Bisnow's 11 Most Popular Stories Of 2022
Taxes. Recession. Lawsuits. Layoffs. And, of course, Amazon. There are certain things Bisnow readers just can’t get enough of.
Our 11 most-clicked stories of 2022 have all this and more. Read on, and remember some of the biggest drama of the year.
11) Biden Is Going After 1031 Exchanges Again. CRE Is Mobilizing To Stop Him
Ciara Long, March 31
One of commercial real estate’s greatest fears when Joe Biden was elected president was the threat he posed to the 1031 exchange program — his campaign included promises to end the tax break. Year one in office passed with no change, but then the administration’s proposed budget for fiscal year 2023 included a rule that would limit those like-kind exchanges by capping the capital gains deferral. CRE pros said the proposal amounted to eliminating the benefit, and they brought lobbyists out in force. In the end, the 2023 budget passed with no change to the beloved program.
10) 'Dark Days Ahead': How KKR, Apollo, Invesco View CRE Investing In A Recession
Miriam Hall, Sept. 23
Gloom had settled over the commercial real estate industry by late September. The Federal Reserve had already raised interest rates three percentage points. The Bank of England had declared the UK was in recession, and the debate over a recession in the U.S. had turned more into “when” than “if.” This story included insight from major investors on how they were gearing up for a downturn. Though some saw opportunity for deals, including from an uptick in office landlords handing back their properties in lieu of foreclosure, the primary talking points were stagnation and rough seas ahead.
9) CBRE Sued For $11.5M By Landlord Of 600K SF Private School That Won't Pay Rent
Jon Banister, July 1
After JLL was ordered to return a commission for not following Washington, D.C., dual representation disclosure laws (more on that later in this list), affiliates of the 601W Cos. sued CBRE in July over a sublease to a private school in D.C., claiming it failed to properly disclose it was representing both sides and that it misled the landlord on the tenant’s financial health. 601W told Bisnow it had been “suffering mightily” since the school defaulted on its 600K SF, 30-year sublease. It withheld half of CBRE’s $23.2M agreed commission and is asking CBRE to return the amount that was paid.
CBRE asked the court to throw out the suit, saying it only represented one side of the deal. The judge hasn't ruled yet on the motion to dismiss, and she ordered the parties to appear for a preliminary conference on Jan. 20.
8) Biggest U.S. Office Deal Ever? Real Estate Heir Reportedly Selling Father's Crown Jewel
Miriam Hall, Oct. 11
Rumors that Stefan Soloviev was close to a deal to sell the Solow Building on New York City’s 57th Street turned out to be unfounded, but the possibility of setting a new pricing record for an office sale certainly caught the country’s interest. The property, developed by Sheldon Solow in the 1970s, is a sought-after location and was last appraised at $3.4B, so its sale could break the city record of $2.9B.
7) Hines Reportedly Handing Back The Keys To D.C. Office Building After Law Firm Departure
Jacob Wallace, Sept. 20
Hines and Sarofim Realty relinquished their ownership of 700 11th St. NW in Washington, D.C., in September after a tenant departure left the building fully vacant. Hines had owned the property since 1994, and the deed-in-lieu-of-foreclosure from a well-capitalized landlord underscored the level of pain in the D.C. office market, which has record-high vacancy. Lender Allianz is now marketing the property for sale as an office-to-residential conversion opportunity offered at a discount.
6) Amazon CFO: We Have Too Much Space, Too Many People
Dees Stribling, April 29
Amazon’s statement in its Q1 earnings call that it had overexpanded was a shock of cold water on the business world. Its rapid growth in headcount and square footage led to $2B in additional costs from Q1 2021 to Q1 2022, and the company reported a net loss of $3.8B in Q1. This announcement marked a turning point, and news broke through the year of developments being canceled, closed facilities, millions of square feet being subleased and staff laid off.
5) Third-Largest U.S. Pharmacy Chain May Go Under, Analyst Warns
Ciara Long, April 8
A Deutsche Bank analyst downgraded Rite Aid in April, saying its stock could be worthless and it was at risk of going out of business. So far, that hasn’t happened, but nor have things improved for the pharmacy company. Its Q3 report showed revenue continuing to drop and a negative return on equity for shareholders. Analyst George Hill attributed Rite Aid’s struggles to the coronavirus hurting the retail pharmacy industry at large, though the company also took on $3.2B in debt over the past few years as it expanded, making a permanent dent in of its profitability.
4) CBRE To Lay Off Workers Amid $400M Cost-Reduction Plan
Jarred Schenke, Oct. 27
CBRE announced it would eliminate $400M in expenses, most of it through staff reduction, in Q4. The brokerage’s net income increased year-over-year, but its sales revenue dropped 11% globally as global mortgage origination revenues dropped 28%. The brokerage is now expecting a painful recession.
3) Judge: JLL Can't Collect $800K Commission After Failing To Properly Disclose It Repped Both Sides
Jon Banister, April 25
Brokers in D.C. and beyond watched as a judge stripped JLL of its commission for not clearly disclosing it was representing both sides of a lease agreement in the manner a local law requires. The rule has been on the books since 1996, but this was the first time a judge ruled on a case based on it. The finding could spark other such suits in D.C., but it also kicked up a conversation on dual representation itself, particularly since the judge in this case said the practice is “inherently suspect” and has “inescapable conflict of interest.”
JLL appealed the ruling, but while an appeals court judge indicated he thinks JLL is due its commission and called the case “absurd,” the three-judge panel has not officially made a decision.
2) JLL Cuts Staff As Part Of ‘Global Transformation’
Ethan Rothstein, Nov. 15
On the heels of spending $9.3M in severance costs in Q3, JLL implemented a wave of layoffs in mid-November. More layoffs are expected across the brokerage industry as commercial real estate grapples with reduced deal flow and a less-than-rosy outlook for 2023. JLL missed its previous projections for earnings in 2022 and saw its net income decline 41% year-over-year in Q3, a trend that was echoed across the major brokerages.
1) Amazon Crushes Building Materials Supply Chain, Sends Shockwaves Through Construction Industry
Olivia Lueckemeyer, April 24
Amazon’s explosive growth over the last few years made development harder for everyone else. The company was able to leverage its size and buying power to lock down materials already in short supply from supply chain bottlenecks — one steel joist and deck material supplier told a general contractor Amazon had purchased everything in production for six months into the future. Months-long delays and sharp price increases for construction materials were common as manufacturers worked through Amazon’s needs first. Amazon has since slowed its pace of construction and leasing, opening up the market for everyone else to finally get projects done.
