Tina Daunt

  • Donald Trump golf club sued over treatment of workers in Rancho Palos Verdes (Credit: Getty Images, iStock)

    Donald Trump golf club sued over treatment of workers in Rancho Palos Verdes (Credit: Getty Images, iStock)

    Four employees at Trump National Golf Club Los Angeles have filed a lawsuit alleging they were forced to work overtime without pay and were denied rest and food breaks.

    The suit against VH Property Corp. — a holding company connected to the Trump Organization — accuses the golf club in Rancho Palos Verdes of violating California Labor Code. The four waitresses who filed the suit are seeking to recover wages that were withheld along with damages that exceed $25,000.

    The suit comes nearly three months after Rancho Palos Verdes voters rejected a ballot measure that would have required large resorts and clubs — including Trump National — to pay employees at least $15 an hour, implement regular raises through 2022 and provide panic buttons to employees who work in isolated areas.

    The food servers’ lawsuit was filed in Los Angeles County Superior Court. Its plaintiffs are Adriana Curiel, Brissette Curiel, Jackeline Honorio and Maria Rodriguez. VH Property is the entity that runs President Trump’s golf properties, including its club house restaurants and meeting facilities.

    Trump purchased the golf course for $27 million in 2002 from developers Kenneth and Robert Zuckerman; they had filed for bankruptcy protection after a portion of the course collapsed into the ocean.

    While Trump made substantial additions to the property, the club has struggled financially in recent years.

    Trump has also endured a rocky relationship with the city leaders and golf course workers. In 2008, Trump sued the city for $100 million claiming Rancho Palos Verdes refused to allow him to build a clubhouse terrace and other amenities needed to maintain the “Trump image.” The city and Trump settled the lawsuit in 2012 but terms were not disclosed.

  • Alexis Manrodt

  • Former Takeda Campus in Deerfield, Horizon CEO and president Timothy Walbert

    Former Takeda Campus in Deerfield, Horizon CEO and president Timothy Walbert

    Biotech company Horizon Therapeutics is set to buy the massive 70-acre campus formerly occupied by Takeda Pharmaceuticals.

    The Deerfield property, which runs along the Tri-State Tollway, totals 660,000 square feet and includes five buildings. The campus went up for sale June of last year when Takeda, a Japanese firm, announced that it was shuttering its suburban headquarters and moving to Boston, sending about 1,000 employees packing.

    The sale price was not disclosed, according to Crain’s, which first reported that the deal was in contract. Savills was marketing the the property, which also includes land zoned for 735,000 square feet of new development

    The turnover of the massive campus, completed in 2011, shows that new office product is still desired in the suburbs. That’s despite a suburban vacancy rate that has ticked up to nearly 20 percent.

    The market has seen a shift with big companies moving downtown and out of the suburbs. Developing areas like Fulton Market and The Old Post Office in the Loop have opened up opportunities for big companies to relocate.

    Horizon is headquartered in Ireland but has occupied a 160,000 square foot office in Lake Forest, which will relocate to the Takeda campus. The company’s stock ticked up nearly 80 percent in 2019 amid a transition to focus on rare diseases and syndromes with few available treatments.

    [Crain’s] — Jacqueline Flynn

  • Francisco Alvarado

  • Clockwise from left: AC Hotel Midtown Miami, E11even and the Gabriel Miami (Credit: iStock, Wikipedia)

    Clockwise from left: AC Hotel Midtown Miami, E11even and the Gabriel Miami (Credit: iStock, Wikipedia)

    AC Hotel Miami Midtown is ready for some football.

    The 153-key hotel opened its doors less than a week ago, and with mere days until the Big Game, it is fully booked from Jan. 30 to Feb. 2, the four days that encompass Super Bowl LIV weekend.

    Pre-booking at the hotel, at 3400 Biscayne Boulevard, started in the $300 range before the AFC and NFC championship games on Jan. 19 that crowned the Kansas City Chiefs and San Francisco 49ers, respectively, said the hotel’s sales director Nelson Garcia.

    “We had a strategy based on pricing from the previous three Super Bowls,” Garcia said. “Based on market demand in the past week, we ended up with some rooms going over $1,000 a night. One of those days is oversold by two rooms.”

    Now that Super Bowl LIV week has finally arrived, hoteliers like AC Hotel Midtown Miami’s owner Aztec Group are capitalizing on frenzied demand for lodging created by the more than 200,000 people coming to South Florida for the big game and accompanying festivities.

    Boaz Ashbel, an Aztec Group managing director in charge of hospitality acquisitions, said Super Bowl weekend rates at its AC Hotel, which is a Marriott brand, reflects what most other hotels in Miami’s urban core are charging.

    “We have a property on Brickell that requires a three-night minimum starting at $800 [per night] and goes up to $1,800 a night,” Ashbel said. “It is fair to assume that folks who are trying to book this week will be paying at least $1,000 a night.”

    In recent weeks, hotel industry analysts and South Florida tourism boosters have touted record-breaking figures for average daily rates and revenue per available room. In early December, analytics firm STR released a custom forecast predicting that Super Bowl LIV-related hotel bookings will generate an average daily room rate of between $520 and $540, and revenue per available room between $473 and $508 for the Miami market.

    Those figures will surpass daily average rates and revenue generated by the cities that hosted the previous nine Super Bowl games. William Talbert III, president and CEO of the Greater Miami Convention & Visitors Bureau, said the Super Bowl is arriving at a time when South Florida tourism is in the midst of a boom.

    “The week ending Jan. 18, the occupancy rate was 85 percent, up from 80 percent last year,” Talbert said. “The average room rate is $244, up 5 percent from the previous year.”

    Since 2010, the last time South Florida hosted a Super Bowl, the region has added more than 10,000 hotel rooms. And the advent of short-term rental platforms like Airbnb has made the lodging marketplace more competitive, Talbert noted. “Ten years ago, consumers had fewer choices,” he said. “Today, the consumer will decide if the rates are too high.”

    According to Booking.com, 190 out of 314 hotels in Miami-Dade County are charging $220 or more a room per night as of early Monday afternoon. The most affordable hotel with at least a four-star rating is the Nuvo Suites Hotel at 1750 Northwest 107th Avenue in Doral, which is nearly 10 miles away from downtown Miami’s Bayfront Park, where the NFL is hosting its annual Super Bowl Live Fan Fest. Nuvo Suites, which is also nearly 10 miles away from Hard Rock Stadium, the site of the big game, is offering a 360-square-foot room with a king bed for $368 a night.

    Closer to the action at Bayfront Park, the price-per-night for luxury hotels jumps exponentially. For instance, the most affordable rooms at East, Miami, the hotel at Swire Properties’ Brickell City Centre, are junior residential suites totaling 750 square feet. Booking.com shows there are five left at $1,099 a room per night. That doesn’t include taxes and other ancillary charges.

    Meanwhile the lowest-priced four-night stay at the five-star Four Seasons Hotel Miami at 1435 Brickell Avenue is $3,750 a night for a deluxe double room with a city view. For nearly $1,000 more a night, Super Bowl big spenders can book a four-night stay at a four-bedroom suite at the Setai Miami Beach at 2001 Collins Avenue.

    Some luxury properties have blocked off rooms for special events or entertainment companies that sell packages that include Super Bowl tickets, accomodations and other big ticket perks to corporate high-rollers in town for the big game.

    For instance, downtown Miami’s 24-hour nightclub E11even is advertising a $1.1 million package anchored by 11 Super Bowl tickets to watch the game in Hard Rock Stadium’s 72 Club premium seating area, plus the VIP owner’s table at the nightclub for four nights and 11 rooms for four nights at The Gabriel Miami, Curio Collection by Hilton.

    Gino LoPinto, an E11even operating partner, said the nightclub has received four legitimate inquiries about its big game week package, including one from a large insurance underwriting company owner in Kansas City. LoPinto added that E11even blocked off more than 40 of the 129 rooms in The Gabriel for Super Bowl-related packages.

    “It is more conducive for the corporate clients,” LoPinto said. “For Super Bowl, you get a lot of requests for bigger groups. We have a great VIP clientele, and having hotel rooms available is a nice add-in for table packages.”

  • Kevin Rebong

  • From top: London, New York and Hong Kong (Credit: Unsplash)

    From top: London, New York and Hong Kong (Credit: Unsplash)

    Residential investment in 18 large economies posted year-over-year declines for four straight quarters through last September (Credit: Unsplash, iStock)

    The global economy grew at its slowest rate since the financial crisis last year. A big part of the slowdown came from cooling housing markets around the world, which have increasingly started moving in sync.

    Residential investment in 18 large economies posted year-over-year declines for four straight quarters through last September, the Wall Street Journal reported citing an analysis from Oxford Economics. This string of declines was the longest the world economy has seen since 2008 and 2009.

    “The housing market is a big asset market which has quite large potential impacts on consumer spending,” Adam Slater of Oxford Economics told the Journal. “It tends to be a sector when it booms, it booms; when it busts, it busts.”

    In addition to a slowdown in the broader economy, residential markets have been constrained by affordability problems and heightened geopolitical uncertainty, including the U.S.-China trade war, Brexit, and protests in Hong Kong.

    According to the International Monetary Fund — which projects worldwide economic growth to rebound somewhat this year — low interest rates have contributed to greater synchronization between housing markets, as yield-hungry investors scoop up real estate across the globe. A similar degree of synchronization has long existed in global stock and bond markets.

    Home price increases have also been limited by new regulations. Vancouver introduced a foreign buyer tax in 2016, while New Zealand banned overseas investors from buying existing homes altogether in 2018. Meanwhile, Seoul has tightened restrictions on mortgage lending and capped residential prices. [WSJ] — Kevin Sun

  • Gregory Prosser

  • Baha Nabulsi's Facebook post

    Baha Nabulsi’s Facebook post

    Kobe Bryant’s death in a helicopter crash Sunday triggered an outpouring of grief across the world, with sports fans paying tribute to one of basketball’s greatest-ever talents. But one eXp Realty agent saw the tragedy as an opportunity, and an off-color remark she made on social media has now led to her dismissal.

    “Who’s his realtor?” agent Baha Nabulsi posted in a Facebook group called “Real Estate Mastermind” just hours after Bryant, his teenage daughter and seven others were killed when their helicopter crashed into a Calabasas hillside outside Los Angeles. According to Inman, a managing broker from eXp’s Austin office, Shelia Dunagan, posted an apology and promised that the issue would be “dealt with.”

    Nabulsi was later fired from eXp, with a spokesperson for the firm telling Inman that the firm “does not condone or support behavior that does not match our core values.”

    Bryant, a five-time NBA champion with the L.A. Lakers and the fourth-leading scorer of all time, lived in a gated community in Newport Beach off of North Pelican Hill Road, and owned a number of other properties in the area.

    Founded in 2009, eXp is one of the fastest-growing national brokerages with 20,000 agents as of August. At a time when traditional firms have been competing for agents, eXp offers high splits, revenue-sharing and company stock options. During the second quarter of 2019, it reported a “record” $266.7 million in revenue, up 104 percent year-over-year, but its losses were also up 16 percent, to $2.2 million. It recently launched its own iBuying program called Express Offers. [Inman]TRD Staff 

  • Erin Hudson

  • From left: David Walker, Philip Lang and Tyler Whitman (Photo by Sasha Maslov)

    In a recent episode of “Million Dollar Listing New York,” the show’s newest cast member, Tyler Whitman, beat out celebrity broker Ryan Serhant on a listing.

    “I’m just super-excited that Bubblemint gum finally has their first listing,” said Serhant, flubbing the name of Whitman’s brokerage, Triplemint, and shrugging off the loss.

    How staged the scene was is anyone’s guess, but Serhant’s confusion rings true. Outside of some small circles in the proptech and residential brokerage worlds, Triplemint has little name recognition. That, however, is starting to change.

    “I want to be to Triplemint what Ryan Serhant was to Nest Seekers,” said Whitman, who’s expanded his team in preparation for an onslaught of new business.

    The newfound publicity will undoubtedly translate into dollars and cents for the firm — just as it did for Serhant and fellow “MDLNY” star Fredrik Eklund, whose team at Douglas Elliman became the firm’s top-producing group in the wake of his TV debut.

    But with its rising profile, Triplemint — which has both rabid supporters and critics — will also face more scrutiny.

    The firm, which was launched by Yale University friends David Walker and Philip Lang under the name Suitey in 2011, claims to be upending residential brokerage by tapping into a market most ignore, or at best leave to serendipity: residential property owners who have not listed their homes. 

    Its business model is centered on a machine-learning algorithm, dubbed Black Diamond, that combs through public records and consumer data and then uses “predictive analytics” to identify those who seem most likely to sell (whether they know it or not). 

    And while the company is still a small fish on the New York brokerage scene, its promise of disrupting an industry that is in the midst of an existential crisis is piquing the interest of some investors. The firm has raised $17.7 million in venture capital money to date.

    According to The Real Deal’s most recent ranking of New York’s residential firms, it closed only $46.1 million in sell-side deals in Manhattan in 2018. Triplemint, however, claims its total sales volume was $300 million in the last year, as of October. (By comparison, the top five firms in the city closed over $1.5 billion each.)

    Its investors, meanwhile, include Tyler and Cameron Winklevoss — the entrepreneurial twins who sued Mark Zuckerberg for stealing their idea and using it to launch Facebook — as well as former Cushman & Wakefield President Tom Falus and French “super-angel” investor Fabrice Grinda.

    “Triplemint’s the first brokerage to change the experience for the consumer,” said Brock Saunders of Summit Action, which participated in the firm’s $4.5 million Series A funding round. “I think David and Phil have the ability to create a multibillion franchise, and I feel lucky to be part of the journey.”

    But that journey has not been completely smooth.

    A number of former Triplemint employees and agents told TRD that the technology the firm promised didn’t deliver — though current agents claim their business is seeing a sizable boost. More broadly, some in the tech world just don’t believe that Triplemint’s tech will prove to be that revolutionary. They say iBuying — when companies quickly buy and sell houses — is more likely to transform the residential space. 

    Andrew Ackerman, an angel investor and managing director at fund and startup accelerator Dreamit Ventures, said Triplemint’s model is “pretty compelling.”

    Ackerman — who mentored Walker and Lang and whose wife is a former Triplemint agent — said, however, that this year will be a significant one for the firm.

    Ryan Serhant and Tyler Whitman on Bravo’s “Million Dollar Listing New York”

    “Generally speaking, after eight or nine years the default assumption is you’re not going to make it,” he said. “At that point, the startup has to prove why not.”

    Diamond in the rough

    At a recent weekly sales and marketing meeting, Walker sprang to the front of the room to address the 207-person firm.

    “Triplemint on three. One, two, three!” shouted the CEO, who was dressed in a signature navy blue tailored suit and Triplemint T-shirt. “Triplemint,” the staffers chanted back.

    Many of those staffers have drunk the firm’s Kool-Aid, and Walker and Lang (who is COO) are betting on their platform to keep that buy-in flowing.

    Here’s how it works: Black Diamond searches through the firm’s custom-built database and spits out a score for each property. The higher the score, the more likely the owner is to want to sell. The firm then passes the promising leads to a team that contacts property owners.

    If owners express interest in selling, they get sent to a Triplemint agent. That agent reaches out and moves them into the “premarket platform,” circulating the property internally and gathering feedback from fellow Triplemint agents and the buyers they represent.

    Triplemint claims the platform reduces the amount of time the company’s listings sit on the market to a median 54 days — 40 percent less than Manhattan’s median 89 days, per UrbanDigs.

    Summit Action’s Saunders remembered hearing about the premarket platform and thinking, “Gosh, doesn’t that make sense? Why doesn’t everyone do this?”

    “I saw the value prop to buyers and sellers very clearly,” he said.

    Pat Hedley, who worked for 30 years at private equity firm General Atlantic and also wrote a check to Walker and Lang in 2016, called the combination of the premarket platform and Black Diamond “a game changer.”

    And GeiFaan Kim, who left Triplemint in early 2019 to join virtual brokerage eXp Realty and launch an overseas development firm, recalled seeing early demonstrations of Black Diamond and being impressed. He said that during a mid-2018 presentation where one of the sample sellers happened to be his friend, the system estimated her household income, how long she had lived there, whether she had pets and “actually knew that she was seven months pregnant, which was kind of creepy.”

    Kim recalled going online to see if it all checked out. It did.

    “It was cool,” he said. “Wow, there’s a lot of personal information. But it’s all out there in public. Our job is to put it all together.”

    Walker declined to reveal what data Triplemint collects but said it is all publicly available — either sourced from public records or purchased from consumer data providers.

    Recruitment run

    Lang and Walker met rowing at Yale in the early aughts.

    Their teammate and longtime friend Bob Casey described that time as “the era of Zuckerberg building Facebook and Jack Dorsey building Twitter.”

    Walker took a year off to work on a renewable electronics company called YouRenew that Casey founded (and later sold). Meanwhile, Lang worked for a summer at Lehman Brothers just before it collapsed in 2008 and then as an analyst at Macquarie Capital after graduating.

    He quit in 2011 to work on Suitey with Walker, who was still finishing his final year at Yale. 

    Casey recalled how the duo shuttled between New Haven and New York that first year. He called Walker the “hype man” and Lang more behind the scenes “making the trains run on time.”

    For its first two years, Suitey was geared toward rentals — and Walker and Lang were working as agents.

    Cameron and Tyler Winklevoss

    But in 2013, it rebranded as Triplemint and began participating in a series of venture accelerator programs, which focus on startup growth. It also began to shift into sales and raise money by pitching its tech to investors.

    In 2016, it began aggressively recruiting agents and tapped Eric Barron — the former CEO of Keller Williams NYC — as chief revenue officer. He quickly started hiring agents who could close deals, selling them on Triplemint’s cutting-edge technology.

    But several employees and agents who were recruited during that time said that the technology didn’t meet their expectations. (Triplemint started building its premarket platform in 2015, began working on Black Diamond in 2016 and debuted Black Diamond in early 2018.)

    Eight agents and employees who worked at Triplemint between 2015 and 2017 told TRD versions of the same story: that leads were coming from a handful of people who were manually scouring public records, listing platforms and social media — rather than from a proprietary system. 

    Triplemint disputes those accounts and said all leads are routed to its dedicated 11-person team — with 10 of those members based in New York and one in the Philippines — to vet before getting passed on to agents.  

    In 2017, a group of agents confronted Walker and Lang to ask when the technology would be ready, according to three agents.

    The founders, they said, admitted there were unexpected delays, apologized and began updating the agents on the progress.

    “They owned the fact that they misled,” one of the agents said. “It was actually shocking to us.”

    In a statement, the company acknowledged that these meetings occurred, but said it was management that asked agents to give feedback because the company was “behind on a few product launches.” The brokerage also noted that it hired a new chief technology officer in mid-2017 and now gives weekly product updates to the entire staff.

    Speaking broadly, Walker said delays are inherent when pushing the envelope on innovation.

    “Not everyone can handle the process of creating something new,” he said. “You have to be willing to try things to see if they work, knowing that some won’t.”

    Primed for growth?

    Walker and Lang say their in-house tools generate roughly half of the firm’s business.

    “I think it’s crazy that real estate agents don’t demand that their companies generate business. In what other industry is that the case?” said Walker.

    Current Triplemint agents TRD talked to confirmed that they are getting fed business and rave about the platform.

    Jed Lewin, an agent who joined in June 2018, said his gross commission income has grown more than 300 percent as a result of leads from Triplemint’s systems.

    “They’re not giving me potential,” he said. “They’re giving me business.”

    Julianne Bond, who has been at Triplemint for over a year, estimated that about 30 percent of her business comes from leads generated by the firm.

    And in some ways the firm is hedging its bets and pushing into the traditional brokerage world. In August, it landed its first new development project, albeit a small one. Agent Gina Ko and her team are handling sales for a 25-unit condo in Astoria called the Alexandra.

    Summit’s Saunders pointed to the firm’s strong revenue growth and Triplemint’s 94 Net Promoter Score — an index that ranges from -100 to 100 and measures the customers’ willingness to recommend a company to others — as indicators that “hey, we’re doing the right things.” The firm said it’s NPS has been above 90 for the past three years.

    Walker said that Triplemint has aligned every part of its model — including tying agent bonuses to customer reviews — with the clients’ satisfaction. “Our mission is to change the experience for the buyer and the seller,” he said. “How is buying and selling a home not an amazing experience?” 

    But Mike DelPrete, a real estate tech strategist and scholar in residence at the University of Colorado Boulder, said Triplemint, like Compass, is simply trying to make its agents more efficient. He called it traditional brokerage “with a fresh coat of paint and technology in the back end.”

    Dror Poleg, co-chair of the Urban Land Institute’s Technology and Innovation Council, agreed, arguing that creating technology to make agents more efficient is no longer enough.

    “It’s becoming a tougher and tougher sell,” Poleg said, citing Realogy as the poster child for that model. “The best-case scenario is just to be a better Realogy,” he said.

    Poleg also noted that Triplemint is not the only real estate player using predictive analytics.

    He pointed to other venture-backed firms like Opendoor and major institutional players like the Blackstone Group that are also exploring how to harness machine-learning algorithms to fuel business.

    “The idea has been out there, including by people with more resources than Triplemint,” he said.

    Walker, however, argued that Triplemint has a head start on any rivals. And Lang noted that it takes time to execute on long-term growth plans.

    “There’s a quote I’ve always loved … ‘Ten years of hard work and all of a sudden you’re an overnight success,’” Lang said. “A lot of people don’t understand how long it takes to build a large and valuable company.”

    The reality TV boost

    Both founders and Whitman are anticipating a major growth spurt following their first season on “MDLNY.”

    In a webinar he co-hosted with Serhant in October, Whitman vowed that the brokerage would be in 25 markets in the next year.

    In July, the brokerage did indeed absorb the 15-agent Hoboken-based Court Street Property Group. At the time, Walker said the firm would be “investing heavily” in New Jersey’s Hudson County and that the move was part of a larger strategy for Triplemint to expand into other markets.

    Walker and Lang declined to elaborate on their short-term plans, but Lang said the expansion would be focused on major U.S. metro areas. Saunders, meanwhile, said recent conversations between the founders and investors have focused on mergers and acquisitions.

    “I think everyone agrees that the business is primed for growth,” he said. “[Now we’re] navigating the path of how we actually execute on it.”

    Meanwhile, Lewin said the firm’s exposure is already paying dividends.

    “When I tell sellers we’re one of the ‘Million Dollar Listing’ companies … that goes on a long way,” he said, noting that four former clients reached out to him throughout the season.

    Whitman, who was Triplemint’s first employee and is a partner in the company, has not been shy about his high hopes for fame.

    “Triplemint is a household name, and my face will be synonymous with that,” he said on the webinar.

    He later said that he’s already seeing an upside from “MDLNY.” “My business and price point have grown exponentially,” he noted.

    And Triplemint’s founders are banking on his TV success to give the company a boost.

    “Tyler wants to be one of the best agents in the city and a spokesperson for the company that we all love?” Walker said. “I feel fantastic about that.”

    Correction: A previous version of this story included a photo from Getty mistakenly labeled Cameron and Tyler Winklevoss. The two people in the photo could not be properly identified after the mistake was brought to our attention, and the photo has since been replaced.

  • E.B. Solomont

  • Robert Reffkin and Kristen Ankerbrandt

    Compass CEO Robert Reffkin and CFO Kristen Ankerbrandt

    UPDATED, January 27, 6:10 p.m.: Compass is laying off up to 40 employees across its IT, marketing and M&A teams, the company confirmed Monday.

    Sources said the move, which is taking place this week, is part of a broader reorganization as the SoftBank-backed company consolidates roles that service agents. The sources said Compass will create a new team called the “Agent Experience Team” to replace teams of employees who onboarded new agents, train them on the Compass platform and staff the IT help desk. The cuts are taking place nationwide.

    The layoffs represent a fraction of the New York-based firm’s 2,500 workforce. At latest count, the company has 18,000 agents and staff across the U.S.

    Sources said jobs will also be cut from Compass’ M&A team, since the residential brokerage isn’t currently pursuing deals. In recent years, Compass has grown through strategic acquisitions with firms like Pacific Union International in San Francisco and Stribling & Associates in Manhattan.

    This week’s cuts punctuate a period of massive growth for Compass, which in 2017 announced a plan to have 20 percent market share in 20 major U.S. cities by 2020. Late last year, Compass CEO Robert Reffkin conceded in a companywide letter that the company has not yet reached that target. While it has captured 20 percent of the market in cities like San Francisco and Washington, D.C., Reffkin said Compass hit 10 percent market share in “many more markets, which is major progress towards our 2020 by 2020 target.”

    However, Compass’ grow-at-all-costs approach has become a thing of the past.

    Last year, the brokerage said it would pump the breaks on its expansion to new markets, instead focusing on its existing markets. In the wake of WeWork’s failed IPO, Compass sought to distance itself from the co-working firm and found itself defending a $6.4 billion valuation.

    In a statement, Rob Lehman, Compass’ chief business officer, said: “We are continuing to invest and grow at the same rate we always have, and we expect to increase our headcount every month this year.”

    Write to E.B. Solomont at [email protected] 

  • E.B. Solomont

  • Jeff Blau

    Jeff Blau (Credit: Getty Images)

    On a brisk day in mid-October, CEO of The Related Companies, Jeff Blau, surveyed the development firm’s massive project on the Far West Side with an iced coffee in hand.

    “I used to run down here all the time while we were building this,” he said, sweeping his hand through the air and gesturing toward the six completed towers that make up Hudson Yards’ first phase of development.

    Just 44 when he was named CEO back in 2012, the perpetually youthful executive marked his 50th birthday in April 2018 by running his first marathon.

    In an industry known for sharp elbows, Blau’s seen as the nice guy who shows up to his kid’s hockey practice, to Cycle for Survival events at Equinox and to the Metropolitan Transportation Authority boardroom when it’s time to hash out a deal and Related founder Stephen Ross is in China. More than a dozen people interviewed described Blau as a consummate dealmaker — the kind of person who clicked with Ross as a student at the University of Michigan and then, two decades later, skillfully assembled the financing for Related’s biggest project yet.

    This fall, wearing a dark suit and a snowy dress shirt, the bespectacled Blau could be mistaken for any one of the bankers or lawyers he’s lured to Hudson Yards, including those at Wells Fargo, KKR and SAC Capital, to name a few. It would be another month before Facebook signed a 1.5 million-square-foot lease across three towers at the project.

    Although Related was once betting on retail and residential development to carry Hudson Yards, Blau said that as those sectors have softened, the project’s strong office component has been a surprise “game changer.”

    So far, 91 percent of the 8.8 million square feet of office space has been leased up. Blau said Related zeroed in on the struggle companies face attracting talent and refined its pitch for Hudson Yards as the “workplace of the future,” where employees can live, work, shop and socialize.

    “Real estate has changed,” Blau told The Real Deal during a recent interview at Hudson Yards. “You can’t just build a physical asset [anymore],” he said. “You have to be involved in what happens inside.” The goal is a business that’s “less subjected to market fluctuations,” he added.

    Since the financial crisis, one-off developments have become more competitive, Blau said, but Related has found a niche in ultra-complex projects that few rivals will take on as it moves into higher-margin businesses, including hotels and property management.

    “We strive for complicated things that others can’t execute on, so if there’s a consistent theme, it’s that,” Blau said.

    That plan will be put to the test as Related embarks on Hudson Yards’ second act in a less-than-perfect market. Phase two will entail 6.2 million square feet, including an expected six residential towers and an elementary school.

    The mirror-glass megaproject was never a sure thing, however. Dan Doctoroff — the deputy mayor for economic development under Mayor Michael Bloomberg — said many people doubted whether the West Side could ever be developed.

    “I say all the time, [Related] were the only developers in the world who could have pulled off Hudson Yards,” said Doctoroff, now the chair and CEO of urban-tech startup Sidewalk Labs, which has office space at 10 Hudson Yards.

    But Related almost didn’t get the chance.

    Related’s bid for the 28-acre site on the Far West Side fell apart in 2008 after News Corp. pulled out as an anchor tenant. Only when Tishman Speyer — the fim selected by the MTA, owner of the site — walked away after the financial crisis hit, did Related get a call back.

    “It was a scary time in the real estate industry,” Blau recalled.

    Yet he, Ross and Beal had an ace up their sleeve. In late 2007, an investor group including Goldman Sachs, Michael Dell’s MSD Capital, Abu Dhabi’s Mubadala Development and the Olayan Group provided Related with $1.4 billion in debt and equity. The deal gave the group a 7.5 percent ownership stake in the firm.

    “I can’t tell you how much it helped them get through a bad period,” said Marty Burger, president of Silverstein Properties, who worked at Related in the early 1990s and again from 1997 to 2006. “It gave them additional connections throughout the Middle East,” he added.

    “Anyone can be successful in good times,” said Blau, who joined Related in 1990, only to see the bottom fall out of the economy. “Some of the best deals in history are made during bad times because people are scared and there’s pressure. People say, ‘Why waste a great recession?’ That stuff, I think, is really true.”

    Over the years, Blau has taken his own advice.

    In 2009, at the height of the financial crisis, Related launched a fund management business targeting underperforming assets. Headed by Goldman Sachs alum Justin Metz, that arm has raised more than $6 billion to date. And with more than 50 borrowers, it has diversified beyond distressed deals alone. Related now originates and acquires debt and invests in multifamily projects, though it is not in the business of predatory lending, Blau stressed. “We’re in the business of providing debt and getting repaid,” he said.

    Related’s increasingly diverse portfolio is also a hedge against an economy that’s heading for a correction after a record bull run.

    For example, Related’s plans to develop 12 Equinox-branded hotels would be a “huge part” of the company’s business going forward, Blau said. Through the hotel business, the developer will also enter new markets, such as Seattle, Chicago and Houston, that Blau said are growing faster than core markets. “This is actually the biggest change in the hotel industry, maybe since the W,” he said, referring to how the luxury hospitality brand popularized personalized hotel stays.

    Industry observers said the foray is coming at a good time — when national hotel chains are struggling to compete with boutique offerings. Even without Equinox’s loyal members, who will likely patronize the hotels, travelers will be apt to stay at a hotel they associate with fitness and health, said hospitality consultant Bjorn Hanson. “There’s a halo effect,” he added. “It plays into people’s aspirations when they travel.”

    But even the most successful firms run up against intractable forces.

    For Hudson Yards’ second phase — which Related filed plans for in 2018 — those forces are Trump and Chuck Schumer. The president and U.S. senator from New York have clashed over how to fund the $30 billion Gateway Project, which would build a new railroad tunnel between New Jersey and Manhattan. The proposed tunnel would run under the second phase of Hudson Yards, which was to be completed by 2024.

    But in late December, the New York Times reported that Related was no longer providing a timetable for completion. If it weren’t for that funding disagreement, the developer would be ready to break ground.

    “That will delay this, definitely,” Blau told TRD during an October tour of Hudson Yards, arguing that the tunnel is “for the greater good of the city.”

    “It’s pretty frustrating,” he said.

    Blau is more accustomed to being the person making things happen.

    Doctoroff recalled Related’s early bet on the High Line in 2005, at a time when the city needed buy-ins from 38 landowners who wanted the old elevated rail line to be demolished. Instead, elected officials proposed a rezoning that would allow owners to sell the air rights above their buildings to developers throughout West Chelsea, but there was a question about whether there’d be a market for those air rights.

    “Jeff Blau stood up in the meeting when the High Line property owners questioned whether or not the air rights would be worth anything,” Doctoroff recalled. “And he said, ‘We’re buying.’ That swayed everybody.”

    That sort of confidence is what helped make Hudson Yards happen.

    To date, one of Related’s singular feats has been raising $17 billion in debt and equity for Hudson Yards from an array of international investors. As recently as November, it secured a $1.25 billion loan from Wells Fargo, Deutsche Bank and Morgan Stanley using 55 Hudson Yards as collateral.

    “They found capital in every single part of the world,” said Matt Borstein, global head of commercial real estate at Deutsche Bank, a longtime Related lender that provided $4.5 billion in financing for Hudson Yards. Borstein said that when Ross and Blau pitched the bank on Hudson Yards, they meticulously laid out their vision for a new neighborhood that would be an economic engine unto itself.

    Blau in particular, Borstein said, urged the lender to think of Hudson Yards not just as a collection of buildings but a city within a city, and the financing not just as a loan but a “bridge to billions of dollars in more loans.”

    Though snags with Gateway may stall phase two, Hudson Yards is already a success — something certainly not guaranteed when Related signed a $1 billion long-term lease with the MTA at the start of the financial crisis.

    But when asked about that gamble by TRD in 2011, a year and a half before the project even broke ground, Blau’s answer was both confident and prescient.

    “Hudson Yards could be our greatest accomplishment yet,” Blau said. “It’s the future growth corridor of the city. It’s where companies are going to go.

  • Kevin Rebong

  • Alderman Anthony Beale (9th), Jeff Bezos and the 150,000-square-foot warehouse in Pullman (Credit: Google Maps, Getty Images, Ward09)

    Alderman Anthony Beale (9th), Jeff Bezos and the 150,000-square-foot warehouse in Pullman (Credit: Google Maps, Getty Images, Ward09)

    Amazon has a $60 million deal in the works for a 40-acre distribution center in Pullman, according to a new report.

    Ald. Anthony Beale (9th) confirmed the e-commerce giant has expressed interest in building a 150,000-square-foot warehouse on the former Ryerson Steel property, bringing hundreds of jobs to Beale’s district. About 500 construction jobs and “200 to 300” permanent jobs to be exact, according to Beale.

    If it goes through. the e-commerce giant would deepen its already firm position in Chicago. The news, first reported by Crain’s, comes just weeks after Amazon inked a massive lease at Melrose Park. Additionally, Amazon already has a massive 237,000 square foot facility about 15 miles north of Chicago in Skokie, Illinois.

    “We could not be happier,” Beale told Crain’s. “It underscores that Pullman is rapidly becoming the new green industry/transit logistics and distribution center of Chicago.”

    The $60 million deal would seek a county property tax abatement to be approved by the City Council. [Crain’s] — Jacqueline Flynn

  • Alexis Manrodt

  • The Hoxton hotel at 200 N. Green St. (Credit: iStock)

    The Hoxton hotel at 200 N. Green St. (Credit: iStock)

    An increasing number of hotels across Chicago — including the boutique variety — are offering day-rate rooms, pegging them as a co-working spinoff complete with bed and bathroom.

    The strategy — employed by about two dozen properties — comes at a time when new hotel development in Chicago has squeezed profits, as have Airbnb and other short-term rental companies, according to Crain’s. Fulton Market alone is projected to be home to about 1,500 hotel rooms in the next few years, raising questions about how much supply the market can absorb.

    The Hoxton in Fulton Market offers half-price rooms from 10 a.m. to 4 p.m., and properties like Sofitel Chicago Magnificent Mile and Hyatt Centric Chicago hotel in Streeterville offer similar deals, Crain’s reported. Dayuse.com, a reservation platform, booked about 8,000 rooms in Chicago last year, four times more than 2018’s total, according to the report.

    And following a strong 2018, revenue per available room at downtown hotels dipped to $150.82 in 2019, according to Crain’s, citing STR data.

    Despite the increased competition, hotel development continues. The Chicago Planning Commission last week advanced North Park Ventures’ 476-key hotel project at 800 West Lake Street in Fulton Market.

    [Crain’s] — Brianna Kelly

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