In the News—Week of May 8, 2023
Deal of the Week
A Texas-based land/lot developer sold 88 completed lots in Surprise, Arizona to a national build to rent developer for over $10 million. This transaction was closed by Bryan Selna, Vice President & Senior Escrow Officer, in our Scottsdale office.
Revenues from commercial real estate, mansion tax in LA lower than expected
Commercial real estate and mansions that sell for more than $5 million in Los Angeles are charged a 4% tax, with a 5.5% tax on sales above $10 million. Voters approved the measure to raise money for fighting homelessness. The tax took effect on April 1, and in the first month raised $528,000, the LA Times reports. Only two properties in America’s second-largest city qualified for the tax in its first month. The city originally sold voters on the idea that the tax would raise $900 million a year. In March, the city lowered its estimate to $672 million in revenue from July 2023 to June 2024. No doubt revenue will increase. Many deals came in ahead of the April 1 start date. And sellers are holding back as two lawsuits attempt to overturn the new law.
Civil suit in South Florida over commissions is now criminal case
Legal action over allegations of unpaid commissions on the sale of a building in downtown Coral Gables is moving from civil court to criminal court, The Real Deal reports. Manny Chamizo, a broker with One Sotheby’s International Realty, is accused of stalking another real state professional. Chamizo pleaded not guilty to the felony charge. Chamizo and real estate agent Vince Lago, the mayor of the wealthy suburb outside Miami, were involved in the sale of an office building in 2020. They say the seller went behind their backs to negotiate the sale and cheated them out of a $120,000 commission. Chamizo and Lago sued. Prosecutors say that Chamizo stalked and threatened rival broker Eddy Fernandez.
Blackstone feeling the effects of commercial real estate slowdown
Hedge fund giant Blackstone, the largest owner of commercial real estate in the world, saw its earnings fall 36%, CNN reports. The big culprit was commercial real estate, which dipped 58%. Blackstone president Jonathan Gray stressed on an earnings call that the fund had diversified its holdings and office properties only account for 2% of its portfolio. CEO Stephen Schwarzman told investors that the fund could weather “adverse market conditions.”
Google is building two more data centers in central Ohio
Google continues to bet heavily on central Ohio, The Columbus Dispatch reports. Two years ago the tech giant announced a $1 billion upgrade for a data center in New Albany. Now Google has started building two data centers on land it purchased in 2021. One is in Columbus and the other is in Lancaster. Google would not give the paper more specifics. “It’s very unique and special to have three different campuses in one region like central Ohio,” Amber Tillman, Google’s head of data center economic and community development, tells the paper. “I think that’s a great testament to what a great place Ohio has been to do business for us.”
Phoenix metro area industrial rents jump by almost one third
As the temperatures rise in Arizona, the industrial market continues to sizzle, AZ Big Media reports. Figures from Colliers in Arizona show that industrial rents in the first quarter grew by 31.4% from the previous year and were up a healthy 5.5 % format the previous quarter. Construction activity is up 37.8% year over year. According to the Greater Phoenix Economic Council, 47 prospective tenants are looking for space of more than 200,000 square feet in the area.
Two Arizona firms decide to lease joint headquarters—in Dallas
Two Arizona commercial real estate firms — development and investment firm Creation and construction firm LGE Design Build — have leased a $17-million headquarters in the Dallas Design District, D Magazine reports. The companies have $503 million worth of projects on the way throughout Texas and will share 32,000 square feet. The two companies have separate ownership and operations. David Sellers is the co-founder of Creation and CEO of LGE Design Build. “It’s not just a building, but an opportunity to create an environment that fosters innovation and collaboration among our teams in Texas and Arizona. Our new headquarters will serve as an incubator for real estate and construction idea creation and a valuable tool for our team and the development community to utilize,” Sellers tells the magazine.