An office building that sold at a tremendous loss, a community of 3D printed homes and Gavin Newsom cleaning up Los Angeles. From the wild and wooly world of real estate, here are our Hits and Misses for the week of Aug. 5-9.
Miss: Who Wants to Buy a Cheap Office Building?: The most lamentable real estate sale story we covered over the past few days involved a 23-story Manhattan office tower that sold in 2006 for $332 million but changed hands this week in an online auction for $8.5 million – a 97.5% loss. The owner of the property, an investment fund run by UBS Realty Investors, had previously tried to offload the building for under $50 million, but that transaction fell apart. Oddly, at the same time the commercial real estate investment firm KPG Funds released a forecast predicting a significant increase in New York City’s commercial property values, with expectations of a 50% to 60% rise in pricing as interest rates decline. So, what is it going to be? Was that heavily discounted property sale an anomaly, or does KPG Funds need a new crystal ball?
Miss: Mouse House Misery. The Walt Disney Co. reported weaker than expected returns from its theme parks, dampening the plans of CEO Bob Iger’s plans to use the company’s real estate holdings to boost revenue. Disney’s latest quarterly report found theme park revenue up by 2% year-over-year to $8.4 billion, but operating profit dropped by 3% year-over-year to $2.2 billion. The company attributed the shaky figures to higher costs couple with “moderation of consumer demand” that “could impact the next few quarters.” Last March, Iger said, “We could actually build seven new, full lands if we wanted to, around the world.” But to riff on the “Field of Dreams” mantra, if he builds it will anyone come – especially when Disney theme park prices are at their highest levels?
Hit: The Community of Tomorrow. Anyone looking for the future should pay a visit to Wolf Ranch, a community in Georgetown, Texas, that consists of 100 3D-printed houses. Reuters reported the construction of this community began in November 2022 and is nearing completion. Wolf Ranch’s single-story three- to four-bedroom concrete homes take roughly three weeks to finish printing, with the foundation and metal roofs installed traditionally. The homes are being created with a robotic printer from the company ICON, whose Senior Project Manager Conner Jenkins declared, “It brings a lot of efficiency to the trade market. So, where there were maybe five different crews coming in to build a wall system, we now have one crew and one robot.” The 3D-printed homes at Wolf Ranch cost between $450,000 to $600,000, and that’s not bad for a home located just outside of Austin.
Hit: Pitbull’s Real Estate Coup. Hats off to the recording star Pitbull, who signed a lucrative five-year naming rights deal with Florida International University’s football stadium. ESPN reported the rapper will pay the school $1.2 million per year for five years – and as part of the deal, he will create an anthem for FIU, post about the school on social media 12 times a year and appear at one athletics fundraising event per year. He also gets use of the stadium 10 days per year and the vodka company he owns will be the stadium’s preferred brand. After too many years of stadiums named after corporations and brands, it is refreshing to have a stadium named after an entertaining and invigorating personality.
Miss: Lights, Camera, Newsom. California Gov. Gavin Newsom deserved commendation over his recent executive order for the dismantling thousands of homeless encampments across his state, where an estimated 180,000 people are unhoused – after all, the masses of homeless people living on the streets have frayed the quality of life in commercial and residential areas. Sadly, Newsom’s egomania got in the way again as he turned up in Los Angeles yesterday to assist in the removal of a homeless encampment. According to the New York Times, Newsom didn’t bother to tell city officials he was coming, which is no surprise since they are opposed to his directive on dealing with the homeless. But Newsom had no problem alerting the media to his appearance at a site under Interstate 10, with ridiculously staged scenes of a trash-hauling, t-shirt and jeans-clad governor designed to give the impression that he was leading the charge to clean up the city (see the above photo). “If we don’t deal with this, we don’t deserve to be in office,” Newsom told reporters, which makes this stunt feel like a photo op that will be used in his 2026 re-election and perhaps his 2028 presidential run.
Hit and Miss: The Right Idea, But Why Now? The Department of Housing and Urban Development (HUD) released a statement this week with the headline “Biden-Harris Administration Expands Access to Housing for Veterans.” The news, according to HUD, involved “a new set of policy changes that will help more veterans receive assistance under the HUD-Department of Veteran Affairs (VA) Supportive Housing (HUD-VASH) program, and improve their access to supportive housing developments.” HUD Acting Secretary Adrianne Todman announced this development by claiming, “No veteran should ever have to experience homelessness, but when they do, they should not face barriers to getting help they deserve.” We can’t argue with Todman on that point and we’re glad for this news, but there’s another point that needs to be raised – after three-and-a-half years in office, why did the Biden-Harris administration wait until now before updating this program? And when will the Biden-Harris team acknowledge that homelessness reached record highs since they came into office?
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
Photo courtesy Gov. Newsom’s office
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But Why Now? The election, of course.
Newsome lost a court case, the result of which he had to sign an order to dismantle the camps. Typical politician, making a big deal over a problem he promised to solve many times in the past, and has actually increased.