'Survive 'Till '25' Was About Weathering The Storm. Here Are 20 Things That Didn't Make It
Heading into 2024, the mantra for many in commercial real estate was “survive till ‘25.”
CRE companies of all stripes were prepared to hang on for the year, hoping interest rate relief and general market improvement would come in time to allow them to recover in 2025.
While that strategy worked for countless companies and projects in the space, some weren’t so fortunate.
Elevated interest rates, high construction costs and crippling uncertainty — along with plain old change of heart — brought some businesses and projects to an end.
From REITs liquidating to professional sports teams calling off their relocation plans, here are 20 things that, well, didn’t survive till ‘25.
Common Living
After building itself into one of the country’s largest co-living firms via an acquisition spree, Common Living filed for Chapter 7 bankruptcy in June. The company was founded by Brad Hargreaves in 2015 and grew its portfolio to 7,000 units by 2022. The firm, which sought to capitalize on the co-living trend in which tenants rent private bedrooms but share areas like living rooms, kitchens and bathrooms, liquidated and German parent company Habyt absorbed its remaining assets.
Equity Commonwealth
The office REIT founded by the late real estate titan Sam Zell called it quits in July after failing to identify an acquisition target. Pointing to a 75% decline in office transaction values from its prepandemic levels, Equity’s board acquiesced to activist investors who began calling for the company’s closure in March. The company spent the remainder of the year selling properties, including two in Austin and one in Washington, D.C. The sale of its final property in Denver is still pending.
Jaws Mustang
A special-purpose acquisition company led in part by Starwood Capital Group Chair Barry Sternlicht (and known as Jaws Mustang Acquisition Corp.) gave up its plans to partner with Starwood to acquire a group of hotels. After announcing the plan in March, Jaws said in November that it had “suspended further pursuit” of a hospitality business combination. The announcement came after Host Hotels & Resorts agreed to purchase 1 Hotel Central Park in Manhattan, one of the properties targeted by Jaws.
Distress Fundraising
As the pallor crept over commercial real estate in 2023 and early 2024, opportunistic investors predicting a market bottom began stockpiling cash to use on distressed assets when the time came. But by November, distress fundraising had fizzled. Two funds raising $240M were created through November 2024, compared with 13 funds raising $4B in 2022. Investors spent the year putting off deals as looming debt maturities set up potentially more enticing deals, causing fundraising to dry up.
New SEC Headquarters
In one of the biggest blows to D.C.’s beleaguered office market since the pandemic, a plan for a new headquarters for the Securities and Exchange Commission fell apart. Developer Cayre Jemal’s Nick LLC, a joint venture between Douglas Development Corp. and Midtown Equities, was to develop 1.2M SF in the NoMa neighborhood for the SEC, but the General Services Administration in October terminated the lease. The GSA blamed the developer’s inability to secure financing and walked away from one of the largest federal contracts in recent history, valued at $1.4B.
Neighborhood Development Co.
A Washington, D.C.-based affordable housing developer packed it in after 25 years, pointing to high construction costs, higher-for-longer interest rates and overall softness in the market. Neighborhood Development Co. said in August that it would cease operations a month later, blaming a “perfect storm” in the D.C. market. NDC had 1.1M SF of projects totaling 1,900 units in its development pipeline at the time. In July, it received a notice of foreclosure on its 36-unit Arbor at Takoma property, which went to auction as NDC participated in discussions with its lender, Forbright Bank.
Biden’s Rent Control Push
To the chagrin of multifamily owners nationwide, President Joe Biden in July proposed capping residential rental rate hikes to 5% annually by revoking tax benefits to landlords that exceeded that threshold. Biden’s plan was one of several efforts at the national level to address a worsening housing crisis nationwide, but it was met with resistance from a host of real estate groups. Like many other parts of Biden’s agenda, the rent control plan is unlikely to survive the return of President-elect Donald Trump to the White House in January.
5.5% Interest Rates
The Federal Reserve’s decision to cut interest rates by 50 basis points in September and another 25 basis points in November was one of a few causes for celebration for CRE in 2024. Elevated rates kept capital markets deadlocked for much of the year and caused adjustable-rate loan payments to balloon, leading the industry as a whole to yearn for a rate cut. The Federal Open Market Committee eventually obliged and is likely to cut rates further in 2024 and 2025, but other indicators — namely the 10-year Treasury yield — have kept a wave of deals at bay.
Location Ventures
Miami developer, investor and property manager Location Ventures began to unravel in May 2023 and spent much of 2024 seeing its assets sold off by a court-appointed receiver. Former CEO Rishi Kapoor was charged with fraud in January, with the SEC accusing him of a $93M scheme. Location Ventures and other related entities were included in the charge. Kapoor settled with the SEC in November, agreeing to pay a cash judgment and avoid serving as an officer at a company that sells securities for five years.
Steward Health Care System
Hospital operator Steward Health Care System filed for bankruptcy in May, putting landlord Medical Properties Trust in a financial squeeze as well. Steward blamed high costs and insufficient reimbursement from the federal government, but as the year went on, other problems came to light. The company came under investigation for fraud in July and sued MPT in August. Former Steward CEO Ralph de la Torre resigned after failing to appear before a Senate panel, earning a criminal contempt charge.
Chicago’s Property Transfer Tax
Chicago Mayor Brandon Johnson’s effort to raise roughly $100M in tax revenue through a real estate property tax suffered defeat at the hands of voters in March, sparing the city’s property owners the same fate as their counterparts in Los Angeles and New York City. Johnson intended to use the revenue to fight homelessness and is still looking to property owners for additional funds. He proposed a $300M property tax hike in October but has since dramatically scaled it back, with a city council committee approving a 2025 budget that includes a $68.5M property tax increase.
99 Cents Only Stores
Discount chain 99 Cents Only Stores closed all 371 of its stores across the southwest following a liquidation announcement in April. The company decided against bankruptcy after a struggle with real estate costs and cash flow and instead elected to wind down its business. The retailer was just one of several big-box tenants to vacate space in 2024, along with Conn’s Home Plus, Family Dollar and Big Lots.
Somerville’s 15 McGrath Highway Project
Leggat McCall Properties and DLJ Real Estate Capital put a halt to a 262K SF life sciences project in Boston’s Somerville neighborhood citing slow demand. The country’s busiest life sciences market wasn’t immune to a severe slowdown in lab leasing in 2024, with a vacancy rate of 19.6% in the third quarter. While high, that number is still better than the national vacancy rate, which sits at roughly 30%.
Capitals, Wizards To Virginia
Alexandria, Virginia, had its hopes dashed in March when Monumental Sports & Entertainment CEO Ted Leonsis and D.C. Mayor Muriel Bowser signed an agreement to keep the Washington Capitals and Wizards in downtown D.C. for 25 years. Alexandria had planned a $2B mixed-use development to be anchored by an arena for the NHL and NBA teams. Without the arena, the development could not proceed.
$15 Congestion Pricing In NYC
An abrupt about-face for New Yorkers came in April when Gov. Kathy Hochul reversed course on a plan to implement a congestion pricing plan that would have charged cars $15 to drive below 60th Street during certain hours. The plan had been backed by the real estate industry, which saw it as a way to bring foot traffic back to struggling office districts. The idea could be resurrected at a lower rate, however, with the Metropolitan Transportation Authority in November approving a $9 fee.
X’s San Francisco Headquarters
Many things have changed for X, including its name, in the last two years following billionaire Elon Musk’s $44B acquisition of the social media platform in 2022. This September, however, Musk made good on threats to move the company out of its headquarters at 1355 Market St. in San Francisco’s Mid-Market neighborhood. Employees based in the office were relocated to San Jose, ending an era for Mid-Market and downtown San Francisco, which has struggled since the pandemic.
Tyler Perry’s $800M Atlanta Studio
Entertainment mogul Tyler Perry called off plans to develop an $800M studio campus in Atlanta in February, reportedly after laying eyes on OpenAI’s text-to-video artificial intelligence model Sora. The project would have added 12 soundstages at the former U.S. Army base Fort McPherson after Perry bought 367.5 of the more than 400 acres there. Georgia’s film industry, known as Y’allywood, suffered overall in 2024 as film and television production slowed.
CA Ventures Europe
Chicago-based CA Ventures began liquidation of its European business interests in November after a deal to sell the overseas investment platform to a Bahraini bank fell through. CA Ventures’ European portfolio included 7,000 student housing beds and had plans for 5,000 more. But the bank balked, putting CA Europe in a “dire position,” according to the company’s chief investment officer John Diedrich. The company also faces legal challenges in the U.S.
London Breed As San Francisco Mayor
San Francisco has arguably been the slowest city to recover from the pandemic, with vacant offices and retailers fleeing downtown. Mayor London Breed has steered the city for the last six years and has taken on challenges, including homelessness and a housing crisis, with mixed results. Breed herself was evicted from office on Nov. 5, however, losing her reelection bid to Daniel Lurie, heir to the Levi Strauss fortune.
The Kroger, Albertsons Merger
Grocers Kroger and Albertsons spent most of 2024 trying to get together, but in December their union fell apart. A decision by an Oregon judge placed an injunction on the pending $25B merger that would have resulted in the sale of 579 retail locations. The next day, Albertsons terminated the merger agreement and filed suit against its dance partner, asking for billions of dollars.
