The Real Deal New York

National Cheat Sheet: Compass gets boatload of funding, failing malls drag down on property values … & more

By James Klatell | November 09, 2017 05:10PM

National Cheat Sheet

Clockwise from top left: TRD‘s Shanghai event, Downtown LA’s Million Dollar Theatre, the skyline of North America’s least affordable city, and WeWork’s Adam Neumann.

Compass raises another $100M in funding
Venture capital-backed real estate firm Compass raised another $100 million in a new funding round, bringing its total valuation to $1.8 billion. The company plans to use the money to expand to 10 new cities in the next two years and to develop new technology. “We’re just getting started,” Compass’ executive chairman Ori Allon said in a statement to The Real Deal. “The real vision is for Compass to be everywhere.” [TRD]

Struggling shopping malls are dragging down on commercial property values
Mall valuations took a 6 percent dive from September to October and fell by 11 percent in the last 12 months, according to a report by real estate research firm Green Street Advisors. Those dwindling values are weighing down the the entire commercial real estate market, Green Street found. The firm’s commercial property price index, which tracks REIT-owned properties, decreased by 1 percent from September to October — the largest month to month drop since the financial crisis, the Wall Street Journal reported. [WSJ]

Chinese investors should keep their eyes on “1.5” cities, experts say
Despite the Chinese government’s tightening of capital outflows, investor demand for U.S. real estate remains robust, industry insiders from both countries said during The Real Deal‘s latest U.S. real estate showcase and forum in Shanghai. While blockbuster deals have slowed, Chinese investment in “1.5 cities” — those that “will become the 2.0 investment strategy” such as Charlotte, Denver and San Diego — are growing, said Jack Portman, chairman of Portman Holdings. DMG Investments’ Jacky He pointed to the the tremendous interest in U.S. education from Chinese students as a major factor in continued interest in U.S. investment. [TRD]

Douglas Elliman’s sales grow but profitability plummets over 50%
Profitability at Douglas Elliman fell more than 50 percent in the third quarter, even as the New York-based national brokerage’s sale volume rose. Elliman’s revenue rose 3.2 percent to $190.4 million, but its net income fell to $4.2 million from $8.7 million the year before, according to filings by its parent company, Vector Group. Chairman Howard Lorber blamed the drop on fewer “higher margin” new development closings. [TRD]

NYC and San Fran are expensive but North America’s least affordable city is …
North America’s least affordable housing market is north of America, according to The International Housing Affordability Survey conducted by Point2Homes. Vancouver, with a median home sales price of more than $1.1 million and a median family income of $63,944, took the top spot. Home prices are slightly higher in the second-most unaffordable city, Manhattan, with a $1.2 million median, but New Yorkers’ $77,559 median income is also higher than their Canadian counterparts. Third place goes to San Francisco, where the median home price is even higher at nearly $1.3 million. But that’s offset by a median income of $92,094. [HousingWire]

Major Market Highlights

WeWork CEO, partners invest $65M in NYC development site
Adam Neumann, the CEO of high-flying co-working company WeWork, is one of the investors in Chelsea Realty Capital LLC, which acquired a $65 million mortgage on a Chelsea development site. A tipster told The Real Deal in recent months that the company toyed with the idea of building a WeLive co-living tower on the site, which includes parcels at 123-131 West 23rd Street and 116-120 West 24th Street. It wasn’t immediately clear whether that’s still the plan. [TRD]

Voters pass $400M bond to combat sea level rise in Miami
Fifty-five percent of voters in Miami approved a ballot measure to give the city a $400 million bond to be used to combat rising sea levels and to fund affordable housing. The bond will allow the city to spend $192 million on storm drain upgrades, flood pumps and sea walls. About $100 million will be set aside for affordable housing and economic development. [TRD]

Historic LA theater’s future is in the hands of a yet-to-launch startup
The historic Million Dollar Theatre has stood at 307 S. Broadway in downtown Los Angeles since 1917, but its future is now controlled by CoBird, a fashion startup that hasn’t even launched yet — and that has conservationists worried. The theater was included in a sale of properties from Yellin Co. to Adam Daneshgar of Langdon Street Capital, but CoBird had signed a lease on the building a month before. [TRD]

San Francisco grocers look to fill food deserts
The growing San Francisco metro area needs more grocery stores, and high-end companies like Whole Foods and Trader Joe’s are expanding to meet the demand. With retail vacancy rates still lagging behind pre-recession levels, there’s plenty of space to fill, and developers are pushing for on-site grocery stores to be included as amenities in their buildings. “We see the grocery store as an important amenity for our residents and the neighborhood as a whole,” Tishman Speyer Senior Managing Director Carl Shannon told Bisnow. [Bisnow]

Denver voters favor ambitious green roof initiative
Voters in Denver approved Initiated Ordinance 300, which requires buildings to incorporate rooftop gardens and solar panels to increase energy efficiency. New buildings with at least 25,000 square feet will be subject to the new rules, as will older buildings that replace their roofs or expand their square footage. Mayor Michael Hancock was opposed to the measure, but said he will work to implement the rules. “We have always made a good-faith effort to implement the initiatives — once the people have spoken, that’s our job,” he told the Denver Post. [Denver Post]