Related’s Blau bearish on Class B; Compass’ lingering accounting issues ... and other top stories from the week

The best national real estate stories from The Real Deal. Jun 10, 2023 [View in Browser]( | [$1 for 1 Month](     In today’s newsletter, we look at Related Companies CEO Jeff Blau’s recent comments about the [death of Class B office](, and what it will take for other office owners to survive. Plus, [Messi’s potential impact on Miami real estate](, [record-setting rents in NYC](, and [Compass’ losing battle to fix issues with its financial reporting](. These and more stories below.   [Related CEO Jeff Blau to Class B office owners: “Take what you can and run”]( Related Companies CEO Jeff Blau thinks it won’t be long before companies force more of their workers to return to the office. It’s an optimistic viewpoint, and one that would benefit Blau’s business. The office space at Related’s Hudson Yards averages about 80 percent occupancy much of the week. But, the prospective end of remote work won’t benefit all office owners, Blau says. Blau is a firm believer in the flight to quality, and only the best of the best will benefit. “Every landlord thinks they have Class A,” Blau said. “There is a big difference between a 50-year-old, well-taken-care-of building and a new building.” As for Class B buildings, Blau told owners to get out while they can. Don’t bother with conversions, he added. They don’t work. It’s a message that many office owners — and their lenders — have taken to heart in recent months. RXR’s Scott Rechler shocked the industry when he decided to hand over significant New York office assets to his lenders. Commercial banks typically prefer to work with borrowers to fight off defaults on big loans, which allows them to delay losses on their balance sheets. But many [lenders have decided to change their approach](, realizing huge losses now, often by offloading the debt for pennies on the dollar. It’s a desperate move but one that makes sense to banks who are questioning whether the office sector can ever recover. In a February conversation with The Real Deal, [Rechler compared some office towers, like those he gave to his lenders, to Kodak film](. That analogy may work for Blau, too. “Take what you can and run,” he said.   Together with Opendoor Make the sale fast Bring your clients a simple solution for a seamless experience. [Get started.](   [I'm an image]( [Two years after IPO, Compass still has issues with its books]( Compass is two years out from its IPO, but there are still material weaknesses in its financial reporting . The company and its auditors downplayed the concerns, but some onlookers say it’s time to worry. “There’s significant risk of material misstatement or fraud,” said an accounting lecturer from the Wharton School. [I'm an image]( [Messi to Miami: What that means for real estate]( Lionel Messi’s move to Inter Miami sent shockwaves throughout the soccer world. It could also provide a jolt to the city’s real estate. The athlete already owns a handful of condos in the city, but Messi is poised to make a splash near the highest end of South Florida’s residential market. [I'm an image]( [NYC rents notch record high, but recession fears loom]( The average Manhattan rent hit an all-time high for the third straight month, reaching $4,395 in May. But, many renters still seem wary of an oncoming recession, and it's affecting their leasing habits.   Advertisement   [I'm an image]( [Brand Studio Miles Nadal shares secrets to successful partnerships]( [I'm an image]( [Political real estate scandals mark “latest generation” of alleged South Florida corruption]( A wave of political real estate scandals is sweeping South Florida as developers line the pockets of local politicians. The latest offender, Location Ventures’ Rishi Kapoor, [donated $50,000 to a Miami Beach mayoral candidate](. [I'm an image]( [“Hell for the past three years”: Strategic Properties’ $190M deconversion deal is dead]( Strategic Properties battled for years to complete the largest condo deconversion in Chicago’s history. The “fiasco” lasted three years, complete with false starts and lawsuits. But, the deal fell apart at the 11th hour, and it’s likely dead for good. [I'm an image]( [Starwood’s well runs dry at troubled West Texas multifamily portfolio]( Private equity giant Starwood built a huge multifamily portfolio in West Texas over the last decade. Now, that portfolio is spiraling into distress thanks to the area’s oil industry. [I'm an image]( [Brand Studio Why NYC’s elite trust ViVODOMi’s home and concierge service]( [I'm an image]( [Wells Fargo to take a $60M loss on SF office tower]( Wells Fargo has sold its San Francisco office tower to an unknown buyer, and the bank is prepared to take a huge loss on the sale. Wells Fargo purchased the tower for $108 million in 2005, and is expected to sell for about $40 million. [I'm an image]( [LA’s “mansion tax” took in just $3.6M in April]( Los Angeles’ ULA transfer tax was supposed to raise $56 million a month, according to the city’s projections. In April, the tax brought in just $3 million in revenue. But proponents of the tax have a reason for optimism.   [Facebook]( [Twitter]( [Instagram]( [LinkedIn]( [YouTube]( [Manage Newsletters]( | [Unsubscribe]( | [Privacy Policy]( | [Subscribe]( | [Advertise]( The Real Deal 450 West 31st Street, New York, NY 10001 ©2023 TheRealDeal. All rights reserved. [View Online](