The Bisnow Weekender: You’ll Never Walk Alone
Thanks for reading The Bisnow Weekender, my personally curated roundup of the most impactful news, notable quotes, binge-worthy show recommendations and other colorful highlights from the Bisnow world of commercial real estate and beyond.
What a week for news.
Another major financial institution looked to significantly reduce its CRE exposure; one of the country's largest brokers of commercial mortgages came under investigation by Freddie Mac; the industry continued to mourn the tragic death of self-made developer Artem Tepler; the U.S. government, after more than a decade of deliberations, decided to move the FBI's new headquarters to Maryland; and Ivanka Trump gave forgetful testimony during a civil trial that could reshape The Trump Organization’s real estate empire.
And that was just up until Wednesday.
But wait, there was something more — something else that reminded me of an old motto from a former coworking unicorn: “Thank God it’s Monday.”
Hello, Monday, indeed. That was when WeWork filed the most anticipated Chapter 11 bankruptcy in recent memory. We all knew it was coming, but I have to admit that I was wrong about one count: I thought WeWork would file on Tuesday. (I was only off by about 2.5 hours!)
One of the many things that make the Bisnow newsroom special is that our reporters and editors are everywhere, so aside from the globally focused analysis we brought to one of the biggest stories of the year, we also covered WeWork’s “strategic action” with local boots-on-the-ground reporting — from Los Angeles, Boston, New York City, London, Denver, San Francisco, Washington, D.C., and Chicago.
How you explain market-rattling news to the industry at large is one thing, but how you break it down for everywhere our readers live and do business is flexing a different muscle entirely. Within minutes and hours of WeWork filing — from both sides of the Atlantic — our team went handbrake off to display a singular degree of speed, diligence, expansiveness and teamwork.
The WeWork saga will continue to play out, and we will continue to unravel and analyze its impacts, but for now, I would just like to salute our entire news team on a job well done this week.
Have a great weekend. And remember, Saturday is Veterans Day in the U.S., and it’s Remembrance Sunday in the UK. To all veterans, thanks to you and your families for your sacrifices.
— Mark F. Bonner, Bisnow Editor-in-Chief
Voices From The CRE Battlefield: WeWork Edition
“It's kind of like WeWork is losing weight. It was a fat slob, and now it's going to get on Ozempic.”
— Leo Jacobs, a commercial litigation and bankruptcy attorney and founder of Jacobs PC in New York, to Bisnow South Florida Reporter Matt Wasielewski in the lead-up to WeWork’s long-anticipated Chapter 11 bankruptcy filing on Monday. For WeWork, the bankruptcy process is likely to be messy and complicated.
***
“The problem was the capital structure. They were taking long leases that didn’t match the income that was coming through. Plus, you had a megalomaniacal CEO, who was a brilliant innovator and created an amazing product, but that kind of founder is often not the right kind of person to take the business forward.”
— Manish Chande, managing partner of Clearbell Capital, a London-based real estate fund manager, to Bisnow UK Editor Mike Phillips on the root cause of WeWork’s epic downfall into bankruptcy.
***
“As part of today’s filing, WeWork is requesting the ability to reject the leases of certain locations, which are largely non-operational and all affected members have received advanced notice.”
— WeWork, in a statement released Monday night with its bankruptcy filing. WeWork could exit as many as 163 leases as part of its bankruptcy restructuring process — about a third of its global portfolio.
***
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet. We defined a new category of working, and these steps will enable us to remain the global leader in flexible work.”
— David Tolley, CEO of WeWork, in a press statement this week titled WeWork Takes Strategic Action to Significantly Strengthen Balance Sheet and Further Streamline Real Estate Footprint.
***
“This has been a long time coming, and it's the last thing that’s needed for the market. The landlords are going to be the losers.”
— Wharton Property Advisors CEO Ruth Colp Haber to Bisnow NYC Reporter Miriam Hall, referencing to the New York City office market. In filing for Chapter 11 protection, WeWork asked the bankruptcy court to immediately reject 38 leases across 36 buildings in New York City. As of October, WeWork leased 7.4M SF across the entirety of New York City.
Bisnow News Excerpts: Nov. 6-10
'Counterintuitive' Strength In Brick-And-Mortar Lifts Outlook For Retail REITs — Atlanta Reporter Jarred Schenke
Major retail REITs are coming off a strong third quarter, with executives expressing a general sense of optimism as retailers are willing to pay more for the space amid record-low levels of available square footage nationally.
“We're waiting for shoes to drop, but we haven't seen it,” Simon Property Group CEO David Simon said on his company's earnings call last week. Read more.
***
Virginia, FBI Leaders Cry Foul On HQ Decision As Maryland Cheers 'Historic' Win — Washington, D.C., Reporter Emily Wishingrad
The federal government has finally made the decision to move the FBI out of downtown D.C. to the Maryland suburbs, the result of a decade-long, interstate tug of war that spanned three presidential administrations and several stops and starts. But the start of construction is still years away, and Virginia lawmakers and the FBI itself are already publicly castigating the decision and pushing for a reversal. Read more.
***
Fannie Mae Says All Broker-Involved Agency Loans Must Now Be Pre-Reviewed — South Florida Reporter Matt Wasielewski
The government-sponsored mortgage giant told lenders Tuesday that it was introducing a pre-review rule for all agency-backed loans that involved brokers. Loans that have already begun the underwriting process or have a quote outstanding will have to be resubmitted to the lender. Read more.
***
Retailers Put Theft In The Spotlight — But Does The Publicity Fit The Crime? — UK Reporter Mark Faithfull
Shoplifting is clearly a problem for retailers, made more public by social media. Incidents of violence toward shop workers are shocking and not to be underplayed. But some retail analysts and researchers have argued that local crime statistics conflict with this narrative and questioned whether this is less a worsening crime spree and more a case of “theftwash” to cover up performance issues. Read more.
***
Americans’ Summer Trips Abroad Reshaped Demand For Hotel Giants — Boston Reporter Taylor Driscoll
Crowds of American tourists this summer filled the streets of European and Asian cities, with many branching out after three pandemic-era years of vacationing closer to home. This shift of American travel patterns had a big impact on hospitality markets and the multibillion-dollar companies that own and operate hotels. Read more.
***
More News From The Week …
— PODCAST: MSCI Chief Economist Jim Costello On How Much Distress Is Coming For CRE
— Starbucks Plans To Open 17,000 New Stores While Cutting $3B In Costs
— Donald Trump Defends His Properties' Valuations As Witness In Fraud Trial
— REPORT: Freddie Mac Investigating Meridian Capital
— MBA Survey: Commercial Real Estate Lending Dropped By Half In Q3
My Slightly On/Off-Topic Media Diet
I read, watched and listened to a lot on WeWork this week — like oodles and oodles and oodles of news and analysis — but I will mostly spare you. We had enough already, right?
Turning Empty Offices Into Apartments Is Getting Even Harder (WSJ): “Slowing rent growth might make apartment conversions less attractive to investors, if the trend persists into next year. Asking rents for apartments have fallen 1.2% nationally over the past 12 months, according to rentals website Apartment List. Construction loans are also far more expensive than they were 18 months ago and many banks now shy away from development lending. A number of conversion efforts are on hold because of higher interest rates.”
Most People Would Love A 4-Day Workweek. But It Doesn’t Work For Everyone (CNN): “The reason for this is likely that the four-day workweek might work for some people and some jobs, but could cause issues in other situations. Outside studies support this. Burnout is a work-related syndrome. If people are forced to cram their work into four days when they prefer five — and if they need longer days to do so — it could cause burnout.”
Shares Of Maersk Plunge 18% As Shipping Giant Announces 10,000 Job Cuts (CNBC): “A surge in demand and mammoth supply chain challenges during the Covid pandemic saw freight rates soar, but this trend has now cooled amid a gloomy macroeconomic picture.”
Why Are Billionaires So Convinced The U.S. Economy Will Break? (Quartz): “Any billionaires that are getting vocal about the potential for the economy ‘breaking’ are either too late to the party or talking their book. What they’re really trying to say is ‘please don’t break our business models.’”
Which U.S. Workers Are More Exposed To AI On Their Jobs? (Pew Research Center): “About a fifth of all workers have high-exposure jobs; women, Asian, college-educated and higher-paid workers are more exposed. But those in the most exposed industries are more likely to say AI will help more than hurt them personally.”
Drowning In A Sea Of Mediocre AI-Generated Content (Message Lab): “Mediocre is the new bad, because ChatGPT and its ilk will render actually awful content truly worthless.”
Google Spent $26B To Hide This Phone Setting From You (Washington Post): “That’s more money each year than McDonald’s makes selling burgers.”
The Making Of The Last Beatles Song: ‘Now And Then’ (YouTube): “The long mythologized John Lennon demo was first worked on in February 1995 by Paul, George and Ringo as part of The Beatles Anthology project but it remained unfinished, partly because of the impossible technological challenges involved in working with the vocal John had recorded on tape in the 1970s. For years it looked like the song could never be completed. But in 2022 there was a stroke of serendipity.”
5 Thoughts About the Beatles’ Last Song, ‘Now and Then’ (The Ringer): “The first words [Paul] McCartney sings alongside Lennon are ‘love you,’ and in the chorus’s confession and plea, ‘Now and then / I miss you,’ the two seem to be talking to each other while we listen and gently weep.”
Bisnow Weekend Interview Preview
The General Services Administration had a busy week, identifying a couple of million square feet it wants to sell and announcing a new headquarters location for the FBI, which immediately sparked drama.
In this week’s Weekend Interview, Bisnow Washington, D.C., Reporter Emily Wishingrad chatted with Elliot Doomes, who was appointed last month as the commissioner of the GSA’s Public Buildings Service, a role that oversees the federal government’s more than 350M SF of real estate across the country.
Bisnow: I want to jump into one of the top challenges for GSA right now, which is office space. As you know, the General Accountability Office in its report earlier this year found that for the majority of the federal agency headquarters that it surveyed, 25% or less of the space was actually used. Talk to me about your plans for the future of office spaces under GSA’s jurisdiction.
Doomes: I’ve got every intention of following the lead set by my predecessor and Administrator [Robin] Carnahan. We’re looking to rightsize the portfolio and optimize the portfolio. We’re looking at fewer buildings, better buildings, and we’re working with the agencies. So our job as the federal government’s real estate landlord is to offer tools to other federal agencies about how they might rightsize their portfolio, understanding their workplace needs and giving them solutions.
The Weekend Interview goes live every Friday evening — head to www.bisnow.com over the weekend to check it out!
Jobs! Jobs! Jobs!
Here are this week’s top jobs over at our careers platform, SelectLeaders. Reach out to SelectLeaders Managing Director Ryan Neale to learn more. You can email him at ryan.neale@bisnow.com.
Senior Vice President of Real Estate Development — Lead a growing deal team executing all functions of development for affordable housing and multifamily projects in North Carolina.
Vice President, Asset Management — Play a pivotal role in optimizing the performance and value of an NYC-based real estate portfolio.
VP of Acquisitions and Asset Management — Check out this premier Southeast Class-A office owner/operator.
Vice President, Capital Markets — Join a growing real estate investment management firm seeking a transformative capital markets leader.
Upcoming Bisnow Events And Webinars
Monday, Nov. 13 (Webinar): CRE Success Through Thoughtful Marketing
Tuesday, Nov. 14 (Miami): Florida Multifamily & Affordable Housing Summit
Tuesday, Nov. 14 (Boston): Boston Higher Education & University Development Summit
Tuesday, Nov. 14 (Seattle): Seattle Retail & Hospitality Summit
Wednesday, Nov. 15 (Houston): Houston Construction Trends + Innovations
Wednesday, Nov. 15 (Dallas): DFW Women Leading Real Estate
Thursday, Nov. 16 (New York City): New York City State Of The Market Conference
Thursday, Nov. 16 (Washington, D.C.): Mid-Atlantic Healthcare Real Estate Summit
Thursday, Nov. 16 (Atlanta): Atlanta Office Market Outlook
Thursday, Nov. 16 (Toronto): Toronto Women Leading Real Estate Celebration
Thursday, Nov. 16 (Chicago): Chicago Architecture & Design Summit
Thursday, Nov. 16 (Minneapolis): Twin Cities State Of The Market
Thursday, Nov. 16 (San Francisco): Northern California Healthcare Summit
Hey, Mike, What Are You Going To Binge This Weekend?
I’m a podcast nut and currently can’t get enough of Empire. Erudite and entertaining, it traces the history of some of the world’s major empires and how we’re still living with the bad decisions British men made hundreds of years ago. They don’t teach this stuff in schools in the UK, and they should. Also, the last two episodes of The Marvelous Mrs. Maisel, a snappily written show with great performances — particularly the eponymous lead from Rachel Brosnahan — that makes you root for the characters. And if Liverpool can pick up three points at Brentford on Sunday, that will round off the weekend nicely. — Mike Phillips, Bisnow UK Editor and lifelong Kopite (Y.N.W.A.)
***
How did I do? You can send all love letters and dissents directly to me at mark.bonner@bisnow.com.
