The 1996 movie âJerry Maguireâ had a few really good lines: an emotional Tom Cruise declaring his love with the words, âYou complete meâ; a charming Renee Zellwegerâs âYou had me at âHelloâ â; an intense (dare we say âunhingedâ?) Cruise barking at his client: âHelp me ⦠help you!â But the most memorable will always be â[Show me the money](.â It could be the motto for the entire commercial real estate industry. And the money was on display last week in a way we hadnât seen in quite some time. Cain International [scored a whopping]( $2 billion in construction financing for One Beverly Hills, the 17.5-acre luxury development complex in Beverly Hills, Calif. The financial package included a $500 million senior loan from JPMorgan Chase. The project includes a luxury Aman hotel, a 10-acre âgarden oasis,â two residential towers (which promise to be the tallest in Beverly Hills) and lord only knows what else. We needed that. Itâs not like there havenât been other impressive loans of late. Like, say, RXR[seizing $118 million]( from Starwood to refinance its office property, The Hall, in Downtown Brooklyn and its mixed-use project One Clinton Hill in New Rochelle. Or Dwight Mortgage [scoring nine figures]( ($108.2 million, specifically) for its luxury building The Shoreline in Gravesend Bay, Brooklyn. Or T2 Hospitality [recapitalizing two Marriotts]( in Silicon Valley with $102.9 million in bridge financing from Peachtree Group. But getting up into 10 figures? Well, we havenât felt that good in a while. Frank âCushâ discussion We didnât notice when we first watched âJerry Maguireâ back in 1996 (maybe because we werenât in the commercial real estate biz back then) but Cruiseâs golden boy client was named Frank âCushâ Cushman. Unless [Wikipedia]( and [IMDB]( are lying to us, yes, like Cushman & Wakefield! Cush was the semi-treacherous quarterback who was the No. 1 overall draft pick in ⦠well, whenever âJerry Maguireâ took place. (Ably played with grinning phoniness by Jerry OâConnell. Honestly, we liked him better [when he was Vern]( in âStand By Me.â) Cushman (the firm, not the character) was on our minds last week in any event after Commercial Observer [sat down with its (relatively) new CEO]( Michelle MacKay to discuss how the real estate Goliath is dealing with an extremely vexing market. The bad news: C&W (like almost every real estate firm) saw declines last year: 6 percent in revenue, 10 percent in service-line fees, a 12 percent slip in its leasing and valuations business, and a 41 percent drop in revenue from its capital markets business. (There were other things, too, like [losing Brookfield Propertyâs business]( and some [high-profile departures](.) But itâs not like MacKay has been twiddling her thumbs. She first moved to refinance $1.4 billion in debt that the company has due in 2024. And the fourth quarter of last year saw C&W outhustle its peers in one asset class that nobody has earned their bragging rights: office leasing. âWeâve got some of the best people in the business,â MacKay told CO. âOur competitors think about brokers in terms of transactions, but weâre advisers to clients in how they think about and use space.â And during its fourth quarter earnings call they could claim $101.2 million in cash flow. Persistence pays. Or, to quote a sign in a âJerry Maguireâ locker room: âSuccess consists of simply getting up one more time than you fall.â âIf this is empty â this doesnât matter.â No, Dicky Fox (Tom Cruiseâs [menschy agent mentor]() was not talking about office space in the former part of the statement â he was gesturing toward his left breast. (The latter thing was the head.) But âemptyâ should worry us all regarding office space. In Downtown Manhattan the office vacancy rate is [still above 20 percent](, and nearly every brokerage expects it to stay that way. However, that comes with caveats. âThe numbers donât really tell the whole story,â Newmarkâs Andrew Peretz told CO. âIn reality, phones are ringing, there are tours, there are inquiries, paper is being traded. Better-quality assets are seeing activity.â And Peretz for one figures that the answer is likely in conversions. Indeed, Vanbarton Group has already embarked on a massive conversion at 160 Water Street â what the developer is calling Pearl House â of which CO was [given a sneak peek]( recently. Conversion is one of those easy solutions that is actually far more difficult to execute the closer you look. But theyâre possible in the right hands. âThrough strategic architectural interventions â including altering building cores, retrofitting operable windows, and adding new floors with an overbuild atop the original structure â the team has catalyzed a metamorphosis at 160 Water Street,â architect Robert Fuller told CO. Indeed, at 219-235 East 42nd Street [we learned]( from The Real Deal that Nathan Berman (one of the great gurus of conversion) and David Werner are planning a 1,500-unit mega-rental. But whether itâs by conversion or new development, more housing is essential. And New York City has gotten on board with the Department of Buildings unveiling the draft of [a rezoning plan]( for a 42-block stretch of Midtown South that would open it up to 4,000 new units. Did you know that the human head weighs 8 pounds? Thereâs a lot to think about right now in American real estate. But real estate is an important topic everywhere. Last week CO was on the ground at MIPIM in Cannes, France, to get a more global perspective on commercial real estate. Of course, that meant in some cases sitting down with figures we see in New York (yes, [weâre talking about you](, Dean Shapiro) as well as figures we see [less frequently]( like Marino Giannopoulos, the CEO of Enterprise Greece, that nationâs trade agency. There was [some]( [optimism](, some[political nervousness](, and [some mixed thoughts]( on the future. Which was sort of the case in South Florida, where CO hosted its [South Florida Multifamily & Mixed-Use Forum](. âCOVID has supercharged our growth,â Allen Morris Companyâs Daniel Schwimmer told his panel. But this could have been easily rebutted with an observation from Terranovaâs Stephen Buttel: âThe banks here are out of business.â Guess itâs the same story everywhere. But, if you want a largely happy story, you should look to industrial and logistics. Whether the future is as bright as the recent past, thatâs an asset class that has been on an upward trajectory for years. So, before you go too far in celebrating St. Patrickâs Day, you should cozy up with a nice pint of Guinness and [read our interview]( with Prologisâs Megan Creecy-Herman. Erin go bragh! [View in Browser]( | [Advertise]( | [Forward to a Friend](
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This newsletter was published 03/17/2024