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National Real Estate Deal Roundup 9.25.20 – Real Estate Daily Beat

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National Acquisitions Roundup

  • Amazon has acquired 550 Army Navy Drive in Pentagon City, Virginia from the Blackstone Group for $148.5 million. The tech giant plans to demolish the existing Marriott hotel and utilize the 1.5 acres of land as part of its second headquarters. With the deal, Amazon now owns the entire 11.6-acre PenPlace. The site was always part of the company’s HQ2 plans, but the hotel remained the last holdout, and it appeared the company would just build around it. (CO)
  • A consortium of South Korea’s Hana Alternative Asset Management has signed a contract to acquire a 38-story office tower in downtown Seattle for around $686 million. Skanska USA’s newly-constructed Qualtrics Tower spans 701,000 SF. Tenants include Qualtrics, Indeed, Dropbox, and co-working firm Spaces. (KI)
  • Invictus Real Estate Partners has purchased the remaining 90 percent stake in The Waypointe at 515 West Avenue in Norwalk, Connecticut from Carmel Partners. The two-building complex, which includes 56,000 SF of ground floor retail and restaurant space, opened in 2015. Its apartments are currently 93 percent occupied, while the retail space is 74 percent leased. The deal valued the asset at $157 million. (TRD)
  • As part of its ongoing industrial real estate expansion, PGIM Real Estate has acquired a 40 percent interest in a 5.4 million-square-foot, 12-complex industrial portfolio valued at $700.5 million. PGIM acquired the stake in the portfolio through a recapitalization of the interest in a JV with partner IAC Properties and a subsidiary of Perlmutter Investment Company. At that valuation, the deal works out to a 4.7 percent cap rate. The portfolio includes 30 industrial properties spread throughout the 12 complexes, which altogether are 97 percent leased. (CO)
  • July Residential and Firm Capital Apartment REIT have acquired North Pointe at 5735 29th Avenue in Hyattsville, Maryland from FCP for $37.5 million. The 19-building apartment community contains 234 units. (CO)

National Leasing Roundup

Office

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  • Netflix has signed a 171,000-square-foot office lease in Burbank near major competitors like Warner Brothers and Walt Disney. Netflix’s new space is at 2300 West Empire Avenue near the 5 Freeway in Los Angeles County. Earlier this month, CEO Reed Hastings told WSJ that he expects employees back in the office once a coronavirus vaccine is available. (CO)

Industrial 

  • Logistics and storage firm Mega Lion has signed a 132,423-square-foot lease at 13021 Leffingwell Road in the Mid-Cities submarket of Los Angeles County. Golden Springs Development owns the property. Asking rent on the five year lease was reportedly $0.90 per SF, triple net. (CO)

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The Realtors' Big Defeat – The New York Times

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A settlement in the real estate industry is a case study of a central flaw in free-market economic theory.

Free-market economic theory suggests that the American real estate market should not have been able to exist as it has for decades.

Americans have long paid unusually high commissions to real estate agents. The typical commission in the U.S. has been almost 6 percent, compared with 4.5 percent in Germany, 2.5 percent in Australia and 1.3 percent in Britain. As a recent headline in The Wall Street Journal put it, “Almost no one pays a 6 percent real-estate commission — except Americans.”

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If housing operated as an efficient economic market should, competition would have solved this problem. Some real estate brokers, recognizing the chance to win business by charging lower commissions, would have done so. Other brokers would have had to reduce their own commissions or lose customers. Eventually, commissions would have settled in a reasonable place, high enough for agents to make a profit but in line with the rest of the world.

That didn’t happen. Instead, an average home sale in the U.S. has cost between $5,000 and $15,000 more than it would have without the inflated commissions. This money has been akin to a tax, collected by real estate agents instead of the government.

The situation finally seems to be ending, though. On Friday, the National Association of Realtors, the industry group that has enforced the rules that led to the 6 percent commission, agreed to change its behavior as part of an agreement to settle several lawsuits.

The settlement is important in its own right. Americans now spend about $100 billion a year on commissions. That number will probably decline by between $20 billion and $50 billion, Steve Brobeck, the former head of the Consumer Federation of America, told my colleague Debra Kamin.

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Allied REIT buys out Westbank on two building projects, the Home of the Week and more top real estate stories – The Globe and Mail

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Home of the Week, 80 John St., Upper Penthouse 1, TorontoJohn Lee/John Lee/Soare Productions

Here are The Globe and Mail’s top housing and real estate stories this week and one home worth a look.

Take The Globe’s business and investing news quiz

Canadians’ wealth is bolstered by stock rally amid housing slump, Statscan says

In the fourth quarter, households saw their net worth rise by $290-billion, or 1.8 per cent, to roughly $16.4-trillion, Statistics Canada said in a report Wednesday. But many homeowners have yet to face the full brunt of higher interest rates until they renew their mortgages, writes Matt Lundy. Others have variable-rate mortgages with fixed payments, which means that as rates have increased, more of their bill is going toward the interest portion rather than paying down the principal. The looming renewals, among other factors, led Canadians to stay cautious about taking on new debt — financial liabilities only rose by 3.4 per cent in 2023.

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Allied REIT takes control of two towers co-developed with Westbank

Allied Properties REIT AP-UN-T is buying out its partner, Westbank Corp., on two office skyscrapers as the Vancouver-based real estate developer faces rising costs and legal claims at projects in Toronto and Seattle, writes Rachelle Younglai and Shane Dingman. The deal, which is expected to close in early April, will significantly cut the amount of debt Westbank owes Allied — giving them an infusion of cash in the process. In November, The Globe and Mail reported that Westbank faced legal claims for $25-million in unpaid work at the Mirvish Village development in Toronto.

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Advertised rents for purpose-built rentals were up 14.4 per cent nationwide in February, compared with the same month in 2023. An apartment rental building in Toronto’s Beach neighbourhood on Mar 11.Fred Lum/The Globe and Mail

Why rent inflation is much higher for rental apartments than for condos

In Canada’s overheated rental market, tenants are increasingly gravitating toward purpose-built rentals, experts say – demand that is driving up rent for these units much faster than for condos, writes Erica Alini. Advertised rents for purpose-built rentals, also called rental apartments, were up 14.4 per cent nationwide in February, compared with last year— rents for condos, on the other hand, grew by just 5 per cent in the same timeframe. A severe supply shortage, affordable prices and the allure of rent control in older buildings is driving up the prices in purpose-built rentals.

Renters have harder time accumulating wealth than homeowners, RBC report says

According to the report, homeowners have seen their net worth grow from nine times household disposable income to 13 times since 2010, while for renters, net wealth grew from three to 3.5 times over the same period. The gap has widened even though renters’ incomes have risen at the same pace as homeowners. Meanwhile, homeowners are also accumulating home equity with their housing payments. The tightening of renters’ incomes will make it even harder to save up for a down payment, economists say.

Home of the week: Festival Tower penthouse with an interior designer touch

  • Home of the Week, 80 John St., Upper Penthouse 1, TorontoJohn Lee/John Lee/Soare Productions

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80 John St., Upper Penthouse 1, Toronto

The 46th-floor penthouse sits right above the TIFF Lightbox theatre, which is home to the Toronto International Film Festival. When you first enter the two-bedroom-plus-den condo, you’re greeted by 11-foot-tall ceilings leading you into the living room. The previous owners had white-lacquered book cases installed on the wall separating the living area from the kitchen — which frames the spacious room — and the primary bedroom has its own hotel-style bathroom attached. The 180-degree view from the penthouse features a panoramic view of the city’s downtown. and stretches across Lake Ontario.

What do you think is the asking price for the property?

a. $2,999,000

b. $3,875,000

c. $4,195,000

d. $4,500,000

c. The asking price is $4,195,000.

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At Real Estate's Biggest Conference, Property Crisis Denial Shifts to Acceptance – Bloomberg

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Welcome to The Brink. I’m Jack Sidders, a reporter usually based in London but this week I’ve been in Cannes where about 20,000 real estate professionals gathered for the annual Mipim conference. We also have news on German giant Bayer, crypto exchange FTX and Swedish debt collector Intrum. Follow this link to subscribe. Send us feedback and tips at debtnews@bloomberg.net or DM on X to @JackSidders.

Mipim is supposed to be a time for developers to show off their grand visions for projects of the future, with cities built in miniature hoping to lure pools of capital that will turn them into full scale realities.

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