Sunday Summary: Stephen Ross Steps Down From Related

It was an eventful return from the long Fourth of July weekend, to say the least. On Thursday, it came out that legendary developer Stephen Ross [will step down as chairman of Related Companies]( and start a new firm on his own in Florida. The 84-year-old isn’t starting from square zero as the new venture, Related Ross, already has a nearly 3 million-square-foot portfolio that includes a mixed-use complex and luxury residential properties in Palm Beach County. With the new company, commercial real estate will now have Related Companies, Related Group and Related Ross in the mix. (Pray for our copy editor come [Power 100](.) While Ross is going out on his own, other companies are coming together. Hudson Bay Company, the parent company of Saks Fifth Avenue, struck a $2.65 billion deal on the Fourth of July to acquire Neiman Marcus and form a new entity called Saks Global. It got some pretty well-known backers with both Amazon and Salesforce investing in the combined company. However, experts told Commercial Observer that the [merger spotlights the declining importance of large department stores](, which haven’t seen any recent new openings. “Luxury sales have changed radically because so many of the major luxury producers are now operating their own stores via e-commerce, and the role of department stores like Neiman Marcus and Saks and Nordstrom and Bloomingdale’s is diminished from what it used to be,” said David Swartz, senior equity analyst at Morningstar. “The market is really at a saturation point, and there’s just not so much need for large department stores anymore.” Meanwhile, details of grocery chain Kroger’s plan to acquire competitor Albertsons, first announced in 2022, were brought to light as it came out the combined brand would [need to shed nearly 600 stores]( to secure antitrust approval for the merger. Coming to AmericaWhat better way to keep the Independence Day celebration going than by celebrating some new arrivals to the country’s real estate market? First up, South Korea-based Bando Engineering and Construction made its first purchase in the country in the run-up to the holiday, and fittingly started its U.S. portfolio with a bang. The company picked up the [landmark retail condominium at 2 Times Square for roughly $100 million](. Downtown, a Canadian buyer made its second splashy purchase in the city. Biotech entrepreneur Carlo Bellini’s real estate firm 99c [snapped up 180 Maiden Lane for $297 million](. That comes two years after 99c made its first purchase, the [$252 million acquisition]( of 175 Water Street. While Bando and Bellini are investing in the U.S., another foreign buyer is getting out. Australian developer Lendlease continued its divestment of most of its international holdings, [selling off a 40,000-unit U.S. military housing portfolio]( for $323.4 million to Guggenheim Partners. Green thumb There are plenty of cannabis operators planting seeds around New York City. A yet-to-be-named legal dispensary run by William Norgard and James Mallios inked a 20-year lease for the entire four-story, [10,040-square-foot building at 30 Times Square](. (I’m sure its close proximity to the M&M store will be welcome news to its patrons.) On the other side of the East River, Gotham, the 1-year-old dispensary launched by angel investor Joanne Wilson, [signed on for 4,000 square feet]( at The Refinery at Domino, the converted sugar plant in Williamsburg, Brooklyn. Those deals come on the heels of Gov. Kathy Hochul announcing the state recently [approved another 109 dispensary licenses](, bringing the grand total to 730 issued this year. But weed operators weren’t the only ones with the munchies for space in the city last week. [Hobby Lobby signed on for 70,716 square feet]( at 270 Greenwich Street to open its first Manhattan store, and second in New York City. On the office end, [CBRE recommitted to its 180,000-square-foot offices]( in the MetLife Building, where it’s been located for more than three decades. The real estate giant will stay put until 2037. As part of the deal, CBRE will replace former owner Tishman Speyer — which recently gave up its final ownership stake to Irvine Company — as the property manager. There were also some big deals on the financing side, including Goldman Sachs providing a [$430 million refinancing for the Fairmont Austin hotel](, Citigroup and Goldman originating a [$400 million loan for two hotels in Santa Monica, Calif.](, and Aareal Capital providing a $148 million refinancing for [The Victoria hotel and multifamily tower in Harlem](. Busy beesThe number of distress and complex deals happening in the market has been good news for a few people. Brokers who handle Uniform Commercial Code foreclosures — which foreclose on mezzanine debt and shrinks the process to just a few months — have had their hands full as [these deals have exploded in popularity recently](. “Foreclosures are definitely up — there’s an absolute ton right now,” foreclosure auctioneer Matthew D. Mannion, principal at Mannion Auctions, told CO. “This is the busiest we’ve been since before COVID.” Lawyers have also had to navigate increasingly complex commercial real estate deals and made many law firms focus on their [hiring efforts this year to handle the excess work](. “A few months ago when we saw that the number of deals was increasing and they weren’t simple deals, we took stock and realized that we really needed more senior help,” Kramer Levin’s Jay Neveloff said. “We thought that was an opportunity in the market, because a lot of other law firms weren’t that busy, to pick up senior talented people who are better suited for what we expect our business will be like over the next year or two.” Finally, we’ll end this on a bit of a down note.[CO looked at the potential for mixed-used development]( as a solution for America's acres of unused office space and found that it's a great fix … if you exclude the cost of these projects. “Mixed-use development is inherently more expensive to build, operate and maintain over the long term,” said Katie Bucklew, a vice president for mixed-use at AvalonBay Communities, an Arlington, Va.-based real estate investment trust and one of the largest apartment owners and builders in the country. Hope that doesn’t ruin the rest of your Sunday! [View in Browser]( | [Advertise]( | [Forward to a Friend]( [Manage your email preferences or unsubscribe]( [Share your thoughts: Help us improve with our quick feedback survey!]( [Commercial Observer]( © Copyright 2024 [Observer Media]( 1 Whitehall Street, Floor 7, New York, NY 10004 This newsletter was published 07/14/2024