In the News—Week of March 11, 2024

 In The Title Trove

Deal of the Week

In January, a Canadian capital group sold a 71-unit townhome complex to an Arizona-based investor for $6.95 million. The multifamily project, near historic Downtown Glendale, Arizona, was under construction at the time of closing. In February, the new owners closed a $15 million construction loan to complete the project. The lender was a privately held bank that has a substantial presence in the Arizona market. Both transactions were closed by Senior Commercial Escrow Officer Sheila Hunter.

National

Successful Google search: Tech giant finds property bargain in New York City

Google recently opened its newest New York City facility at the St. John’s Terminal, a rail facility in Manhattan, Forbes reports. The tech giant is one of several major companies that have found relative bargains in the Big Apple because of a depressed market for office space. Google bought the 1.3-million-square-foot former rail terminal at 550 Washington St. in Manhattan’s Hudson Square neighborhood for $1.97 billion. Other major firms that have done well bargain hunting include: Wells Fargo, which bought over 400,000 square feet of space at 20 Hudson Yards for $408 million; Enchanté Accessories, which bought a 12-story building at 147-149 Madison Ave. for $77 million; and Hyundai, which acquired 15 Laight St. in Tribeca for $275 million.

National

L.A. Fitness, South Florida developer disagree on what constitutes a gym

It seemed simple enough in the beginning. L.A. Fitness opened a fitness center at The Square in downtown West Palm Beach. L.A. Fitness wanted to be the only gym in the mixed-use development. So they put it in the lease. But other office space and apartments in the project began offering spaces with fitness equipment as “building amenities.” Tenants may not be able to use apartment facilities, at least for now, because L.A. Fitness is taking Related Cos. of New York, the developer, to court over the matter, The Palm Beach Post reports.

National

Investor seems ready to walk away from two properties in downtown SF

The Paramount Group, a New York-based real estate firm, is weighing walking away from two prominent properties in San Francisco, The San Francisco Standard reports. “There is a strong possibility that these assets may not be in the Paramount portfolio going forward,” Paramount Chief Operating Officer Wilbur Paes told investors on a recent earnings call. “They are currently a drag on occupancy, a drag on earnings, a drag on leverage, and we get no credit for it in our stock price.” The two properties are the Market Center, a 770,000-square-foot office complex split across two buildings on Market Street, and a building on Sutter Street near the fictional sire of Sam Spade’s office in the novel and movie “The Maltese Falcon.” Both properties are about half empty — hardly the stuff of dreams.

National

City of Boston likely to face shortfall because of declining office space values

The city of Boston is heading for a budget shortfall over the next five years, GBH reports. Figures from Evan Horowitz of the Center for State Policy Analysis at Tufts University show the city can expect to endure a shortfall of $1.5 billion as property taxes fall on office space. “Offices are not as desirable as they used to be,” Horowitz says. “Boston’s got a lot of offices. If those offices are less desirable, then they are worth less, and you can’t charge as much in taxes. And therefore, the city is going to collect a lot less in taxes on those offices in the coming years.” Horowitz says office space in Boston is expected to decline as much as 30% by 2029.

Arizona

TSMC holds topping out ceremony for second semiconductor fab

Taiwan-based TSMC recently completed the topping out on its second semiconductor fabrication facility in Phoenix, AZ Big Media reports. TSMC Arizona is scheduled to begin producing chips by the first half of 2025. The company says this will be the most advanced facility in the United States and will provide 4,500 high-tech jobs.

Arizona

Apartment construction activity in Phoenix area continues to rise

Nationally, apartment construction lagged last year, but the Phoenix metro area was one of several markets that bucked the trend, AZ Big Media reports. Figures from Yardi Matrix show that construction starts for 2023 fell 25.3% below those in 2022. Most of that decline came late in the year. “Yardi Matrix expects new construction to remain on a moderating trend in 2024. Meanwhile, multifamily completions will remain elevated in 2024 and early 2025 and will not bottom out until 2026,” Matrix analysts write. Overall, Phoenix construction starts in 2023 rose 3.0% from 2022. Other markets that enjoyed an increase were North Dallas, Raleigh–Durham, and Tampa–St. Petersburg–Clearwater, Kansas City and Boston.

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