A report from the Commercial Property Executive. “Does multifamily property management have a particularly weak spot right now which could be hit in case of a recession? Diana Batayeh, the CEO of Village Green: Building new apartments and improving existing ones come with high costs. To drive the yields expected by stakeholders, rent prices need to rise. In the event of a recession, the ability to achieve higher rents becomes difficult. Apartments within the more affordable Class B and C sectors tend to be impacted less during a recession because housing is a basic need. Higher-end Class A apartments, however, typically cater to renters by choice. These higher-end luxury apartments will experience a decline in renter demand and likely need to lower rent and offer more concessions to maintain occupancy. That will make it more difficult to attract investors to new development opportunities as well as dilute the returns on existing Class A assets.”
The Pioneer Press in Minnesota. “An interesting thing happened in the St. Paul housing market in October. Rents, which had been climbing faster than inflation, finally dipped, even compared with the same time a year prior. Also in the third quarter of 2019, developers were well underway with construction of 643 housing units in St. Paul. How many might be considered affordable? Arguably none. Another 5,000 market-rate or mixed-income units also were in the concept stages.”
“The report describes median rents in St. Paul falling in October compared to a year prior for both one- and two-bedroom apartments, but rising for three-bedroom apartments. Minneapolis rents also showed decline in all three categories. Median one-bedroom rents fell 11 percent, from $1,100 a year ago to $974 in October. Median two-bedroom rents fell 6 percent, from $1,250 to $1,175. It’s not entirely clear whether that indicates a slight softening in the rental market or just a temporary reprieve in monthly rents.”
“‘We had an internal discussion, but it’s too soon to really say that for sure,’ said HousingLink President Sue Speakman Gomez.”
The Palm Beach Daily News in Florida. “A U.S. bankruptcy judge made the right call last spring when he approved the sale of the stagnant Palm House hotel condominium project in Palm Beach for nearly $40 million, a federal appeals court has affirmed. The court’s decision delivered a blow to former Palm House owner and private lender Glenn Straub, whose company had appealed a lower court’s decision upholding the sale order issued by West Palm Beach-based Judge Erik P. Kimball. In March, at the same hearing in Kimball approved the sale, Straub had made a last-minute offer to buy the long-padlocked Palm House property at 160 Royal Palm Way.”
“But Straub’s proposal was roundly rejected by Kimball and the parties who had been working for months to sell the beleaguered Palm House project to repay dozens of foreign investors who claim to have lost millions in the project. Several creditors also are owed money. According to courthouse testimony, Straub bought the Palm House property in foreclosure from Robert Matthews in 2009 and carried out renovations before transferring ownership back to the control of Matthews in 2013. Matthews has since pleaded guilty and is awaiting sentencing on felony conspiracy, money-laundering and tax-evasion offenses related to the Palm House in a U.S. district court in Connecticut.”
“Prosecutors there say Matthews and others bilked foreign investors out of money earmarked through the federal EB-5 program to pay for renovations and to open the Palm House as a luxury hotel and condominium. Instead, according to Matthews’ plea agreement, Matthews used investors’ money to buy property in Connecticut and to cover personal expenses. The Palm House property remains shuttered, and court records show the proceeds from May’s sale are being held in an escrow account.”
From The Real Deal. “Developer Ian Bruce Eichner has slashed the price of his Continuum South Beach penthouse as he mulls his next project in Miami. Eichner cut the price of the 11,031-square-foot, seven-bedroom unit to $39.9 million. That’s 20 percent below the original $50 million ask. ‘You put an apartment on the market with a price, which would have made sense, but then the market changes,’ Eichner said. He added, ‘So, I’m going to reduce the price to a number that reflects the market. Five percent is too little and 50 percent is stupid.’”
“Eichner is founder of the New York-based Continuum Company, which delivered the two-tower condo development at 50 and 100 South Pointe Drive in 2003. His penthouse comes with a cabana, a guest unit on a lower floor and 10 parking spaces. The unit features a terrace with a private pool, a screening room and large open kitchen. It hit the market in 2015, and the price was reduced a year ago to $48 million.”
“Earlier this year, developer Related Group CEO Jorge Pérez slashed the price of his penthouse nearby at One Ocean, a building he developed, to $10.95 million, a 45 percent discount off the original asking price.”
From Curbed Atlanta in Georgia. “With its white picket fence and bright red porch swing to match the front door, this circa-1920 Virginia-Highland bungalow with beaucoup walkability aims to charm intowners who covet timeless housing styles. Yet the property has lingered unsold for well over a year, listing records show. It’s been listed as high as $895,000 in summer 2018. After nearly a dozen incremental price adjustments, it returns to market at $840,000 this week.”
The Los Angeles Times in California. “A price cut was the cure for the Lake Arrowhead listing of plastic surgeon Andrew Ordon. The Emmy-nominated host of ‘The Doctors’ just sold his waterfront retreat for $2.2 million after trimming about $700,000 off the original asking price.”