Keller Williams’ Josh Team and Redfin’s Glenn Kelman (Credit: iStock)

Keller Williams is seeking to copy Redfin’s tech to beat the brokerage at its own game.

Keller Williams President Josh Team noted that the real estate industry is seeing an “arms race” — and the company is looking at Redfin because “they’re doing some really great things. The brokerage thinks it can “copy the technology of Redfin before Redfin can take the market share,” Inman reported.

Team compared the strategy to Google Plus, the social network once touted as a Facebook killer. Google had a good concept that Facebook was able to copy, he said.

Keller Williams has viewed tech-powered brokerages like Redfin as rivals. Last year, the company acquired a startup specifically to help building a strategy to challenge aggregator listing portals. The brokerage is also getting closer to releasing a consumer-facing app meant to challenge Zillow and Redfin.

Team also spoke about Kelle, the company’s artificial intelligence-powered virtual assistant, comparing it to Apple’s Siri and Amazon’s Alexa. Both features had to start out “going wide” because they “didn’t have anywhere to start.”

Compass CEO Robert Reffkin also praised Redfin’s tech, saying the portal has more inventory and faster alerts that most multiple listings services. But firms like Redfin have also splintered the real estate community, he said.

“I think companies like Redfin benefit from the fragmented nature of this industry,” Reffkin said.

Earlier this year, Compass tweaked its own listings website to display the name and contact information of each listing broker. The move was aimed at gaining the competition’s trust. [Inman] — Meenal Vamburkar

San Francisco (Credit: iStock)

What could push the already piping hot San Francisco housing market into the stratosphere? How about a surge of new millionaires and billionaires?

The market is ramping up in anticipation of the wave of IPOs by Bay Area tech companies expected this year that could make a large number of stockholders super-rich overnight, according to the Wall Street Journal.

Agents say buyers are moving quickly to scoop up homes in fear that a wave of newly wealthy stockholders will send prices even higher and push them out of the market.

Price growth in the high-end market slowed somewhat in San Francisco last year, but it remains one of the most expensive markets in the country. A November report by Trulia found 80 percent of homes in the metro area were priced above $1 million, more than anywhere else in the country.

Ride-sharing service Lyft went public in March, while companies including Airbnb, Uber, Palantir, and Slack are all expected to go public by year’s end. Stockholders are typically barred from liquidating their holdings for six months or so, meaning many could be ready to buy within a year from now.

Sellers are debating whether to hold listings for that crop of would-be buyers. Listings in San Francisco dropped 20 percent year-over-year in the first quarter, Compass chief market analyst Patrick Carlisle told the Journal.

Many tech companies aren’t allowing agents to pitch their employees in any official manner, so agents have had to get creative. Hilton & Hyland sent fancy embossed boxes with marketing materials to the 50 people they think will hit the jackpot with the IPOs, according to the Journal. Others are distributing flyers near company offices and tagging online ads with company names in hopes of catching employees’ eyes. [WSJ] – Dennis Lynch 

Union Bank Plaza and CEO of Union Bank Steve Cummings (Credit: Wikipedia)

Union Bank is close to completing a deal that would sharply reduce its space at Union Bank Plaza in Downtown Los Angeles, The Real Deal has learned.

The bank, an anchor tenant at the high-rise for five decades, will vacate 136,000 square feet, sources said. The bank occupied 344,000 square feet at the 40-story tower in early 2018. The firm has shed some space in the past year though the amount was unclear, a source added.

Recently released marketing materials for the property at 445 S. Figueroa Street reveal Union Bank is vacating floors 2 through 9. Justin Collins of Cushman & Wakefield is the listing agent with Peter Collins and Kelli Snyder.

Justin Collins said Union Bank’s deal to vacate has not been finalized, but that he’s marketing the space as “open.”

A representative for Union Bank said that, though the bank has been a “mainstay” at the tower, it periodically “shifts colleagues within the building to bring teams closer together.” He declined to comment on the firm’s total square footage there or its decision to vacate those floors.

The owner of Union Bank Plaza — KBS Real Estate Investment Trust II — has been struggling to sell the massive property. Roughly two years ago, RC Acquisitions backed away from its $280 million deal to purchase the 627,000-square-foot site, plus its 2-acre developable parcel.

In a shareholder meeting a few months after the deal fell through, Newport Beach-based KBS also said the appraised value of the property had dropped about $52 million.

(Illustration by Dushan Milic)

When President Donald Trump announced in June that the United States would pull out of the Paris climate accord, New York developer Jonathan Rose sensed that something more than an environmental safety net was at stake. He saw retreating dollar signs.

“Bottom line is, these are major economic opportunities,” he said, referring to technologies that promote energy efficiency, such as electric cars and solar energy. “We just ceded them to China.”

Nearly 200 nations, including the U.S., signed the Paris agreement in December 2015, pledging to dramatically reduce greenhouse gas emissions and limit global temperature increases to 2 degrees Celsius or less by 2100. In some ways, supporting the accord is a symbolic gesture — even if every participating country meets its reduction goals, the world is still on track to exceed that amount of warming by 2030. But inaction or silence on the issue accomplishes even less, and in the case of New York City’s real estate industry, rising temperatures could have grave consequences — from regular flooding to major storms like Superstorm Sandy that occur every few years.

Maya Camou, director of sustainability at the Manhattan-based development firm Time Equities, said “it was a no-brainer” for her company to formally sign a letter supporting the Paris climate accord. “Climate change is real, and you see it everywhere,” she said. “Our own properties all over the U.S., as well as internationally, will start being affected by these changes [over the next few years].”

New York real estate developers would seem inclined to support measures that would curb rising temperatures and extreme weather events — threats that could directly impact their assets. While a handful of companies are incorporating climate-conscious designs in new development projects, the industry at large hasn’t stepped up to make climate change a public priority.

“It’s very hard for people to grasp what things are going to look like in 100 years,” said Sweta Chakraborty, a risk management expert and assistant director of the Institute for Global Policy. “Whose job is it to look beyond their lifetime? Builders definitely don’t.”

Of 165 real estate firms The Real Deal surveyed on Trump’s decision to remove the U.S. from the Paris agreement, 146 declined to participate. Some later said that they didn’t have an opinion on the matter, but most declined to participate without explanation.

When asked separately, the Real Estate Board of New York’s spokesperson Jamie McShane said that the lobbying group doesn’t have an official position on the agreement.

“To the extent that many in the real estate industry are political conservatives, it isn’t all that surprising that climate change hasn’t been high on their agenda,” said Michael Mann, a professor of atmospheric science at Pennsylvania State University. “It is unfortunate and rather ironic since the real estate industry may be among the hardest hit by climate change.”

New York real estate owners are not only among the most exposed when it comes to rising sea levels and storm damage, but they are also responsible for a majority of the city’s greenhouse gas emissions.

Buildings produce 75 percent of NYC’s annual emissions, which weighed in at an annual 52 million metric tons in 2015, according to the most recent data released by the city. Without dramatic reductions in fossil fuel use, sea levels could rise as much as six feet by 2100, and major storms that were previously expected every 100 years or so could instead occur every two to three years.

Jeff Moelis, director at L+M Development Partners, who was disappointed by the president’s choice to abandon the climate accord, said it’s not as easy for real estate as it is for other industries to collectively make its position known.

“The real estate industry is so fragmented. It’s not like oil or gas, where you have one company that’s the mouthpiece for the industry,” he said. “It’s a lot of small family businesses, so there isn’t one general thought leader.”

Playing the long game

After Superstorm Sandy pummeled New York City in October 2012 — resulting in $8.6 billion of private property damage — some developers and real estate owners took steps to guard their buildings. They moved mechanical equipment from basements onto higher floors, invested in detachable flood shields and added landscaping designed to intercept rainfall. Rudin Management, for example, elevated the second floor of Dock72, a waterfront office development in Brooklyn, 40 feet above the ground. And Brookfield Properties decided to add floodgates to One New York Plaza after more than 20 million gallons of water rushed into the building’s subterranean shopping mall.

But while these measures acknowledge the need to be proactive in the face of climate change, they only address immediate threats.

Sea levels in New York City are expected to rise 30 inches by 2050 — and by that point, roughly 90 percent of the city’s 1 million buildings will still exist, according to a study released by the city last year. Most of those buildings — 98 percent — span less than 50,000 square feet, according to the report. Because those small and mid-sized properties are rarely vacant and tend to change hands often, their owners are less likely to incorporate technology like solar and wind power or passive-house standards. In addition, some owners are not financially equipped or willing to wait a decade for the benefits of energy efficiency to pay off. Their investment horizons are limited to however long they plan to own the asset, and the added upfront cost and potential loss is enough to dissuade them from trying out new technologies that could cut down on energy use and carbon emissions.

“It’s a challenge to [retrofit] existing buildings when they are fully occupied,” said Justin Palmer, CEO of the sustainable property developer Synapse Development Group.

Synapse has had luck building from the ground up, and the company constructed Manhattan’s first passive-house rental apartment building, at 542 West 153rd Street. On average, passive houses use anywhere from 70 to 90 percent less energy than standard buildings, according to the independent research organization the Passive House Institute. The structures require airtight construction and an energy-recovering ventilation system in place of traditional heating and cooling equipment.

While similar projects have sprung up in the city over the past few years — including Cornell Tech’s 26-story residential tower on Roosevelt Island, which will be the world’s tallest passive house — the standard is hardly the go-to due to high costs and limited labor. Building to passive-house standards can cost 3 to 5 percent more than a building with a traditional heating and cooling system, and there are only a handful of contractors equipped to install passive-house facades and ventilation systems, Palmer and others explained.

L+M and Jonathan Rose Companies are teaming up on a 751,000-square-foot passive- house project in Harlem dubbed Sendero Verde, which means “green path” in Spanish. The affordable housing project is expected to use 60 to 70 percent less energy than a standard building of its size.

But building sustainably requires patience. For instance, incorporating solar and wind power — which requires upfront costs of hundreds of thousands of dollars — can take seven to 10 years to pay off, said David Brause of real estate investment firm Brause Realty. His firm, which owns and manages more than 3 million square feet of property, is developing a 38-story, 266,000-square-foot rental building in Long Island City that uses both.

Brause said that not all property owners are thinking long-term, and many plan to sell before the energy savings pencil out. But family-owned companies tend to take the long view, he noted, since they typically build with future generations in mind.

“It’s my duty as a father and the owner of a business to do what I can to make the world a better place,” Brause explained. “It’s not just about making a dollar in the real estate business.”

Another family firm, the Durst Organization, which owns 13 million square feet of office and retail space and another 3 million square feet of residential rental properties in New York, has made efforts to build responsibly. The developer had planned to take its massive Hallets Point residential project off-grid, which means the buildings would operate using their own power plants.

But that plan was foiled when the 421a tax break lapsed for 15 months starting in 2016, Phil Skalaski, vice president of engineering and energy services at Durst, told TRD. Without the exemption, it wasn’t clear if all five buildings would be constructed, and the off-grid concept hinged on the entire project moving forward. Instead, Durst incorporated an alternative air-conditioning system, where cold water is circulated through a building’s pipes and tenants are able to control exactly how much energy they are using.

While the chilled water apparatus increases the initial cost of each building’s mechanical system by about 8 percent, the projection is that the energy-savings costs will more than make up for that, Skalaski said.

He said that the complexity of alternative air-conditioning and other forward-thinking technologies can be a deterrent for property owners, noting that many aren’t willing to front the extra money and are often wary that the new systems won’t work properly.

“I don’t know if that’s going to change,” Skalaski said. “A lot of developers have one way of doing things.”

Pat Sapinsley, managing director of cleantech initiatives at Urban Future Lab, NYU Tandon School of Engineering’s incubator for smart-grid energy solutions, echoed that sentiment, calling the real estate industry acutely “liability conscious.” But she noted that there are some climate-conscious players in the industry and named Rudin Management’s John Gilbert, who last year helped pioneer a cloud-based building operations system. The new technology allows the company to monitor and adjust energy use in its buildings based on occupancy and other factors.

But many developers and property owners remain wary of that and other energy-saving technology. “They don’t trust the energy-savings calculations,” Sapinsley said.

David Schwartz, principal of the multifamily developer Slate Property Group, said that while he supports the Paris climate accord, there isn’t enough “compelling data available” to convince landlords that energy-saving technology, like passive house or cogeneration, is a glitch-free way to cut costs.

“You never want to be the first guy to do it if it doesn’t work,” he said.

Inefficient efforts

Other initiatives such as Energy Star and Green Globes exist, but over the last 20 years, many developers have built to the requirements of the Leadership in Energy and Environmental Design (LEED) certification program, which the United States Green Building Council launched in the late 1990s to evaluate the environmental performance of a building.

However, architects and engineers alike have spoken out against the international certification program, claiming that it detracts from more effective initiatives. Critics argue that LEED is prohibitively expensive and hinges on a point system that doesn’t always add up to an energy-efficient building.

Geoffrey Lynch, director of architecture at the New York office of engineering giant AECOM, said that he still views LEED as a powerful tool but has seen some developers move away from the system. They either feel that they can make their buildings energy efficient without it or seek a more advanced certification program.

“When it first came out, it was new and different and it was something to show off,” he said. “It’s not exotic anymore.”

In April 2010, architect Frank Gehry caused a stir when he told Bloomberg News that developers were given LEED awards for “bogus stuff” and that the program served as more of a marketing tool than a meaningful way to promote energy efficiency.

“[LEED has] become fetishized in my profession. It’s like if you wear the American flag on your lapel, you’re an American,” he told Bloomberg at the time.

A few months later, the Brooklyn-based development firm Forest City Ratner announced it would not pursue LEED certification at its Gehry-designed rental tower at 8 Spruce Street in Manhattan.

“As much as we can, we designed the building to be sustainable. And as we look at the ongoing operations, we look to make it as sustainable as possible,” Susi Yu, an executive vice president at Forest City Ratner, told TRD last month.

Most recently, some of the building’s residents began participating in a composting program as part of a pilot run by the city. Eventually, Forest City plans to make the program available to all residents in the roughly 900-unit building to significantly cut down on trash input.

But on the whole, Yu said she feels that developers are increasingly making climate-conscious decisions as a selling point for younger tenants.

Regulatory pressure

Demand is not only coming from everyday New Yorkers. Local officials are also putting increased pressure on property owners to start retrofitting their buildings, especially in the wake of the country’s withdrawal from the Paris agreement and President Trump’s move to dismantle the Environmental Protection Agency. State and city leaders have pledged to adhere to the climate accord despite the president’s decision.

In late June, seven City Council members introduced a bill that would essentially require certain buildings to meet passive-house standards beginning in 2025. And just a few weeks earlier, Council members Jumaane Williams and Brad Lander called on Mayor Bill de Blasio to require retrofits across the city, which was met with fierce opposition from the real estate industry. Williams, who serves as chair of the Council’s committee on housing and buildings, said the city needs to target buildings under 25,000 square feet and require energy-saving upgrades to electrical systems.

Last month, John Banks, president of the Real Estate Board of New York (REBNY), told Politico that although the group shares the city’s goal to reduce emissions, a call of mandatory retrofits does not reflect “economic reality or credible methods of implementation.”

Carl Hum, REBNY senior vice president for management services and government affairs, later told TRD that “tenants will ultimately feel the impact in their monthly rent bills.”

It’s not the city’s first attempt to seek mandatory retrofits, however. In December 2009, then-mayor Michael Bloomberg tried and failed. He backed off amid objections from building owners that the plan would prove too costly. Instead, the city left it up to property owners to make changes on their own.

Sapinsley of Urban Future Lab said mandatory retrofits would be an important next step to actually get owners to take energy-saving action. “I have no patience for [the real estate industry’s] whining,” she said.

However, some developers have run into regulations that make going green a lot harder — and far more costly. The Durst Organization is jumping through various regulatory hoops at One Bryant Park, where it has its own 4.6-megawatt cogeneration plant that provides both heat and electricity to the 2.3 million-square-foot office tower. Though the developer boasts that the system is twice as efficient as a conventional plant, Durst is still required to pay Consolidated Edison some $1 million each year in standby rates, fees paid for the utility’s backup energy systems — energy that the building isn’t actually using.

Skalaski said Durst has been working with REBNY and public officials to get Con Ed to reform its rates and incentivize the use of combined heat and power units.

“There’s got to be some level of payback for that. It can’t be a loss every time, or no one will do it,” he said.

Financial shortfalls

Rose of Jonathan Rose Companies said the country’s withdrawal from the climate accord is in some ways a positive development in that it’s shifted the onus of combating climate change on local government and private businesses.

And indeed, at a meeting in late June, the United States Conference of Mayors, a nonpartisan organization comprised of more than 1,400 mayors, stated that it would not only urge the federal government to rejoin the accord, but also find ways to combat climate change in individual cities, the New York Times reported.

Republican and Democratic mayors alike committed to a slew of green initiatives, including enforcing more building codes and creating more incentives for property owners to reduce energy use.

Although environmentalists, city officials and a handful of developers push for more green-building requirements, the bottom line is something any real estate owner can understand: cost. Even when it comes to the city’s efforts to safeguard itself from another Sandy, funding for some New York City-run projects has dried up.

In June, city officials announced that a plan to protect Red Hook from the next “100-year flood” would need to be significantly scaled back. A feasibility study showed that the $100 million project to raise streets in the neighborhood would actually only protect it against a 10-year event. A larger project, the Wall Street Journal reported, would cost $300 to $500 million.

The city’s “Build It Back” program, which is overseeing the rebuilding of thousands of homes in the hardest hit areas such as Staten Island and Red Hook, is $500 million over budget.

And it doesn’t look as though the city will be able to bank on additional federal funding. The president’s proposed budget cuts $667 million from the Federal Emergency Management Agency (FEMA) and local grant programs. He also gutted all $3 billion in funding provided by the Department of Housing and Urban Development after a disaster.

Alan Blumberg, a professor at Stevens Institute of Technology who studies coastal waters and how they interact with urban areas, noted that cities are increasingly planning according to more specific scientific data, not just the broad-brush predictions provided by FEMA. Last year, at the request of the city, the agency agreed to redraw its flood maps to better reflect both current and future flood risks.

For New York, it’s a delicate balance between allowing people to enjoy the waterfront, while they still can, and preparing for a future when they can’t, sources inside and outside of the real estate industry say.

“Pay attention to 2050. Sea level will be at maybe a foot or two more in New York City,” Blumberg said, noting beyond that it’s unclear what things will look like. “People ask me, when is the next 100-year storm coming?” he added. “I say maybe never. Or maybe next year.”

Correction: An earlier version of this story misstated the owner of One New York Plaza. It’s Brookfield Properties.

The project site is an assemblage of six parcels from 1240–1264 W. 2nd Street

Multifamily developers have been turning to Westlake, taking advantage of city incentives that increase the number of units allowed under existing zoning laws.

In nearby City West, a new multifamily tower could soon replace a cluster of industrial properties, and the developer could also utilize those same incentives. Plans call for a 24-story building with 335 residential units, Urbanize reported.

The 39,000-square-foot site at 1240-1262 West 2nd Street is owned by Robert and Julie Freeman, according to the report. Records show Robert Freeman has had a stake in the property since at least 2007. It’s unclear whether the property owners are also developing the project, which was filed without a listed applicant.

In exchange for setting aside some affordable units, the project would qualify for reduced parking requirement and greater density as part of the Los Angeles’ Transit Oriented Communities guidelines.

Tony Ashai of Ashai Design Consulting Corp. has been tapped as the architect. [Urbanize] — Natalie Hoberman

The Agency’s April Lopez, who is named as a defendant in the suit

Robyn Pearlman inherited her Burbank home from her parents and after her father died, was in financial trouble. She and her mother were desperate to save the Delaware Road house.

So in late 2017, Pearlman consulted with a broker from the Agency for help with refinancing her existing mortgage.

But in a lawsuit filed last month, Pearlman claims that the Agency and the broker, April Lopez, conspired with an unlicensed mortgage company to persuade her to take out a fraudulent commercial mortgage loan on the residential property. The loan would have to be paid off in full plus interest, a year later.

Her case, filed in Los Angeles County Superior Court, marks the third legal action against the Beverly Hills-based luxury residential brokerage in less than a year.

1012 Delaware Road (Credit: Zillow)

The lawsuit claims that Lopez — who began her career as a wholesale mortgage lender — advised Pearlman to falsely claim the 2,260-square-foot Burbank home was a rental property. That would allow the homeowner to take out a large commercial loan, bigger than what she would have received from a conventional mortgage.

While the assessed value of the home was only about $462,000, Pearlman secured a $700,000 commercial mortgage from Los Angeles-based Shats Investments in March 2018. The interest on the loan was 9 percent, with a balloon payment of $705,250 due 12 months later, the suit claims.

The company is not a licensed mortgage loan operator but signed off on the loan without verifying Pearlman’s income or her ability to repay, the suit claims. The company is controlled by Carl and Lily Shaknis, who are both defendants in the suit. Lily Shaknis declined to comment. The Shaknis’ also allegedly convinced Pearlman to sign off on a loan that stripped her consumer protections, making it easier to lose the home to foreclosure if she couldn’t repay the loan when it came due.

Pearlman’s attorney David Epstein, said his client and her widowed mother were “desperate to save the family home.” Epstein said “they put their trust in a broker and lender who they were convinced would do the best thing for them. Instead, they fell into the clutches of unscrupulous predators who steered them to a loan they could never afford.”

The suit also named Alex Nelson and his firm, Sherman Oaks-based 1st Point Lending, which also allegedly conspired with Lopez and Shats on the loan. Nelson and the firm are defendants in the suit. Nelson declined to comment.

A representative for the Agency said the brokerage is investigating the allegations. Lopez declined to comment.

Pearlman’s allegation come on the heels of another lawsuit against the Agency and its co-founder, Mauricio Umansky. Last month, the vice president of Equatorial Guinea sued Umansky and the brokerage over the sale of a 15,000-square-foot estate in Malibu. The suit, which marks the second time the Agency has been sued over that property, claims Umansky misrepresented the value of the home to the seller, Teodoro Nguema Obiang, pocketing millions for himself and an accomplice. Umansky denies those charges.

Larry Flint is expected to attend the opening of the new Hustler Hollywood store (Credit: Google Maps)

The Hustler Hollywood retail store has a new lease and a new location, but it didn’t go far.

The adult retail shop’s new location is 8873 W. Sunset Boulevard, WeHoville reported. The store will occupy about 5,100 square feet at $75 per square foot per year, according to Newmark Knight Frank, which handled the lease. The building is registered to a trust that is owned by Saeed and Shahla Hakakzadeh.

Newmark brokers Jonathan Dadourian and David Ghermezian advised on the deal.

The retail store is about 400 feet from its former location, at 8920 Sunset Boulevard. That store will be taken over by the members-only Arts Club — a development by London & Regional Properties and VE Equities. The 120,000-square-foot project designed by Gensler was approved by the city of West Hollywood last August.

The Arts Club is backed by Gwyneth Paltrow, and will include private restaurants, bars, screening rooms, office space, fitness center, spa and art gallery. The owners purchased the site from Hustler founder Larry Flynt for $18.3 million in 2015.

Hustler Hollywood opened in 1998, and 28 other locations have opened since then. [WeHoville] — Gregory Cornfield

Los Angeles City Hall and Mayor Eric Garcetti (Credit: Getty Images)

A tenant coalition is pushing for Los Angeles to provide attorneys and financial support to renters who face harassment or eviction by their landlords.

Activists this week urged Mayor Eric Garcetti and city leaders to advance a “right to counsel” ordinance and dedicate $10 million in the budget for legal assistance, the Los Angeles Times reported. The funds would also be used for outreach and payments to help keep renters in their homes.

Renters protesting (Credit: Twitter)

A landlord group is opposed to the proposal. The Apartment Association of Greater Los Angeles told City Council members in a letter that legal aid would only serve “to make eviction defense attorneys rich.” It added the assistance would also draw out an “already long and difficult eviction processes.”

New York City provides a “right to counsel,” and provides legal assistance for such situations. San Francisco voters also approved a similar measure.

L.A., which is one of the nation’s least affordable cities, has seen more rent strikes in areas where renters refuse to pay the rising prices or have received eviction notices. Between 2014 and 2018, there were almost 6,950 evictions of rent-controlled households in the city.

Renters protesting (Credit: Twitter)

Advocates want the city to provide subsidized legal services for low-income tenants, along with help for other renters who would pay on a sliding scale.

Last August, officials voted to consider the plan and asked city staff to make recommendations, but the plan has since stalled. The Los Angeles Renters’ Right to Counsel Coalition recommends starting the program in the ZIP codes with the most need, and then expand throughout the city by 2024. [LAT] — Gregory Cornfield

The Climate Mobilization Act aims to curb carbon emissions in NYC (Credit: iStock)

As Washington debates the controversial Green New Deal, New York City is forging ahead with its own measures in a bid to curb climate change.

The city council will announce Thursday a batch of proposed legislation, dubbed the Climate Mobilization Act, that aim to curb carbon emissions in the country’s largest metropolis and would force landlords to cut emissions by 40 percent by 2030, according to HuffPost.

The most drastic measure would require landlords with buildings over 25,000 square feet to conduct retrofits like new windows and insulation that would make the building’s more energy efficient.

The Real Estate Board of New York has already taken steps to oppose the measure, and at a hearing in December, reportedly forged alliances with other industry groups, including hospitals and the Catholic Church.

The proposed legislation isn’t “cognizant of short-term realities,” REBNY’s vice president Carl Hum reportedly said at the time.

Other measures in the act, which would be implemented by 2024, would require solar panels or plants to cover the roofs of some buildings, or install miniature wind turbines. A second batch of legislation, that is expected to be introduced in coming months, would require all school buses to be electric. [HuffPost] — David Jeans 

Coalition for Responsible Community Development President and CEO Mark Anthony Wilson, Jr and a rendering of HCHC’s project in Compton

A pair of affordable housing developers secured construction loans for residential projects in Compton and Florence, as county municipalities and builders look to ease Los Angeles’ housing crisis.

Hollywood Community Housing Corporation secured a $23 million loan from Wells Fargo for its project in Compton. And JPMorgan provided $16.7 million in financing to a joint venture of L.A. Family Housing and the Coalition for Responsible Community Development for their project in Florence.

Hollywood Community Housing’s 85-unit development will rise over a vacant lot at 14733-14803 S. Stanford Avenue, records show. The organization has been working on the project for two years.

Despite the need for affordable housing construction in the L.A. area, it’s not unusual for projects to take years to break ground. But avoid that kind of delay, SRO Housing Corporation applied to fast-track a recent project in Westlake. It acted through a state law passed last year that requires local governments to speed up affordable housing development.

Hollywood Community Housing’s construction would be split between two three-story buildings. About half of the units will be reserved for “extremely low-income” households, meaning those with annual incomes below 30 percent of Area Median Income. The other units will be split between income levels up to a maximum of 60 percent of Area Median Income.

In Florence, L.A. Family Housing and the Coalition for Responsible Community Development are teaming up on a 32-unit project on city-owned land. The development will rise at 6901-6917 S. Main Street. The four-story building would be 100 percent affordable with a mix of studio, one-, two-, and three-bedroom units. It is specifically for homeless individuals and family members.

Despite those projects, the number of affordable housing units has sharply declined in recent years in L.A. County. L andlords have converted more than 5,000 affordable apartments to market-rate since 1997, which works out to about five per week. The California Housing Partnership estimates that 12,100 units in the county are “at risk” of market-rate conversion.

There are a couple of new real estate events coming up in Los Angeles next week.

From April 17 to April 18, PERE News is hosting its Investor Forum for 2019 at Convene, 333 South Grand Avenue. This event will offer networking opportunities, along with panel discussions on a variety of topics affecting the real estate industry, such as the integration of technology and Opportunity Zones. Anthony Scaramucci of SkyBridge Capital and Tsilah Burman of CBRE Global Investors will be among the speakers at the event.

On April 18, All Star Group is holding its Southern California Commercial Real Estate & Lending Conference at the Hilton Long Beach, 701 West Ocean Boulevard from 8 a.m. to 5:30 p.m. Come to this event to network and hear professionals market data. Joe Coupal of the Howard Jarvis Taxpayers Association will also be giving a keynote speech on the split roll tax.

To search for future industry events or browse past ones, click here. And to submit more industry events, please reach out to events@therealdeal.com.

Click here to buy tickets to The Real Deal’s L.A. Showcase and Forum

The Real Deal is hosting its annual Los Angeles Residential Showcase and Forum on Friday, June 21st at The London West Hollywood. This year’s forum will focus on how social media and guerrilla marketing play into securing exclusive listings, as well as analyze the impact of new trends and challenges in L.A.’s hottest neighborhoods.

The TRD team has already secured a powerhouse lineup of speakers that include Joyce Rey of Coldwell Banker; Michael Williamson of Sotheby’s; George Penner of Deasy Penner; Aaron Kirman of Pacific Union; Ernie Carswell of Douglas Elliman; Josh Flagg of Rodeo Realty; Ivan Estrada of Douglas Elliman; Billy Rose of The Agency; and Josh Altman of Douglas Elliman.

Check out our event page daily for the latest forum updates. Sponsorship opportunities and tickets are still available, but selling out quick! For more information, visit our event site.

San Francisco

New York City is no longer the most expensive place in the world to build, according to a new report.

San Francisco has usurped the New York market with an average building cost of $417 per square foot, according Turner & Townsend’s latest International Construction Market Survey. Those costs are expected to increase 6 percent in the next year. In New York, the average building cost was $368 per square foot, up slightly from last year’s $362 per square foot. This year, those costs are expected to increase 3 percent.

Still, New York has the highest labor costs of the U.S. markets surveyed at an average $101.30 per hour. The city was second only to Zurich, which has an average rate of $110.70 per hour, according to the report. San Francisco was just below New York with $90 per hour, followed by Seattle at $75.50 per hour and Chicago with $69.60.

In terms of overall costs, Seattle ranked sixth with an average of $338 per square foot, and Chicago was eighth place at $290 per square foot.

Several markets are struggling to find enough skilled labor for their projects, while overall costs are also being driven up by tariffs on materials, especially steel and aluminum. According to the report, owners can expect the cost of overall core and shell construction for tall and supertall steel-framed buildings to increase by 5 to 10 percent. In the past year, steel costs in the U.S. have jumped 22.4 percent, according to the report.

“The big challenge for the San Francisco Bay Area and wider U.S. construction market is meeting this demand in the face of import tariff talks, escalating materials costs, and a shrinking skilled labor force,” John Robbins, Turner & Townsend’s managing director U.S. and North America head of real estate, said in a statement. “Simply turning to local supply isn’t solving the problem… clients are considering other strategies to develop their real estate – from alternate and more unique construction methods, to reductions of their build programs.”

The estate sold for sold for $33.5 million (Credit: iStock)

Andrew Rosenfield, among the top executives at Guggenheim Partners, and his wife, are the new owners of Oaktree Capital Management CEO Bruce Karsh’s Brentwood estate.

The $33.5 million sale was reported last week, but the buyer was identified only through 12 Oak Properties LLC. Variety identified Rosenfield and his wife, Betsy Bergman Rosenfield, as the new owners. The mansion on Oakmont Drive traded at a 20-percent discount from the original listing price of $42 million.

The Brentwood estate sold for $33.5 million to Andy Rosenfield and Betsy Bergman Rosenfield. (Credit: Hilton & Hyland)

Karsh bought the property for $33.7 million in 2014 from his business partner Howard Marks.

The main home was built in 1940 by architect James Dolena. It spans 8,600 square feet with six bedrooms and eight bathrooms. The gated two-acre estate also include an art studio, staff quarters, a security building, a detached gym and a swimming pool.

Oakmont Drive is one of the priciest streets in Brentwood, with residents who include billionaire philanthropist Eli Broad, Disney’s CEO Bob Iger and John Thain, the former CEO of Merrill Lynch.

The Brentwood estate sold for $33.5 million to Andy Rosenfield and Betsy Bergman Rosenfield. (Credit: Hilton & Hyland)

The Rosenfields have long been based in Chicago, where they own an estate in the Lake Forest area with more than 14,000 square feet of living space.

Karsh, the billionaire co-founder of Oaktree Capital, upgraded the home last year after buying a mansion in Holmby Hills for $69 million.

The Brentwood home was listed by Linda May of Hilton & Hyland. [Variety] — Gregory Cornfield

Is the market better for buyers, or sellers? (Credit: iStock)

Have we arrived at one of those rare Goldilocks moments in real estate, where the market works well for sellers and buyers, strongly favoring neither?

Maybe. Based on the latest national consumer-sentiment survey by mortgage investor Fannie Mae, American consumers appear to think so. They’re more positive about the overall direction of the housing market than they’ve been in nearly a year. Growing numbers think it’s a good time to sell and a good time to buy. They expect their own personal financial situations will improve this year, and they believe that interest rates for home loans will continue to remain relatively affordable.

Housing and mortgage economists tend to agree. As Michael Fratantoni, chief economist of the Mortgage Bankers Association, told me: Six months ago, “I was guardedly optimistic. Now I’m just plain optimistic.” Mark Fleming, chief economist of First American Title Insurance, says: “So far in 2019, we’ve seen mortgage rates decline and wages rise — both trends work to boost home-buying power and fuel greater market potential for home sales, setting the stage for a stronger than expected” season.

Yet some economists warn that things are not necessarily as rosy as Fannie’s consumer survey would suggest. They point to troubling signs: Total home sales on a national basis continue to decline. That pattern historically has been a leading indicator that prices could actually fall during the year ahead, ending years of nonstop appreciation. Plus, houses are taking longer to sell — many owners are having to cut their asking prices. The days of widespread bidding wars are over.

So what’s really going on, and how do you relate it to your own situation, either as a potential buyer or seller? Some hard facts:

— Prices are still rising, but at a slower rate than in recent years past. The median home listing price hit $300,000 last month for the first time ever, a 7 percent jump over the previous year, according to Realtor.com. Fratantoni predicts price increases will moderate to an average of just 4 percent this year, 3 percent next year and 2.5 percent in 2021.

— A notable percentage of sellers’ asking prices are being reduced. In the four weeks ending March 24, prices on nearly 21 percent of all listings nationwide were cut, according to Redfin, the real-estate brokerage. Just 16 percent of offers written by Redfin agents encountered bidding wars during the first three weeks of March, compared with 61 percent during the same weeks in 2018.

— Interest rates have been a great stimulus and are key to a strong spring. Lower rates are good for buyers, good for sellers. Last fall, average rates for a fixed-rate 30-year mortgage hovered near 5 percent, according to data from investor Freddie Mac. In the first week of April they averaged 4.08 percent. Homeowners and would-be buyers have responded enthusiastically to the lower rates, sending applications soaring by 18.6 percent during the week ending March 29 compared with the week earlier, according to the Mortgage Bankers Association.

— Inventories of available homes for sale continue to rise — meaning more choices for shoppers, according to National Association of Realtors researcher Michael Hyman. Listings nationwide were up by 3.2 percent year-over-year in February. That’s generally a good sign for buyers because it helps keep price pressures down. But homes for sale in the primary entry segment for first-time home buyers — houses priced under $200,000 — dropped by 9 percent year-over-year, according to Realtor.com, while they grew by 11 percent in the upper price brackets over $750,000.

All this is well and good, says Issi Romem, chief economist for realty marketing and data site Trulia, but the reality is that the housing market is in cyclical slowdown mode. Inventories of available homes may be increasing, but part of the reason is that houses are staying on the market unsold for longer times in many areas. The price cuts and longer days-on-market times reveal that significant numbers of “sellers are facing greater difficulties in selling.”

Romem and Trulia Senior Economist Cheryl Young issued a report last week that runs counter to the cheery outlook prevailing in the industry. “[It] is possible,” they say, that “by fall or next year prices might modestly decline.”

What that means is that the Goldilocks theory and perceptions of balance between sellers and buyers may not be quite right.

Advantage: buyers.

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From negotiating with buyers to tidying up their client’s listings, there are a few sentiments real estate agents share across the board.

The Corcoran Group’s Sarah Fearon brought together her two specialities, real estate and comedy, to encapsulate a day in the life of a New York City real estate agent in parody form.

Aside from selling properties for her clients in Manhattan, Fearon is an actress, comedian and playwright. Her one-woman show, “2B” — which is debuting at the Players Theatre from April 25 to May 12 — is based on her experiences as a real estate agent.

Watch the video above, starring Fearon as her character “Snazzy Peabody,” to see what real estate agents really say.

Dick Wolf, Jennifer Aniston and Brad Pitt (Credit: Getty Images)

The biggest deal on the books this week was “Law & Order” executive producer Dick Wolf’s $14.8 million purchase of a spec home in Hope Ranch, just outside Santa Barbara. Wolf bought the home for his wife, Noelle Lippman. Lippman and Wolf, who lives in nearby Montecito, are reportedly in the process of separating. The 11,200-square-foot spec home sits on 2.3 acres and has a long backyard pool and a cactus garden. Hope Ranch saw a surge in activity last year after Montecito was hit by mudslides caused by the Thomas Fire.

The biggest new listing of the week is for a 12,000-square-foot Beverly Hills estate once owned by Hollywood super-couple Brad Pitt and Jennifer Aniston. The current owner, hedge fund manager Jonathan Brooks, has listed the house for $56 million. Pitt and Aniston bought the 1930s-era estate in 2001 for $13.5 million, and spent three years renovating it before selling in 2005 following their divorce.

Not far away in Holmby Hills, Formula One heiress Petra Ecclestone has again chopped the price on her 56,500-square-foot estate. Ecclestone is now asking $160 million for Spelling Manor, named for its original owner, the late television producer Aaron Spelling. The 123-room French chateau-style estate first hit the market for $200 million in 2016, but with no bites, Ecclestone cut it to $175 million last summer.

Not to be forgotten in the sea of larger listings and deals was “Big Bang Theory” actor Jim Parsons’ sale of a Spanish Colonial-style home in Los Feliz. Parsons closed for just under $7 million, just a few hundred thousand dollars more than what “Twilight” star Robert Pattinson paid for the home in 2014, the Los Angeles Times reported. The 4,000-square-foot home has three bedrooms, and 3.5 bathrooms. The sloping backyard is centered around a lagoon-style backyard pool fed by waterfalls.

Parsons and Pattinson aren’t the only celebrities that have owned the home. Los Angeles Lakers great Kareem Abdul-Jabbar, actor Tim Curry, and cinematographer Robert Richardson have all owned the home at one point.

Bestseller Tower designed by architect Dorte Mandrup (Credit: Dorte Mandrup)

The tallest building in Western Europe may rise in a location few would have guessed: a rural village in Denmark.

The 1,050-foot-tall building would be visible for up to 37 miles in every direction from Brande, Denmark, population 7,000.

However, Brande has a significant footprint in the fashion world despite its petite size. The town is the headquarters of Bestseller, a company that produces low-price apparel, and it’s also the home of Bestseller’s founder Anders Holch Povlsen, the wealthiest man in Denmark.

The planned skyscraper has been dubbed Bestseller Tower and will house office space for the fashion company, plus a hotel and conference facilities. The development will also include ground-floor retail space where Bestseller is expected to display its apparel brands.

Danish architecture firm Dorte Mandrup designed the tower with a grid-style façade which bears a resemblance to Manhattan’s infamous 432 Park Avenue.

In March, Brande’s town council approved the skyscraper’s development, which was first announced in 2017. Construction is expected to start this year and conclude in 2023. [Architect’s Newspaper] – Mike Seemuth

From left: Thompson Island, Kmart and Andrew Lippi (Credit Google Maps, Monroe County Sheriff’s Office, iStock)

A Florida man, who paid $8 million for a private island off Key West last month, just got caught stealing about $300 of merchandise from a Kmart store.

Andrew Lippi, 59, bought products from the Kmart in Key West and collected refunds by returning the containers without the original products inside, the New York Daily News reported.

According to a police report, Lippi paid about $160 for a Keurig coffee maker at the Kmart on March 30 and got a full refund the next day by returning the Keurig container with a basketball inside.

A few days later, at the same store, he paid slightly more than $100 for a coffee maker and eight light bulbs before getting a refund the same day by returning the containers with an older coffee maker and a different brand of light bulbs. Lippi also bought a bed skirt and got a refund by returning a pillow case instead.

Video from a store-security camera shows him buying and returning all the merchandise.

Lippi owns a portfolio of properties including Thompson Island off Key West, which he bought in March for $8 million, and a 12-room house featured on the MTV series “The Real World,” according to South Florida television station WPLG. He reportedly rents out the mansion on Airbnb for $1,800 a night. [NYDN] – Mike Seemuth

A tiny Balkan country is emerging as the preferred destination for the world’s richest people.

Montenegro is one of the most popular travel destinations among billionaires this year and also home to a growing population of the ultra wealthy, according to a recent report by Business Insider.

The country has a total population of 620,000 and is approximately the size of Connecticut, but it also has a 182-mile coastline on the Adriatic Sea, which makes it a haven for yacht owners. (To be exact, 450 yachts can dock at one time in the newly-built Porto Montenegro.)

Membership in the North Atlantic Treaty Organization a few years ago seems to have fueled Montenegro’s appeal among the affluent. After joining NATO in 2017, Montenegro adopted the euro as its currency and airlines added more direct flights into the country. By the end of 2017, Montenegro reportedly had 64 millionaires among its residents, compared to 54 millionaires the year before.

In another step to lure wealthy individuals, a government program launched last October offers passports to 2,000 investors who pour at least $291,000 (plus additional fees) into a government-led development projects.

Residential real estate prices in Montenegro are still low, at least compared to the French Riviera and Monaco. For example: three-bedroom luxury condos with an ocean-view terrace and four-bedroom homes are listed for under $300,000. [Business Insider] – Mike Seemuth