Architect Frank Gehry and renderings of The Grand in Downtown Los Angeles, (Credit: Related Companies)

A massive $1-billion development designed by Frank Gehry is finally coming to Downtown Los Angeles.

Construction of  The Grand, a mixed-use project with 39 stories and more than 400 condos and apartments, is underway after 15 years of planning and more than a decade of anticipation. Developers Related Companies and CORE USA expect the two towers to be complete by the fall of 2021, the Commercial Observer reported.

The development adds a 20-story Equinox hotel with 309 rooms, and a 39-story residential tower with about 100 condos and 300 apartments – 80 of which will be designated as affordable housing – to Downtown. Plans also call for 176,000 square feet of retail space, 12,000 square feet of restaurant space, a movie theatre complex, and a public plaza.

The site at 100 S. Grand Avenue was home to the “tinker-toy” parking structure, which was recently demolished. The new towers will face Gehry’s famous Disney Concert Hall across the street.

The project is funded by a $200 million bond from the city, a $290-million investment from CORE USA, and a $630-million construction loan from Deutsche Bank.

The developers said the project is part of the biggest development boom in Los Angeles in nearly a century, with $28.5 billion invested in downtown alone between 1995 and 2017.

AECOM was hired last year as the construction manager.

Related also completed the 12-acre Grand Park nearby at 200 N. Grand Avenue in 2012, and opened the 271-unit Emerson tower at 225 S. Grand Avenue in 2014. [CO] – Gregory Cornfield

(Credit: Wikipedia and Pixabay)

Mortgage originations fell last year, while new auto loans hit all-time highs, according to a report by the Federal Reserve Bank of New York released on Tuesday.

New mortgage loans for 2018 were at the lowest level since 2014. Mortgage originations in the fourth quarter fell to $401.5 billion from $445.3 billion in the previous quarter, the lowest volume since the first quarter of 2016 in nominal terms, the Wall Street Journal reported. New auto loans totaled $584 billion, the highest volume on record.

The dip in new mortgages could be due to the recent slowdown in housing markets, after years of acceleration. The market is expected to keep cooling in 2019, as higher rates and steep prices deter buyers. Meanwhile, auto sales have continued their strong growth since the recession, and auto lending has been driven by borrowers with good credit scores.

The New York Fed’s quarterly report on household debt and credit is based on data from the credit-ratings firm Equifax.

Overall U.S. household debt rose to $13.54 trillion in the fourth quarter, the 18th consecutive increase and $869 billion above its previous 2008 peak. Student and auto loans are seen as the main drivers of the rise in household debt since 2013.

At the same time, Americans appear to be keeping up with their payments despite the higher debt loads. In the fourth quarter 1.06 percent of mortgage balances were overdue by 90 days or more, down from 8.89 percent in the first quarter of 2010. [WSJ] — Kevin Sun

Chris Graham, Managing Director for Blackstone’s LA outfit, with 27200 Tourney Road and 249-269 LaFayette Park Place

Blackstone Group has sold two Los Angeles properties — an apartment complex in Westlake and an office building in Santa Clarita — for a combined $113.6 million in separate deals. The private equity giant has been an active player in L.A. real estate, and in 2017, had unloaded several properties in the area.

The larger of the two most recent properties is a 268-unit apartment complex at 249-269 LaFayette Park Place in Westlake. Blackstone sold it for $71.6 million to an entity tied to Roberts Companies, a multifamily owner and manager based in Santa Monica. Westlake has seen considerable investment over the last cycle.

Roberts Companies secured a $41.5 million loan from JPMorgan for the purchase. It’s the priciest acquisition the firm has made in L.A. in the last year. In June, it paid $7.7 million for a 15-unit apartment building in Brentwood.

Blackstone sold the second property, a 210,000-square-foot building in Santa Clarita’s Valencia neighborhood, for $42 million. The buyer of the property at at 27200 Tourney Road is an entity tied to Alex Ghassemieh, of the West Hollywood-based firm Atlantic Pearl Investments. The company is behind the Mr. C Beverly Hills condo development.

Blackstone went on a selling spree in 2017, unloading more than $1.2 billion worth of assets in the first half of the year alone. Most of those properties were owned by Equity Office Partners, a firm Blackstone acquired in a leveraged buyout in 2007.

The firm has been buying in L.A., too. A year ago it paid $42 million for a three-building distribution center in the City of Commerce.

Anti Amazon graffiti displayed in the Long Island City (Credit: Getty Images)

Leaving a $3 billion incentive package on the table, Amazon has decided against coming to New York City.

The company told the New York Times that it won’t build a new campus in Queens. The decision follows reports last week that Amazon was reconsidering its selection of New York, amid fierce political opposition. Much of the blowback sprung from the $3 billion state and city incentive offered to the company to come to the city.

“After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens,” the company said in a statement. “For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term. While polls show that 70 percent of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.” — Kathryn Brenzel 

The pool at the Landing at Long Beach

Friendly Franchisees Corp. acquired a 206-unit apartment complex in Long Beach.

The Landing at Long Beach, at 1613 Ximeno Avenue, has 18 two-story buildings and spans about nine acres. It has one- and two-bedroom units. Amenities include a swimming pool, lighted tennis court, and barbeque areas.

FFC, which invests in restaurant franchises along with apartment buildings, secured a $43.1 million loan for the purchase of the Landing at Long Beach. The seller was Western National Group, an Irvine firm that paid $46 million for the complex in 2012.

Western National was one of state’s largest donors to groups that fought Proposition 10, a November ballot measure that would have opened up the possibility for new rent control measures statewide.

The complex is in the Circle Area neighborhood of Long Beach, removed from Downtown Long Beach, where developers have concentrated their attention. In the last few months, plans have emerged or moved forward for large projects in the area, including a 157-unit project by Anastasi Development Company proposed last month, a 429-key hotel project with 30 stories by American Life LLC, and a 407-unit complex by Raintree Partners.

Steven Mnuchin and Nancy Pelosi (Credit: Getty Images)

The Trump administration may bypass Congress in its effort to privatize Fannie Mae and Freddie Mac, which have been in government “conservatorship” for a decade.

Treasury secretary Steven Mnuchin, who previously sought support from Democrats in Congress to privatize the mortgage giants, is now working on a set of proposals to do so unilaterally, sources told the Financial Times.

“They want bipartisan support, but they know that is going to be difficult, especially with so many Democrats running for president,” one source said. “But there are plenty of things they can do without Congress giving its support.”

Efforts to overhaul the country’s two largest mortgage guarantors have been in limbo for years, as lawmakers argue over how to remove them from government control while ensuring that they underwrite loans for low-income households, all while protecting American taxpayers.

One way of bypassing Congress, which would require the backing of the Federal Housing Finance Agency, would be to simply recapitalize the two institutions and allow them to enter the private market as-is. The administration’s choice to lead the FHFA, Mark Calabria, will testify in front of Congress on Thursday.

Since 2012, a policy known as the “net worth sweep” has required that Fannie and Freddie return all their profits to the Treasury. Investors argue that ending this policy would give the entities sufficient capital buffers to weather a major financial storm.

Another option would be not to privatize the entities at all, but to recapitalize them under government control and shrink their scope, a move that would likely anger shareholders banking on big returns from privatization.

Many observers believe this administration is no more likely to succeed in privatizing the mortgage giants than lawmakers have been over the past decade.

“Any administrative effort to remove Fannie Mae and Freddie Mac from conservatorship without legislation falls short on a fundamental goal of housing finance reform,” said Ed DeMarco, president of the Housing Policy Council and former head of the FHFA. [FT] — Kevin Sun

Victor Coleman and a rending of Maxwell (Credit: Hudson Pacific Properties)

Despite an enviable list of tenants gearing up to lease its studio and office space, Hudson Pacific Properties saw its earnings drop by half in the fourth quarter.

There were some bright spots. The real estate investment trust said in an earnings call that it signed 75 new and renewal leases in the quarter, combining to 807,400 square feet. Those deals include Technicolor’s renewal in Hollywood, a Nutanix lease in San Jose, a Nestle lease in Seattle and a Knotel lease in San Francisco.

But net income in the quarter dropped 50 percent to $15.9 million, and funds from operations fell slightly to $78.8 million.The quarterly earnings were largely in line with analysts’ expectations.

Revenue in the fourth quarter grew 4.8 percent to $198.4 million, largely due to an increase in rental revenue from its properties in San Francisco and Los Angeles.

Victor Coleman, Hudson Pacific’s CEO and chairman, explained the results by saying that 2018 was “all about setting the stage for the company’s next stages of growth.” In 2019, the company will focus on a mix of internal and external growth, he said, as a “tremendous amount of cash” comes in from leases that were executed at year’s end.

Hudson Pacific’s stock price, which has been on the upswing the past month, rose 7 cents to $33.33 a share on the earnings announcement. Coleman said Thursday that the company had recently bought back $50 million worth of its outstanding stock.

Net income for all of 2018 was $98 million, a 45 percent hike over 2017, while funds from operation dropped 5.5 percent to $292.9 million. Revenue remained largely stagnant, growing less than 1 percent to $728.4 million.

Much of the yearly spike can be attributed to double-digit rent growth in Hollywood, where Hudson Pacific owns multiple studios and office buildings, said Arthur Suazo, executive vice president of leasing. “Hollywood is a standout,” he said.

In L.A., the firm’s headquarters, Hudson Pacific closed some big deals in the first few months of the 2019. The firm signed Google to a 14-year lease at One Westside, formerly known as Westside Pavilion, starting in 2022. It also inked a 12-year deal with WeWork for part of its Maxwell project, which Coleman confirmed will be occupied by two enterprise tenants.

Coleman said he expects “rent growth momentum” throughout 2019 as the demand from media and nearby tech companies continues to grow.

“I think it’s going to be pretty surprising the amount of cash we’re going to have in the company in the next 24 months,” Coleman said.

Ventus Group Executives Scott Gale and John Booty

A new sprawling complex planned for a site near the University of Southern California is making its way through the approvals process, whether opponents like it or not.

On Thursday, the Los Angeles Planning Commission threw its support behind the Fig, a a $300 million mixed-use complex set to bring hotel rooms, student housing, restaurants and shops to South L.A., the Los Angeles Times reported. It still needs approval from the City Council to move forward.

Located on a 4.4-acre site, the proposed project on Figueroa Street would rise across the street from the Banc of California Stadium and near the University of Southern California’s campus. The project would include a cluster of seven-story buildings featuring a 298-room hotel, 200 units of student housing, 200 apartments, office, restaurants and retail space.

Ventus Group, led by Scott Gale and former USC quarterback John David Booty, is developing the Fig. As of January 2018, the firm was looking for a joint venture partner for the sprawling project.

Critics claim the project would increase unaffordability in the area, as it would displace 32 apartments that fall under the Rent Stabilization Ordinance. A spokesperson for the developer countered that statement by saying that Ventus is building 82 units that will be set aside for low income housing.

Opponents also raised concerns about the hotel portion, which city commissioners say could be subsidized with taxpayers dollars. Last summer, City Council voted to hire consultants to analyze how subsidies, or other financial assistance, could help the project move forward in anticipation of the 2028 Olympic Games.

The project would largely complement USC Village, a $700 million mixed-use development to make its way to the area recently. USC Village, which spans 1.2 million square feet, opened its doors in 2017 after three years of construction. [LAT] — Natalie Hoberman 

Bruce Flatt and Manhattan West

Brookfield Asset Management, which gobbled up Forest City Realty Trust, General Growth Properties and Kushner Companies’ 666 Fifth Avenue is en route to becoming New York’s largest commercial landlord, had a record year in 2018.

The Toronto-based alternative asset manager generated $7.5 billion of net income last year, a record for the firm, which reported its year-end results on Thursday. Last year, Brookfield’s net income was about $4.6 billion, marking a 65 percent increase in net income for 2018.

Meanwhile, funds from operations came in at $4.4 billion for the year, $1.8 billion of which came from the firm’s real estate segment. Overall, FFO was up 16 percent from the year prior. Brookfield’s FFO could have been higher, if “not for the impact of the year end volatility on our financial assets, much of which has reversed in the first quarter following the market recovery,” the firm said.

Last year, the firm’s real estate arm, Brookfield Property Partners, also gobbled up two real estate investment trusts. After buying mall REIT GGP for $15 billion, Brookfield said it wants to turn many of those malls into mixed-use “mini cities.”

And Brookfield’s $6.8 billion acquisition of Forest City Realty Trust, which officially finished in December, cemented Brookfield as the largest commercial landlord in New York City.

Also in New York, last year Brookfield jumped in on some notable development and redevelopment projects, including acquiring the ground lease at Kushner Companies’ 666 Fifth Avenue office building, with the intent to overhaul it. Last year the firm also bought a seven-building development site in Mott Haven for $165 million, which will be the site of a megaproject spanning 1.3 million square feet.

Brookfield recently closed its $15 billion real estate fund, its largest to date, the firm said in its earnings release. Brookfield ended the year with $34 billion of liquidity to invest, after investing or committing $35 billion.

And as for its outlook for the future, should the U.S. fall into a recession?

“We’re not compelled to invest the cash we have,” CEO Bruce Flatt said on an earnings call. “It’s time to be wary, but we’re optimistic.”

— Kathryn Brenzel contributed reporting.

LMU President Timothy Law Snyder and renderings of the planned dorms

Facing a swelling student body, Loyola Marymount University is planning to build two student-housing buildings with more than 600 total beds on its campus in Westchester Bluffs.

The university hopes to start construction later this year on the four-story structures, which will house freshman and sophomore students, UrbanizeLA reported. The buildings will replace two existing one-story dormitories at 1 S. LMU Drive in Westchester.

The current buildings will be demolished in May, and the project is expected to be complete in the second half of 2020. It is funded by $90 million in “green bonds,” which LMU sold through the California Education Facilities Authority.

LMU’s newspaper, The Loyolan, reported that new dorms are needed for larger incoming classes. In August, the largest class in university history moved onto campus, according to the report. The university also started placing students in off-campus locations.

Architecture firm Steinberg Hart is designing the new dorms.

Other universities in Southern California are also working on housing solutions for increasing numbers of students. In the past year, developers announced a 16-story project for up to 462 students near UCLA; Southwestern Law restarted a 133-unit dorm project in Koreatown; a 128-unit project is set to rise near Cal State Northridge; and USC filed for a 79-unit building.

LMU also leases 50,000 square feet for its School of Film and Television at an office campus at 12105 and 12126 W. Waterfront Drive, which is now for sale. [Urbanize] – Gregory Cornfield

Redfin’s Glenn Kelman (Credit: Redfin)

Redfin’s losses widened to $42 million in 2018, as the discount brokerage invested heavily in direct advertising to fuel its growth.

Despite the slowing housing market, the Seattle-based firm said Thursday that its revenue soared 32 percent year over year in 2018 to $486.9 million.

“We believe the housing market is getting stronger,” CEO Glenn Kelman said during an investor call on Thursday. “Despite regional setbacks — and the many federal workers in the Washington, D.C. area who spent January waiting for a paycheck — homebuyers seem more confident now than they did during the second half of 2018.”

On a quarterly basis, Redfin’s losses widened to $12.2 million during the fourth quarter, compared to $1.8 million in the prior-year period. However, Redfin’s revenue rose 30 percent to $124.1 million.

Redfin projected a net loss between $69.2 million and $67.8 million for the first quarter of 2019 (compared to $36.4 million during 2018’s first quarter.) “Our 2019 ad campaign will increase this year’s losses,” Kelman said. “The ads should accelerate 2019 revenue growth and contribute to profits by 2021.”

During an earnings call, CEO Glenn Kelman said the company is “mainlining” its Redfin Now program, which offers sellers an instant offer to purchase their home, despite fewer deals in late 2018. “During the fourth quarter, a worrisome end-of-year market limited the number of homes we bought and the number we sold.”

Redfin said its discount commission model saved homebuyers and sellers $31 million during the fourth quarter, and $154 million for the full year, compared to the traditional 2.5 percent commission.

Earlier this week, Redfin announced its expansion into Canada, specifically in Vancouver and Toronto. Kelman cited the massive opportunity there, given home prices in those markets and Canada’s lack of a major national real estate portal. “Vancouver and Toronto are big, juicy burgers,” he said.

“We’re excited to get to markets that are lucrative and tasty,” he said. “There’s not a national website that shows the price of homes that are sold — which is what every real estate consumer wants.”

Clockwise from top left: Amazon cancels HQ2 plans for Long Island City, Google plans multibillion-dollar, cross-country real estate investment, Sears plans to downsize, focus on tools and appliances post-bankruptcy and Simon Property Group teams up with a cannabis oil company to open 108 shops.

Amid opposition, Amazon says ‘adios’ to LIC site for HQ2
So long, Big Apple. Amazon has scrapped its plans to build a new campus in Long Island City, Queens — a decision it attributed to political opposition. New York lawmakers, including Sen. Michael Gianaris and Councilman Jimmy Van Bramer, both of Queens, opposed the $3 billion incentive package the technology giant had been set to receive. Critics also took issue with the Seattle-based company’s business practices and the possibility of displacement, among other concerns. While some celebrated the decision, which came a week after reports surfaced of Amazon having second thoughts, others excoriated those they blamed for forcing a coveted tenant out of town. Gov. Andrew Cuomo, the Real Estate Board of New York and others lamented Amazon’s about face, with Cuomo blaming politicians with “narrow political interests” for the reversal. [TRD]

Google plans $13B in cross-country real estate investment
Despite Amazon’s ongoing HQ2 drama, fellow technology industry titan Google is planning to invest more than $13 billion in data centers and offices across the country, CEO Sundar Pichai wrote in a blog post. The investment will include expansions in 14 states and is expected to create more than 10,000 new construction jobs, Pichai said. Google is slated to have locations in two dozen states by the end of 2019. The company, a unit of the Alphabet conglomerate, spent approximately $2.5 billion in 2018 opening or expanding data centers in Alabama, Oklahoma, Oregon, Tennessee and Virginia. Google, which paid $2.5 billion in cash last year to acquire the Chelsea Market building in Manhattan, is also planning to invest $1 billion in a new campus in the city. [TRD]

Sears to downsize, focus on tools and appliances post-bankruptcy
The storied retailer plans to sell off or downsize some of its remaining 425 stores after escaping liquidation in bankruptcy court, the Wall Street Journal reported. Sears, which filed for bankruptcy in October, will stop selling clothing and focus instead on tools and appliances — one of the areas that generates the most revenue for the company. Sears also plans to open some smaller stores, according to the outlet. Chairman Edward Lampert said he felt the company would “still have enough of a critical mass,” despite the changes. His hedge fund ESL Investments successfully bid $5.2 billion for Sears’ assets in January. [TRD]

Simon Property Group, cannabis oil company to open 108 shops
Riding high from a record fourth quarter, mall industry giant Simon Property Group is now planning to open 108 shops that sell cannabis extract cannabidiol-infused products in its malls, CNBC reported. The mall owner is teaming up with Green Growth Brands to open the shops, the first of which will open in March, the two companies said. “The GGB shopping experience is exactly the type of innovation our customers want and expect from us,” said a statement from John Rulli, president of Simon Malls. Long Island’s Roosevelt Field Mall Mall and Houston’s Galleria are among the shopping centers that will host the new shops after the first opens its doors at the Castleton Square Mall in Indianapolis next month. [TRD]

JLL CEO cites co-working, tech investments for revenue boost
Focusing on co-working is paying off for Chicago-based JLL. The real estate services giant reported revenue of $4.9 billion in the fourth quarter of last year — 13 percent higher than the same quarter in 2017. CEO Christian Ulbrich attributed the jump to co-working and real estate technology investments. “I can say for us that the flex-based [coworking] 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 on an earnings call. JLL is currently valued at $6.67 billion. [TRD]

MAJOR MARKET HIGHLIGHTS

HUD administrator moves into NYC public housing complex
The regional administrator for the U.S. Department of Housing and Urban Development is temporarily moving into a public housing complex in New York City. Lynne Patton, a former event planner, plans to live at the Patterson Houses in the Bronx to learn more about quality-of-life issues that New York City Housing Authority residents have been facing, from moldy walls to leaky pipes. HUD recently appointed a federal monitor to oversee the agency as it carries out improvements. “The goal of this move-in is to make NYCHA very aware of what is happening,” Patton said. “To make the President of the United States very aware of what is happening here in his own hometown.” [TRD]

Chicago sees lowest housing supply level since at least 2007
The Windy City had fewer homes on the market on Feb. 2 than it has since at least 2007, Crain’s reported, citing data from the Chicago Association of Realtors. According to the data, 3,041 homes were up for sale that day — a 14 percent decline from the same date the previous year. The numbers most likely came as no surprise for experts who have been attributing increased home prices and decreased home sales in Chicago to low inventory. Property tax hikes, underwater mortgages and overbuilding are among the factors that have contributed to the inventory declines, the outlet reported. [TRD]

Tommy Hilfiger, partners sell Miami Beach hotel for $103M
An Art Deco-hotel in Miami Beach owned by Tommy Hilfiger and the Dogus Group has sold for $103 million. A partnership formed by New York-based developer Michael Shvo, the Bilgili Group and Deutsche Finance Group bought the 83-room Raleigh Hotel, which closed its doors after Hurricane Irma hit in 2017. Hilfiger called the deal “an offer we just could not refuse.” Shvo, meanwhile, said he planned to “[bring] about [the hotel’s] next renaissance” and called it “a nostalgic icon and a symbol of twenty-first century style and luxury.” Hilfiger’s group shelled out $67.5 million for the property back in 2014. [TRD]

Tyra Banks’ ‘Modelland’ amusement park set for Santa Monica mall
“America’s Next Top Model” creator Tyra Banks is bringing a model-themed amusement park to an outdoor mall in Santa Monica. The 21,000-square-foot park known as Modelland is slated to open at Santa Monica Place some point this year, WWD reported. The permanent destination is expected to offer shopping, entertainment and unspecified interactive experiences. Banks told WWD that Modelland, which takes its name from a book that she wrote, has been in the works for a decade. A children’s museum will also be opening at the mall this year. [TRD]

Subterranean Las Vegas home built in the 1970s seeks $18M
An underground mansion has hit the market for $18 million in Las Vegas. The 15,000-square-foot home, built in the 1970s by former Avon executive and underground living enthusiast Girard Henderson, has a guest house, a pool and a front yard with trees — all of which are below the surface. Henderson’s wife built an additional above-ground home at the property in 1983, after Henderson passed away. Listing agent Stephan LaForge of Berkshire Hathaway said there has been “a lot of interest in the sense that people want to look at it,” Time reported. “It’s like an attraction, like going to Disneyland,” he said. [TRD]

“Birthplace of Amazon” in Seattle hits market for $1.5M
Jeff Bezos may have turned his back on New York City, but the home where Amazon was formed has now been listed by its current owners for $1.5 million, the Seattle Times reported. Bezos was renting the 1,500-square-foot, three-bedroom home in the Seattle suburb of Bellevue when he launched Amazon back in 1994. The home’s listing agent, Pat Sullivan, is marketing it as the “birthplace of Amazon.” The house previously sold for $620,000 in 2009, the outlet reported. Bezos currently owns a $76 million waterfront estate in Medina, Washington, and he spent $13 million in 2017 on a Beverly Hills mansion. [TRD]

Knotel CEO Amol Sarva and 429 Santa Monica Boulevard

Shared office space company Knotel will open its first Los Angeles outpost in Santa Monica, expanding its U.S. reach from New York and San Francisco.

Knotel will lease 12,388 square feet across the third and fourth floors at 429 Santa Monica Boulevard, the company announced. The seven-story building is a few blocks from the beach and from the Metro Expo Line’s Downtown Santa Monica station.

Company founder Amol Sarva said in a statement that the firm expects to add “several more locations here in the coming months, and plan to expand in more cities during the year.”

Ray Howden at Cresa represented Knotel in the transaction. Robert Cavaiola and Shay Bolton of Savills Studley represented the sublandlord, Inventure Capital Corporation.

Douglas Emmett owns the building. The firm purchased it from Blackstone in 2017 for just under $74 million as part of a larger deal.

Sarva has billed the New York-based startup as an alternative to rivals that “spend a lot of money and lose a lot of money,” he has said.

Founded three years ago, Knotel takes office space under leases or management agreements and sublets them to companies, using flexible terms. Overseas, it also has offices in Berlin, London and Sao Paolo.

Top to bottom: Chicago, Miami, Newark, Dallas, and Jeff Bezos recieving phone calls (Credit: Getty Images, Pixabay, and Wikipedia)

What about now?

They may have been rejected once, but they’re not giving up. At least a handful of cities that had been in the running for Amazon’s second headquarters said they would be willing to restart talks after the e-commerce giant’s stunning news it had pulled out of plans for New York City.

Some of those cities that reached the Top 20 but missed out on the big prize — Chicago, Miami, Dallas and Austin among them — responded to the news with a glimmer of hope, while remaining realistic.

“They know how to reach us and they know all that Dallas and our people have to offer,” Dallas Mayor Mike Rawlings said. The mayor said his city will “continue to keep the lines of communication open.” But the canceled plans for New York, he said, “should not be taken as a sign that anything imminent will be happening with Amazon in Dallas.”

Amazon, which cited mounting political opposition as a reason to back out of developing a headquarters in Long Island City, said it has no plans to reopen the HQ2 search “at this time.” Instead, the Seattle-based company will move forward with its second headquarters in Northern Virginia, and an expansion in Nashville, Tennessee. “We will continue to hire and grow across our 17 corporate offices and tech hubs in the U.S. and Canada,” Amazon said on its company blog.

Across the Hudson River, New Jersey Gov. Phil Murphy said he would welcome Amazon. “New Jersey is open for business, and now more than ever, Newark is the clear choice as the next presence for Amazon corporate offices,” he said in a statement. In its ultimately unsuccessful bid, Newark had been considering offering up to $1 billion in tax breaks to help lure Amazon.

In New York, the major issue with was the $3 billion in state and city tax incentives Amazon was set to receive for setting up in Queens.

For Miami-Dade Mayor Carlos Gimenez, there was a lot of confidence and no talk of tax incentives.

The mayor said his county maintains it is the “ideal location” for HQ2 as the gateway to the Americas. The 27-acre Miami Worldcenter was the proposed second headquarters site for South Florida. “We have the talent, technology and low taxes that would serve Amazon’s needs, if they chose to reengage,” Gimenez said in a statement.

Meanwhile, in Texas, a spokesperson for the Austin Chamber of Commerce was all but resigned to the inevitable. No one from Amazon had called, but the chamber was “always open to working with companies that want to consider doing business and creating jobs for families in Central Texas.”

But in Chicago, hope was alive and well. Last week, after reading a report about the potential about-face, Illinois Gov. J.B. Pritzker “immediately called Amazon,” he has said. On Thursday, Pritzker and Chicago Mayor Rahm Emanuel were again ready to work with Amazon following news New York had been dumped.

In a letter addressed to the Everything Store, the two politicians wrote that “Chicago, our surrounding communities and the state of Illinois remain ready to welcome HQ2 to our city, and to ensure a smooth and successful transition and launch.” And in a reference to the opposition that led to Amazon’s departure from New York, Pritzker and Emanuel noted Illinois’ “new commitment to bipartisanship…We will be happy to bring you back.”

Erin Hudson and John O’Brien contributed to this report.

Shenglong Group Chairman Yi Lin and a rendering of Olympia

City Century has cleared the first hurdle to building its $1 billion mixed-use Olympia project in South Park.

The Los Angeles City Planning Commission approved Olympia on Thursday, sending it to the City Council’s Planning and Land Use Committee, Urbanize reported. If approved by the committee, it would go to the full City Council for a final vote.

The project at 1001 W. Olympic Boulevard would feature three towers on a podium.

The largest would be a 65-story tower with 1,000 hotel rooms and 20,000 square feet of retail space. It would be joined by a 53-story tower and a 43-story tower with a total of 879 apartments, and an additional 20,000 square feet of retail space between them.

There would be 163,000 square feet of open space and other amenities.

City Century wants to wrap the majority of the podium with digital signage, much like the Circa project, and the nearby Fig+Pico project. The developers of Oceanwide Plaza are also planning large LED signs, but work has stopped on that project.

City Century is an American affiliate of the Chinese development firm Shenglong Group. It first proposed the Olympia project in 2016 with a different configuration. It reconfigured the project in 2017, adding the 1,000-room hotel. [Urbanize] — Dennis Lynch 

Eric Trump and Donald Trump Jr. with a rendering of a Scion Hotel (Credit: Getty Images and Alterra International)

The Trump Organization is abandoning plans to build two nationwide hotel chains amid growing scrutiny over the company, and as a Democrat-led House of Representatives looks to position itself against President Trump.

While the company had only formally announced one hotel location in Mississippi, it was in negotiations for at least a dozen more deals in Washington, D.C., and five other states, the New York Times reported.

In a statement, the president’s son, Eric Trump, blamed the decision to shelve the hotel project — the Scion and American Idea — on the political climate. “We live in a climate where everything will be used against us, whether by fake news or by Democrats who are only interested in presidential harassment and wasting everyone’s time, barraging us with nonsense letters,” he said, according to the Times.

The company was facing opposition in Dallas and St. Louis over potential Scion deals. The Trump name has also proven to be a sore spot for some investors and partners even though the president does not run the company he still owns.

The Trump Organization was planning on partnering with local hoteliers, brothers Dinesh and Suresh Chawla, for one Scion, and as many as three American Idea hotels. The Chawlas will move forward with the projects without the company, with the possibility the two family firms could reunite once President Trump leaves office, the Times reported.

The Scion brand was intended to be a four-star, boutique hotel, while the American Idea offers more budget-friendly rooms.

The Trump Organization has come under increasing scrutiny along with the president’s own business dealings before he took office. Trump’s former fixer Michael Cohen, was sentenced in December to three years in prison after pleading guilty to lying about his involvement in the deal to bring a Trump Tower to Russia. [NYT] — Natalie Hoberman

Glendale City Council and Mayor Zareh Sinanyan

Glendale has passed a mandatory relocation fee ordinance meant to assist renters priced out of their apartments.

It’s an early move by lawmakers in Los Angeles to find ways to strengthen rent control measures after November’s defeat of Proposition 10.

Landlords in Glendale will pay relocation fees to tenants if they plan to raise rents more than 7 percent, according to Curbed. The Glendale City Council approved the measure on Tuesday.

The city approved a temporary 5 percent cap on rent hikes approved in November, but that expires at the end of February.

Glendale’s measure applies to the owners of buildings built before 1995, to comply with the Costa-Hawkins Rental Housing Act, which bars rent regulations on buildings built after that year.

Prop 10 was a statewide measure that would have repealed Costa-Hawkins and opened the possibility for sweeping new rent-control laws across California.

Glendale will also require landlords to offer year-long leases to tenants, including at buildings built after 1995. Relocation fees will be lower for owners of smaller buildings.

L.A. County lawmakers approved a rent cap in November for unincorporated parts of the county. That cap was set at 3 percent. The measure has scared off some investors from buying up multifamily assets in those areas, which include urban parts of L.A.

Glendale has a tight residential market. The vacancy rate is under 3 percent and more than half of renters spend more than 35 percent of their income on rent, according to Curbed. [Curbed] — Dennis Lynch 

(Credit: iStock)

Are senior homeowners preventing millennials from buying houses? Could the decisions of millions of older owners to “age in place” rather than sell their homes explain why millennials are lagging behind in homeownership?

A provocative new study  from federally chartered mortgage investor Freddie Mac suggests the answer may be yes. “Who is living in those homes that millennials might otherwise have bought?” ask the study’s authors. Their answer: baby boomers, war babies and people born in the 1930s. By hunkering down longer than would have been typical of earlier generations — who would have sold their homes in greater numbers by now — today’s seniors are effectively denying their houses to the real estate market. As a result, according to the study, roughly 1.6 million homes have been kept out of buyers’ reach in recent years, sharply reducing the availability of houses nationwide that millennials could buy.

“The most important fundamental in today’s housing market is the lack of houses for sale,” says the Freddie Mac study, which was conducted by the company’s economic and housing research group.

Does all this sound right? There’s no question that tight inventories exert upward price pressure on properties that are available, and they make it tougher for many buyers to afford homeownership. And there’s no question that millennials haven’t opted for ownership at rates comparable to earlier generations. When the Urban Institute’s Housing Finance Policy Center studied the matter last summer, it estimated that 3.4 million millennials are missing from the ranks of homeownership, based on the behaviors of boomers (born between 1946 — 1964) and gen X-ers (born between 1965-1980). Millennials are 8 percentage points behind earlier generations at the same age.

But should seniors take the rap for the gap? Previous studies of millennial homebuying have pointed to multiple causes for differences in ownership rates. Last month, the Federal Reserve identified ballooning student-loan debt loads — now an estimated $1.5 trillion nationwide — as a key barrier to millennial home purchasing. It estimated that 20 percent of the decline in ownership among young adults since 2005 can be attributed to student debt, which doubled in real terms during the decade ending in 2015.

Last year’s study by the Urban Institute highlighted other important factors in addition to student debt:

— High rents that many millennials pay, which make it more difficult to save for a down payment.

— Later ages for marriage and child-bearing, thereby postponing key traditional inflection points that stimulate homebuying.

— Locational choices by millennials themselves, who often show a lifestyle preference for higher-cost urban centers.

In an interview, Edward Golding, a nonresident fellow at the Urban Institute, also noted that there are financial constraints on senior owners beyond simply wanting to age in place and enjoy their homes. Some seniors choose not to sell because they don’t want to give up mortgages they have at favorable interest rates — the so-called “lock-in effect.”

Another factor the Freddie Mac study doesn’t mention: Homes owned for many years often are not what millennials are shopping for anyway — they’re too big and may have too many bedrooms, plus they might have interiors that require extensive updating. They’re frequently priced for move-up buyers, not first-timers. Yet the study includes an example in which fictional older owners, Al and Rose, aren’t selling, thereby forcing younger buyers, Alex and Rita, “to wait longer — and pay more.”

In an interview, Doug McManus, Freddie Mac’s director of financial research, conceded: “That’s a simplification.” So is the entire study. Millennials have lower homeownership rates for a complex of reasons — some of them financial, some of them simply reflective of changing personal preferences.

You can’t blame it all on the old folks.

Phil Ansell, head of the L.A. County Homeless Initiative and a rendering of one of the winning ideas from LifeArk (Credit: LifeArk)

Los Angeles officials have announced the winners of a challenge to create ways to build housing units more efficiently to alleviate the homeless population in the region.

Five applicants were awarded $4.5 million in revenue from the county’s Measure H to implement their ideas, the Los Angeles Times reported. From the 53 entries, winners were selected based on how creative, achievable, and scalable the projects will be.

Development firm LifeArk was one of the entries selected for its houses that can float.
The company purchased land in El Monte to construct three of the buildings for homeless tenants.

Another submission from Brooks + Scarpa involved prefabricated housing that can be stacked, which cuts construction time in half and cost by 10-25 percent. The company will use the award money to build a prototype for homeless people that can be replicated in any community.

The challenge was part of a push to break the dependency on a federal program that for decades financed supportive housing. And after voters committed new local taxes to the homeless crisis, constructing units has been slower and costlier than expected.

For months, a committee overseeing Proposition HHH – the city’s $1.2-billion homeless housing bond – has been raising concerns over setbacks and costs that have escalated to more than $500,000 per unit.

In January, Mayor Eric Garcetti set aside $120 million from the bond to solicit proposals to build 1,000 units without tax credits. He plans to model it after the county’s challenge. [LAT] — Gregory Cornfield

From left: Lindsey Graham, Bob Menendez, and the Foreign Security Council, Take 2 (Credit: Getty Images, Pixabay, and Wikipedia)

The “sanctions bill from hell” is back from the dead.

Republican Senator Lindsey Graham (SC) and Democratic Senator Bob Menendez (NJ) on Wednesday introduced a tougher version of last year’s “Defending American Security from Kremlin Aggression Act,” and once again, the bill includes a provision that targets people using limited liability companies for high-priced real estate transactions nationwide, the Wall Street Journal reported.

The Treasury Department’s Geographic Targeting Orders, which currently apply to a dozen major metropolitan areas including New York, Miami, Los Angeles and Chicago, require title insurance companies to disclose beneficial owners of anonymous LLC’s used to purchase real estate with cash.

The sanctions bill would expand this program nationwide and make it permanent.

The U.S. is now the world’s second largest tax haven behind Switzerland, as the anonymity of LLCs and the stability of U.S. real estate markets have made the country attractive to money launderers worldwide.

“U.S. real estate is a great place to stash dirty money,” Clark Gascoigne of the Financial Accountability and Corporate Transparency Coalition told the Journal.

The prospects of this beefed-up version of the sanctions bill are unclear. Unlike last year, it would now have to pass a Democratic-controlled House before reaching President Trump’s desk. Previous sanctions against Russian citizens have already led to the seizure of real estate in New York City.

Among its many provisions, the bill would also require a report on Vladimir Putin’s net worth and assets, which some have claimed is worth over $200 billion, much of it stashed in the West. [WSJ] — Kevin Sun