In the News—Week of July 1, 2024

 In The Title Trove

Deal of the Week

After insuring the initial construction loan in 2021, Thomas Title’s Cannabis Transaction Team closed the sale of a purpose-built cultivation facility in the Phoenix MSA. The 53,000-square-foot building was completed in 2022, and sold to a Delaware-based investor. The $19.5 million transaction was financed by an international investment platform with a prominent position in real estate lending to the cannabis industry. The deal was closed by Joel Montemayor and Chadwick Campbell in our Scottsdale office, and takes Thomas Title’s total deal volume within the cannabis industry to over $500 million.

National

Rapidly growing space industry will need commercial real estate space

The rapid commercialization of space has led to an increased demand for real estate, with a focus on research facilities and offices for space-focused businesses, Commercial Observer reports. The space industry’s growth is closely tied to the commercial spaces these companies occupy. The industry’s expansion requires physical space, with startups raising $12.5 billion last year and a predicted annual growth of 9%. The competition for specialized talent and proximity to research centers and launch sites has made space industry real estate similar to technology and life sciences. California, with its string of sites attracting attention and real estate development, is a key player in the space industry.

National

Commercial interests own more than one in four homes in Fort Worth

A recent city report reveals that over 25% of single-family homes in Fort Worth, Texas, are owned by commercial entities, Channel 5 NBC-DFW reports. The report, conducted by Fort Worth Lab, sparked concerns among city council members about housing affordability and availability. The council requested a more detailed report to provide a clearer breakdown of home ownership, rentals and market availability. While some council members argue that commercial ownership leads to rental homes rather than home ownership, others suggest these properties could be individually owned local rentals or homes being flipped back onto the market.

National

San Francisco’s office vacancy rate slows in Q2—but still sets a record

San Francisco’s office-vacancy rate ticked up only slightly in the second quarter, but still set a record high, the San Francisco Examiner reports. Figures from real estate giant CBRE show office vacancies increased from 36.7% to 37%. Real estate professionals can find solace that the vacancy rate is stabilizing. Large numbers of employees working remotely continue to devastate the office market in the Bay Area and elsewhere. But there have been signs that companies are showing more interest in leasing.

National

Feds say firm funded CRE with money from drugs; no criminal charges filed

Talk about keeping it civil. Federal prosecutors accused Sefira Capital, a Miami-based real estate company, of using millions of dollars from drug trafficking to fund investments in commercial real estate in Florida and other states between 2016 and 2019, the Miami Herald reports via the Tampa Bay Times This was revealed in a 2021 civil forfeiture complaint by federal prosecutors. Ironically one of the properties involved, Courthouse Place in Fort Lauderdale, houses the offices of law firms and some Broward County prosecutors. Despite federal authorities’ allegations in the civil complaint, Sefira and its co-founders faced no criminal charges, and the company agreed to forfeit $22.5 million and pay $6.5 million in lieu of losing properties in a settlement. The Miami Herald’s review of leaked financial records shows the company’s co-founders establishing offshore accounts during this time. The case highlights the loopholes in the existing legal framework that don’t require companies like Sefira to vet the source of their funds, making commercial real estate an attractive vehicle for money laundering.

Arizona

Subtext to build second student apartment complex near ASU

Subtext, a housing developer, has announced plans for a 15-story student apartment community, called Verve Tempe, near the Arizona State University campus, AZ Big Media reports. The building, at 1011 E. Orange St., will house 240 units and offer a range of amenities including a coffee bar, study spaces, a game room, a rooftop pool deck and a two-story fitness and wellness center. The development is designed to meet the growing student housing needs in Tempe and promises to provide an unmatched resident experience. The project, which is set to be completed by fall 2026, is Subtext’s second in Tempe. The other project, Canvas, is at Orange Street and South Terrace Road.

Arizona

Hilton chooses downtown Glendale for first LivSmart Studios in Arizona

Hilton plans to open a hotel in downtown Glendale, AZ Big Media reports. The hotel will be the Hilton’s first LivSmart Studios in Arizona and will provide lodging for Glendale’s Civic Center and the city’s Sports & Entertainment District users, among other visitors. The project, developed by Arizona-based CivicGroup, is part of a broader effort to rejuvenate downtown Glendale and support local businesses. The hotel will feature over 90 modern studio apartment-style suites and amenities such as a fitness center and laundry facility. “We are thrilled that Hilton chose downtown Glendale for their first Arizona LivSmart property,” says Daniel Sabillon, deputy director of economic development at the City of Glendale. “This hotel represents the opportunity and growth we want to see in downtown.”

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