Editors’ Weekly News Roundup April 29 – May 3
Although recent news reports about WeWork on Connect CRE tended to focus on the workspace provider’s rejection of its leases in various markets, the top story for the past week told quite a different tale. As reported in WeWork Reaches Restructuring Deal with Creditors, the company is in line for a $450-million infusion of fresh capital, subject to bankruptcy court approval.
Under this arrangement, WeWork’s majority owner would be Yardi Systems. The deal reportedly isn’t sitting well with WeWork’s co-founder and former CEO, Adam Neumann, who had offered to buy the company for $500 million. An up-or-down vote on the restructuring is scheduled for the end of this month.
Shifting from workspace to living space, the second most-read story for the week ending May 4 was a Q&A focusing on a potential pitfall for apartment landlords and developers and a means of getting around it. The pitfall is tenants defaulting on rent. The solution was summed up in the headline: Using Lease Guarantees to Mitigate Multifamily Developers’ Risks.
As explained by TheGuarantors’ Jess Schmidt, “Lease guarantees allow [developers] to widen their applicant pool without increasing risk by approving more conditionally approved or non-traditional applicants who may not meet strict income or credit requirements.” These may include students, non-U.S. citizens, freelancers, thin-credit applicants, and fixed-income applicants.
Our third most-read story for the week focused on an even more common headache for multifamily owners: changes in the state or local regulatory regime. For owners in Los Angeles and much of surrounding Los Angeles County, the onerous change took the form of Measure ULA, the so-called “mansion tax” on property sales of greater than $5 million that took effect in April 2023.
Its impact, according to a report from NAI Capital Commercial that was summed up in Report: Measure ULA “Significantly” Reduces Multifamily Sales,was on the order of a 71% year-over-year decline in sales volume. In specific areas such as LA’s Westside, the impact on sale transactions was even greater. The story garnered strong readership both in California and nationwide.
Although a report on California’s population registering a net increase in 2023 after three years of declines just missed the top five for the past week, our fourth most-read story had a tie-in with the Golden State, albeit indirectly. Tech giant Oracle shifted its global headquarters from Silicon Valley to Texas in 2020, and now it’s relocating even farther east.
Oracle is Moving to Nashvilleunderstandably drew interest around the U.S. as well as the Atlanta/Southeast region where the story originated. The company is developing a $1.3-billion headquarters campus in the Music City that will include office buildings, a community clinic, restaurants, hotels, a concert venue, and a floating stage on the lake for community concerts.
Rounding out the top five was a story about another large-scale mixed-use development, this one in a city that has rebounded from its COVID-era decline in tourism. In “Multi-Billion Dollar” Development Planned Near LV Convention Center,we reported developer LVXP’s plans for a 27-acre site across from the newly expanded Las Vegas Convention Center, adjacent to Fontainebleau Las Vegas and near Resorts World Las Vegas. Residences and hotel rooms are part of the menu, and LVXP also hopes to bring in an NBA franchise.