In the News—Week of July 15, 2024
Deal of the Week
A local Arizona based owner-operator purchased land in North Scottsdale from the Arizona State Land Bureau Department for $28+ million. This transaction was handled by Senior Escrow Officer, Bryan Selna, in the Scottsdale, AZ office.
National
Chicago tops big cities for highest effective commercial property tax rate
A recent study by Altus Group reveals that Chicago has the highest effective commercial property tax rate among major U.S. cities, at 5.37%, Wirepoints reports. This rate significantly surpasses that of New York City, which is the second highest at 4.79%. The study highlights that Chicago’s tax rate is over four times greater than those of San Francisco (1.18%), Los Angeles (1.20%) and Nashville (1.30%). As a result, commercial properties in Chicago are over-assessed, potentially leading to lower property values in future reassessments. However, this reassessment could shift the tax burden to homeowners, who already face some of the highest property tax rates in the nation. This contributes to the risk of a “doom loop,” where the financial strain on both businesses and residents could drive further economic decline in the city.
National
Downtown Los Angeles hotel reopens as a limited-service inn like Airbnb
The former Ace Hotel in downtown Los Angeles has reopened as Stile Downtown Los Angeles by Kasa, operating under a minimal-service model similar to Airbnb, the Los Angeles Times reports. This shift reflects a growing trend among struggling hotels to adopt short-term rental strategies. The hotel, which was a key player in the economic revival of Broadway, will now offer limited services, focusing on room rentals managed via a tech platform. The attached United Theater will continue to host live events, while the hotel features a rooftop wine bar but no restaurants.
National
New owners say they will spend $100M to re-energize Kansas retail landmark
The sale of Kansas City, Missouri’s Country Club Plaza to HP Village Management has been completed, with immediate plans to enhance security and infrastructure, KCTV5 reports. The new owners of the plaza — a Spanish architectural style, century-old property that remains a top tourist stop — say they aim to revitalize the area by investing over $100 million in improvements and focusing on attracting unique local and national brands. Former Mayor Sly James and local real estate expert Daniel Brocato emphasize the importance of maintaining local connections and reducing rents to restore the Plaza’s unique character and appeal.
National
UBS Group using online auction site to sell building in Manhattan
UBS Group is trying to sell a nearly 1 million-square-foot office building in midtown Manhattan through an online auction on the Ten-X platform, The Real Deal reports. The building, located at 135 W. 50th St., is listed with a starting bid of $7.5 million. Although Ten-X is typically used for lower-quality properties, the 35% occupied, Class A building recently underwent a $76 million renovation. UBS owns the building through a long-term leasehold, while Safehold owns the ground. The auction comes after UBS sold the property to Safehold in 2019 for $285 million and then leased it back.
Arizona
Chandler has given green light on 2,000 apartments; funding is obstacle
Chandler has approved over 2,000 new apartment units, but construction has stalled due to a funding crunch, the East Valley Tribune reports. Developers are facing difficulties securing the necessary funds for construction after overpaying for land based on previous valuations. The city acknowledges a significant gap in affordable housing, particularly for low-income families. To address this, Chandler is partnering with private companies to build affordable units through the Rental Assistance Demonstration program. However, with limited undeveloped land remaining, the city faces challenges in expanding housing supply.
Arizona
Retail vacancy rate rises slightly, but Valley market remains strong
The retail sector in Greater Phoenix continued its strong recovery from the pandemic in the first quarter of 2024, AZ Big Media reports. Figures from Avison Young show the vacancy rate rose slightly to 5.2% from 4.9% at the end of 2023, and the market saw negative net absorption for the first time since the pandemic due in part to the closing of 40 99Cent Stores. More than 1 million square feet of new space has been delivered in the last year. Another 2.7 million square feet is under construction. “What you had there in the first quarter is some new space being delivered and not all of it being absorbed. You also had some closures of box spaces,” says Matt Milinovich, principal at Avison Young. “I don’t expect (negative absorption) to continue. I think we’ll be back on the positive side for the rest of the calendar year.”
