In the News—Week of December 30, 2024
Deal of the Week
An Arizona based national Multifamily developer sold a 650+ unit development to a Pennsylvania based national investment company for around $54 million. The Transaction was handled by Vice President Bryan Selna.
National
Destination dining options help shopping malls reinvent themselves
Shopping malls are experiencing a significant transformation in their business model, shifting from retail-centric spaces to dining destinations, CNBC reports. While traditional malls have declined from 2,500 in the 1980s to around 700 today, many are finding new life by dedicating up to 30% of their space to food and beverage offerings. This evolution includes both upscale restaurants and modern food halls, moving beyond traditional food courts to attract customers. The strategy appears successful, with restaurants such as The Cheesecake Factory serving as major attractions and younger generations showing renewed interest in mall experiences. This shift represents a reversal from past decades when shopping was the primary draw and dining was secondary.
National
As many as 400 Big Lots locations might survive if deal can be reached
Big Lots, the Columbus-based discount retailer, has reached a pivotal agreement with Gordon Brothers Retail Partners amid its bankruptcy proceedings, Fox Business reports. The deal could preserve approximately 200 to 400 stores under new ownership by Variety Wholesalers, Inc., which operates several retail chains in the Southeast and Mid-Atlantic regions. This development comes after the company’s earlier announcement of conducting Going Out of Business sales across all locations, following a failed agreement with Nexus Capital Management. The arrangement includes the transfer of stores, distribution centers and intellectual property, with the possibility of retaining some existing employees. Despite recent financial challenges, including an 8% decline in quarterly sales and significant losses, this new agreement offers hope for the continuation of the Big Lots brand.
National
Manhattan’s office market tightens as larger tenants scramble for space
Manhattan’s office market has experienced a remarkable turnaround from its pandemic-era slump, with available space becoming increasingly scarce across prime locations, the New York Post reports. Major companies and firms are finding themselves unable to expand within their current buildings due to unprecedented space constraints, particularly in desirable Midtown areas. The recovery is driven by a significant shift away from work-from-home policies, with various industries gradually returning to office-based work throughout 2024. According to industry experts, the situation is particularly challenging for larger tenants seeking 100,000+ square feet, as new construction is limited and existing prime spaces are nearly fully occupied, with vacancy rates reaching historic lows in premium corridors. “Some tenants have the false perception that the market’s open, there’s nobody in the offices — but in fact it’s tighter than it was in 2019,” one broker tells the newspaper.
National
LA’s mansion tax has depressed market, CRE pros say, fallen short of solving homelessness
Los Angeles implemented a significant property transfer tax in April 2023, known as the “mansion tax,” which imposes levies of 4% to 5.5% on property sales above $5.15 million. While the tax has generated nearly $500 million for affordable housing initiatives, real estate professionals report it has significantly dampened the market, with property sales above the threshold dropping by 70%, CoStar reports. This measure has particularly impacted institutional buyers and private equity firms, who are increasingly hesitant to invest in Los Angeles property amid existing challenges from the pandemic recovery and financing difficulties. The money generated so far is only a drop in the bucket for what is needed to make an impact on homelessness.
Arizona
Desert Ridge Corporate Center sold to Discount Tire for $35 million
Discount Tire has acquired the Desert Ridge Corporate Center in Phoenix for $35 million through its real estate division, Halle Properties, AZ Big Media reports. The purchase includes two four-story office buildings totaling 275,208 square feet, with Discount Tire already occupying one floor for corporate operations. The property, situated near the company’s headquarters and a previously acquired 35-acre site, includes a three-level parking structure. Discount Tire employs over 3,500 people in Arizona and maintains a network of more than 1,200 stores nationwide.
Arizona
Phoenix’s Deer Valley Airport to be home to Omaha firm’s private-use hangars
“Home basing,” an operating model pioneered by Sky Harbour, is coming to Phoenix’s Deer Valley Airport in January, AZ Big Media reports. Sky Harbour is an aviation infrastructure development company based in Omaha and is unrelated to Phoenix Sky Harbor International Airport. Sky Harbour home bases are private-use jet hangars, dedicated line crews and customized services. Sky Harbour home bases do not serve transient aircraft, allowing for a suite of tailored services otherwise unavailable in aviation. Advantages include efficiency, security, control and flexible use of the residents’ private space.
