An electric scooter and Los Angeles skyline (Credit: Wikimedia Commons and Pixabay)

Dockless scooters make be all the rage for tech company workers, but one city councilman wants them out of his district.

More companies will be deploying more dockless scooters and bikes in Los Angeles in about nine days. But Councilman Gil Cedillo asked the transportation department last week not to issue permits for electric vehicles in his neighborhoods, including Highland Park, Westlake, Chinatown, Echo Park, and Dodger Stadium, CurbedLA reported.

Cedillo cited safety concerns and access to sidewalks.

E-scooters have become a symbol of tech firms landing in Silicon Beach, and more companies could bring more office leases. Startup firm Bird leased 58,000 square feet at the Colorado Center in a deal described as a temporary solution before the company expands further. Such leases drove rents higher in the third quarter of last year.

Cedillo’s motion still needs to be approved by the full council. L.A. County Supervisors are considering temporary bans on the vehicles as well.

In August, Santa Monica approved four companies to operate 2,000 e-scooters and 1,000 e-bikes after months of negotiations. Beverly Hills, however, banned the scooters outright, prompting Bird to file a lawsuit.

L.A. has given eight companies short-term approval for a combined 24,000 vehicles. The transportation department will begin issuing 12-month permits on March 15, when providers can distribute between 3,000 and 10,500 bikes and scooters. The department received applications from 11 companies for 40,000 bikes and scooters.

Last year, Councilmember Paul Koretz proposed a temporary citywide ban, but that motion died. [Curbed] — Gregory Cornfield

Arata Isozaki, the Museum of Contemporary Art in Los Angeles, and Art Tower MITO in Japan (Credit: city-life.it and Wikipedia)

Arata Isozaki, once called the “emperor of Japanese architecture,” was crowned with the industry’s highest honor: the 2019 Pritzker Architecture Prize.

Isozaki, 87, will be the 46th person to receive the award and the eighth from Japan, the New York Times reported. His work includes the Museum of Contemporary Art in Los Angeles, the Palau Sant Jordi (home of the 1992 Olympics in Barcelona), Shanghai Symphony Hall and the Qatar National Convention Center in Doha.

He described his work as “invisible” but “felt through the five senses.” The Japanese concept of “ma,” which translates to the merging of time and space, plays a significant role in his designs.

“Like the universe, architecture comes out of nothing, becomes something, and eventually becomes nothing again,” Isozaki told the Times. “That life cycle from birth to death is a process that I want to showcase.”

The Pritzker jury’s citation commended Isozaki for “possessing a profound knowledge of architectural history and theory, and embracing the avant-garde.”

“He never merely replicated the status quo,” the Pritzker jury wrotie in its citation. “But his search for meaningful architecture was reflected in his buildings that to this day, defy stylistic categorizations, are constantly evolving, and always fresh in their approach.”

Last year’s winner was Balkrishna Doshi, who designs buildings in his native country of India at varying scales ranging from educational and cultural complexes, to studios and homes, to government buildings that are specifically tailored for the context in which they’re built. Previous winners have included big names like Zaha Hadid, Renzo Piano, Jean Nouvel ad Frank Gehry. [NYT] — Kathryn Brenzel

Michael Cohen and Acqualina in Sunny Isles Beach

President Trump’s former attorney, Michael Cohen, is suing two Chicago taxi medallion moguls over a $6 million loan the couple allegedly failed to repay, and in which their luxury Sunny Isles Beach condo was used as collateral.

In 2012, Cohen loaned Semyon and Yasya Shtayner $2 million for their penthouse at Acqualina Ocean Residences, according to the lawsuit. Cohen kept loaning them millions more and by 2015, the total debt was up to $6 million. Cohen, who was sentenced to three years in prison for lying to Congress and has been disbarred by the state of New York, is suing for the full amount owed, plus interest, default interest and collection expenses.

Cohen filed the lawsuit against the couple and the Acqualina condo association in early February. Attempts to reach the Shtayners and the association were unsuccessful.

According to a schedule included in the suit, the Shtayners were supposed to make monthly payments to Cohen of $61,250 beginning in May 2015, with the full principal due in April 2019. Those payments were never made, according to the suit.

“People who borrow money should pay it back,” said Cohen’s attorney, David Haber of Miami-based Haber Law.

That wasn’t the first time the Shtayners received millions of dollars in loans from a member of Cohen’s family. Cohen’s father-in-law, Fima Shusterman, has provided at least $20 million in loans to Yasya Shtayner, according to the Chicago Sun-Times.

Semyon Shtayner, who is now in the marijuana industry, acknowledged Cohen and his family had loaned him money in the past to finance taxi medallions, but told the Wall Street Journal last year that Cohen has not been involved in his marijuana growing business.

Semyon and Yasya Shtayner were also identified by name in the FBI warrant used to raid Cohen’s law office and home in April, CNN reported at the time. The FBI was searching for documents tied to Cohen’s businesses, including in the taxi industry.

Property records show the Shtayners paid $4.7 million for the Acqualina unit condo in 2009. Penthouse 4506 is four bedrooms and 6,419 square feet. The couple financed the purchase with $2.35 million in seller financing from developer Eddie Trump — no relation to the president. Fima Shusterman also owns a unit in the luxury tower, on the 40th floor. Cohen’s father-in-law paid about $1.5 million for his condo in 2006, the year the building was completed.

The Shtayners and Shusterman immigrated to New York City in the 1970s from Ukraine. Yasya Shtayner’s family owns Chicago Medallion Management Corp., which manages 368 taxicabs through five companies in the city, including some that Cohen own. Nearly 100 of their taxi medallions were in foreclosure as of April 2018.

Last February, The Real Deal reported that much of Michael Cohen’s wealth had been tied up in New York City taxi medallions. At the time, Cohen owned at least 34 medallions through 17 LLCs, according to a TRD analysis. In 2013, when medallion values were at their peak, those plates could sell for $1 million each. That figure has plummeted with the rise of Uber and other ride-hailing apps.

Cohen will begin serving his prison sentence in May for lying to Congress and making cover up payments to Stormy Daniels and Karen McDougal, who allege they had affairs with Trump.

Sotheby’s CEO Philip White (Credit: Sotheby’s)

Sotheby’s International Realty — which for years ran its franchise and company-owned businesses separately — is bringing the two operations under one (corporate) roof.

The Realogy-owned brokerage billed the integration as a strategic business decision that will help the company realize economies of scale, invest further in marketing and technology, and claim more global market share.

Philip White — who has been president and CEO of the Sotheby’s franchise business for five years — will lead the combined business as chief executive. Kathy Korte, who ran the New York-based company-owned operation, will transition into an advisory role, the company said.

“It’s about strategic growth; having our two teams aligned gives us a sharper focus on the market,” White said.

Sotheby’s International Realty was formed in 1976 as a marketing and referral program for auction house clients. White said for years the franchise and company-owned businesses were run as a single operation; it wasn’t until 2004 that they were split. At that point, Realogy licensed the Sotheby’s name for its franchise system and for 43 company-owned brokerage offices in key cities including New York, Los Angeles, Palm Beach and others.

“This is getting back to our legacy,” he said. “It’s about creating more synergies between our two companies.”

Globally, Sotheby’s has 22,500 agents in 990 offices in 72 countries. In 2018, Sotheby’s franchise and company-owned offices sold a combined $112 billion worth of luxury homes — a record sum that bested 2017’s $108 billion. In the U.S., sales rose from $96 billion to more than $100 billion; international sales were flat at $12 billion.

White stressed that the move is not a cost-cutting measure and said Sotheby’s is investing in the marketing and tech space. The company plans to roll out an integrated website this year that will feature listings from all of its offices, and will look at opportunities to open additional company-owned offices.

“Having our two teams aligned gives us a sharper focus on the market,” he said. “It allows us to get even closer to the business and agents so we can build tools and systems to help them grow their businesses.”

In Manhattan, Sotheby’s International Realty — with 286 agents — was No. 6 on The Real Deal‘s recent ranking of top brokerage firms. It logged $1.24 billion worth of closed deals in 2018, according to TRD‘s analysis. The company-owned firm is moving the headquarters for its New York-based operation to a 38,000-square-foot space at 650 Madison Avenue. That’s roughly 30 percent more space than it currently has at 38 East 61st Street.

7310 Mulholland Drive

The “California Gurl” is saying ciao to her Hollywood Hills home.

Pop star Katy Perry sold a property on Mulholland Drive to restaurateur Michael Chow, according to real estate blog Yolanda’s Little Black Book. Chow paid more than $9.4 million.

Perry owned two properties next door to each other, adjacent to the Runyon Canyon trail entrance. Chow purchased the larger of the two, which includes a Spanish-style house with five bedrooms, six bathrooms and more than 7,400 square feet.

It was long owned by Walmart heiress Sybil Orr, who sold it to oil heiress Aileen Getty, who later purchased the smaller house next door. Perry paid Getty $11.2 million for both properties in 2013.

The larger, 2.33-acre property is walled off, and includes a gated driveway with a security guardhouse, a guest house, fitness building, outdoor amphitheater and a pool.

Chow is the co-founder of the Mr. Chow restaurant chain, which started in London and later expanded to Beverly Hills, New York, Miami, and Las Vegas. He owns a 30,000 square-foot mansion on South Mapleton Drive in Holmby Hills, which was listed in October for $78 million.

Perry has been nominated for 13 Grammy Awards, and owns a $19-million estate in the Beverly Hills Post Office enclave.

She also was involved in legal drama over a convent near Los Feliz. She paid $14.5 million for the location, but the nuns rejected the offer and sold it to a different buyer.

Perry was later cleared to acquire the eight-acre estate, but the transaction hasn’t officially closed. [Yolanda] – Gregory Cornfield

HNA Chairman Chen Feng (inset) and Guo Wengui at his penthouse apartment in the Sherry Netherland (Credit: World Travel and Tourism Council via Flickr and Getty Images)

HNA has dropped a $300 million defamation lawsuit against Chinese businessman Guo Wengui, dismissing it as a distraction to the company.

Guo, the exiled real estate billionaire who lives at the Sherry Netherland in New York, has claimed that a member of China’s Communist party, Wang Qishan, holds a shadow stake in the conglomerate through his nephew, Yao Qing.

The Sherry Netherland at 781 5th Avenue (Credit: Wikipedia)

In dropping the suit, which was filed in 2017, HNA’s attorneys said that Guo’s comments “are no longer of public concern,” and that to pursuing the action “unnecessarily distracts from its key business priorities,” according to The Wall Street Journal.

The claims came at a time when the Chinese conglomerate was on a $40 billion buying spree in the United States, including stakes in Deutsche Bank AG and Hilton hotels and Anthony Scaramucci’s Skybridge. Goldman Sachs, Bank of America and Skybridge all walked away from deals with the firm, which has an opaque ownership structure.

Guo, who also goes by the name Miles Kwok, has been living in his $67 million penthouse apartment in the Sherry Netherland and is seeking asylum in the United States following claims of widespread corruption in China.

Guo recently filed a $300 million lawsuit against Soho China, alleging the developer’s slander suit against him cost loss of rental income, termination of construction projects, and attorney fees. He is also seeking to sell his Sherry-Netherland pad. He first listed the seven bedroom, eight bathroom apartment for $86 million in 2015. Since then he’s dropped the price to $67 million. Douglas Elliman’s Richard Steinberg has the listing. [WSJ] — David Jeans 

Relevant Group Managing Partner Richard Heyman and a rendering of the Selma Wilcox Hotel

Relevant Group is three for three in Hollywood.

The Los Angeles City Council this week approved the Hollywood developer’s plan for a 114-key hotel at Selma and Wilcox avenue, Curbed reported.

Called the Selma Wilcox, it will be the third of four Relevant hotel projects under development near the intersection. The decision was unanimous and included the denial of appeals against the project by four groups.

Those organizations included petitioners United Neighborhoods for Los Angeles — a community organization — and the labor union Unite Here Local 11. Both groups raised concerns that the city hadn’t properly studied the impact the hotel’s construction would have on the neighborhood along with the sale of alcohol.

They also accused the city of allowing Relevant and other developers to effectively build an entertainment district with a series of smaller development projects, but failing to take into consideration the cumulative impact of those projects.

Relevant plans to have four independently branded hotels built within a roughly two-block radius over the next few years. It has already completed the Dream Hotel, is building the Tommie Hotel and last year secured construction financing for the 190-room Thompson Hotel.

Last month, it revealed plans to convert the Citizen News building across the street from the Selma Wilcox and Dream hotels into a 36,6000-square-foot restaurant and event space.

Relevant Group likely would have had a harder time if it proposed those together as a megaproject. Relevant isn’t the only developer building there. Restaurateur Adolfo Suaya wants to build the 134-key Whisky Hotel on a parking lot on Selma Avenue near Hollywood Boulevard. [Curbed] — Dennis Lynch 

The Altman Brothers, Ruth Pugh, Ernie Carswell, and the Pugh-Tomasi & Associates team

The Altman Brothers were Douglas Elliman’s top team in California for the second year in a row.

The brokerage named Josh and Matt Altman — stars of “Million Dollar Listing Los Angeles” — the top team by gross commission income in the state in 2018.

The honors were handed out at the Ellies, Elliman’s annual awards ceremony. Top performers from California included those in L.A., Monterey, Orange, San Diego, Santa Barbara and Riverside counties. Awards went out to top teams and brokers in markets from around the country, including New York and Miami.

The Altman Brothers also took the top team prize at last year’s Ellies and earlier this year, they became the first Douglas Elliman team in Los Angeles to get their own office.

Nationwide, Douglas Elliman’s 2018 total sales volume was $28.1 billion, up 8 percent from 2017, it reported.

Also honored at Tuesday’s event were three teams working out of Beverly Hills — Ernie Carswell & Associates, the Chad Lund Team and the Tracy Tutor Team — along with San Diego-based Pugh-Tomasi & Associates. In August, Carswell sold the “Brady Bunch” house in Studio City, the 2,500-square-foot home used to film the exterior of the popular television sitcom.

Tracy Tutor’s team nabbed the second place spot at last year’s awards, a few months after signing on to star with her Elliman colleagues on “Million Dollar Listing.”

The top individual agent in California last year was Pegi DiRienzo, based out of Orange County. Following her were Juliette Hohnen, Alissa Cunningham, Leslie Romenesko, and Trevor Schneeberger.

Last year was Elliman’s first full year in California with the weight of around 500 former Teles Properties agents behind it. The brokerage acquired Teles in mid-2017 and previously had around 130 agents in the state.

From left: Savanna’s Chris Schlank, Sen. Michael Gianaris, Jeff Bezos, Gov. Andrew Cuomo, U.S. Rep. Alexandria Ocasio-Cortez and Mayor Bill de Blasio (Photo Illustration by Lincoln Agnew)

It’s no secret that the real estate industry was salivating over Amazon’s arrival in Long Island City — and was giddy about the potential ripple effect expected for the entire New York market.

But the retail giant’s decision to ditch its plans for a second company headquarters in LIC had a more apocalyptic effect on some than on others.

Not only had Amazon tapped TF Cornerstone to develop part of its new HQ2 on a site just south of the Queensboro Bridge; more significantly, it also signed on for 1 million square feet of office space at One Court Square, a 1.4-million-square-foot office tower owned by real estate private equity firm Savanna. That move set off a chain of events that has now left Savanna in the lurch as a deadline on its $315 million loan looms.

Amazon’s about-face — prompted by political blowblack from some elected officials and other opponents — also put a halt to the condo-buying frenzy, the development rush and the hopes that LIC would become the next big tech hub, a sort of East Coast Silicon Valley.

The company had committed to creating 25,000 jobs over the next decade, and the overall economic bump was pegged by Gov. Andrew Cuomo’s administration at $27 billion over the next 25 years.

The deep-sixing of the deal has drawn condemnation from all corners of the industry, as The Real Deal has been reporting. One developer even referred to the elected officials who sank the deal as financial “terrorists.”

“There is nothing we can equate this to in the history of the state,” Howard Zemsky, head of Empire State Development, the state’s economic development agency, said days before Amazon fled, according to published reports. “It’s the largest economic development prize we’ve ever had.”

Real estate brokers and developers had been benefiting from that dangling prize since November, when Amazon announced that Long Island City (and Crystal City, Virginia) had won its much-hyped national competition to land HQ2, which could have eventually encompassed 8 million square feet.

The Long Island City condo market, which had been suffering from an oversupply of inventory, suddenly became frothy, with lines for open houses stretching down the block and developers eyeing more deals. Office leasing brokers expected Amazon to be a magnet for other tech companies.

All of that activity vanished when Amazon, which is owned by billionaire Jeff Bezos, pulled the plug.

Developers are now back to worrying about how to unload units, office space is likely to stay empty for longer, and investors have already pulled back on new land trades.

“Absorption will happen, but it will take some time,” said Michael Tortorici, executive vice president of investment sales at Ariel Property Advisors. “How quickly is anyone’s guess.”

Amazon’s opponents — two of the most prominent being state Sen. Michael Gianaris and newly elected U.S. Rep. Alexandria Ocasio-Cortez, whose district abuts Long Island City — have maintained that forking over roughly $3 billion in tax incentives to one of the richest companies in the world was irresponsible. They also criticized the deal for being negotiated in backroom fashion without any public input. And many opponents declared victory for long-time middle-income LIC residents, who they argued would be pushed out by the inevitable residential price increases. 

But other local activists decried the loss of 1,500 jobs that were slated to go to residents of the Queensbridge Houses, the largest public housing complex in the country, over the next 10 years.

“Here comes Amazon, the biggest company in the world, to come to do business with Long Island City and the biggest public housing project in the world, and they turn it down. I don’t understand it. Explain it to me,” local activist Billy Robinson told TRD.

“No one came with a backup plan and said, ‘Listen, given that you guys might lose out on the 1,500 jobs, we have so and so in place where we’re going to be able to give out X amount of jobs,”’ he added. “You don’t hear anything about that. They don’t have a plan.”

Real estate players also point out that the $3 billion in tax breaks was not earmarked exclusively for Amazon — any qualifying company could have taken advantage of them — and that those incentives were performance-based, meaning Amazon had to deliver on its promises in order to get them.

Despite their ire, real estate players say LIC is still a bankable long-term investment and that it will revert back to where it was before Amazon entered the fray.

And while far from a consolation, Amazon has said it will continue to take office space in New York. While small beans compared to HQ2, it’s reportedly close to signing a 10,000-square-foot lease at the Chrysler Building.

But the missed HQ2 opportunity is still stinging. And the fact that Amazon’s opponents drove the company out of the city suggests that opposition to the real estate industry is hardening in Albany.

CBRE’s Mary Ann Tighe said the Amazon deal was unique in its potential to transform LIC. “A key point on the Amazon deal is that they elected to pioneer a neighborhood,” she said. “Google’s growth is obviously a huge blessing for the city, but they’re growing in among the most desirable neighborhoods for New York City office space.”

From frenzy to freak-out

Before the Amazon deal, Long Island City was by all accounts a buyers’ market.

That all changed after Amazon selected LIC.

Condos began selling sight unseen, prices started rising, brokerages began jockeying for business, and developers were scrambling to start new projects.

According to data from the listings portal On-Line Residential, 79 contracts were signed in LIC and Astoria between Sept. 13 and Nov. 12 of last year — before the deal with Amazon was announced, the New York Post reported late last month. That number shot up 98 percent to 157 between Nov. 13 and Feb. 13, during the period when Amazon was on its way to LIC.

Meanwhile, in the five weeks after the Amazon deal was announced, 18.8 percent of listed homes in the area saw a price jump versus zero in the previous five-week stretch, according to StreetEasy.

Eric Benaim’s Modern Spaces was already seeing the bump in business.

“It’s devastating for New York,” said Benaim, who collected roughly 4,000 signatures on a petition after news reports surfaced that Amazon was reconsidering.

Benaim, whose firm is a market leader in the neighborhood with $45 million in active listings, said his company would be alright: “We were going fine three months ago, and we’ll continue to be fine.”

Still, he said, condo absorption would slow down.

Savanna’s Christopher Schlank, left, and Nicholas Bienstock

“We’ll have to work like we worked before,” said Benaim, who added that the firm will move forward with post-Amazon plans to recruit between 30 and 40 new agents. “It’s hard, but that’s the work.”

Halstead’s Robert Whalen, director of sales in Long Island City, said, “the future of the neighborhood is still going to happen.”

“But Amazon could’ve accelerated the process,” said Whalen, whose firm had 77 in-contract listings and 13 active listings in the neighborhood on the day Amazon pulled out.

In many ways, though, the aftermath of Amazon’s exit is still playing out.

Stribling & Associates’ Patrick Smith said some LIC buyers with contracts out chose not to sign and “opted to take a wait-and-see approach,” while others signed. He added that the three-month period before Amazon backed out didn’t see notable price increases, but it did reduce negotiability in the market.

Now buyers who went into contract during that time may attempt to renegotiate prices, said Jonathan Adelsberg, a partner at the law firm Herrick Feinstein.

While it’s still early, Adam Swanson, a real estate litigator at the law firm McCarter & English, noted that some buyers could eventually find themselves in foreclosure if they closed on units at too-high prices. He also said there could be a spike in buyers looking to retrade on closed deals, hoping that speculators “with steel spines and ice water running through their veins” will look to capitalize on a potential overcorrection.

Smith said that in retrospect, he’s glad he warned clients that the Amazon plan was not a done deal and that they should invest in the neighborhood for broader reasons.

“Add Amazon, and people felt it would supercharge the growth rate even more,” Smith said. “Take that out, and you’re still left with a good real estate market.”

Developers decelerate

With Amazon now a distant memory, development deals have already started to slow.

Nancy Packes, president of Nancy Packes Signature Marketing Services, said she had a client who was looking to acquire a roughly 35-unit rental building in Astoria, which borders LIC.

After the Amazon deal fell through, the client — which does acquisitions, not ground-up development — instead opted to buy and renovate a similar-size building in Jersey City.

“For them, [Amazon] swayed sentiment away from Astoria,” Packes said.

Herrick’s Adelsberg said LIC was seeing a “substantial slowdown of people putting shovels in the ground” before Amazon selected LIC.

The numbers back that up: Last year, there were 21 LIC development site sales totaling $229 million, according to Ariel. By comparison, in 2015, at the peak, there were 34 deals totaling $524 million.

“People thought Amazon would offset any slowdown,” Adelsberg said. “[The fact that the company pulled out] will have a profound impact.”

Compounding matters is the deluge of development that’s already occurred.

Since 2006, about 16,800 residential units have been added to the market, with another 11,700 units expected to open by 2020, according to the LIC Business Improvement District.

The inventory is dominated by rentals, but interest in condo development has been ramping up lately. For example, Adam America and Vanke have the 182-unit Galerie on the market, and CBSK Ironstate has the 85-unit Corte. (The Corte saw 39 contracts signed while the world was under the impression that Amazon was moving in.)

Ariel’s Tortorici said that residential supply will “come into check” as fewer development sites trade.

If there is a silver lining here for the real estate industry, it’s that Amazon didn’t wait even longer to pull out, sources said.

Even if developers wanted to pounce during the three-month window of real estate euphoria, they had a short amount of time to scope out and close on deals.

In addition, brokers say the neighborhood has another major thing going for it. Large sections of LIC are located in an Opportunity Zone, the much-ballyhooed federal tax deferment program.

“We were bullish even before Amazon because of the Opportunity Zone,” said James Nelson, head of tri-state investment sales at Avison Young. “That will help drive some of the activity.”

An ‘iffy’ office outlook

If anyone is actually losing sleep over the loss of Amazon, it’s likely Christopher Schlank and Nicholas Bienstock, the heads of Savanna.

With Amazon no longer taking space at One Court Square and with Citigroup, the tower’s current anchor tenant, expected to leave either this year or next, the firm could see vacancy in the building soar to 70 percent.

Now Savanna is struggling to refinance the building, with talks to borrow more money or sell stakes in the building all but dead, the Wall Street Journal reported.

“It is going to be hard to get a large commercial real estate loan on a property that is 70 percent vacant,” Joe McBride of research firm Trepp told the Journal.

Savanna’s $315 million loan for the property matures in 2020.

The company, which declined to comment, could lose the property to creditors if it cannot work something out before then.

Beyond One Court Square, the industry was readying for a bump in pricing and a drop in vacancy in the LIC office leasing market with Amazon as a draw.

In November, Savills Studley Vice Chairman Jeffrey Peck said the neighborhood could become the new Midtown South, a submarket that has become a hub for tech companies in recent years.

Overall, 2018 leasing activity in LIC totaled 742,000 square feet in 2018, a 93 percent increase over 2017, according to CBRE. That bump was driven by two large transactions — a 299,793-square-foot expansion by Macy’s at Tishman Speyer’s 1.2 million-square-foot JACX office complex and a 100,000-square-foot renewal by the New York City School Construction Authority.

But LIC still needs more tenants.

In late 2018, Newmark Knight Frank put its availability rate at 26 percent — versus the Manhattan average of about 12 percent.

“For everything Amazon would’ve brought, it was giving hope to the office market,” said Jonathan Eshaghian, an investment sales agent at Marcus & Millichap. “Now the office market is looking iffy.”

The next big fish

While New York missed the Amazon boat, the company is still being wooed by other cities. Chicago, Miami and Newark — all contenders in the original national competition — have reiterated their interest in the online retail giant.

Already home to Amazon-owned audio affiliate Audible, Newark had considered offering up to $1 billion in tax breaks — one of the largest subsidy packages offered outside New York — to land HQ2.

The question now is whether the loss of Amazon will hinder New York as it goes after other tech tenants.

Facebook, Google and Spotify are just a few of the tech companies that have grown in the city in recent years. And a report from the New York City Economic Development Corporation found that more than 7,000 startups with a combined economic value of $71 billion are located in the city.

But will other tech giants follow Amazon’s lead and opt not to deal with the messy politics and community opposition that they might encounter in New York?

The speculation is mixed.

“I do worry about the implications and about the message it sends to the next company that wants to make a big bet on New York,” said Julie Samuels, executive director of Tech:NYC, which advocates for the technology community.

The growth of the tech sector is important to diversify the city’s economy, which has been dominated by financial companies, she said. Given the market’s inevitable ups and downs, Samuels said, a more diverse economy would help New York better weather the downturns.

Others took a more optimistic outlook.

“Can New York City entice another company?” said Marcus & Millichap’s Eshaghian. “Everything is clearly there. Amazon liked it, another company can like it. It’s already a set table, ready for the diners.”

Additional reporting and research by Kathryn Brenzel, Katherine Kallergis, Erin Hudson, Will Parker and Kevin Sun

Robhana Group secured $38 million in refinancing for three properties in the Pico-Union neighborhood. (Credit: DB&R Marketing Communications, Inc.)

The Robhana Group scored $38 million in refinancing loans for three commercial properties in the Pico-Union neighborhood near Downtown Los Angeles.

The L.A.-based firm’s portfolio includes 110,000 square feet of commercial space located on a two-acre lot at 1120-1122 Washington Boulevard.

Silverpeak Argentic provided $28 million in financing. An unnamed New York lender provided the remaining $10 million. The deal was split into two loans – a long-term debt for the medical facility, and shorter-term debt for the multi-tenant building and parking structure.

Beverly Hills-based Quantum Capital Partners secured the funds for Robhana Group. The same firm arranged the financing to acquire the multi-tenant building and development site in 2012, as well as the construction financing for the medical office facility and parking structure in 2017.

The three Robhana Group properties include the new 60,000 square-foot Downtown West Medical facility and an urgent care clinic operated by Healthcare Partners, the recently renovated 50,000 square-foot multi-tenant office building, and a new nine-story parking structure serving both buildings.

Increasing demand from healthcare, biotech and life science industries dominated the office real estate market in Southern California last year. Commercial real estate firm Avison Young projects these industries will continue to drive office leasing through 2019.

In January, Alabama-based developer B2 Partners sold a medical office property in Alhambra to Jinbo Holdings LLC shortly after completing it and leasing it to dialysis giant DaVita, Inc. for a 15-year term. The developer purchased the 1.2-acre property in 2016 for $5.5 million. In December, the same firm sold a 11,450-square-foot medical office building in San Gabriel for $11.2 million.

Silicon Valley (bottom) and New York City (top) (Credit: Wikipedia and Pixabay)

Amazon may have side-stepped New York, but there’s still enough demand for the city to transform into a tech hub.

A new study shows that New York, Beijing, Tokyo and London are increasingly being looked at as places for tech innovation, and could surpass demand in Silicon Valley by 2023, according to the Wall Street Journal.

New York ranked No. 1 on a ranking of cities next in line to lead tech innovation, which was based off a KPMG survey of 740 tech industry leaders in a dozen countries. Beijing, Tokyo and London followed, and Boston and Austin, Texas, made the top 10.

The cities have attracted investment from tech companies in recent years and the rise of cloud computing has reduced the need for tech innovation to stem from a single location. Almost 60 percent of respondents said it was “likely” or “very likely” that Silicon Valley will lose its title as a global technology center by 2023.

“Geography is less important in an always-on, constantly connected world,” Jack Clare, chief information and strategy officer at Dunkin’ Brands Group, told the Journal.

The survey also reportedly found that 23 percent of respondents believed the U.S. has the largest impact globally on technology, a reduction from 34 percent last year. China ranked second with 17 percent, a drop from 26 percent over the past year. [WSJ] — David Jeans 

A Family Dollar store with Dollar Tree CEO Gary Philbin (Credit: Getty Image and Twitter)

Dollar Tree is going to shut down or rebrand almost 600 Family Dollar stores this year.

The company has booked an impairment charge of $2.73 billion during the fourth quarter to lower Family Dollar’s value, according to the Wall Street Journal. It had purchased the chain in 2015 for almost $9 billion after a bidding war.

Dollar stores overall have enjoyed a decade of strength as consumers focused on buying cheap goods in the wake of the recession. However, sales at Family Dollar have been slumping for years thanks to unhappy workers, neglected stores and bad product selection, analysts have found.

Dollar Tree said on Wednesday that it plans to close up to 390 Family Dollar Stores and convert roughly 200 more into Dollar Tree shops. At the end of the latest quarter, the firm had about 8,200 Family Dollar stores and 7,000 Dollar Tree stores.

Starboard Value LP, an activist investor, asked management in January to consider selling Dollar Tree and asked the company to consider selling some of its items for more than $1 to increase profits.

Dollar Tree CEO Gary Philbin defended the value of Family Dollar to the company.

“I know it’s worth more to us than we are getting credit for and quite frankly it’s not worth that much to anyone else,” he told the Journal. “We are the ones committed to fixing and growing it.” [WSJ] – Eddie Small

3547-3585 North Figueroa Street

A Canadian developer is planning a mixed-use project in Cypress Park with 55 residential units.

An entity tied to Toronto developer Greg Sharp filed plans for the project for 3547-3585 N. Figueroa Street on Tuesday. It would involve demolishing a pair of commercial buildings to build a five-story structure with 7,400 square feet of ground floor commercial space.

The developer plans to take advantage of density bonuses through the city’s Transit Oriented Communities program, which provides them for building affordable units near transit. The project would have six affordable units.

Beverly Hills-based developer FDZ Partners LLC also filed for TOC benefits for a 100-unit project a block away at 3836 N. Figueroa Street. FDZ is planning a 100-unit development there that would replace a gas station.

Both sites are about two blocks from the Metro Gold Line’s Heritage Square station, which connects to most other Metro lines at Downtown Los Angeles’ Union Station.

The TOC program has proven popular with developers around the city. It has put more than 1,000 affordable units in the pipeline in its first 10 months of being active.

Amazon CEO Jeff Bezos shutting down an Amazon Pop-up (Credit: Getty Images and EWI Worldwide)

It’s a pop-up dust-up. Amazon will close all its retail pop-up stores by the end of April, the company announced Wednesday.

The e-commerce giant, which launched the small-store concept in 2014, said it had begun to tell employees of the 87 store closures, according to the Wall Street Journal. The pop-up stores, which are located in malls, and some of its Whole Foods stores, provide items like Echo, its voice-assistant speakers, and Kindle, its e-reader.

“After much review, we came to the decision to discontinue our pop-up kiosk program,” the company said.

The announcement follows the conglomerate’s dramatic withdrawal from plans to bring 25,000 jobs to a campus in Queens, and which it says is now being re-allocated to its current locations in Seattle, Crystal City and Nashville.

However, the company said it remains committed to developing a brick-and-mortar concept, and it will keep open its existing book stores and so-called 4-star stores, which sell products that customers have rated at four stars or more.

The company is also reportedly planning a large rollout of its cashless convenience stores, Amazon Go, and another grocery store brand. [WSJ] — David Jeans 

From left: 6523 South Brynhurst Avenue, 4339 Berryman Avenue, 1200 North Vermont Avenue (Credit: Google Maps)

The Hyde Park neighborhood near Inglewood again topped the list of multifamily projects recently proposed in Los Angeles, as it attracted more affordable housing development.

The top five projects with less than 50 units would add a total of 163 units to the market.

Continuing a clear trend, each multifamily project came with requests for density bonuses, mostly from Los Angeles’ Transit Oriented Communities program.

Four of the top five projects applied for bonuses from the TOC program, which the city allows for developments with affordable units near transit stops. The one on the list that did not is seeking density bonuses through other programs. Three of the top projects filed in February also requested TOC bonuses.

1. 6523 S. Brynhurst Avenue | Hyde Park | 41 units
Project applicant Manish Drona is requesting tier-3 TOC bonuses to construct a four-story apartment building with 41 units in Hyde Park.

Five of the units will be reserved for extremely low-income households.

Six existing units at the location will be demolished. Drona purchased the site at 6523 S. Brynhurst Avenue in September 2018 for $1.6 million.

In February, Ronald Mayer and 6604 West Blvd LLC applied to build a 47-unit permanent-supportive housing structure nearby in Hyde Park at 6578 S. West Boulevard.

2. 4339 S. Berryman Avenue | Del Rey | 40 units
Owner Sassan Ohebsion with Victoria SK Holdings LLC applied for a four-story apartment building with 40 units in Del Rey.

Ohebsion purchased the property at 4339 S. Berryman Avenue in June 2018 for $4.8 million.

3. 1200 N. Vermont Avenue | East Hollywood | 29 units
Owner Morris R. Sharaf with MJJ Properties LLC filed plans to build a six-story building with commercial space and 29 residential units in East Hollywood.

Sharaf is requesting tier-3 TOC incentives to increase the density near the Vermont/Western Metro station. He purchased the property at 1200 N. Vermont Avenue in August 2002 for $855,000.

4. 2241 S. Crenshaw Boulevard | Mid-City | 29 units
Owner William Chang with WGC Enterprises, LLC, filed plans to build a four-story apartment building with 29 units on Crenshaw Boulevard

Chang is requesting tier-2 TOC bonuses. He purchased the property in Mid-City for $1.9 million in October 2018.

Mid-City is also expecting a 55-unit affordable housing project by Meta Housing Corporation. Those structures are proposed to take the place of city-owned parking lots at 4600 and 4601 W. Washington Boulevard, near Crenshaw Boulevard.

5. 904 S. New Hampshire Avenue | Koreatown | 24 units
Ron Gonen with Newshire, LLC, filed plans to build a seven-story project with 24 condominiums on New Hampshire Avenue. Gonen is requesting TOC incentives to increase the density and decrease the required open space.

Owner Eitan Gonen with Montshire, LLC, purchased the Koreatown property in July 2018 for $1.5 million, records show.

Amherst Residential president Drew Flahive (Credit: Twitter, Pixabay, and PxHere)

One of the nation’s largest homeowners is planning to add an additional 10,000 single-family rental properties to its collection this year.

Austin, Texas-based Amherst Residential will buy both individual properties as well as groups of houses from large landlords who want to shrink their portfolios, Amherst president Drew Flahive told Bloomberg. The company will run most of the acquisitions as rentals through its property management subsidiary Main Street Renewal, which already manages some 20,000 rental homes across the U.S. It will also renovate some to sell.

The move comes as shifts in demographics and a tighter market for home sales are leading more investors to rental homes. Pretium Partners closed a $1 billion fund last year, and Tricon Capital Group launched a $750 million joint venture with two institutional partners. Cerberus Capital Management also launched its own fundraising.

The main challenge is finding the homes, the report said. After the financial crisis, the single-family rental industry grew with companies like Blackstone Group snagging thousands of distressed properties. But as the market has recovered, cheap homes are harder to come by.

The key is having “a platform that’s broad enough to aggregate from smaller, midsized or institutional owner-operators,” Flahive said. “We want to buy and manage assets at a wide range of price points, so we need to have the ability to service those assets.”

Amherst has spent $404 million to purchase 2,400 houses since October — and is eyeing opportunities from other mergers and acquisitions. In February, Amherst bought about 450 properties from Front Yard Residential, a real estate investment trust that acquired most of those assets when it took over a larger portfolio. [Bloomberg] — Meenal Vamburkar

Carr Workplaces downtown Los Angeles renderings (Credit: Carr Workplaces)

Add another co-working space to Downtown Los Angeles’ growing stock.

Carr Workplaces has inked a lease for its first L.A. location, a 24,000-square-foot space at the massive mixed-use property, The Bloc, according to the Los Angeles Business Journal. The Washington, D.C.-based company will open the location in the spring.

The firm joins a crowded market for co-working space Downtown. WeWork announced last month it was leasing 78,000 square feet on South Broadway. And in January, Industrious said it was leasing 22,300 square feet at the Citigroup Center.

CommonGrounds and Cross Campus have also both been in talks in recent months to occupy more space in DTLA.

The Carr lease is a win for National Real Estate Advisors, the firm that owns the Bloc. The property has had a number of setbacks since NREA acquired it in 2013 and redeveloped it together with the Ratkovich Company. Ratkovich sold its stake to NREA last April and now the tide appears to be turning. Fast fashion retailer Uniqlo signed a 15,000-square-foot anchor lease there in May.

Carr has two locations in Orange County along with two-dozen throughout the country. The bulk of its properties are in Washington, D.C., and Virginia. But others include San Francisco, Chicago and New York, according to its website. [LABJ] — Dennis Lynch

A tent on Skid Row

The Los Angeles City Council agreed to settle a three-year-old lawsuit, effectively surrendering the city’s ability to seize without notice the possessions of people living on the streets.

Property owners and developer say the decision will discourage real estate development in Downtown L.A.’s Skid Row and will present health and safety concerns, according to the L.A. Times.

The decision comes as the wave of redevelopment in DTLA edges closer and closer to Skid Row, a decades-old haven for people living on the street. Skid Row’s 90013 ZIP code is the second fastest gentrifying zip code in the country, followed closed by neighboring 90014.

The move to settle Carl Mitchell v. Los Angeles leaves in place a 2016 injunction that prohibits city employees and law enforcement from confiscating possessions without notices. The injunction only covers blocks considered part of Skid Row. The vote was 10-2 in favor of settling the suit.

Lawyers for the plaintiffs — a group of homeless individuals and two downtown advocacy groups — argued the city’s regular cleanups arrest sweeps were meant to destroy property and clear areas of people the city didn’t want there. It was an indirect effort to open the door for economic investment and real estate development, plaintiffs argued.

Recent development projects near Skid Row include Realm Group and Urban Offerings’ 452-unit apartment project called 7th and Maple.

Meanwhile, the Council continues to struggle to find locations for temporary homeless shelters, as part of Mayor Garcetti’s “A Bridge Home” program. Residents in Venice and Koreatown came out strongly against proposed sites in their neighborhoods last year.

The city has had more success in Downtown L.A. than anywhere; two shelters have opened there, including the first in the program. [Curbed] — Dennis Lynch

Michael Cohen and Donald Trump (Credit: Getty Images)

President Trump and his namesake real estate company owe their former attorney Michael Cohen more than $1.9 million in legal fees, Cohen alleged in a Thursday lawsuit.

The fees stem from more than a year of investigations into Trump’s 2016 presidential campaign. In the complaint, Cohen says the Trump Organization agreed in July 2017 that it would cover Cohen’s legal expenses related to 2016 campaign investigations as part of a “joint defense” agreement.

In August, however Cohen pleaded guilty to campaign finance violations for paying hush money to two women who alleged affairs with Trump, payments Cohen said were made at Trump’s direction. He is expected to spend three years in prison, and just testified in a Congressional hearing against the president and others in his orbit.

Cohen alleges that sometime in the months following the April raid his of Manhattan hotel room, the Trump Organization stopped honoring the indemnification agreement. Cohen said publicly that he would cooperate with prosecutors in June of 2018.

Keller Williams CEOGary Keller and president Josh Team (Credit: Keller Williams, iStock, and Topitto)

Keller Williams saw an uptick in deals last year as the franchise brokerage continued on its growth plan and doubled down on tech, it said in a statement Thursday.

In the U.S. and Canada, agents closed $332.4 billion in sales volume last fiscal year, up 5.7 percent from 2017, according to the franchise brokerage. Closed deals ticked up 2.2 percent, while contracts rose 2 percent to 1.2 million. According to the company, contract volume in the U.S. and Canada totaled $365 billion, up 5.5 percent over 2017. And listings volume totaled $256 billion, a 14 percent uptick over the prior year.

It previously reported a decline in franchisee owner profit in the third quarter, but said it would not be releasing those profit figures in its full-year results. The company also does not release net income totals, so its financial figures are somewhat murky.

Outside the U.S. and Canada, Keller Williams agent closed $4.5 billion in sales volume, up 37 percent from 2017. Contracts surged 43.9 percent.

Official agent count has remained fairly consistent, with 159,447 agents in the U.S. and Canada as of Jan. 31. The brokerage headed into 2018 with 159,631 agents. A recent report said that many of the firm’s U.S. agents actually “ghosts,” meaning they are inactive, unlicensed, and even deceased. The company said it became aware of “inconsistencies” in agent count earlier this year and “took immediate action to reconcile our roster.”

The results come as founder Gary Keller returns as CEO of his namesake brokerage, replacing John Davis. Davis, who held the role for almost two years, headed the company’s growth initiative since it launched in 2011. He also worked on the company’s effort to building a consumer-facing platform and introduced Kelle, Keller Williams’ AI-powered virtual assistant.

In 2018, 27,311 live referrals were sent through Kelle, which represented $8.3 billion in sales volume, the company said. Roughly 146,000 agents have downloaded the tool.

The company also said it is further developing its tech tools, aiming for “the most robust, global, fully connected, AI-powered real estate platform” by the end of this year. Currently, Kelle is available in the U.S. and Canada.

“Our entire job, the whole reason we’re doing all of this is so that our people can offer the personalized, digital experience that consumers demand,” said Josh Team, president of the firm.

Keller Williams is also likely launching its own iBuyer program in the second quarter this year. At a presentation in January, Keller said he was reluctant to do it but feels like there isn’t another option.

“I feel like I have no choice now,” he said. “I can’t allow Opendoor or Zillow to go out and be the only player in the iBuyer space and then begin to dictate terms and build brand around ‘they buy houses.’”

In New York, Keller Williams Midtown has struggled to keep CEOs. Michael Guerra, who was hired in June, was forced out earlier this month, The Real Deal reported. The Midtown franchise lost two other leaders last year in quick succession, including Lezley Charles, who oversaw a massive hiring spree.