The Real Deal New York

National Cheat Sheet: Congress debates the future of Fannie and Freddie, office leasing hits lowest level since 2012 … & more

By James Klatell | January 05, 2018 09:30AM

National Cheat Sheet

Clockwise from top left: Atlanta’s Westin Peachtree Plaza hotel is one of the late John Portman’s iconic buildings, Senators Bob Corker and Mark Warner are debating Fannie and Freddie’s future, and Macy’s is closing its historic location in downtown Miami.

Senate proposal would force Fannie and Freddie to sell assets
The future of Fannie Mae and Freddie Mac is being debated in Congress, and the owners of billions of dollars worth of shares in the mortgage giants are anxiously awaiting the outcome. A draft Senate bill would put Fannie and Freddie into receivership, forcing them to sell their assets, but how shareholders would be compensated remains an open question. Bloomberg reports that the Senate proposal, authored by Bob Corker and Mark Warner, could pay owners of preferred shares close to full value, while owners of common shares would get far less. That would mean hedge funds such as Paulson & Co., the Blackstone Group and Bill Ackman’s Pershing Square Capital Management would make big profits on their investments. [TRD]

U.S. office market leasing hits lowest level since 2012
Net office absorption of office space fell to it lowest level since 2012, with 21 million square feet absorbed in 2017, according to a report by research firm Reis. Rents grew a mere 1.8 percent in 2017, compared to double-digit growth before the Great Recession. The Wall Street Journal notes that the pace of new office construction has slowed, which should help stabilize the market. [TRD]

Leadership changes at Douglas Elliman lead to rumors about what’s next
Rumors are swirling at residential giant Douglas Elliman after the firm shook up its management structure and promised more aggressive expansion. Elliman chairman Howard Lorber recently announced the promotion Scott Durkin to president, a title previously held by CEO Dottie Herman, which has some questioning her future. Lorber denies any shakeup and says the management changes are a sign of how much the firm has grown. Some Elliman insiders, however, believe that the move lays the groundwork for Susan De França, the firm’s development chief, to eventually take over for Herman. [TRD]

Renters say a gym is an important amenity but many never use it
Eighty-two percent of renters say an on-site gym is important to them, but 42 percent also said they either rarely or never actually use their building’s fitness facilities, a recent survey from the National Multifamily Housing Council and Kingsley Associates found. The survey asked 272,743 tenants across the country what they looked for in a building or apartment complex. Almost all, or 91 percent, of respondents said they already lived in a building that had a gym, the Wall Street Journal reported. [TRD]

Lenders want Fannie and Freddie to accept new credit score
The Federal Housing Finance Agency is debating whether or not to allow Fannie Mae and Freddie Mac to accept a new credit-rating system when reviewing potential loans. FHFA currently requires banks to check FICO credit scores, created by the Fair Isaac Corp., but non-bank lenders are pushing for FHFA to start accepting VantageScore, a rival credit scoring system created by Equifax, Experian and TransUnion. They argue that FICO is too restrictive and excludes millions. [TRD]

MAJOR MARKET HIGHLIGHTS

The glass ceiling hasn’t broken at New York City’s top commercial real estate firms
While women are better represented at top of residential real estate firms, the development and commercial sectors are dominated by men, a TRD analysis found. Most of the largest commercial and development firms in New York have leadership teams that are 70 percent male and only three of the top 20 commercial brokerages come close to having an even split of male and female brokers. Whats more, there has been very little change in the gender breakdown of New York’s real estate top executives since 2007 with women occupying the same 27 percent share of executive-level managerial positions. [TRD]

LA-based ex-Agency broker busted in Colorado with 52 lbs. of pot in car
A Los Angeles-based broker was arrested this week in Colorado after a state trooper discovered 52 pounds of marijuana in his car, authorities said. Jonas Heller, who most recently was with the Agency, had been pulled over on Interstate 70 in Mesa County, according to the Colorado State Patrol, when a trooper found two suitcases full of pot in the the backseat. Agency co-founder and president Billy Rose said Heller is no longer with the company. His now-deleted profile on the company’s website said he has done more than $1 billion in sales. [TRD]

Macy’s to close historic downtown Miami location
Amidst a number of nationwide closings, Macy’s will shutter its downtown Miami location this quarter. Originally the flagship of Burdines, a local retailer which first leased the East Flagler Street store in 1917, the location has operated under the Macy’s brand since 2005. Macy’s plans to close 11 stores across the country in the first part of 2018, saving some $300 million per year, according to a press release from the company. [TRD]

Houston office market shows signs of recovery but new supply weighs down the numbers
With 460,000 square feet of new supply added to Houston’s office market in the fourth quarter of 2017, a boom in leasing still couldn’t tame the city’s vacancy rates. Free rent and other financial perks enticed companies to fill empty space, but the year ended with a 23.2 percent vacancy rate. A CBRE report found Houston “on relative solid footing” due to economic strength in Texas and nationally, but worries over stagnant energy industry hiring “could restrain any significant office sector leasing activity.” [Houston Chronicle]

Tishman Speyer plans $540M residential project in San Francisco
Tishman Speyer is proposing a high-rise residential development in San Francisco’s SoMa neighborhood. The $540 million project would eventually host 907 residential units in two 400-foot towers designed by Bjarke Ingels Group. The proposed construction would build more than 1 million square feet, with 26,000 square feet of retail space and 94,000 square feet of below ground parking. The proposal does not include affordable housing, but Tishman plans to meet its affordable housing requirements at nearby developments. [Bisnow]

John Portman, Atlanta’s defining architect and developer, dies at 93
John Portman, the sometimes controversial architect and developer who shaped much of Atlanta’s skyline, died at the age of 93. Some of Atlanta’s defining buildings, including the Hyatt Regency, Peachtree Center, AmericasMart and the Westin Peachtree Plaza hotel, stand as Portman’s legacy in his hometown. Former Mayor Andrew Young once said that “there is no one who has done more for Atlanta.” He also designed major buildings in New York, San Francisco and Shanghai. [Atlanta Journal Constitution]