In one of the first Daily Dirt editions of 2023, I skeptically asked if this would be the year of WeWork. It wasn’t.
At the time, then-CEO Sandeep Mathrani said WeWork’s new revenue target was for the “endgame” of 2023. Mr Matlani departed in May. By August, the company was telling investors it might not survive another year. It declared bankruptcy in November.
This bankruptcy not only interrupts WeWork’s spectacular decline, but also impacts the future of coworking and how its competitors model it. Over the next year, it will be interesting to see how landlords forced into a corner by WeWork will respond as the company reorganizes.
Of course, WeWork wasn’t the only company to suffer in the past year. Multifamily lender Signature Bank collapsed as customers including real estate companies scrambled to withdraw $18 billion worth of deposits. The owner of the office property returned the keys to the lender when the loan came due. As foreclosures of rental buildings pile up, debate rages over the number of rent-stabilized apartment vacancies and who is responsible.
These real estate and old office inventory woes will continue to be a hot topic in 2024. City and state officials want to convert aging offices en masse into apartments, but are reluctant to give the tax breaks needed to make that happen. State Democrats say they want to conclude a housing agreement in 2024 that includes multifamily development tax relief and tenant protections, but it doesn’t address the plight of rent-stabilized owners.
A long journey to challenge the state’s rent stabilization law culminated in the filing of a petition by the Community Housing Improvement Program and the Rent Stabilization Association in the U.S. Supreme Court. It wasn’t taken up. There’s still a chance the court will hear two other cases that take a narrower approach to challenging rent laws, but I’m not holding my breath.
These two landlord groups are in the process of merging their efforts. The merger brings new leadership and could mark a turning point in how these groups make their ownership case to lawmakers and New Yorkers at large.
What is also noteworthy this year is that the Adams administration was involved in a number of real estate-related scandals.
Former Building Secretary Eric Ulrich was charged with accepting or soliciting $150,000 in bribes in exchange for helping friends and colleagues get projects approved. He had resigned in November 2022 when his name surfaced in the gambling investigation.
Separate investigations into Adams’ fundraising efforts covered a variety of real estate topics, including an alleged straw donation scheme involving a construction company and a list that allowed large landowners (and donors) to skip the fire inspection line. It’s surfacing. The mayor has not been accused of wrongdoing.
One of the weirdest stories this year was the Flatiron Building auction. This is how we now know the name Jacob Garlick.
The owners of the iconic, oddly shaped building, now in partnership with the Brodsky Organization, plan to convert it into condominiums, possibly with retail space.
It’s shaping up to be an interesting new year in New York, with legislative and state elections, housing policy initiatives, and projects (like Flatiron) being decided. Competition for County Down’s three casino licenses is heating up, with industry giants vying for the chance to open New York City’s first casino.
Let us know if there are any issues you’re focused on in the year ahead.