus on co-working and real estate technology investments for $4.9 billion in reported revenue in the fourth quarter, a 13 percent increase year over year.

The boost was driven in part by a 25 percent year-over-year increase in global leasing revenue for the Chicago-based real estate services giant, with a 34 percent spike in the Americas alone, Ulbrich said during an earnings call Tuesday.

Shares in JLL rose nearly 16 percent on the news, topping $170 per share for the first time since August.

“I can say for us that the flex-based [co-working] companies … have become an important client base for us, and so quite a significant proportion of that additional growth is coming from them,” Ulbrich said.

JLL has publicly predicted co-working spaces will make up 30 percent of corporate portfolios by 2030, as companies like WeWork and Knotel race for market dominance.

Ulbrich added Tuesday that JLL’s “high market share” in the rapidly-growing real estate tech sector was “another part of our growth.”

The firm capitalized on both factors at once last month when it announced its venture capital wing, JLL Spark, led a $5.2 million funding round for London-based office booking platform Hubble.

JLL Spark lined up seed or series-A investments in 10 different startups since June, when it announced it would devote $100 million to staying ahead of the exploding real estate technology sector. The fund also invested in real estate venture capital firms Metaprop and Navitas Capital as a limited partner.

JLL counted $276 million in net income last quarter, up from $208 million one year earlier. Its 2018 income was $563 million, compared to $426 million during 2017.

JLL is valued at $6.67 billion, second only to CBRE’s $15.9 billion market cap. Chicago-based Cushman & Wakefield is third, with a $3.6 billion valuation in the wake of its initial public offering last year.

Mayor Bill de Blasio, Assemblywoman Tremaine Wright, and Bedford-Stuyvesant, Brooklyn (Credit: Getty Images and Wikipedia)

White residents are being targeted walking home by the city’s Airbnb enforcers in Bedford-Stuyvesant, a state assembly member claimed this week.

The city’s Office of Special Enforcement has in recent months ramped up its efforts to close illegal Airbnb rentals across the city, after intense lobbying by the hotel industry and affordable housing advocates.

During a budget hearing in Albany on Monday, Assemblywoman Tremaine Wright alleged that members of the city agency had followed and harassed white constituents of her district, according to Crain’s. She didn’t offer further details.

“I have to say at this moment, white members of my community are followed home from the train station by your Office of Special Enforcement,” Wright said, according to the publication. “It is a problem. It is not fair. It’s discriminatory. The practice needs to stop.”

The claim prompted a response from Mayor Bill De Blasio who had just delivered a speech at the hearing, and said it was a “major concern.”

“That is the first time I’m hearing that. I want to take it very seriously,” he said.

Laws introduced by the city and state in recent years ban the rental of unoccupied homes for less than 30 days. Another city law that was expected to take effect this month and would force Airbnb to turn over the names of listing hosts, was blocked by a federal judge.

Across the city, short-term rentals believed to be Airbnbs have been shutdown. One of the largest raids occurred in November at the Atelier luxury residential condominium on the Far West Side, where city agents issued almost two dozen violations.

And in another lawsuit filed by the city last month, landlord Torkian Group was accused of conducting over 1,000 short term rental deals in 13 apartments, which generated $1.1 million in revenue. [Crain’s] — David Jeans

Johnson Development CEO Geordy Johnson and an aerial view of 4500 West Long Beach Avenue (Credit: Google Maps)

A developer based in South Carolina has filed plans to build an industrial warehouse in Central-Alameda, about 500 feet away from a residential area.

Johnson Development Associates is requesting approvals to demolish a collection of existing buildings and build a new 167,000-square-foot warehouse, according to documents published with the Department of City Planning.

If approved, the property would be used as storage for household goods.

Property records show an individual named Hector Lozano owns the six parcels, located at 4500 West Long Beach Avenue. The assemblage includes five industrial properties and one residential property.

The applicant — Johnson Development — is a subsidiary of the Johnson Group, based in South Carolina. The company, which has an office in El Segundo, builds industrial, multifamily, self-storage and commercial properties, according to its website.

Central-Alameda, located in South Los Angeles, is home to several industrial properties already. In December, one of the owners of a 256,000-square-foot warehouse on South Alameda Street filed plans to convert the property into a 118-unit multifamily complex. Tal Hassid, the CEO of a door manufacturing company, said in the filing that the project would cater to “artists in residence.”

Google CEO Sundar Pichai (Credit: Getty images and Google)

OK, Google. Tell me about the multibillion-dollar real estate investment you’re making this year.

The tech giant announced on Wednesday that it plans to spend more than $13 billion in data centers and offices across the U.S., including major expansions in 14 states.

Google CEO Sundar Pichai said in a blog post that the new data centers and offices will create more than 10,000 new construction jobs in Nebraska, Nevada, Ohio, Texas, Oklahoma, South Carolina and Virginia. By the end of the year, the company will have locations in 24 states and 13 data centers.

In the Midwest, it’s expanding in Chicago and Wisconsin, and building new data centers in Ohio and Nebraska. Google said it will also open its first data center in Nevada, expand in Washington, Oklahoma and South Carolina, as well as build a new office and data center in Texas and new office space in Massachusetts, the latter of which houses one of the largest Google hubs outside of the San Francisco Bay Area.

The announcement comes after Google invested $9 billion in 2018, including $2.5 billion spent on opening or expanding data centers in Alabama, Oregon, Tennessee, Virginia and Oklahoma.

In December, the company said it plans to invest $1 billion in a new 1.7 million-square-foot in New York City’s Hudson Square. There, Google plans to double the size of its more than 7,000-employee workforce. (And it follows its more $2.4 billion purchase of the Chelsea Market building in the city last year.)

In California, Pichai wrote that the technology company will continue redeveloping the Westside Pavilion and the Spruce Goose Hangar in the Los Angeles area.

The increasing demand for digital storage has pushed investment in the U.S. data center sector to record levels. In 2017, Northern Virginia, Dallas/Fort Worth and Chicago were the top data center markets in the country, according to CBRE. The demand for digital storage centers is expected to continue growing dramatically as driverless vehicles, artificial intelligence and other technological advances require more power supply.

The surge in construction of data centers in the Chicago area alone pushed the industry’s regional vacancy rate up to 11 percent from 2 percent the previous year, according to a report from September.

Russ Weiner and his Beverly Hills mansion (Credit: Pinterest and The Agency)

The brainchild behind Rockstar Energy Drink is having a hard time finding a real-life rockstar to buy his Beverly Hills mansion, adding yet another relisting to the luxury Los Angeles market.

Russ Weiner has chopped the price on his 12,000-square-foot mansion by $4 million, bringing its ask down to $36 million, Variety reported. It first hit the market nearly two years ago for $49 million.

Much like other properties in glitzy Beverly Hills, the massive estate is rich in Hollywood history. Actress Sela Ward, best known for her roles in “Sisters” and “CSI:NY,” owned the home before she sold it to Madonna. Beyonce and Jay-Z were rumored to have later rented the palatial home from Weiner, according to Variety.

Located on Sunset Boulevard, the French Normandy-style residence includes eight bedrooms and 14 bathrooms. There are also two detached guesthouses, a 60-foot long swimming pool, tennis court, home theater and gym.

Weiner extensively remodeled the place after spending $19 million to acquire the home in 2015, adding handmade custom cabinetry and smart-home automation.

Mauricio Umansky at the Agency has the listing.

Weiner, the son of polarizing radio talk show host Michael Savage, founded Rockstar in 2001. With an estimated net worth of $4.5 billion, according to Forbes, he’s also amassed a hefty real estate portfolio. In addition to the Beverly Hills mansion, he also owns an oceanfront home in Hermosa Beach, and two properties in South Florida. [Variety] — Natalie Hoberman

Deena Zimmerman (Credit: iStock)

After Illinois legalized medicinal marijuana in 2014, Deena Zimmerman traveled to Colorado to learn how the marijuana industry was intersecting with the real estate market.

The vice president at commercial brokerage SVN visited a town on the outskirts of the Denver metro area, a once-rundown place “where the tumbleweeds were rolling,” she said.

“Now it’s thriving,” Zimmerman said. “There’s cool apartments, cool retail. But cannabis came first.”

Gov. J.B. Pritzker already signaled his strong support for legalizing recreational marijuana and powerful House Speaker Mike Madigan says he is on board. While draft legislation has been proposed, the state Legislature has not formally taken up the measure.

What is clear, industry experts say, is that the law would be a boon to the real estate industry.

Legalized recreational weed would particularly benefit Chicago’s hot industrial market and it could help areas that have missed out on the city’s recent warehouse development and leasing boom. That is if the pitfalls of a nascent industry that’s still illegal at the federal level can be overcome.

“Industrial is really hot right now,” Zimmerman said. Legal marijuana “is going to to put it over the top.”

A new demand

Although recreational marijuana legislation is still in its infancy, Illinois lawmakers already released an outline of what a recreational marijuana industry could look like. In the proposal, possession of up to 30 grams of pot would be legal, local governments could opt out of the new law and landlords could restrict or ban the use or cultivation of marijuana on their properties.

Because the product cannot be transported over state lines, marijuana would have to be grown in-state. And it would have to be sold from dedicated retail storefronts. Where it can be grown and sold has yet to be determined, but that decision will play a huge role in a marijuana-related real estate market, sources said.

The Chicago-area industrial market is experiencing highs not seen in years. A new industry that needs ample room for growing and storing could contribute even more demand.

Tim McGraw

“I think there’s about to be a pretty big boom here,” said Tim McGraw, CEO of California-based Canna-hub, a development firm focused solely on the marijuana industry.

Industry players from around the country have taken notice.

McGraw founded Revolution Enterprises, one of the the first companies to receive a marijuana growing license for Illinois’ nascent medicinal program. He spent 38 years in the state, but left in 2016 for California, which legalized marijuana two years later. Property values have risen in some areas of Los Angeles County because of high demand from cannabis industry tenants and low supply of landlords willing to work with the industry.

McGraw saw an opening in the California market. There he has developed two “cannabis hubs,” or industrial parks specifically for marijuana growers. Canna-hub is one of only a few marijuana property developers in the country, he said.

Like California, Illinois has a large warehouse industry that will help determine where marijuana growers initially set up. Growers will likely be priced out of the hottest parts of the Chicago market, thanks to rent premiums, plus accessory costs like security and insurance.

In Denver, a third of the marijuana industry is within older Class B properties, white the rest is in the least in-demand Class C facilities, according to a 2017 CBRE study of the Denver market. None are in high-end, Class A buildings.

Chicago growers likely would put down roots outside the city to save money, market pros said. For his medical marijuana business, McGraw chose to open Revolution Enterprises’ grow facilities in Barry in southern Illinois, and a 75,000-square-foot growhouse just south of Peoria in Delavan, population 1,700. Cresco Labs, one of the biggest medical marijuana companies in the state, chose Joliet and Kankakee for its grow locations — towns much larger than Barry or Delevan but still a distance outside Chicago.

In addition to the high costs in a place like Chicago, McGraw added, “there’s typically more bureaucracy in a big city, so why would you want to deal with it?”

Who will cash in?

Local ordinances and zoning laws will also be major factor in determining where marijuana facilities can set up.

Chris Tecu

Pot operations will not be able to open up shop just anywhere, said Chris Tecu, a principal at Avison Young in Chicago who worked in Washington state around the time recreational marijuana was legalized there in 2012. Even more than market factors, local laws and zoning codes will dictate where the industry sets up, he said.

“In most states, grow houses are in heavily industrial areas,” Tecu said. “You go to Seattle, they are in down-and-dirty industrial parts of town.”

Cities and counties almost certainly will be able to opt out of any measures legalizing marijuana in Illinois, which will restrict where growers can set up. Even in the areas that do allow for the new industry, zoning laws likely will place limitations.

That means that a number of landlords could get really lucky. If they are in a town that allows for marijuana growing and if their property is correctly zoned, they could see huge demand, Tecu said.

Zimmerman added, “I think it’s an opportunity for these secondary industrial markets. More people will be paying attention to them now.”

Depending on how big Illinois’ marijuana business grows, demand could be fierce. It will likely benefit established real estate players who can accommodate growers from a legal and logistical standpoint, McGraw said.

That demand — and the fact that landlords are leasing to a company dealing in a product that the federal government still classifies as a controlled substance — means landlords can charge more to marijuana companies. McGraw said some landlords are able to get three times the rent they would normally charge.

In Colorado, marijuana-occupied industrial properties sold at a 25 percent premium over other comparable properties, according to a report in Pensions & Investment.

Given that industrial landlords can rent to marijuana growers at a premium then sell their property at a markup, industry experts sayinvestors will soon want in on the action. But McGraw said Illinois is unlikely to see much speculative marijuana-related development. That’s because the licensing and permitting process for growers is so cumbersome and bureaucratic, it’s hard to know which tenants will be looking for space, and when they will need it.

Who will get in the game?

Working with the marijuana industry will be enticing to brokers and developers, but not everyone is on board for what has historically operated as an all-cash business.

The finances are changing, but the drug’s status on the federal level remains too daunting for some traditional investors.

“The institutional guys, most won’t touch legal or medical marijuana,” Tecu said. “If I’m head of leasing, I’m not putting my neck on the line to lease to someone making a Schedule 1 narcotic. There’s just too much risk.”

When helping her medical marijuana industry clients find either industrial or retail space, Zimmerman said landlords refuse about 90 percent of the time. She said they are deterred by the all-cash nature of the business. They are also concerned about skeptical neighbors and local politicians who might not approve.

“There is that stigma that we’re going to see for a bit,” she said.

But if traditional lenders won’t get in the game, there are others who will.

Real estate investment trusts have become an increasingly big player in the marijuana-related business. And in 2017, the country’s lone publicly-traded marijuana REIT, Innovative Industrial Properties, was the top-performing REIT. It earned a 117-percent return over that time.

In late December, Innovative Industrial acquired its first property in Illinois, paying $19 million for Revolution Enterprises’ facility in Barry. The REIT will invest $6 million into the facility as Revolution eyes an expansion.

California’s massive marijuana industry is drawing a number of new and institutional players to get in the game. In August, Beverly Hills-based Inception Companies announced the launch of a $50 million REIT aimed at the marijuana industry. Pelorus Equity Group, a Newport Beach-based investment firm, in September launched a $100 million fund targeting marijuana-related real estate ventures.

With Illinois apparently on the cusp of legalizing recreational marijuana, landlords and real estate investors should start thinking about their game plan, Zimmerman said.

“I think owners should get on board, because space is going to be at a premium,” she said. “You can really make a premium on this, because that’s what it’s going to cost.”

From left: Los Angeles and Long Beach ranked among the most stable places in terms of cost of living the past decade, according to SmartAsset (Credit: Wikipedia)

Los Angeles, Long Beach and Orange County are among the places offering the most -stable rates for cost of living in California, a new report shows.

While Southern California may be home to some of the most expensive rents in the country, residents’ purchasing power has remained about the same over the span of the last decade, according to financial tech firm SmartAsset.

Among eight cities or regions surveyed, the combined L.A. and Long Beach area ranked fourth on the list with a 1.2-percent average change to the cost of living. Orange County tied with Sacramento with a 0.8-percent average change.

By contrast, San Francisco’s average change in cost of living was 3.2 percent, while purchasing power dropped by 4.5 percent. Bakersfield topped the list as “most stable” in the state, with the lowest average change in cost of living at 0.6 percent.

SmartAsset, a New York City-based financial advisory firm, calculated the cost of living for each area by examining factors such as changes in prices for basic goods, rates of inflation, unemployment, wage growth, and average rent.

Rent prices in Los Angeles rose almost 7 percent to $2,461 per month in 2018 due to persistent demand and low inventory.

Nearly two-thirds of employers surveyed by USC and the L.A. Business Council two years ago said they had reconsidered the cost of living when negotiating packages for top-level recruits to reflect higher-than-expected prices. But real estate professionals in California also said they had not seen the mass exodus that had been anticipated after changes to the federal tax code.

Jill Schwartz (Credit: iStock and Jill Schwartz Group)

Agent churn and broker poaching are commonplace in real estate. But one former Compass agent is suing the brokerage over more conspiratorial allegations. Jill Schwarz filed a lawsuit against Compass and three former team members, accusing them of breaking agreements and stealing her listings.

Schwartz, team leader of the Jill Schwartz Group in the Washington D.C. area, also alleged that Compass failed to support her by keeping the team members and by not helping her get the commissions she says she’s owed. The team members named in the suit are Ray Ferrara, Alexandra Thomas Schwartz and Danielle Spira, Inman reported.

“The Defendants acted in concert and as part of a coordinated plan, motivated by greed and self-interest, and in direct contravention of their duty of loyalty, and their duty to use their best efforts on behalf of Plaintiff,” the complaint said.

Schwartz alleges Compass owes her commissions on nine properties ranging in value between $835,000 to more than $5 million.

The lawsuit further accuses the team members of listing themselves as agents in jurisdictions where they weren’t licensed — and that the brokerage ignored any wrongdoing. The complaint is asking for a jury trial and alleges civic conspiracy, breach of contract, unjust enrichment, misappropriation of trade secrets and violation of the Lanham Act, which protects trademarks.

Schwartz was with Compass from August 2016 to October 2018, but is now an agent at Keller Williams Capital Properties in Bethesda, Maryland. Ferrara, Thomas Schwartz and Spira joined Compass’ Jill Schwartz Group as team members in 2017, according to the complaint.

As part of joining the team, members agreed to work on Schwartz’s behalf — including using her custom digital intellectual property assets, including branded marketing material; to include her name as the team leader on all contracts; and to owe her a duty of loyalty, the complaint said. In exchange, Schwartz’s complaint said she provided them office space, resources and customer leads. But some time in 2018, she alleges the team members, “apparently unhappy or unwilling to share their commissions with Plaintiff” — entered into buyer agency agreements and sales contracts without putting her name on the contracts. They allegedly withheld contracts from her and entered into agreements with developers with whom Schwartz had pre-existing agreements, the report said.

Then, in August 2018, the complaint alleges that Thomas Schwartz downloaded Schwartz’s database of contacts without permission — and later told Schwartz the three members would be creating their own team.

“Compass management in effect condoned the conduct of the Defendant team members and failed to assist Plaintiff in putting a stop to it,” the suit said. “Motivated by its own greed and self-interest, Compass supported the Defendant team members rather than Plaintiff. Plaintiff provided Compass with detailed information as to the wrongdoing that the Defendant team members had committed.” [Inman] — Meenal Vamburkar

El Rancho Tajiguas

A sweeping 3,500-acre coastal ranch outside Santa Barbara with two mansions and a working farm is on the market for $110 million.

El Rancho Tajiguas, a working ranch that hugs the Pacific Coast between Santa Barbara and Point Concepcion, is hitting the market for the first time since owner Mansour Ojjeh, a French-Saudi businessman, purchased the spread almost four decades ago, according to the Wall Street Journal.

The ranch’s two Spanish-style villas — which are on opposite sides of the expansive property — are 10,000 square feet and 12,000 square feet and were built in 2014 and 2015. It took about five years to secure approvals for the homes, according to listing agents Marco Naggar and Aaron Kirman, both with Compass. Both homes have helipads, five bedrooms, wine cellars, and guesthouses.

The property operates as a ranch and the sale would include 120 cows there. A farm on the property grows avocados and persimmon. There are around 20 other buildings on the property for ranch staff.

It appears to be Kirman and Naggar’s largest exclusive listings, but not the most expensive. Kirman has a dozen exclusive listings with higher asking prices, including the $1 billion asking price on the “Mountain of Beverly Hills.”

Naggar told the Journal that Ojjeh is selling because he’s busy with his businesses and doesn’t visit often.

Ojjeh owns part of the Swiss-based company TAG Group and is a shareholder in the British supercar maker McLaren. He spent three decades running McLaren’s Formula One racing team before he resigned last year. [WSJ] – Dennis Lynch

(Credit: iStock)

Amid the recent nationwide housing market slowdown, there has been a jump in demand for servicing mortgage payments.

Mortgage servicers — the first to deal with troubled mortgages — were very profitable after the last recession, but struggled as the housing market improved. Now, things are beginning to shift again.

Sales of mortgage servicing rights tallied $600 billion in loans backed by Fannie Mae, Freddie Mac and Ginnie Mae, according to the Wall Street Journal. That amounted to a 14 percent rise compared to 2017 in loans from those government sponsored enterprises.

Mortgage servicers are responsible for handling borrower’s mortgage payments and for making sure that taxes and insurance are paid.

Some of the largest private servicers such as West Palm Beach, Florida-based Ocwen have also faced lawsuits over mishandling of mortgage payments and improperly foreclosing on homes.

Banks and non-banks have become more interested in that line of business. Smaller lenders are looking to sell those rights because they don’t have enough capital to hold the mortgages during a downturn, the Journal reported.

One company, New Residential Investment, just reported it bought $114 billion of servicing rights of loans, according to the Journal. New Residential, a real estate investment trust managed by Fortress Investment Group, provided the news during its fourth quarter earnings release Tuesday.

A number of recent data points and reports have signaled that the post-recession housing boom may be coming to an end. Highlighting this point, in the third quarter of 2018, home flipping was was at its lowest levels since the first quarter of 2015.

[WSJ] — Keith Larsen