In the News—Week of October 21, 2024
Deal of the Week
Amerco, the real estate division of U-Haul, has recently acquired a portfolio of four Class A, multistory, climate-controlled facilities in Minnesota and Kansas. The properties include 3,297 units, totaling 327,179 net rentable square feet across 11.38 acres, further expanding U-Haul’s extensive portfolio. The all-cash transaction was completed by Joel Montemayor, Senior Commercial Escrow Officer, in our Scottsdale, Arizona office.
National
Walgreens says it plans to close about 1,200 stores by 2027
Walgreens has announced plans to close approximately 1,200 stores by 2027, representing about one in seven of its current locations, CNN reports. This decision comes as the drugstore grapples with fierce competition from online retailers and decreasing profits from prescription drug sales. The closures, which include 500 stores shutting down over the next year, mark a significant increase from the company’s previous announcement in June of 300 store closures. Despite these challenges, Walgreens reported a 6% increase in revenue compared to the same quarter last year. However, the company also posted a $3 billion loss, largely due to writedowns of its investments. This move to close stores is seen as a necessary step for the company to address its financial struggles and adapt to changing market conditions.
National
Kore Investments sticks with core philosophy of buying in the suburbs
Kore Investments recently acquired an office building in Lone Tree, a rapidly growing suburb about 20 miles south of downtown Denver, CoStar.com reports. The building was purchased for approximately $18.3 million. The sale price was a significant discount from the $42.2 million the building fetched in 2015. The deal aligns with Kore’s strategy of focusing on properties in suburban areas surrounding major urban centers. Despite the challenges facing the Denver office market, including high vacancy rates and declining sales volumes, this purchase demonstrates that some investors see opportunities in discounted properties, particularly in areas with strong residential demand.
National
OpenAI leases 90,000 square feet in historic Manhattan building
OpenAI, the company behind ChatGPT, has secured a significant office space in Manhattan, leasing 90,000 square feet at the Puck Building in Soho, The Real Deal reports. This move comes as artificial intelligence firms are increasingly impacting commercial real estate markets across the United States. While San Francisco remains the epicenter of AI-related office leases, other cities like New York also are seeing growth in this sector. The historic building opened in 1896 and was the headquarters for Puck, a humor a magazine that folded in 1918. The building is now owned by Jared Kushner.
National
NFL Rams owner plans to build luxury hotel near SoFi Stadium
A luxury hotel is planned near SoFi Stadium in the Los Angeles suburb of Inglewood, KABC reports. The Kali Hotel and Rooftop, a 13-story establishment featuring 300 rooms, will be located on Stadium Drive, offering convenient access to major entertainment venues in the area. Sofi Stadium is the home of the National Football League’s Rams and Chargers. The hotel will be part of Rams owner Stan Kroenke’s mixed-use project and will boast various amenities including a pool, yoga deck, spa and fitness center. The hotel site is close to LA International Airport and aims to cater to sports enthusiasts and travelers seeking upscale accommodations in the area.
Arizona
Vacant offices have large impact on Phoenix and Tucson economies
Vacant office space is having a significant economic impact on the Phoenix and Tucson metro areas, AZ Big Media reports. Figures from Switch On Business show the two areas are losing over $800 million in potential rent due to unoccupied offices. Phoenix alone accounts for more than $756 million in lost revenue, with over 25 million square feet of unused office space. While Tucson has lost about $68.2 million in revenue, with 2.9 million square feet of vacant office space. This trend is part of a larger national issue, with office vacancy rates reaching their highest levels since 1979. The shift toward remote and hybrid work models has exacerbated the problem, leading to discussions about potential office-to-residential conversions and concerns about broader economic consequences. The survey showed 20% of U.S. workers aged 18-24, now work on a hybrid or fully remote schedules.
Arizona
Billion dollar projects entangled in dispute in North Scottsdale
Optima, a luxury residential developer, and ASM, a multinational tech company that has been in Arizona since the 1970s, are at odds over their neighboring billion-dollar projects in north Scottsdale, the Scottsdale Progress reports. Optima’s McDowell Mountain Village, a 10-story luxury apartment and condo complex, was approved in 2022 despite opposition from some council members and residents. Now, ASM’s plans for a corporate headquarters and research lab next door are causing concerns for Optima, particularly regarding a proposed five-story parking garage that could impact Optima’s project. ASM’s project does not require rezoning, which the Optima project did and received. The company says it will employ as many as 1,200 workers. As of now, the dispute is unsettled, and the city wants no part of sorting it out.
