In the News—Week of May 22, 2023
Deal of the Week
A California based hotel investor purchased a My Place franchise hotel in Medford, Oregon for $9.8 million. This deal was closed by Bryan Selna, Vice President & Senior Escrow Officer, in our Scottsdale office.
Commercial real estate giant Sam Zell passes away at age 81
Sam Zell, the billionaire Chicago real-estate magnate, died on May 17, CNN reports. He was 81. He was known for buying distressed properties and flipping them for a profit. He was nicknamed “The Grave Dancer.” His estimated worth was $5.9 billion. Besides real estate, Zell also tried his hand at turning around a newspaper company in 2007, buying the Tribune Company, which published the Chicago Tribune and Los Angeles Times, among others. But the company was already staggering and filed for bankruptcy under Zell.
When it comes to office vacancies, Houston, Dallas top list of big cities
Houston and Dallas top the list of metros for the highest percentage of office vacancies, Yahoo Finance reports. Figures from CoStar and JPMorgan show that Houston had 18.8% of its office space vacant at the end of last year. Dallas was at 17.2%. While more workers have returned to the office in the two Texas cities, investors have overbuilt. Houston and Dallas added more office space between 2010 and 2021 than any other metro areas except New York City.
Uber looking to sublease office space it never moved into in San Francisco
Uber had intended to occupy four buildings in San Francisco for its headquarters. Now the ride-sharing company is trying to lease one of those buildings, a 285,000-square-foot property at 1725 Third St. that was completed in 2021 and never occupied, The San Francisco Standard reports. “We are in the early stages of seeking interest in subleasing one of our four buildings in Mission Bay. As one of our buildings is currently unoccupied, this will not change our footprint in the city or impact space available for employees,” an Uber spokesperson says. “We remain committed to our hybrid work approach, which emphasizes in-person collaboration and continue to welcome employees to our Mission Bay campus.”
LA’s westside story: Developer calls area ‘gold standard’ for CRE
While the rest of the country and the rest of Los Angeles County are worried about a commercial real estate recession, a Malibu developer says he has the answer, Yahoo Finance reports. “West LA,” including Beverly Hills, Brentwood, Century City, Malibu, Santa Monica, Silicon Beach, West Hollywood and Westwood, can serve as a hedge against any downturn and is the “gold standard,” says Larry Taylor, the founder and CEO of real estate development company Christina. “Century City has the lowest vacancy rate and highest rental rate in Southern California. Fox just announced they’re adding 1.5 million square feet to their production studios,” Taylor says. “Yeah, there’s a lot of problems in cities with a central core, but I live and work in Malibu. I only go downtown to see a basketball game.”
Consumers in Phoenix, suburbs show heightened interest in self-storage
The interest in finding self-storage space has surged in the Phoenix area, AZ Big Media reports. Figures from a survey by Storage Cafe show that Google searches for self-storage increased by 300% in Gilbert from 2019 to 2022. They increased by 263% in Mesa, 236% in Phoenix, and 230% in Chandler. Developers are responding to increased demand. More than 380,000 square feet of self-storage space is expected to be added in 2023.
Short-term rentals underperform for major sporting events in the Valley
It wasn’t just Eagles fans who were disappointed by the Super Bowl in February. A lot of landlords who thought they would clean up with short-term rentals didn’t, AZ Big Media reports. And baseball’s spring training continued the slump for Airbnb and VRBO rentals. A significant number of investors bought up properties for short-term rentals and the market may be oversaturated, meaning there is likely to be a selloff.