The city, state and country are in a much different place than at the start of 2021. But it is understandable if you are experiencing a bit of déja vu.
Omicron cases are surging. Companies are delaying return to office plans. Events are being canceled and businesses are shutting down. A sore throat is still anxiety-inducing; going out requires a risk assessment.
New York City is trying to figure out how to deal with the rapid spread of the variant, preparing for a new mayor and the expiration of state eviction protections. The past year saw a new president take office, a governor resign in disgrace and a new mayoral administration start to take shape — all developments that will affect the real estate industry in 2022.
Here is a rundown of some of the biggest real estate-related stories of the year:
Gov. Andrew Cuomo stepped down in August, following numerous allegations of sexual harassment. The governor’s resignation meant the loss of an at-times powerful ally for the industry. Kathy Hochul is known as a moderate, but it remains to be seen where she will fall on issues like good cause eviction and the renewal of the 421a property tax break.
New York City elected a new mayor, who happened to be the industry’s favorite candidate. Eric Adams established himself as the pro-business, tough-on-crime choice in the Democratic primary, though some real estate bigwigs did hedge their bets by also supporting Kathryn Garcia. The industry preferred either candidate to left-leaning Maya Wiley, who advocated for the elimination of 421a.
Compass and Douglas Elliman went public. The former held its initial public offering in April, with its stock price closing at $20.15 per share, meaning that it had a market cap of $7.7 billion. But last month Compass saw it drop under $10, an all-time low, last month. As of Wednesday, shares were hovering under $9, but the company saw a small bump on Thursday after Elliman started trading.
Gowanus and Soho were rezoned. The Brooklyn neighborhood had been largely restricted to industrial use, but the rezoning paves the way for 8,500 new apartments, of which 3,000 would be set aside for low- and moderate-income New Yorkers. The rezoning of Soho and Noho similarly allowed for both residential and retail uses in neighborhoods that mostly permitted manufacturing use. Both were priorities of the de Blasio administration and were billed as important steps away from rezoning only low-income neighborhoods.
A condo building collapsed in South Florida, killing 98 people. This incident caused cities around the country to consider ramping up their building inspections. Jersey City passed a measure requiring periodic structural and facade inspections on certain buildings. Condo and co-op boards in New York took another look at repairs that had been put off, and experts raised concerns about the city’s lack of mandatory, structural integrity inspections.
WeWork went public via a SPAC, and Katerra filed for bankruptcy. In March, the coworking firm merged with BowX Acquisition Corp. to go public in a deal valued at $9 billion. You may remember that WeWork was valued at $47 billion in 2019. Katerra, another troubled SoftBank-backed company, declared bankruptcy in June.
After much delay, federal rent relief was distributed. The state has given out or approved all of the $2 billion in rent aid allocated by Washington and has requested another $996 million. Meanwhile, the state’s eviction moratorium is slated to expire Jan. 15. This month, Hochul announced that $539 million would be available for low- and moderate-income homeowners. That would only cover a measly 9 percent of mortgage arrears, which have totaled an estimated $5.85 billion during the pandemic.
Zillow killed its iBuying business. In November, the listings giant announced that it would no longer flip homes and would lay off 25 percent of its staff. Many pointed to Zillow’s method for estimating home values as the fatal flaw, but it remains to be seen if the end of “Zillow Offers” portends trouble for the rest of the iBuying space.
HFZ lost control of its marquee project. The developer was plagued by lawsuits and foreclosure proceedings for much of 2021. This month Steve Witkoff and Len Blavatnik bought the XI condo project in a foreclosure sale. The new owners have secured financing to resume construction of the 900,000-square-foot, mixed-use towers at 76 11th Avenue.
The future of real estate is … virtual? Digital land deals are on the rise. Republic Realm recently bought a property in The Sandbox, a popular metaverse, for $4.3 million. The future of this kind of investment is still uncertain: Will it be a significant asset class or just a very expensive version of the Sims?