Every day, The Real Deal rounds up Los Angeles’ biggest real estate news. We update this page at 9 a.m., 12:30 p.m., and 4 p.m. PT. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 4 p.m. PT

L.A. is very into co-living. More co-living companies are opening up locations in the city. While they range in terms of prices — some are pretty high — and options, they’re also starting to go niche, with a host of amenities and events to separate themselves from the crowd. [TRD]

Relevant Group is going affordable. The developer that has been building a mini hotel empire in Hollywood submitted plans for a fully affordable apartment building, featuring 150 units, in Westlake. [TRD]

Matthew Perry’s Century City penthouse has hit the market. The “Friends” actor is selling his uber-luxurious full-floor unit at the Century for $35 million. The 9,300-square-foot penthouse has five bedrooms, and velvet throughout, and was custom-designed for him. [TRD]

Millenium Partners faces a setback in its massive project in Hollywood. A California appeals court ruled that the environmental review the developer conducted for its $1 billion Hollywood Center project was “fatally defective.” The project is now in violation of the California Environmental Quality Act. The mixed-use project has been in the pipeline for a decade, and it’s unclear what will happen next. [Curbed]

Discount brokerage Redfin’s revenue rose 39% in the second quarter. The Seattle-based firm’s new iBuying platform helped push revenues, but steep marketing costs resulted in net losses growing from $3.2 million to $12.6 million. [TRD]

Smart-lock maker Latch made off like a bandit with a $126 million Series B fundraise. According to the startup, one in 10 new apartment buildings in the country use its smart locks, and investor Brookfield has said they plan to install latch at Greenpoint Landing. [TRD]

This Montecito estate was recently relisted for $65 million.

Santa Barbara’s seaside homes are “selling like hotcakes.” Demand for beachfront homes is driven in part by concerns among buyers that homes in the hills are vulnerable to wildfires and mudslides that have ravaged the region. [TRD]

Seritage posted a $26 million net loss in Q2. Sears’ real estate asset spinoff attributed the loss in part to lower rents from its leases with Sears, which is in the midst of bankruptcy proceedings. Seritage has signed leases with stores worth a total of $154 million in annual base rent since 2015. Rents should start flowing in the next couple of years, the company said. [TRD] 

Tipton John, partner at AllenMatkins; and Jerry Nickelsburg, of UCLA Anderson Forecast

Commercial real estate players see expansion on the horizon. A UCLA-Allen Matkins survey found experts and investors optimistic that the industry would pick back up after a predicted slowdown through next year. The industrial sector is expected to perform the strongest, but respondents also expect office to do well. [TRD]

Elegran Real Estate is going after Compass. Elegran, whose executives were found this week to be behind a massive network of knockoff building website, claims that leasing manager Zino Angelides and three other Elegran agents took over $2 million worth of data to the $6.4 billion real estate brokerage. [TRD]

Global roundup: the Queen needs a property manager at Buckingham Palace. And in other news from abroad, a watchdog says European Union commercial property values are overvalued. [TRD]

From left: Jesse Lasky, Adolfo Suaya, Samuel Goldwyn and the Hillview Hollywood in background (Credit: Wikipedia and Getty Images)

A historic apartment building in an Opportunity Zone hits the market. The 53-unit Hillview Hollywood, which was listed for $25 million, qualifies for a reposition because of a controversial eviction law. The owner is an LLC linked to restaurateur Adolfo Suaya, who paid CIM Group $16 million for the property in 2016. [TRD]

The now-demolished Yolk store in Silver Lake. (Credit: owners via Yelp)

L.A. may increase fines on “unscrupulous developers” who work without permits. Councilmember Mitch O’Farrell wants to make developers think twice about demolishing a building without proper permits. Developer Mohamad Hadid’s unpermitted work on an under-construction spec mansion in Bel Air is the most high profile example. But O’Farrell’s motion was prompted by the unpermitted demolition of the Streamline Moderne Yolk store in Silver Lake in May. [Curbed]

Whole Foods leases 50,000 square feet of space at Carmel Partners’ Cumulus complex. The grocer will rent half the available retail space at the under-construction West Adams project, which upon completion will also have 1,210 apartments and a public park. CIM Group and 4D Development are among the other developers building in the neighborhood, which borders red-hot Culver City. [LABJ]

A rendering of Quixote Studios (Credit: Quixote Studios)

Quixote Studios opens its new media production facility in Pacoima. The production house was lured by the north San Fernando Valley neighborhood’s affordability and strong demand for studio time from streaming services. Quixote wants to turn Pacoima “into a production hub,” CEO Mikel Elliott said. Amazon and Sony will be the first to shoot at the new five-soundstage facility. [LAT]

Jeffrey Epstein and Donald Trump in 1997 (Credit: Getty Images)

Donald Trump and Jeffrey Epstein sparred over the Florida estate of nursing home mogul Abe Gosman in 2004. Gosman originally purchased from Epstein’s close friend and mentor Leslie Wexner. But after Gosman went bankrupt, Trump out-bid Epstein for the property, and flipped it just four years later for $95 million. [Vanity Fair]

WeWork has been negotiating for up to $6 billion in financing, but there’s a catch. The financing is contingent on the We Company raising $3 billion when it goes public. JPMorgan Chase has reportedly already promised $800 million. [Bloomberg]

FROM THE CITY’S RECORDS:

Relevant Group wants to build a 150-unit apartment building at 1316 W. Linwood Avenue in Westlake. [LADCP]

An LLC led by an individual named Reuben Robin wants to replace a West Pico Boulevard car wash with a five-story mixed-use building with 16,500 square feet of commercial space and 67 residential units. [LADCP] 

Compiled by Dennis Lynch

Andrew Sugrue and Luke Schoenfelder (Credit: Crunchbase and LinkedIn)

The smart lock maker Latch has finished its Series B fundraising with $126 million in financing, the company announced on Thursday.

Growth equity firm Avenir led the Series B funding round along with existing investors such as Brookfield Ventures, RXR Realty and Tishman Speyer. The money completes Latch’s Series B raise, following a prior $70 million funding round that Brookfield Ventures led last year. The New York-based company is now valued at about $500 million overall.

Launched in 2017, Latch allows residents to unlock their doors with a smartphone, keycard or code. The startup claims that one in 10 new apartments in the country now use its system.

Brookfield plans to install Latch systems at some of its new multifamily properties, including Greenpoint Landing. Other major companies planning to use the system at their properties include Toll Brothers, RXR Realty and Encore Capital Management.

Latch said it will use its latest round of fundraising to scale its new construction commitments, expand more into the retrofit market and set the stage for future offerings.

“We’re thrilled to partner with Avenir to catalyze the next phase of Latch’s growth,” Latch CEO Luke Schoenfelder said in a statement. “Equipping doors with our devices is just the first step toward the future we imagine for the modern building.”

Landlords and online retailers have become more interested in smart locks in recent years. Online retailers see them as a way to make it easier for delivery workers to drop off packages, and they allow landlords to no longer have to change physical locks when tenants move out.

Carson Living, a property management tech startup and Latch competitor, announced a $3 million seed funding round for its platform earlier this year.

From left: Dean Martin and Matthew Perry (Credit: Hilton & Hyland, Getty Images)

Two famous groups, The Rat Pack and the one from “Friends” — actually one one member of each group — factored into the week that was in Los Angeles celebrity real estate.

Matthew Perry, previously known as Chandler Bing on “Friends,” listed his full-floor penthouse at The Century luxury tower in Century City. The asking price is $35 million. Two years ago, Perry paid $20 million for the condo in the building designed by Related Companies. The unit spans 9,300 square feet and includes four bedrooms and eight bathrooms, as well as a screening room and four terraces, and an ample amount of velvet. The 42-story tower also includes a pool, a movie theater and more amenities.

In neighboring Beverly Hills, a mega mansion with ties to legendary crooner and entertainer Dean Martin hit the market for $75 million. It spans 27,500 square feet and has a modern museum style. It’s called “The Glazer Estate” after its most recent owner, megamall developer Guilford Glazer, and his wife Diane. The current home replaced Martin’s longtime abod on the 1.5-acre property near the Sunset Strip. The mansion now includes six bedrooms and 15 bathrooms, as well as a ballroom and an indoor pool. The estate also has a 98-foot outdoor swimming pool and man-made ponds and waterfalls.

The Brentwood home that once belonged to legendary film actor Jimmy Stewart sold for $8.3 million, Town & Country reported. It was the first time the half-acre property and its 4,600-square-foot house traded in 60 years. The ranch home, built in 1938, has four bedrooms, four bathrooms, two fireplaces and a two-car garage. It appears to have remained relatively untouched since he lived there. Stewart starred in “It’s a Wonderful Life,” “Vertigo,” “Mr. Smith Goes to Washington,” and a host of other films.

Embattled former “Empire” actor Jussie Smollett took a $30,000 loss on the sale of his Studio City home, Variety reported. Smollett, who is facing a lawsuit from the city of Chicago over his alleged hate crime hoax earlier this year, sold the 2,600-square-foot home for $1.6 million in an off-market sale. It has three bedrooms and 3.5 bathrooms, and a security system complete with cameras.

799 East Third Street and Whitey Bulger in his 2011 mugshot (Credit: Zillow, Getty Images)

A Boston home connected to mob boss James “Whitey” Bulger is on sale for $3.5 million.

The property, dubbed “The Haunty,” has a total of 1,975 square feet of living space in two buildings, a front and rear house, and its lot spans 5,000 square feet. While it’s not millions-of-dollars large, the listing pitches the Cape-style property as a “development opportunity” in City Point, a quickly gentrifying neighborhood, according to the Boston Globe.

The potential sales-pitch hitch here is this was the location where the late mob boss committed three gruesome murders and where subsequently he had the bodies buried.

The property at 799 East Third Street in South Boston was owned at the time of the murders by the brother of a Bulger associate, Pat Nee. Before Michael and Kathleen Nee sold the South Boston property for $120,000 to the current owners, Russell and Mary Radcliffe, in 1985, the remains of the victims were moved to a location in the Dorchester area before.

Bulger was bludgeoned to death in October 2018 at the Hazelton federal penitentiary in Bruceton Mills, West Virginia. He was 89 years old and serving two life terms for 11 murders. No one has been charged in his murder — and, according to the Globe, he was given a proper burial in the Saint Joseph Cemetery. [Boston Globe] — Mike Seemuth

(Credit: iStock)

A decline in Seattle-area home values is the first in years in a major U.S. metropolitan area, a leading source of real estate data reported.

Single-family home prices in May fell 1.2 percent, compared with the same month last year, according to fresh data from S&P CoreLogic Case-Shiller.

Kelly Meister, a Seattle-based broker for Compass, said home prices appear more uneven than a year ago from one neighborhood in the city to another.

“The Seattle market is like a microwave: super hot in some spots and cold I others,” she told the Seattle Times

Indeed, the dip in house prices across metropolitan Seattle obscures strong markets for homes north and south of the city.

South of Seattle in Pierce County and Tacoma County, for example, the median house price was 7.3 percent higher in June than in the same month last year, the Northwest Multiple Listing Service reported.

Single-family home prices also vary widely within the city of Seattle, where the median price of a house is $714,600, research by Zillow shows.

Whether house-price declines spread from the Seattle area to other major metropolitan areas “remains to be seen,” Philip Murphy, managing director of S&P Dow Jones Indices, said in a prepared statement. “For now, there is still substantial diversity in local trends.”

The growth of home prices has been slowing across the nation, even in the Southwest, where prices have been rising at the fastest pace. [Seattle Times] — Mike Seemuth

742 Southwest Boulevard N (Credit: Zillow)

A listing for a house in St. Petersburg, Florida, shows a photograph of the property engulfed in fire and smoke.

The asking price is $99,000. But this tear-down is probably a better deal than the fiery photo suggests.

The listing acknowledges the 1,280-square-foot house was “heavily damaged in a fire” but notes that its 6,037-square-foot lot is in “a very popular area.”

The city government issued an order to demolish the house, which was built in 1959 at 742 Southwest Boulevard N in St. Petersburg.

Dylan Jaeck, the listing agent, said the fire happened in late 2018 while the previous owners were traveling. They sold the house to the current owner, whom Jaeck represents.

He told the Tampa Bay Times he included the photo of the house afire to get attention and succeeded.

Jaeck, who works for St. Petersburg-based Luxury and Beach Realty Inc., said he had gotten many phone calls from real estate agents in Pinellas County inquiring about the burned house.

The upside could be considerable. The first property sale that Jaeck ever handled was a fire-damaged house that went for $46,000 in 2015, and the following year it sold for $150,000. [Tampa Bay Times] – Mike Seemuth

(Illustration by Christiane Engel)

Anyone who’s tried to do business with a serious golfer on a summer Friday — or Monday, for that matter — may be on a fool’s errand.

With an abundance of storied golf clubs in the metropolitan area, the same is true of real estate’s biggest players.

Built on hundreds of acres of rolling hills in Westchester, New Jersey and the Hamptons, golf in the tri-state area is unquestionably a real estate story — sharing a clubby nature with an industry known for being less than hospitable to outsiders.

Though New York’s older clubs are steeped in history, a slew of new courses built over the past two decades have attracted the industry’s biggest names and the imprimatur of golf starchitects who have pushed clubhouse aesthetics into the modern age.

At the Bridge — a 17-year-old club in Bridgehampton whose members include HFZ Capital’s Ziel Feldman and Marty Burger of Silverstein Properties — architect Roger Ferris designed a modern, glassy clubhouse that houses art by painter and photographer Richard Prince and contemporary artist Tom Sachs (both members).

And at East Hampton Golf Club, which opened in 2000, the clubhouse was designed by Pembrooke & Ives, the interior design firm behind the luxury condos at 212 Fifth Avenue and the Astor at 235 West 75th Street, among others. (That club also counts high-profile real estate attorney Jon Mechanic, chair of law firm Fried Frank’s real estate department, and Cushman & Wakefield’s Doug Harmon as members.)

In fact, New York real estate players help populate several of the toniest clubs in the Hamptons, where membership can be as steep as $1 million plus annual dues.

And playing with clients and colleagues is, well, par for the course.

“There’s a lot of quid pro quo going on in golf,” said Robin Schneiderman, head of business development for Halstead and Brown Harris Stevens Development Marketing, who plays at Gardiner’s Bay Country Club on Shelter Island. “I’ll take you to my place if you take me to yours.”

What’s your handicap?

The East End is dotted with exclusive clubs whose membership goes back generations.

Shinnecock Hills Golf Club, Maidstone Club and National Golf Links of America are generally uttered in the same breath — often followed by the words “discerning,” “private” or “snooty.”

Among the top three, Maidstone has been called the “most blueblood.”

The East Hampton club, founded in 1891, is said to have a seven-year waiting list.

Famous members have included George Plimpton, co-founder of the Paris Review. Arthur Zeckendorf is also a member.

Atlantic Golf Club, which opened in 1992 in Bridgehampton, has an equally prestigious (and deep-pocketed) member base.

But early on, it had the reputation of attracting Jewish members who had been turned away from other clubs. Some of those early members included the Blackstone Group’s Stephen Schwarzman and Jonathan Tisch, chair and CEO of Loews Hotels, according to published reports. Harry Macklowe is also said to be a member, sources said. And Corcoran Group CEO Pam Liebman plays there as well.

Liebman said she’s “cemented many a deal over golf,” and plays not just for the chance to spend several hours outside in a beautiful environment, but also to connect with clients and potential clients (often with cocktails on the last hole). It “doesn’t hurt,” she said in a text message, “to often be the only woman playing in small or large groups.”

The strength of a golfer’s game may depend on the day, but there are some real estate players with strong handicaps.

John Leslie, senior managing director at ABS Altman Warwick, the capital markets arm of ABS Real Estate Partners, has a 3.4 handicap — meaning that on average he scores 3.4 above par on 18 holes. Steve Witkoff’s handicap is 4.4, according to the Golf Handicap and Information Network, which is maintained by the U.S. Golf Association. Two Trees Development’s Jed Walentas has a handicap of 4.8.

CBRE’s Paul Amrich went to college on a golf scholarship and almost went on a PGA development tour. “In hindsight, I’m really glad that I didn’t,” he told the Commercial Observer this year. “Those guys lived out of the trunk of their cars, and they’re not playing professional golf.”

Not unlike co-op boards, golf clubs have strict admissions policies requiring sponsorship by a current member and hefty financial outlays. Even then, some decisions are shrouded in secrecy. Membership at the most elite clubs are often passed down from family members.

ABS’ Leslie said they probably take 10 new members a year. “There’s a lot of people vying for those eight to 10 spots,” he said.

Too many clubs

The fact is, there’s a surplus of golf courses thanks to a building boom in the 1980s. But over the past decade, the number of golfers has dropped off.

An estimated 24.2 million Americans played golf in 2018, down from a peak of 30 million in 2001, according to the National Golf Foundation. That steep decline, partly a result of the sport failing to attract millennials, has taken a toll on golf clubs.

“The number of closures has outpaced openings for a 10-year period now,” said Jeff Davis, founder of Dallas-based Fairway Advisors, a golf course brokerage and advisory firm. Nationwide, there are around 16,700 courses — with around 12 courses opening and 198 courses closing in 2018 alone.

Courses that were built purely as amenities for residential projects are particularly vulnerable. Great Rock Golf Course, an 18-hole course in Wading River on Long Island, was designed in the 1990s with 140 homes. By the early aughts, the club ran into financial trouble after trading lawsuits with the town and defaulted on its taxes, according to local news reports. In 2014, it was sold out of bankruptcy. The course is still private, but it’s unclear who the new owner is.

But even if a club isn’t financially underwater, the land itself can be more valuable as a development site.

In 2017, Elmwood Country Club, a member-owned club in Westchester, was sold to New Jersey-based Ridgewood Real Estate Partners for $13 million. The developer is now planning 175 townhouses on the 106-acre property.

Toll Brothers, meanwhile, is building residential projects on two former courses in New Jersey. The firm is developing a 78-house project at the former site of Apple Ridge Country Club in Upper Saddle River, where it closed on the purchase in 2015.

And, it’s building 275 homes on the former High Mountain Golf Club, a semi-private club in Franklin Lakes that closed in 2014. The East End’s most elite clubs have been largely immune to the golf course contraction trend, bolstered by status-driven golfers willing (and able) to cough up the dues.

“If there’s an opening to get into Atlantic, there are enough guys out there with the money to do it,” said Fairway Advisors’ Davis. “Same with Maidstone, National and Shinnecock.”

Young blood

Though many of New York’s old real estate families belong to the East End’s blueblood clubs, real estate execs have flocked to a slew of clubs that have opened since 2000.

Sebonack Golf Club in Southampton — which opened in 2006 and costs $1 million to join — counts Witkoff, the Related Companies’ Stephen Ross and Starwood Capital’s Barry Sternlicht as members.

Silverstein’s Burger is said to have joined the Bridge — which opened in 2002 with sky-high initiation fees but lax rules such as no dress code — this year. In addition to Burger and Feldman, other members of that club include Michael May, who runs Silverstein’s debt fund, and Douglas Elliman’s Howard Lorber.

It’s not uncommon to belong to multiple clubs, each with its own reputation, history and course design. Feldman, for example, is also a member at East Hampton Golf Club.

Michael Rudin started playing as a kid with his dad, Bill, and grandfather Lewis, who belonged to Deepdale Golf Club in Manhasset on Long Island. “It has the family connection,” the younger Rudin said of Deepdale, where he still plays, along with Friar’s Head in Riverhead and Atlantic.

Rudin said his grandfather’s legacy there extends beyond club membership: Lewis Rudin founded First Tee, a youth development organization that offers scholarships to students who get into New York University.

Mixing business and golf is either de rigueur or an absolute faux pas, depending who you ask.

Several years ago, ABS’ Leslie met his now-boss Brian Warwick at Winged Foot in Mamaroneck in Westchester, where they are both members. (President Trump is also a member.)

“I actually had heard of Brian years ago through Peter D’Arcy [head of New York for M&T Bank], who is also a member,” said Leslie. Warwick said he “definitely” uses the club to cultivate relationships and show clients a good time.

“They love to come and play at these places because they’re pretty nice places to belong to,” said Warwick, who is also a member at National Golf Links of America, which  opened in 1911 and counts billionaire and ex-Mayor Michael Bloomberg as a member.

Kal Dolgin, co-president of Kalmon Dolgin Affiliates, said for years he and his brother, Neil, played at Engineers Country Club on Long Island, where their father belonged.

Israel Dolgin forged strong relationships with a generation of members, who like him were largely self-made children of immigrants. They discussed family and business on the course, which “became an extension to the proverbial boardroom,” Dolgin said.

In 2017, the Dolgins joined other clubs after Engineers was sold for $20 million to Scott Rechler’s RXR Realty Investments. (RXR has since poured millions of dollars into the facilities, located in Roslyn near two of its residential developments.)

Almost everyone in real estate has a “golf story.”

Robert Ivanhoe, chair of Greenberg Traurig’s real estate practice, said he was in his 20s when his then-boss called late one night saying he needed a fourth for a game the next morning. “I had to scramble like crazy,” recalled Ivanhoe, who had to retrieve his golf clubs at 11 p.m. but  proceeded to shoot a 72 — giving him street cred with a previously cantankerous boss. (Incidentally, that boss was George Ross, who ended up working for Trump, whose four golf outings at Mar-a-Lago in 2017 cost taxpayers $13.6 million, according to a report from the Government Accountability Office.)

For his part, Rudin said he’s never played with someone to get a deal done, but conceded that “at some point it’s inevitable whether you’re doing business with someone — or not — to talk about business” while playing.

He and his dad still make a point of taking their longtime bankers out for a day of golf at least once a year. “We usually have it be me and my dad versus the two bankers,” he said. “It takes the hierarchy of client versus lender out of the equation, and we’re just playing as four people on the golf course. It’s the great equalizer, to some extent.”

From left: London, Shanghai and Paris

Every week, The Real Deal rounds up the biggest real estate news from around the globe.

Europe

Commercial real estate values in the European Union are just too damn high. At least according to European Systemic Risk Board, which warned about potential overvaluation. The problem is the European Central Bank’s monetary stimulus strategy has provoked investors to bum-rush commercial real estate in search of big yield, driving prices higher and higher. And now, the bank is planning for another round of such stimuli. [Reuters]

United Kingdom

Wanted: A property manager for Buckingham Palace. The Queen is on the hunt for an individual to oversee and coordinate work with contractors, events and more at the royal residence. Experience in “historic occupied buildings” is a plus. [HelloMag]

London is in an Empire State of mind with new plans to redevelop an old rail yard. Developers Hammerson and Ballymore will restore derelict railway arches in the East End, decking them out à la New York’s High Line. The Bishopsgate Goodsyard development in Shoreditch originally included 1,350 flats in buildings as high as 46 stories — and no park. Now, there will only be 500 flats in buildings up to 26 stories. [Homes and Property]

“Cycle superhighways” are shifting home prices into high gear. According to brokerage Benham and Reeves, homes in London near these two-wheeler autobahns have been closing at an average of £931,614 — 104 percent more than the average price of £457,471 across the English capital. These homes also command a steep premium compared to other homes in the same boroughs. The average price along Cycle Superhighway 2, for example, is £889,889, 73 percent more than the average price of £513,968 in the burroughs it traverses. [Mortgage Introducer]

A public housing tenant is facing a record fine for subletting his apartment on Airbnb. Amid a crackdown on such illegal subletting, the Westminster City Council took a 37-year-old Toby Harman to court after an investigation showed his flat had been marketed on Airbnb and had accumulated more than 300 reviews since 2013. The judge overseeing the case against Harman ordered him to make a £100,974.94 “unlawful profits” payment. [PropertyWire.com]

Hong Kong

Hong Kong’s massive protests are hurting retail, one leading landlord said. Weber Lo, chief executive of Hang Lua Properties, said mass protests in Hong Kong since early June have eroded sales volume at retail stores in the company’s Fashion Walk shopping center in Causeway Bay. Consulting firm Knight Frank predicted that lease rates for premium retail stores in Hong Kong will decline as much as 10 percent next year. [SCMP]

Singapore

A recent huge buy shows Singapore’s real estate is as hot as “Crazy Rich Asians.” Germany-based Allianz Real Estate and Hong Kong-based Gaw Capital paid S$1.6 billion ($1.17 billion) for Duo Tower, an office high-rise, and an adjacent shopping mall, Duo Galleria, both of which are nearly fully occupied. According to Colliers International, investments in Singapore real estate rose to S$8.2 billion in the second quarter, up 56 percent from the first quarter. [SCMP]

Australia

Olivia Newton-John has found the one. The pop star and actress found a buyer for her longtime ranch in Byron Bay. The identity of the buyer and the final price weren’t immediately clear, but the home was shopped around for A$5 million, or $3.42 million USD. [MG]

South Korea

Six-year-old South Korean YouTube star Boram buys a multimillion-dollar building. Well, her eponymous company did. Boram Company, established by her parents, paid 9.5 million won ($7.2 million) for a five-story property in the upscale Gangnam area of Seoul. Boram has more than 30 million subscribers and an estimated income in local currency equivalent to $2.9 million a month. [Sky.com]

Brazil

Former soccer star Ronaldinho forfeited 57 properties after failing to pay fines and taxes. He was fined 9.5 million reais ($2.5 million) for the illegal construction of a pier at his lakefront home in Porto Alegre, Brazil, and the equivalent of $2 million in unpaid taxes and other obligations. Ronaldinho, who has a personal net worth estimated from $97 million to $121 million, was a forward with the Brazilian team who won the World Cup in 2002 with superstar teammates Rivaldo and Ronaldo. [BBC]

Turks and Caicos

Actor Bruce Willis sold his Turks and Caicos compound at a nearly record-breaking price. The roughly 13,500-square-foot property went for $27 million, the second-highest price ever paid for a home on the islands. Willis, well known for his role as John McClane in the “Die Hard” series, and his wife Emma Hemming-Willis had listed their Parrot Cay home for $33 million in March. The sprawling waterfront property has a five-bedroom main house, two guest houses and a yoga pavilion on 7.37 acres. [WSJ]

(Illustration by Tim Peacock)

It seems buying and selling e-commerce space these days can provide more value than an IPO — at least as far as Singapore’s GLP is concerned.

The massive logistics firm had been considering going public, according to a person familiar with the matter, but landed on a better way to feed its investors: selling a massive warehouse portfolio to Blackstone Group for $18.7 billion, one of the largest deals ever in industrial real estate.

Blackstone’s purchase of roughly 1,300 properties spanning 179 million square feet across at least nine states nearly doubled its U.S. industrial holdings in one fell swoop. And just a few days later, the New York-based private equity giant announced plans to pool $6.8 billion into a new urban warehouse company in Europe.

Of course, Blackstone has made plenty of other big industrial bets in recent years, including $1.8 billion for Canyon Industrial Portfolio’s last-mile properties across Chicago, Dallas and Baltimore, $2.6 billion for Canada’s Pure Industrial Real Estate Trust and $950 million for more than 100 warehouse assets, mostly concentrated in Southeastern states, from Harvard University’s endowment.

The scope of its deal with GLP, however, catapulted Blackstone to the lead spot in the burgeoning e-commerce property game in the U.S. — way ahead of other major players like Exeter Property Group, Clarion Partners and Duke Realty — and possibly around the world.

“This transaction fits perfectly with the strength of the Blackstone Real Estate franchise: large scale, high conviction, thematic investing,” Nadeem Meghji, the company’s head of real estate for the Americas, told The Real Deal in a statement. “We continue to be the largest investor globally in the logistics sector.”

A source with knowledge of GLP’s business strategy said the Singaporean firm still has major growth plans for North America’s e-commerce market, but the chance to sell a portfolio that cost it $8.1 billion in 2015 for more than double the price was just too good to pass up.

Others tapped into the “last-mile” warehouse market said Blackstone’s investments underscore the hard reality that a growing number of people would rather shop online than trek out to the store. And the faster they want those deliveries to arrive, many are betting, the more valuable warehouse space will become.

“Absent any economic shocks to the system, I don’t see warehouse demand going down,” said Innovo Property Group’s Andrew Chung, who has invested roughly $1 billion in industrial properties in New York City.

But some commercial real estate brokers say they’re already seeing a pullback from clients looking to buy and lease warehouse space due to the limited supply of tenants willing to pay the price per square foot they would want. And concerns about oversupply are starting to creep into places where land is cheaper and more readily available than New York.

“[My] instinct, having been in the business for 35 years, is when is the music going to stop, and lenders are starting to ask those questions,” said Joel Bergstein, whose Lincoln Equities real estate firm is working on multiple warehouse projects in the tri-state area. “But every day, demand continues.”

Close to home

While last-mile warehouse space might not be as alluring as the glistening spheres of Amazon’s Seattle headquarters, the seemingly endless e-commerce craze means one can’t exist without the other.

Industrial space across the country had a slim 7 percent availability rate and 4.3 percent vacancy rate at the end of 2019’s first quarter, according to the global commercial brokerage CBRE. That marks the lowest availability rate since 2000’s fourth quarter and the lowest vacancy rate since at least 2002.

The report also found that the U.S. saw just 33.2 million square feet of new industrial supply in the first quarter — a 20.5 percent drop year over year and a sign that demand could continue to rise.

Meanwhile, asking rents for industrial space throughout the country have been steadily increasing since 2011, according to Cushman & Wakefield, hitting an average high of $6.31 a square foot last year.

CBRE’s Brad Cohen, who focuses on landlord and tenant advisory services, said that with more online shoppers expecting their products to arrive in just a few hours max, warehouse space needs to be that much closer to bustling residential areas. Drone technology has offered hopes (and concerns) about those deliveries arriving from remote locations sooner, but that has yet to take hold in the U.S., especially in dense cities.

“The old model of having that distribution a few days’ drive away is no longer going to cut it when you want your product in an hour,” Cohen said. “Consumer buying behavior has changed dramatically.”

Blackstone’s not the only giant looking to capitalize on that.

Prologis spent $8.4 billion last year to buy rival logistics owner DCT Industrial Trust and expand its access to Seattle, South Florida and California, and Warren Buffett’s Berkshire Hathaway has been buying up shares of Amazon — disclosing this spring that it had purchased more than $860 million in stock at the end of March.

And on the sell side, Tom Barrack’s Colony Capital has reportedly tapped Eastdil Secured and Morgan Stanley to market a portfolio of last-mile warehouses and logistics buildings for upwards of $5 billion. Brookfield Asset Management is one of the potential suitors for the properties, Bloomberg reported in July.

Zach Aarons, co-founder of the venture capital firm MetaProp NYC, said there’s been a paradigm shift in recent years between how investors value warehouse and retail space.

“In 20 or 30 years, it’s all going to be one thing,” he said, noting that the industry could soon see “a merger between a Simon Property Group and a Prologis.”

“It’s all going to be one category, and I believe you’re going to see fewer and fewer REITs that just do malls and fewer and fewer REITs that just do logistics,” Aarons added. “There’s going to be … some transformational deal like that that’s going to usher in a new era of thinking about these categories.”

Some say that shift could start to take place in assets that have gone from symbols of America’s obsession with shopping to symbols of brick-and-mortar retail’s decline: traditional shopping malls.

The issue of vacant malls even made its way into the 2020 presidential campaign thanks to Democratic candidate Andrew Yang, who included the American Mall Act as one of more than 100 policy ideas on his website. The proposal stresses that as malls grapple with the ongoing rise of online shopping, there’s a growing urgency to rethink the use of such properties.

“Offices, churches, indoor recreation spaces, anything we can do to keep these spaces vital and positive is an enormous win for the surrounding community,” the candidate wrote on his website.

Yang’s campaign did not respond to multiple requests for comment.

“The era of guaranteed 100 percent occupancy in the shopping mall is over,” Aarons said. “So what do you do with this fallow real estate? Warehouse space in malls might be a really interesting growth angle.”

Sealing deals

Blackstone’s plan, boiled down, is to capitalize on the growing number of retailers moving their supply chains closer to customers in urban markets, according to the company.

Central to its massive warehouse deal was the firm’s belief that e-commerce will continue to rise in popularity, Ken Caplan, Blackstone’s global co-head of real estate, said in a statement. Another company executive, who asked not to be named, also pointed to the limited supply of last-mile warehouse space in big cities.

Though commercial brokers differ on how much of a game changer Blackstone’s purchase is, there was almost universal agreement that it was a good move for the firm.

Alexander Cocoziello, managing director of capital markets and investment at New Jersey-based Advance Realty Investors, said warehouse space “has the longest runway of any real estate asset class, so I’m imagining [Blackstone] has been trying to do this for a while.”

Robert Kossar, a vice chairman at JLL, described the private equity firm’s recent purchase as a turning point for the real estate industry. Kossar, who was not involved in the deal, said there was “significant demand” for the properties from several players.

Other companies that reportedly bid for the GLP portfolio include Prologis, which did not respond to requests for comment, and Brookfield, which declined to comment.

“You have another behemoth in the market,” Kossar said about Blackstone’s growing presence in the e-commerce property business.

Blackstone wouldn’t disclose its plans for specific assets in the GLP portfolio but indicated that it may look to sell some of the properties and hold onto others. The private equity firm is already in talks to sell a chunk of the assets to Prologis for about $1 billion, according to Bloomberg.

For now, though, Blackstone will tuck the portfolio under its Link Industrial Properties arm, which manages about 180 million square feet of industrial space around the country.

John Reinertsen, one of CBRE’s top brokers in the outer boroughs, said it’s not unusual for companies to shed industrial properties after buying in bulk.

“When you buy portfolios, sometimes there’s stuff in there that doesn’t really fit, and you can get rid of that immediately. The other properties need to be leased,” he said. “So you lease it up and make it more attractive and then spin it off, one by one.”

Industry cities

Demand for e-commerce warehouse space has remained strong from coast to coast — even in a city more commonly known these days for its economic struggles than successes.

Detroit had the lowest availability rate for industrial and logistics space in the first quarter of 2019 at just 3.1 percent, CBRE’s data shows. That was followed by Salt Lake City at 4.2 percent, while Milwaukee and Portland, Oregon, tied for third at 4.3 percent.

Los Angeles had an availability rate of 4.5 percent, while Miami’s was 5.2 percent and Chicago’s was 5.4 percent. CBRE does not have statistics yet for New York City, as it just recently started to track the last-mile market more closely.

But the vacancy rate for industrial space remains relatively low in the outer boroughs, according to Cushman. As of 2019’s second quarter, it was at 5 percent in Brooklyn, 5.8 percent in the Bronx and 6.1 percent in Queens, but slightly higher at 10.3 percent in Staten Island.

And the five boroughs saw 2.5 million square feet of industrial space leased overall last year, with 95 percent of those deals involving e-commerce and logistics tenants, according to JLL.

Innovo’s Chung is planning to build a roughly 840,000-square-foot warehouse on Bruckner Boulevard in the Bronx, and the company recently bought warehouses in Long Island City and Maspeth, Queens, for $114 million combined.

Other major New York warehouse projects include a four-story distribution center in Sunset Park, Brooklyn, which Dov Hertz’s DH Property Holdings is spearheading, and an industrial distribution center on the Red Hook waterfront that Joseph Sitt’s Thor Equities converted from a planned office project, as TRD previously reported.

At the same time, Amazon is planning to open a new distribution center on Staten Island that will span more than 850,000 square feet and still has its eyes on Brooklyn and Queens. The e-commerce giant is reportedly in talks to lease 1 million or more square feet near Industry City and is considering building a ground-up distribution facility in Maspeth, Crain’s reported late last month.

These days, Chung noted, even most big-box retailers deliver products to customers’ homes if they prefer. Walmart does not have a store in the five boroughs, but its e-commerce business Jet.com has leased a roughly 200,000-square-foot warehouse in the Bronx. And while Best Buy has several stores in the city, its closest warehouse is in Piscataway, New Jersey.

“Even if you buy in a store now, there’s an expectation to be able to have it delivered rather than having to carry it home,” Chung said.

The ground-up game

Average asking rents for industrial space in Brooklyn are now at about $20 a square foot, per Cushman, and several investors say newly built and renovated warehouses in the city can achieve rents upwards of $30 a square foot — comparable to prices that outer-borough office landlords were seeking a few years ago.

Jeff Milanaik, a partner at the industrial development and acquisitions firm Bridge Development, said he doesn’t expect demand for warehouse space in and around New York to fade anytime soon.

“It’s all focused on that same last mile,” he said.

But there’s a limit to how many warehouses people want to see in their neighborhoods.

Stephen Preuss, an investment sales broker at Cushman based in Forest Hills, Queens, compared the potential for a glut of new industrial buildings to the flood of luxury condos in New York and other major cities in recent years.

“When the first 10,000 come through, obviously there’s absorption,” Preuss said. “It’s the next 10,000 [where] you really have to see how absorption and rental levels stabilize.”

Oversupply is less of a concern in the Big Apple than some other markets, according to local players, given the city’s strict spatial restraints. Zoning laws limit the number of places where warehouses can be built, and several parts of the city that were once geared toward industrial development have since been taken over by residential projects.

The city’s population has added about 1.5 million people since the early 1980s, RXR Realty’s Seth Pinsky noted. “A lot of the places where we’ve accommodated that growth has been on formerly industrial land,” he said. “So, now you’ve got demand [for industrial space] that’s continuing to increase and supply that’s fixed or even diminishing, and it makes it a pretty favorable market for landlords.”

Just outside the city, warehouse space is now about as solid a bet as new residential space, Lincoln Equities’ Bergstein argued. His firm had been working on a project in the Meadowlands that it originally planned to build as a mixed-use development until shifting course to make it a 360,000-square-foot industrial property.

MetaProp’s Aarons pointed to two main factors driving up the amount of money investors can now make from warehouse space: “You’re able to charge higher rent because the market is really competitive now,” he noted. “And you’re delivering a level of service that you would have never thought possible to deliver 10 years ago.”

Bergstein said he expects to see competition for industrial space heat up among New York landlords and commercial brokers as the state’s new rent laws make multifamily deals less attractive than other commercial property types.

Blackstone, after all, is the largest owner of rent-stabilized apartments in the city, according to the Department of Housing Preservation and Development, in large part due to its $5.3 billion purchase of Stuyvesant Town–Peter Cooper Village with Ivanhoé Cambridge in 2015. And the private equity giant recently halted all apartment upgrades and other planned work at the 11,000-unit complexes, citing the legislation signed by Gov. Andrew Cuomo in June.

A spokesperson for Blackstone maintained that the GLP deal had nothing to do with its plans for Stuy Town, and that the company had been investing in logistics long before changes to New York’s rent laws were a concern.

But Bergstein maintained that the booming last-mile warehouse sector would soon see more entrants from the multifamily world.

“I think right now, based on the new rent regulation laws in New York City, all those guys want to get into the e-commerce and industrial business,” he said.

ORCI CEO Andrew Orci and 3415 S. Sepulveda Boulevard (Credit: The Swig Company)

An advertising agency focused on Latino consumers that has worked with Coca-Cola, Jack in the Box, Honda, among others, has moved out of its Santa Monica headquarters.

La Agencia de Orci & Asociados, known as Orci, signed a 15,000-square-foot lease in Palms, at 3415 S. Sepulveda Boulevard, the company said. The firm, which was founded in 1986, will be relocating from its Santa Monica location at 2800 28th Street.

The Swig Company owns Orci’s new office space, whose 12-story building spans nearly 180,000 square feet. Rates at the Class A tower hover at around $45 per square foot per year, according to listing materials.

Michael Arnold of NAI Capital represented Orci in the lease deal. CBRE represented the landlord.

In Palms, Oakmont Capital recently filed plans for a third multifamily project on South Overland Avenue. If approved, the total number of residential units would approach 400.

Orci’s new location also sits a few blocks from Culver City, which has become an attractive alternative for companies trying to avoid more expensive beachside cities like Santa Monica or Venice. Those fims have in turn been helping drive multifamily investment in the area.

Last month, developer David Neman filed plans to build a six-story rental project on Venice Boulevard.The 80-unit project would replace a car wash on a half-acre he bought for $6.7 million in 2015.

Hollywood & Highland, Gaw Capital Chairman Goodwin Gaw and DJM founder John Miller

The U.S. arm of China-based Gaw Capital Partners and DJM Capital paid $325 million to buy the sprawling Hollywood & Highland Center, according to sources familiar with the deal.

The Gaw Capital USA and DJM acquisition for the massive mall and entertainment complex at 6801 Hollywood Boulevard was announced on Monday without a price.

A spokesperson for CIM declined to confirm the purchase price. Representatives for Gaw and DJM did not immediately respond to requests for comment, but called it the largest single-asset retail transaction to take place outside of Manhattan in the past three years in their release.

Eastdil Secured brokered the deal.

The seller was CIM Group, which had owned the 463,000-square-foot complex since 2004. CIM is holding onto ownership of the iconic Dolby Theatre, an 180,000-square-foot auditorium which hosts the Academy Awards ceremony.

Located at the intersection of Hollywood Boulevard and Highland Avenue, the retail complex is one of the busiest destinations in Hollywood. It spans five stories, and includes Dave & Busters, Sephora and Johnny Rockets, among others.

The new owners plan on renovating the 7.6-acre property over the next two years, according to a release about the deal. There are plans to upgrade the common areas, and incorporate “new concepts and uses” to draw traffic.

Abu Dhabi Investment Authority also had a stake in the complex. The sovereign wealth fund, known as ADIA, invested $142 million when CIM Group recapitalized the retail complex in June 2013. They listed the sprawling complex for sale in November. At the time, bids were expected to circle in the $300 million range.

Gaw owns several landmark properties in Los Angeles, including the 94-year-old MacArthur building in Macarthur Park, as well as the Bradbury Building. Neuehouse, an upscale co-working company, recently leased the entire second floor of the Bradbury Building.

San Jose-based DJM has been active on the Westside recently. Last year, Invesco Real Estate tapped the firm to take over all of property management, development, construction, leasing and marketing of the Runway Playa Vista, a 14-acre mixed-use development in Playa Vista.

CIO Matt Evans, COO Alan Kraft and Todd Platt, CEO of Hillwood with Dedeaux Sycamore Canyon Distribution Park

Dedeaux Properties has massively expanded its industrial footprint in Southern California after purchasing a portfolio with more than 1 million square feet of space.

The newly constructed warehouse and distribution center is on 52 acres at 6275 Lance Drive in Riverside, which is in the industrial capital of the country — the Inland Empire. The purchase is one of the largest single asset industrial acquisitions in Southern California this year.

The property was vacant at the time of the sale. The seller was Hillwood Development Company, which was founded by Ross Perot Jr. in 1988.

The property is the second of a two-building industrial complex totaling approximately 1.4 million square feet that L.A.-based Dedeaux has recently acquired. The immediately adjacent site was purchased through a separate transaction from a different seller. The two properties have been named the Dedeaux Sycamore Canyon Distribution Park.

The Inland Empire remains one of the most sought-after warehouse and distribution markets in the United States, according to Colliers International. The region has some of the lowest vacancy rates and highest rental rates compared with other major distribution hubs. During the second quarter of 2019, the vacancy rate hit 3.4 percent, as demand outpaced new construction completions.

Dedeaux Properties specializes in the investment and development of logistics-oriented real estate

The firm’s CIO, Matt Evans, said in a statement that the purchase is the latest move in a pipeline of about 2 million square feet of development and activities for the firm, including cold storage in Central L.A., truck terminal developments in the Inland Empire and trailer parking yards in South Bay. Last year, the firm sold an industrial park in the City of Industry for $50 million.

Ian DeVries and Chris DeVries of Colliers International represented both the buyer and seller, and they are also handling leasing for the property.

Compass CEO Robert Reffkin and CCO Matt Spangler (Credit: Getty Images and Compass)

A day after Uber laid off a third of its marketing team, Compass’ Matt Spangler snapped into action. On Twitter, the brokerage’s chief creative officer retweeted a Google spreadsheet listing those impacted and invited them to check out Compass’ open roles.

And there are many.

After announcing a $370 million funding round on July 30, the $6.4 billion brokerage continues to look to scale. Though Spangler’s tweet is fairly common in tech and creative circles, it speaks to the different trajectories of a post-IPO company looking to right-size and a VC-backed firm that’s still scaling up. On Monday, Uber said it laid off a third of its marketing team, or about 400 people, as the ride-hailing company tries to cut costs and streamline its operations after going public in May.

“That’s the war for tech talent,” one source said.

This is wonderful and super helpful. Hi @Uber talent, @Compass is hiring and we’d love to hear from you! Check out our open roles https://t.co/dweS2hlre7 https://t.co/dswpbP7id6

— mattspangler (@mattspangler) August 1, 2019

Nationwide, the tech sector added 56,400 jobs during the first half of the year, according to an analysis of Department of Labor statistics. That compares to 49,700 jobs added during the first half of 2018.

Founded in 2012, Compass has made a point of hiring talent from brand-name companies such as Google, Microsoft and McKinsey. “Depending on the jobs available and the fit with the recently laid off Uber employees, it could be great,” one investor said of Spangler’s tweet.

Nationwide, Compass currently has 13,000 agents around the country — up from roughly 10,000 in January — and sources said it’s likely to hit 15,000 to 20,000 agents by the end of the year. It also has 2,200 employees and it’s in the midst of tripling its product-and-engineering team. (It currently has 320, of which 200 were hired in 2019. Compass’ website is currently advertising another 71 engineering jobs.)

“We’re going to accelerate our growth in two key areas — one is product and engineering,” CEO Robert Reffkin said last week on CNBC. “And we’re going to double down on our core products,” including Compass Concierge, which fronts sellers the money for home repairs.

As Compass weighs an IPO, it will probably have to rethink its spending — as others have done. Ahead of its IPO, Lyft laid off 50 people in its bike and scooter division, a move the company said was part of its “performance management process.”

And in June, Opendoor — which allows consumers to sell homes online and was most recently valued at $3.8 billion — laid off 50 of its 1,300 employees and ended its free lunch perk. A spokesperson for the SoftBank-backed company said it is “streamlining” certain operations as it continues to grow.

The We Company also conducted a round of layoffs and cut back on perks like salmon-and-bagel breakfasts in 2016. This past March, as it prepares to go public, it laid off as many as 300 employees — or 3 percent of its workforce, as The Real Deal reported. The layoffs were positioned as performance-related.

Jason Illouian and the property (Credit: Faring Capital and Google Maps)

Local developer Faring is advancing a plan to build a cancer center on the border of West Hollywood and Beverly Grove, where the firm once envisioned a boutique hotel.

Faring is seeking to streamline the permitting process for the 271,000-square-foot medical office and research building, according to Urbanize. The West Hollywood Cancer Center, as it would be named, could qualify for a faster approval process state measure that provides incentives for projects built near transit.

According to an initial study published by West Hollywood city officials, Faring is looking to build a 10-story complex at a three-parcel site on the corner of Robertson and Beverly Boulevards. In addition to the medical offices, the building would include a restaurant, design showroom, ground-floor retail and four stories of underground parking.

There are currently four buildings at the site. The project would preserve the existing Charles and Ray Eames-designed building, formerly a Herman Miller showroom, at 8806 Beverly Boulevard. Approximately 34,500 square feet of retail and residential property would have to be demolished to make room for the center.

Office Untitled, formerly known as R&A Architecture and Design, is designing the project. Construction is expected to last 30 months.

Faring, led by CEO Jason Illoulian, had first proposed building a nine-story hotel at the property in 2017. Neighborhood groups criticized the project’s height at the time, and cited concerns about preserving the historic showroom.

Faring’s most prominent project is Robertson Lane in West Hollywood, a mixed-use retail and hotel project that will repurpose the historic gay nightclub the Factory. [Urbanize] — Natalie Hoberman

Miami skyline (Credit: iStock)

The condo market is in a slump. The luxury sector is outperforming others. Sales are up in what one report defines as Miami Beach, yet down according to another analysis.

Such headlines, especially in a slow market, can be confusing for buyers, brokers and builders.

While there’s no shortage of residential market reports throughout the country, the results can often vary due to differences in methodology and data sources.

Anthony Graziano (Credit: Integra Realty Resources)

In South Florida there’s the long-running Douglas Elliman reports, ISG World’s Miami report — the only one that tracks preconstruction and new development sales — and the Anthony Graziano-authored One Sotheby’s International Realty report, as well as those put out by other brokerage firms.

Such firms are quick to jump on trends and use the numbers to back up what their agents are seeing, such as an increase in buyers from high-tax states flocking to South Florida following changes to federal tax laws.

The Keyes Company, for example, released a luxury market report in July that focused on high-end single-family home and condo sales in Broward, Martin, Miami-Dade and Palm Beach counties, where the brokerage is active. Using data from the Multiple Listing Service, the Keyes report combines sales from all four counties to provide a regional snapshot, in addition to breaking down each respective county.

Brown Harris Stevens also publishes a luxury report focused on Miami Beach and other beachfront markets — it also puts out a countywide report — that dives into details like average days on market, bedroom counts and different price points, said Philip Gutman, president of BHS Miami.

Gutman noted his firm’s luxury report comes in handy when pricing new development projects. “It’s very difficult to price out new development when you have such a wide net that was thrown [in the typical market report],” he said. “I felt that that information was needed by the agents and by the consumer to make an informed decision.”

Ana Bozovic (Credit: Analytics Miami)

Ana Bozovic, a broker who owns real estate data firm Analytics Miami, said that the information isn’t wrong in the most popular reports, such as those from Elliman and ISG, but believes they lack context.

“The micro follows the macro, and while neighborhood data is helpful, awareness of the larger market cycle is more important,” she said. Bozovic added that she would “love if these reports show transaction volume,” noting that “no one knows we’re at 2010 transaction volume. That’s the most important thing. As a buyer, you do not want to be on the wrong side of a market trend.”

Most brokerage heads are quick to defend their reports, noting that they rely on the underlying numbers to guide their conclusions.

Ron Shuffield, CEO of newly rebranded Berkshire Hathaway HomeServices EWM Realty, said that while he’s “always pleased to offer my thoughts on a topic, [the] current and historical MLS data always serve as the base of our analysis.”

EWM publishes a biannual Insight Real Estate Market Outlook Report, as well as quarterly, monthly and area-specific analysis based on MLS data. In an effort to parse the various narratives presented by so many different market reports, The Real Deal examined the methodology behind the major reports relied upon by industry sources in South Florida.

Elliman’s analysis

Jonathan Miller

Jonathan Miller, president and CEO of New York City-based appraisal firm Miller Samuel, creates the Elliman reports in 35 markets, including New York’s five boroughs and their surrounding areas, as well as Boston, California and Florida.

In South Florida, Miller uses closed sales MLS data for single-family homes, condos and townhouses in the coastal communities of Aventura, Brickell, Coconut Grove, Coral Gables, downtown Miami, Palmetto Bay, Pinecrest and South Miami. Elliman considers all of those areas part of the “coastal Miami mainland.”

Bal Harbour, Bay Harbour Islands, Fisher Island, Golden Beach, Indian Creek, Key Biscayne, Miami Beach and Miami Beach’s Mid Beach, North Beach and South Beach neighborhoods make up Miami Beach and its barrier islands, along with North Bay Village, Sunny Isles Beach and Surfside, per Elliman’s periodic analysis. South Beach includes properties in the 33139 zip code and those in the 33140 zip code south of 30th Street.

“As we separate a market — [we’re cognizant of] how deep the sales activity is,” Miller said. “One of the problems if you drill down too closely, like at the block level, the data set [becomes] too thin for data trending.”

Miller noted that beach towns logically fit together, while the mainland municipalities do not. Elliman itself is focused on waterfront communities, which is why Miller’s reports only focus on those submarkets. Of course, not all of the properties in those areas have a waterfront component to them. Even though Elliman is paying for his reports, Miller creates them independently and releases them to the brokerage and the public at the same time.

“These reports are used by the [Federal Reserve] and by government agencies… It’s the only report I’m aware of that’s done independently,” Miller said. “The executives get the results when the media gets it. This is not a marketing brochure.”

Miller, a veteran in the appraisal space, added that he and two of his employees create the reports and go through the data to correct any obvious errors.

“A robot can generate a report with numbers and the median price went up X percent year-over-year, but part of it is, what’s the narrative? What does it really say? I know this metric went down, but it actually means the opposite and this is why,” Miller said. “When the news is really good, the report reflects that. When the news is bad, the report reflects that. The narrative itself isn’t couched to the positive.”

ISG’s market info

Aventura-based ISG creates the Miami report, a glossy magazine published each May that tracks new condo development sales from the beginning of the cycle.

Craig Studnicky (Credit: RelatedISG)

The brokerage, led by CEO Craig Studnicky, also releases an update to the report in July, which shows how sales have progressed over the previous two months.

ISG defines the start of the cycle as 2012 and only includes markets from Coconut Grove to Fort Lauderdale and east of I-95. That leaves out new developments in western markets such as Doral and Sunrise. Reservations are not considered sales, but deals that are under contract are considered sold by ISG, the International Sales Group.

As with Elliman, ISG’s Miami report combines a number of beachfront markets and brings in some Broward County cities. Bal Harbour, Bay Harbor Islands, Hallandale Beach, Hollywood, Miami Beach, South Beach, Sunny Isles Beach and Surfside all comprise “the beaches,” according to ISG. Studnicky said his firm consolidates such locales because the buyer profile is similar in those markets.

“Someone who’s looking at Brickell Avenue is not a customer for the beaches and vice versa,” Studnicky said. “In my experience in South Florida, I have a lot of people I’ve sold the Muse [Residences] in Sunny Isles also considering Faena House in Miami Beach, [for example].”

ISG compiles sales reports from developers to get its numbers, which critics claim can be inflated since they’re not independently verified. Studnicky disagrees.

“Everybody wants to make sure their numbers are reflected accurately in our Miami report,” he said.

ISG’s most recent Miami report shows there were 2,101 unsold units remaining out of nearly 20,000 units in the pipeline this cycle, or about 89 percent sold. ISG’s second quarter update said there are now 1,988 units left to sell, meaning that developers unloaded 113 units between April 30 and June 30.

Other accounts and trends

One Sotheby’s released its most recent trends report in August 2018 authored by Graziano, CEO of Integra Realty Resources. Last year’s report added the Palm Beach County market as One Sotheby’s began expanding northward, Graziano said at the time.

The One Sotheby’s analysis looks at condo and single-family home sales, breaking down affluent South Florida markets, such as “Miami’s South End,” into submarkets that include Coconut Grove, Coral Gables, Cocoplum, Gables Estates, Old Cutler Bay and Palmetto Bay. Like other firms that focus on more expensive segments of the housing market, the Graziano-authored report examines markets primarily east of I-95.

The main difference between One Sotheby’s, ISG, Elliman and the mainstream National Association of Realtors’ Florida-focused reports is that the latter includes countywide MLS data in Broward, Miami-Dade and Palm Beach.

The One Sotheby’s report also separates non-waterfront sales from waterfront sales, and breaks down different tiers of luxury sales — such as those in the $1 million to $5 million range, $5 million to $10 million set and the ultra-luxury tier beyond. Graziano, whose report uses historical data dating back to 2014, also pulls out data on price per square foot and the number of closed transactions.

Graziano said a team of three people compile the information and analyze it over a period of six to eight weeks, and it takes another two to three weeks to put it all together. He tries to avoid certain markers that he believes are often used as a scare tactic.

“I’m not a big fan of ‘days on market.’ When the market is hot, people overprice their products,” Graziano said. “As more supply enters the market, people start to more aggressively list, which reduces the days on market.”

Bozovic, of Analytics Miami, creates her own reports using MLS data and property tax rolls dating back to 2007 and earlier. She compares different periods in the market to “large moving boats” headed on a predictable path.

“None of this is magic,” she said. “What’s really important is [seeing] tops and bottoms. Markets are always cyclical, and anyone who thinks they’re not is misinformed.”

Every day, The Real Deal rounds up Los Angeles’ biggest real estate news. We update this page at 9 a.m., 12:30 p.m., and 4 p.m. PT. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 4 p.m. PT

Dedeaux Properties adds 1 million square feet in Riverside. The firm has bought a sprawling portfolio from seller Hillwood Development Company, which was founded by Ross Perot Jr. in 1988. The newly construction warehouse and distribution center sits on 52 acres in the Inland Empire. [TRD]

LaBianca house, scene of Manson-tied double-murder, sells. A Los Feliz home where Charles Manson’s “Family” killed grocery chain owners Leno LaBianca and his wife Rosemary, sold for just under $2 million. The buyer was “Ghost Adventures” host Zak Bagansa, a Travel Channel star whose Haunted Museum in Las Vegas already features other Manson memorabilia. [Curbed]

Compass wants laid-off Uber employees to join their company. Just one day after Uber laid off a third of its marketing team, Compass’ chief creative officer Matt Spangler tweeted that they should come check out the open roles at Compass. The brokerage firm just announced a $370 million funding round on July 30 and in the midst of tripling its product-and-engineering team. [TRD]

Reese Witherspoon has a new Malibu home. The actress paid $6.25 million for a farmhouse-style property in Zuma Beach. The pad sits on two acres, and includes a guesthouse. [Variety]

Hollywood & Highland, Gaw Capital Chairman Goodwin Gaw and DJM founder John Miller

The Hollywood & Highland Center traded for $325 million. The U.S. arm of China-based Gaw Capital Partners joined with DJM Capital to buy the 463,000-square-foot entertainment complex from CIM Group, which has owned it since 2004. CIM Group will retain ownership of the iconic Dolby Theatre. [TRD]

City Council candidate prodded over real estate lobbying. John Lee, a candidate for District 14 and a veteran of City Hall, was grilled by his opponent Loraine Lundquist at a North Hills forum over his work as a consultant and lobbyists for firms with business in front of the city. Real estate influence at City Hall is under the microscope following Councilman Jose Huizar’s donation scandal that broke last year. [LAT]

ORCI CEO Andrew Orci and 3415 S. Sepulveda Boulevard (Credit: The Swig Company)

Advertising agency Orci decamps to Palms. The Latino-focused firm La Agencia de Orci & Asociados signed a 15,000-square-foot lease at a Swig Company-owned office building on South Sepulveda Boulevard. The office is near the border with tech-heavy Culver City. Orci has worked with Coca-Cola, Jack in the Box and Honda. [TRD]

Faring is planning a cancer research center in West Hollywood. The local investment firm wants to build a 34,500-square-foot facility at Roberston and Beverly Boulevards, near where it is also planning a nine-story hotel. The research center would be 10 stories. [Urbanize]

The Sherman Oaks home on Greenleaf Avenue (Credit: Rodeo Realty)

A cannabis-themed open house in Sherman Oaks could be part of a growing trend. Rodeo Realty, Society Group PR, and cannabis industry members-only club Mota Group, invited 100 people to the home to smoke, vape, and get CBD cream massages. Rodeo Realty’s Ben Quibrera said the home on Sherman Oaks’ aptly named Greenleaf Avenue, which listed at $3.5 million, went into escrow within two weeks. [Business Insider]

Mortgage tax reduction’s elimination isn’t slowing middle-class buyers. The Trump administration’s 2017 tax overhaul tweaked a deduction many in Washington saw as a key support of the housing market. But it hasn’t negatively affected sales in the way many economists and real estate experts thought it would. [NYT]

The Chesterfield project planned in South L.A. (Credit: Adobe Communities)

City planning officials will consider another South L.A. affordable housing project. Wakeland Housing & Development Corporation’s 43-unit Chesterfield project will go before the city planning commission later this week. Wakeland wants to streamline permitting through SB 35, a state measure that is meant to accelerate affordable housing production. [Urbanize]

“Saturday Night Live” alum Kevin Nealon sold his Pacific Palisades home, finally. Nealon and wife Susan Yeagley sold the 5,600-square-foot Georgian-style home for $4.9 million. The seven-bedroom abode, which is a half-mile from the beach, had been on the market for three years. [LAT]

A Venice couple is working outside the system to tackle the homeless housing shortage. Heidi Roberts and John Betz have provided housing for 98 people by renting out market-rate properties they’ve bought or rented themselves. They say their model of doubling-up on bedrooms can provide housing quicker than the traditional nonprofit system, and they are seeking both private and public funds to expand it. [LAT]

Compiled by Dennis Lynch and Natalie Hoberman

FROM THE CITY’S RECORDS:
A developer filed plans to demolish two single-family dwellings and build a 6-story, 32-unit building at 1303 & 1307 Orange Grove Avenue in Carthay Square. [LADCP]

Compiled by Jerome Dineen

Clockwise from top left: 1469 Bel Air Road, 141 South Cliffwood Avenue, 921 Rivas Canyon Road and 521 Chalette Drive (Credit: TheMLS.com)

The priciest residential sales in Los Angeles County included homes in Bel Air, Beverly Hills and Brentwood. The top mansion closed at $14 million after a reported price chop of more than 40 percent..

The top five deals combined for $61.7 million, indicative of the current state of the lagging luxury market  in L.A., which has pushed prices down — with exceptions— and inventory up. 

The properties include a mansion that features a hidden panic room, and other properties built in the last few years. Price and property details were found using Redfin and records on PropertyShark. 

1469 Bel Air Road | Bel Air | $14 million

Nicknamed “Amalfi Bel Air,” the property — which is equipped with a hidden panic room — sold after a reported 43 percent price cut. According to reports, it was previously listed for $24.5 million in February 2018. The Contemporary Mediterranean style mansion was completed last year and includes 12,339 square feet of space, with seven bedrooms and 12 bathrooms. The deal pencils out to $1,135 per square foot. The lot spans over an acre and includes a putting green, infinity pool and spa. It was built by developer Chuck Taylor, who owned the property through Amalfi Bel Air, LLC. It also includes a gourmet kitchen, movie theater, and smart home automation. It was listed with Mark Goldsmith of Coldwell Banker. Chad Lurtsema with the CML Group represented the buyer. 

141 S. Cliffwood Avenue | Brentwood | $13.4 million

This just south of Sunset Boulevard includes 8,821 square feet of space, with five bedrooms and eight bathrooms. The price measured out to about $1,519 per square foot. The home was built last year, and features a guest suite, movie theater, elevator, and library. It was last purchased for $6.45 million in 2016 by Thomas Beadel through an LLC. At nearly half an acre, the gated estate includes a pool and spa.It was listed with Ron Wynn at Coldwell Banker Residential Brokerage. David Offer with Berkshire HathawayServices. 

933 N Rexford Drive | Beverly Hills| $13.2 million

The seller was Shohreh Javaheri, who purchased it in 2007 for $9 million. The home includes eight bedrooms and 10 bathrooms over 11,397 square feet. That comes out to $1,158 per square foot. The gated estate was built in 1988 on the 29,200-square-foot lot. The property had previously belonged to Academy Award-winning actress Jane Wyman, who was Ronald Reagan’s first wife. It features a pool and tennis court. It was listed with Fariba Bolour of Sotheby’s International Realty and Yafa Eshaghian of Nelson Shelton Real Estate Era Powered. Heidi Tabib of Beverly Hills Best Realty represented the buyer. 

521 Chalette Drive | Trousdale Estates | $12.6 million

This property sold for a loss, after the ownership entity acquired it in 2014 for $12.9 million. The property spans 5,638 square feet and has four bedrooms and five bathrooms. The deal pencilled out to $2,235 per square foot, the highest of the five this week. The Mid-Century style home was built in 1964. The lot spans over 20,000 square feet and includes an infinity pool and cabana, along with a screening room. The seller was AHG Family Trust and Withers Bergman LLP, through AHX LLC. It was listed with Mauricio Umansky and Baron Steinbrecher of the Agency. The buyer was represented by Ting Thomas Zheng with IRN Realty.

921 Rivas Canyon Road | Pacific Palisades | $8.5 million

This home, built in 2017, is near Will Rogers State Historic Park, and sits on a one-acre lot. The black, modern style mansion includes 5,500 square feet of space with four bedrooms and four bathrooms. It was sold by a trust that belongs to the Moccio family, which purchased it for $3.5 million in 2014. It was listed with Barbara Boyle with Sotheby’s International Realty and Drew Fenton with Hilton & Hyland. The buyer was represented by Sandro Dazzan with The Agency. Another home across the road listed recently for $18 million.

From left: Rudin Management CEO Bill Rudin, SL Green CEO Marc Holliday, WeWork CEO Adam Neumann, and Zar Properties’ Dario Zar (Credit: Getty Images, SL Green, and iStock)

Office landlords in New York City — known to play it safe and fill their buildings with multiple tenants to mitigate risk — are breaking the rules for WeWork, the co-working space behemoth that has gobbled up 5 million square feet across the city.

In the rare case that a landlord is smitten by that one tenant, they’re almost always looking for a company with a proven business model, such as a white-shoe law firm or a well-established financial institution.

But in the case of WeWork — a startup that is valued at $47 billion but lost nearly $2 billion last year — the company occupies the entire rentable office space in at least five buildings in New York City. In at least a dozen other buildings, it occupies more than 50 percent of the space, according to an analysis by The Real Deal.

It’s a gamble taken by landlords, and their lenders, that WeWork will continue to honor its leases — a factor that depends primarily on the success of the company’s core business model of leasing office space and sub-leasing it at a premium. WeWork only guarantees 11 percent of its overall lease obligations, the Wall Street Journal reported in June. And some of the city’s largest landlords, such as Columbia Property Trust and SL Green Realty, have already begun to demand stronger guarantees from the co-working company to reduce exposure.

The nine-year-old firm is now gearing up for an initial public offering that will test the strength of its business model. Landlords are increasingly asking themselves how much space they’re comfortable leasing out to WeWork.

“More than 20 percent of one tenant, and I say to myself ‘is that too much for one building?” said Greg Kraut, managing principal of K Property Group, a landlord that has explored buying buildings with WeWork occupancy.

“It allows you to get a tenant in and lease your building,” he said. “But you’re going to sell it at a higher cap rate. It’s a risk that you’re willing to take.”

A 2018 study from Cushman & Wakefield found that properties with high WeWork occupancies traded at capitalization rates that were higher compared to the overall market rate for similar buildings – indicating that investors viewed these properties as riskier bets.

Last month, the question of whether WeWork’s impact on the sales value of a New York City building was nearly tested when Rudin Management put its 110 Wall Street, which is entirely occupied by WeWork, on the market.

An offering memo issued by brokerage Eastdil Secured offered a sober look at the risk of having WeWork fully occupy a building. The memo cited the possibility that the company could default on lease payments.

“That’s [an outcome] regardless of who the tenant is, whether it’s a startup, law firm, whomever,” said Nick Martin, a spokesperson for Rudin. “Whenever you have a single tenant to one building, you look for security.”

Rudin re-evaluated its decision last month and pulled the building off the market last month. When asked if WeWork’s occupancy added or decreased the sales value of 110 Wall Street, Martin said “we thought they had added value to the asset.”

The SoftBank-backed firm, which rebranded as The We Company in January, has raised over $10 billion to date. In less than a decade, it has already become the largest tenant in New York, Washington, D.C. and central London. In Chicago, it is poised to become the biggest office tenant in the main office district.

With that kind of hype — and billions in cash on hand — the firm has been embraced by institutional landlords. Of 61 WeWork locations in New York City, the company accounts for more than half of the office space in 18 of its buildings, the TRD analysis found. WeWork declined to comment on TRD’s analysis, and declined to disclose how much space it took in 14 of the overall 61 buildings.

SL Green, the city’s largest office landlord, has three properties that are occupied by WeWork. At 609 Fifth Avenue, WeWork signed for all 139,000 square feet there last year.

Some landlords have been bullish on WeWork since the beginning. Zar Properties, which owns WeWork’s second-ever location at 349 Fifth Avenue in Midtown, said the startup fully occupies the 46,000-square-foot building.

“I highly doubt [WeWork] will go bankrupt or default, even though they have had some losses,” said Dario Zar, managing principal of Zar Properties. “They’re going to be around, they are too huge.”

Even as uncertainty mounts around WeWork’s IPO, and reports have documented peculiar business moves by its chief executive Adam Neumann in recent months, some lenders have doubled down on providing loans to buildings that are majority-occupied by the startup.

At 214 West 29th Street, a 125,000-square-foot building where WeWork occupies 80 percent of the space, Bank of America provided a $74 million loan to landlord Walter & Samuels in June.

And in May, Germany-based Arreal Capital provided a $105 million loan to L&L Holding Company and PGIM Real Estate to refinance 511-541 West 25th Street in Manhattan, which is 40 percent occupied by WeWork. (Arreal also issued a $134 million to Himmel + Meringoff and Swig Company for 1460 Broadway in 2014. Arreal declined to comment.)

But given the uncharted future of WeWork’s business model — it posted losses of $1.9 billion against revenue of $1.8 billion last year — some landlords are reluctant to go all-in on it.

“I kind of like WeWork in our buildings,” said Kraut, the head of K Properties. But, he added, “I typically wouldn’t buy a building with 100 percent WeWork.”

Every day, The Real Deal rounds up Los Angeles’ biggest real estate news. We update this page at 9 a.m., 12 p.m., and 4 p.m. PT. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 9 a.m. PT

Zuckerberg-tied investment firm Iconiq Capital scoops up rentals nationwide. The San Francisco-based firm has bought more than 1,600 rentals in L.A., Seattle, and Denver, and is in contract to buy more. Along with managing its own investment funds for clients like Mark Zuckerberg to invest in, Iconiq manages clients’ personal fortunes. [WSJ]

Real estate investor and murder is apprehended in Mexico. Peter Chadwick of Newport Beach is suspected of killing his wife in 2012. Chadwick was charged after the killing, but disappeared in 2015, after withdrawing millions of dollars from his bank accounts. [CBS]

The 2018 Carr Fire (credit: California Bureau of Land Management)

Cal State Long Beach approves 476-bed dormitory complex. The $100 million Parkside North Housing project is part of an update to the school’s master plan and calls for two L-shaped dorm buildings. Gensler is designing the project, which the university expects to complete by 2021. [Urbanize]

Clockwise from top left: 1469 Bel Air Road, 141 South Cliffwood Avenue, 921 Rivas Canyon Road and 521 Chalette Drive (Credit: TheMLS.com)

Panic room-equipped Bel Air home was LA County’s top sale last week. Dubbed “Almafi Bel Air,” the home sold for $14 million, about $10 million less than it first list price. The five priciest residential sales last week included homes in Brentwood, Beverly Hills and Bel Air. [TRD]

Investment bankers angle for lead role in WeWork IPO. With a relationship cultivated over many years and many deals, JPMorgan is expected to take first position in The We Company’s IPO syndicate, but rivals Goldman Sachs and Morgan Stanley are close behind. JPMorgan has been the company’s — and CEO Adam Neumann’s — biggest lender, and is helping arrange an unconventional a $6 billion debt package that depends on the IPO raising at least $3 billion. [Bloomberg]

Barney’s signage at its 660 Madison Avenue flagship location (Credit: Getty Images)

Barneys files for bankruptcy. Less than a day after reports that the department store chain was in talks for a bankruptcy loan, Barneys has secured $75 million in financing from Gordon Brothers and Hilco Global and filed for Chapter 11 bankruptcy as it plans for a formal sales process. The chain plans to close 15 of its 22 locations, but the Madison Avenue flagship — which accounts for one-third of the company’s revenue and has recently seen its annual rent nearly double — will remain open. [NYT]

Puerto Rico’s hotels and condos hit by political turmoil. The island’s lodging and luxury housing markets, still recovering from the fallout of Hurricane Maria, the Zika virus and a debt crisis, took another blow last week when Gov. Ricardo Rosselló resigned amid protests and scandal. Blackstone, which bet bit on the island’s promise in 2005, recently sold one hotel to a local builder and is looking to sell another. [WSJ]

FROM THE CITY’S RECORDS:

An application to designate the former Hollywood Art Center School a Historic-Cultural Monument was filed on Monday. The three-acre former private art school sold in January for $6.5 million, although it’s unclear if there are plans to redevelop it. [LADCP]

Compiled by Dennis Lynch

Here are some real estate events worth attending next week.

Host: Southern California Development Forum
Date: August 13
Time: 7 a.m. to 9 a.m.

The Southern California Development Forum is holding an event on boutique hotels at City Club Los Angeles, 555 South Flower Street from 7 a.m. to 9 a.m. This event will feature a discussion on the popularity of the hotel space. Speakers include Ryan Bean of Sydell Group and Amie Marbin of Relevant Group.

Host: Bisnow
Date: August 13
Time: 8 a.m. to 11 a.m.

Bisnow is hosting its LA Opportunity Zones event at the LA Grand Hotel Downtown, 333 South Figueroa Street from 8 a.m. to 11 a.m. Come to this event to network, and hear discussions on how new regulation could impact Opportunity Zone investments in the region. Sonda Wenger of CIM Group and Scott Gale of Ventus Group will be among the speakers at the event.

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.