WeWork, the troubled operator of shared office space, has named Sandeep Mathrani, a senior executive at the commercial real estate company Brookfield Properties, as its new chief executive. Mr. Mathrani, whose appointment was announced on Saturday, replaces Artie Minson and Sebastian Gunningham, the co-chief executives. Mr. Minson and Mr. Gunningham took over in September from Adam Neumann, the WeWork co-founder whose growth-at-all-costs strategy brought the company to the brink of financial collapse last year. In a statement, Mr. Mathrani said WeWork had “redefined how people and companies approach work with an innovative platform, exceptionally talented team and significant potential if we stick to our shared values and maintain our members-first focus.” The appointment of Mr. Mathrani, who is set to start on Feb. 18, would be an important part of WeWork’s attempts to build a business that could sustain itself in the fast growing but highly competitive market for flexible office space. Mr. Mathrani has been chief executive of Brookfield’s retail division since August 2018, according to his LinkedIn page. Click to read more at www.nytimes.com.
All too often, you hear that commercial real estate is all about who you know, though any real industry expert will tell you what you know
is far more valuable. That’s why REDNews has made it a mission to gather best-in-their-field panelists for our now-monthly summits. Most recently we gathered in Dallas for the Texas Net Lease & 1031 Summit, covering legal and tax updates for tax-deferred transactions, the status of the current net lease market, understanding your lease and credit and emerging trends for 1031 investors which was moderated by Gavin Kam with Net Realty Advisors. In the following pages, we’ll cover some of the highlights and important details gleaned from our panelists and next month you’ll have a recap of current net lease market conditions in Texas also led by Gavin Kam. The effort is being led by the Federation of Exchange Accommodators (FEA), which says it is “heavily promoting taxpayer-friendly legislation,” an umbrella under which 1031 exchanges certainly fall. A 1031 exchange is a vehicle by which an owner can sell an investment property, then acquire another “like-kind” property while deferring capital gains tax. Otherwise, a federal tax of at least 15 percent is applied to your capital gains, along with a 3.8 percent surtax if your net investment income exceeds $200,000 and any state taxes. Click to read more at www.rednews.com.
Dallas-Fort Worth held the top job growth market in the U.S. in 2019, with an employment gain of more than 120,000 jobs during the year ending in November, the commercial real estate firm CBRE reports. Dallas-Fort Worth office growth topped all other cities in the U.S. in 2019, CBRE’s most recently published forecast notes. Last year, expanding and relocating office tenants net-leased about 3.5 million square feet of office space – one of the best totals in a decade, according to the report. “U.S. office-using employment is widely expected to grow again in 2020, albeit at a slower pace than in 2019,” the report found. It notes that global centers of technology in San Francisco, business-friendly Texas, and high-growth southeast metros are “expected to be the top markets for office-using jobs growth in 2020.” Office jobs in the Dallas area grew 5.7 percent in 2019 – more than that of San Francisco’s and Seattle’s, CBRE found. The Dallas area continues to look strong through 2020 with forecast growth of 2.1 percent. The “Big D” also outpaced Houston and Charlotte, N.C., two other fast-growing economies, in year-over-year office job gains, the report found. Click to read more at www.thecentersquare.com.
Turning the calendar over to a new year is a good time to reflect and reassess. That holds true in commercial real estate, especially in reallocating capital and realigning investment strategies. There’s no shortage of white papers and research on capital markets by all industry sectors of commercial real estate, ranging from banking and brokerage to debt and equity sources, but what today’s CRE practitioner is searching for is a reconciliation of the plethora of data and conflicting views into an outlook that puts events and trends into perspective and paints a clear picture of what lies ahead in 2020.
Chapter 1: Heavy Investment in Debt
First, let’s set the stage for this summary of the capital markets entering 2020. Chapter 1 begins against the backdrop of $4.36 trillion of investments on the debt side of the ledger, according to Moody’s Analytics, the highest since before the Great Recession — from all the CRE lending entities, including REITs, pension funds, government-sponsored enterprises (such as Fannie Mae and Freddie Mac), construction lending banks, and permanent debt sources like CMBS. The U.S. economy is still chugging along into its 11th year of recovery (125 months at year-end 2019), with the November gross domestic product revisions back up to 2 percent — and December’s surprising Bureau of Labor Statistics report showing 266,000 jobs created in November; U3 and U6 unemployment levels declining to 3.5 percent and 6.9 percent, respectively; and a 3.1 percent year-over-year wage growth. Click to read more at www.ccim.com.
WeWork, the troubled operator of shared office space, has named Sandeep Mathrani, a senior executive at the commercial real estate company Brookfield Properties, as its new chief executive. Mr. Mathrani, whose appointment was announced on Saturday, replaces Artie Minson and Sebastian Gunningham, the co-chief executives. Mr. Minson and Mr. Gunningham took over in September from Adam Neumann, the WeWork co-founder whose growth-at-all-costs strategy brought the company to the brink of financial collapse last year. In a statement, Mr. Mathrani said WeWork had “redefined how people and companies approach work with an innovative platform, exceptionally talented team and significant potential if we stick to our shared values and maintain our members-first focus.” Click to read more at www.nytimes.com.
Airbnb now says that the Miami real estate developer it entrusted to open the first apartment buildings branded with its name violated a January 2019 agreement and stole at least $1 million. Lawyers for the home-sharing company filed a suit in San Francisco federal court Thursday against NGD Homesharing and CEO Harvey Hernandez. The suit alleges that “NGD and Hernandez stole funds, made unauthorized loans to other Hernandez-controlled companies, fraudulently backdated documents, breached contracts, and then lied repeatedly in an attempt to cover their tracks.” The complaint concludes, “NGD utterly failed to deliver on the core purpose of this partnership: creating more home-sharing accommodations for the Airbnb community, particularly in urban, multi-family buildings.” Airbnb is seeking to terminate the relationship and recover its investment. Click to read more at www.forbes.com.