The headwinds were immense this past year. Things didn’t completely run off the rails. But it was close.
Pithy rhymes were coined to capture the market, as always — “Stay Alive Until ‘25,” “Take Your Licks Until ‘26” and “T-Bill and Chill” (alluding to the attractiveness of bonds versus real estate) were prominent among them.
“From the Federal Reserve’s interest rate hikes to the surge in UCC foreclosures and the persistent bad news for the office market — it was a tough year for real estate,” senior reporter Rich Bockmann writes in the intro to our cover package.
That package looks at some of the figures at the center of the maelstrom, from Compass CEO Robert Reffkin (who actually came out pretty well) to developer Fortis (which didn’t, as its luxury high-rise turned into the leaning tower of FiDi).
In another story, “The Auction Junkies,” senior reporter Keith Larsen hangs with the small-time investors who gather on the courthouse steps in New York City to bid on co-ops they’ve never seen, as a part of a judicial process that is becoming increasingly common.
“If real estate dealmaking in New York is like cocaine,” Larsen writes, “this is crack.”
We also profile Jeff Krasnoff, the forefather of commercial mortgage-backed security servicing, who handles “an ever-growing pile of distressed loans with an iron grip.”
As Bockmann writes, Krasnoff has spent four decades flexing what one colleague called “down-cycle skills” to develop an $11 billion business in distress. (Now you know “down-cycle skills” is something you can put on your résumé.)
“Just know that this is one chapter in a long process.”
Elsewhere in the issue, multifamily investors got hit hard by floating-rate debt this year — and rookie mistakes are putting some firms in a deeper hole, senior reporters Suzannah Cavanaugh and Isabella Farr found. Some fledgling investors seem frozen by their inexperience and unable to communicate with lenders — a necessity when things go wrong, insiders say.
“A lot of people who are in trouble on multifamily syndicated deals, they were in high school in 2008,” said one observer. “They didn’t think this could happen.”
Fast-growing Texas in particular seemed like one bright spot for multifamily investors. But vacancies are rising, among other issues. “For the past few years, Texas multifamily was one of the hottest real estate investments in the country,” writes senior reporter Joe Lovinger. “Not anymore.”
Of course we haven’t even mentioned the verdict against the National Association of Realtors in a landmark case over broker commissions.
In a story by reporter Sheridan Wall, we size up the state of play after the bombshell ruling. The jury says the defendants violated antitrust laws by conspiring to drive up buyer’s agent fees charged to homesellers. But the immediacy of any widespread changes to brokers’ commissions is far from clear.
“Just know that this is one chapter in a longer process,” NAR President Tracy Kasper said, perhaps hopefully, at a recent 12,000-person NAR conference attended by Wall.
Finally, there are some bright spots out there.
Retail was one real estate sector that was in the doghouse several years ago. (“Retail is f*ucked,” read the cover of The Real Deal in May 2017.) But how things have changed — luxury brick-and-mortar retail is flourishing, as our story about the storefronts of Fifth Avenue shows.
“I’ve never seen vacancies so low on Fifth Avenue,” one broker said of the country’s priciest shopping strip.
And it was a bright year too for the players at the top of the heap when it comes to New York City property managers, and Palm Beach and Houston residential brokers.
Enjoy the issue!