The year is mercifully coming to a close, and even in 2020, this time of year is filled with hope for the future and a mad scramble to close deals. But before we change out the calendar — or whatever the digital equivalent of that is — we want to look back one last time at what moved our readers the most this year.
Our coverage drew millions of readers who gravitated to news about hotel closures and construction shutdowns, tax policy and crisis maneuvering. These are the stories that had Bisnow readers clicking the most.
20) David Marriott To Replace Bill Marriott As Chairman Of Global Hotel Giant
Jon Banister, May 12
There will be someone new at the top of the biggest player in the hotel game as the sector works through massive upheaval. Bill Marriott, who had taken over as CEO and chairman of Marriott hotels from the company’s founder — his father, J.W. Marriott — has been at the head of the board for 35 years but will be giving that seat to his son, David, in 2022.
“To me, you are a boss, a mentor, a friend and truly, family,” Marriott CEO Arne Sorenson said when making the announcement in May. “I cannot imagine a time without your partnership and friendship, and I pray that there are many more years ahead for us.”
19) Blackstone’s Coronavirus Playbook
Mike Phillips, April 27
The first month after the coronavirus pandemic hit the U.S. was filled with a mix of panic, dread and paralysis. But by the end of April, as major companies’ CEOs started discussing their strategies on their quarterly earnings call, a clearer picture of the road ahead came into view. Blackstone had already written off millions in retail and hotel investments, but President Jon Gray said it would resist selling because it didn’t anticipate solid pricing.
It also said it would push forward in areas where it saw growth opportunities. Eight months later, Blackstone put its money where its mouth is, recapitalizing subsidiary BioMed Realty Trust for $14.6B in October and buying a $3.5B portfolio of lab buildings from Brookfield, most of which is in the nation’s premier life sciences market, Cambridge, Massachusetts.
18) Proposed Bill Allowing Retailers Out Of Leases Stuns Landlords
Dean Boerner, May 21
California legislators have a way with proposing legislation that strikes fear into the heart of the real estate industry, but even for the Golden State, state Sen. Scott Wiener’s SB 939 was extreme. The San Franciscan’s proposal would have allowed retailers to back out of leases if they couldn’t come to an arrangement for pandemic-related rent adjustments. The industry was aghast and lobbied vociferously against it. The bill ultimately was rejected in June.
The W Hotel at 8 Albany St. in downtown Manhattan, which has permanently closed.
17) The W Hotel Downtown Won’t Reopen
Kelsey Neubauer, July 16
In 2021, permanent hotel closures, especially in gateway cities like New York, won’t be much of a novelty, but when Bisnow first reported the permanent closure of a Marriott-owned W Hotel at 8 Albany St. in Lower Manhattan in mid-July, the news captured the attention of the Big Apple. Marriott laid off 137 workers at the 217-room hotel. Since that time, many other New York hotels have called it quits or filed for bankruptcy, and the industry isn’t expected to recover until 2023.
16) JLL Hit With Discrimination Lawsuit Accusing Former Exec Of Fostering Toxic ‘Boys Club’
Miriam Hall and Kelsey Neubauer, Aug. 11
The #MeToo movement took a back seat in the spotlight to the pandemic and racial injustice protests of 2020, but the courage it inspired in women to come forward about sexism in the office didn’t fade. In the summer, a former employee in the capital markets group of JLL sued the firm, alleging it allowed a toxic work environment to fester with foul, sexist language and discriminatory pay practices. JLL is far from the only brokerage to be accused of discrimination, but the suit filed in August resonated with an audience that had been largely absent from the physical workplace for months.
15) Gov. Cuomo: New York Construction Sites Can Operate Without Restriction
Kelsey Neubauer, March 19
In mid-March, companies across the country were scrambling to react to government restrictions that changed, in some cases, by the hour. In New York City, which has tens of millions of square feet underway, there was serious doubt over whether construction would be allowed to continue while “nonessential work” was forced to go remote. On March 19, Gov. Andrew Cuomo deemed all construction essential, allowing the industry to briefly breathe a sigh of relief. It didn’t last long. (More on that later.)
Courtesy of PMG
Society Las Olas in Fort Lauderdale opened during the coronavirus pandemic.
14) Largest Co-Living Project In The U.S. Debuts In Fort Lauderdale
Deirdra Funcheon, June 3
Co-living, where renters accept tiny living spaces in exchange for large common areas, community-oriented living, and streamlined rent and utilities, didn’t seem like it was built for the pandemic era. But operators have pushed forward anyway, none more so than Property Markets Group, which opened a 34-story, 639-unit co-living tower dubbed Society Las Olas in Fort Lauderdale in June.
While it’s unclear how many units PMG has been able to lease since then — it opened about 20% leased, a PMG executive told Bisnow at the time — it clearly has confidence in the space. The firm purchased land in Wynwood for another Society-branded project, the South Florida Business Journal reported this month.
13) Could The Coronavirus Be A ‘Turning Point’ For New Yorkers To Leave En Masse?
Miriam Hall, April 6
Many versions of this story have been written in 2020, all hitting roughly the same notes: The pandemic hit New York harder than anywhere else, and the city’s many wealthy residents used the opportunity to pack up and leave. Hundreds of thousands have relocated, dropping the city’s average income and clouding its economic outlook as it stares down a $9B budget gap.
This particular story, published April 6, was able to examine some New Yorkers’ personal decisions on leaving or staying. Predictably, the real estate community struck an optimistic tone. In the months since, however, their language has grown darker as the prediction an urban research fellow made to Hall has come true: “Cities are going to have to reinvent themselves, and places like New York in particular.”
12) Why Would Amazon Scope Out JCPenney? It’s The Real Estate, Baby!
Kerri Panchuk, May 19
Never underestimate the readership a great headline and two compelling main characters can draw into a story. Amazon didn’t wind up buying JCPenney — in one of the most remarkable deals of the year, Simon Property Group and Brookfield Properties bought the retailer out of bankruptcy in September. So while the nation’s two biggest mall owners now own one of their largest tenants, the many readers who clicked on this story in May were treated to a fun, speculative piece about what could happen if Amazon gobbled up a legacy retail anchor and one reason JCPenney made for an attractive acquisition despite its struggles.
11) Offices Are About To Cause Productivity To Explode
Mike Phillips, April 20
When Phillips started reporting for this feature on the future of work, the coronavirus was just news science reporters were tracking out of Wuhan, China. But when the Lombardy region of Italy shut down and the world recognized what it was about to be in for, the nature of this article changed completely. Published April 20, it foretells much of what we hear companies confirming today: Offices are going to be hubs for most workers to come to or not, depending on the day, and they will be designed to optimize productivity and collaboration — and health and safety — when workers return.
10) Carl Icahn Says Commercial Real Estate Market Will ‘Blow Up’
Dean Boerner, March 16
On March 11, the World Health Organization declared the coronavirus a global pandemic. Hours later, basketball All-Star Rudy Gobert tested positive for the virus, shutting down the league and kicking off a wave of closures and shutdowns in all facets of the economy. The next day, Carl Icahn predicted a real estate market crash: Malls would default on their loans and the pain would eventually spread to office owners. While he has been predicting the demise of malls for years, he was finally proven right.
President-elect Joe Biden
9) The Hidden Probate Real Estate Tax Bomb In Biden’s Economic Plan
Kerri Panchuk, Oct. 25
After now-President-elect Joe Biden won the Democratic nomination, he began releasing more detailed plans for how he would govern, including a slew of proposed tax policy changes. While some items drew more attention, such as his plan to eliminate the 1031 exchange program and raise the corporate tax rate to 28%, Panchuk dove into a lesser-known wrinkle.
Biden proposed to tax capital gains on inherited real estate, including increasing the capital gains rate upper limit to 43.4% from 23.8%. Any change to the tax code must gain congressional approval, so Biden’s ability to pass such a rule depends on the outcome of the Senate runoff races in Georgia. There are plenty of items on Biden’s agenda that, if he were to govern with a unified majority in Congress, give real estate investors heartburn, and this is high on the list.
8) The CARES Act Fixed A ‘Typo’ In 2017 Tax Law, Resulting In A Big Win For Property Owners
Dees Stribling, April 9
Meanwhile, in good tax policy news for real estate, when Congress passed the landmark Coronavirus Aid, Relief and Economic Security Act on March 27, it fixed what tax experts told Stribling was a “typo” in the 2017 Tax Cuts and Jobs Act. The flub in President Donald Trump’s signature economic policy took away a 50% tax deduction that real estate owners could claim on property improvements.
“Drafters of the bill monkeyed around with the language, but in the process of doing that, they forgot to include building improvements at all,” Pillsbury Winthrop Shaw Pittman tax partner Peter Elias said. The CARES Act fixed the error and allowed owners to deduct 100% of the cost of the improvement — what Elias said was the TCJA’s original intention.
7) Before You Break That Lease Over COVID-19, Negotiate First, Brokers Say
Kerri Panchuk, March 25
The dynamic between landlord and tenant has never been more strained. For proof, look no further than this plea from leasing brokers to tenants, asking them to come to the negotiating table rather than give up on their space and turn over the keys.
All over the country, these negotiations have taken place, and every landlord will tell you every situation is different. But tens of thousands of small businesses have called it quits, and office-using businesses have given up their space, hoping to secure a great deal when they deem it safe to bring workers back. As eviction and foreclosure moratoriums stayed in effect for nearly all of 2020, the shakeout from many of these decisions hasn’t come yet, but rest assured, brokers will be busy dealing with it next year.
6) Mall At Stonecrest Facing Imminent Foreclosure As Deals Fall Apart
Jarred Schenke, Jan. 23
This story about a 1.2M SF mall outside Atlanta facing foreclosure, a situation facing malls all over the country, caught fire on Facebook as residents around Lithonia, Georgia, learned that the retail hub of their community could soon come under new ownership. The mall’s owner, Florida-based Urban Retail Partners, still owns the property, according to DeKalb County property records, but its value has fallen precipitously, from $144.5M to $67M as of 2019.
Gov. Andrew Cuomo gives a press conference March 17, 2020, amid the coronavirus pandemic.
5) Kushner Cos. Defaults On Major Times Square Retail Property
Kelsey Neubauer, March 23
As retail owners around the country experience universal pain, they don’t all have the same spotlight as Kushner Cos. When Trump’s son-in-law, Jared Kushner, was running the company, it made a series of aggressive bets in Manhattan that wound up going sour. While the $1.8B deal for 666 Fifth Ave. has drawn the most attention — and, most recently, Congressional scrutiny — Kushner’s plan to turn the old New York Times Building into an experiential retail hub ran aground before the pandemic.
When New York was pummeled, Kushner defaulted on its CMBS loan for 229 West 43rd St. after missing its March debt service payment. Like many retail properties, it was already flailing before the pandemic pushed it over the edge. Kushner bought the property for $295M, and after it was once valued at an inflated $470M, it was appraised at a $92.5M value in August, Bloomberg reported. It has a $200M senior CMBS loan and an $85M mezzanine loan attached to it, casting doubt on Kushner’s ability to hold onto it long term.
4) Cuomo Changes Course, Deems Most New York Construction Nonessential
Kelsey Neubauer, March 27
While Cuomo drew plaudits and even a book deal for his press conferences and public persona during the coronavirus pandemic, his edicts for closing and reopening different sectors of the economy have lacked consistency throughout the year. On March 27, the construction industry got one of the first tastes of Cuomo’s tendency to change his mind about what is permitted. Eight days after Bisnow reported that Cuomo would allow construction to continue, he backtracked, declaring everything but health care, public works and affordable housing nonessential, forcing hundreds of sites to close and lay off workers.
3) ‘There’s No Bailout For Landlords’: What To Expect As Anxious April Begins
Bisnow Staff, March 31
Twenty days after the pandemic became official, the rent was due. No one knew what to expect, so Bisnow dispatched its full newsroom to try to find out. Most apartment and retail landlords vowed to work with their tenants while pleading for government aid and understanding from their lenders, while office and industrial owners dug in and demanded the rent, even if their tenants couldn’t legally occupy their spaces. The story captured one of the most anxiety-ridden moments of the pandemic for the commercial real estate industry. It turned out that retail landlords were the only ones with much to fear, as rent collections for office and multifamily never dipped below a percentage in the high 80s.
Courtesy of Bad Axe Throwing
Bad Axe Throwing CEO Mario Zelaya
2) Georgia’s Reopening Has Been ‘A Disaster’ For Some Retailers Desperate For Revenue
Jarred Schenke, April 30
Before Georgia was the center of the political universe, it was the center of an economy-versus-public health debate, as Gov. Brian Kemp was among the first to allow indoor dining and other forms of activities to reopen. While many retailers elected to stay closed, others decided they would take the opportunity to try to get somewhere back to business as usual.
Axe-throwing venue Bad Axes was one of the businesses that hoped to welcome back customers, but even though the doors were open, no one walked through. CEO Mario Zelaya’s brutally honest assessment of his first weekend back open — which he called “the worst-case scenario” and “a disaster” — caught the attention of The New York Times, which highlighted Schenke’s dispatch.
1) Cushman & Wakefield Could Be Courting Buyers, And Rumors Are Swirling Around JLL
Jon Banister and Kerri Panchuk, Oct. 7
If water coolers were still a thing in 2020, this rumor would have been the talk of all of them around the brokerage world. While major brokerage mergers happen every year it seems, the tantalizing rumor that the second-biggest commercial real estate services firm could look to buy the third-biggest is as juicy as they come. And even with most of CRE working from home, this one spread like wildfire. Executives from coast to coast, including some in the upper ranks of Cushman & Wakefield and JLL, had heard about a possible acquisition discussion.
After Bloomberg reported that C&W had approached Newmark about a buy, Panchuk and Banister explored why the rumor had such staying power. C&W has a much higher debt load than its peers, reported losses over the summer and was suffering, like all brokerages, with the reduced deal volume brought on by the pandemic. The talks were dismissed as dead or never alive, but as 2020 taught us, anything can happen.