| | | | | | | | | | There’s about to be a new hand on the real estate wheel at Amazon. After 23 years leading Amazon’s global real estate and facilities team, John Schoettler is retiring. He will be replaced by Shannon Loew, who joined Amazon early in 2023 and started running day-to-day operations this year. It’s a little hard to wrap your mind around the impact Schoettler has had on real estate around the world. When he took over, Amazon had 1M SF and 10,000 employees. Now it tops 60M SF and 1.5 million people and is a market-mover for industrial and office markets. Loew will be taking over in an interesting moment of once again trying to rightsize its portfolio across property types. Amazon’s decision this summer to start leasing warehouses again after a pause the last few years had landlords breathing a sigh of relief. Its announcement this week that it is requiring office workers to come in five days a week will likely embolden other companies to do the same, though it’s notable that Amazon previously said it is looking to reduce its office footprint. That move was aimed at bringing its vacancy rate down from 33.8% to 10% — and it hasn’t reversed course on that yet with the new RTO stance. So who is Shannon Loew? Most of his career has been on the design side. He got a master’s in architecture from Harvard and spent a few years at Ideo, focused on designing hospitality, retail, and food and beverage developments. He founded Fix Impact Development in 2008 to create more equitable and sustainable growth by drafting land use policies for cities, guiding strategy for urban redevelopment, launching operating entities in affordable housing and designing new construction products. In 2018, he founded Hatchback Cottages, a company that aimed to alleviate the housing crisis by enabling homeowners to put rental properties in their backyards. He closed the firm in 2021 due to a lack of demand from homeowners. How he might marry this background in affordable housing and equitable development with the vast resources of Amazon will be interesting to watch. Welcome to the hot seat, Shannon. — Jay Rickey, Mark F. Bonner, Kayla Carmicheal and Catie Dixon Not getting The First Draft in your inbox? Click here to sign up. Got any feedback or want to send us a mailbag letter? Email first...@bisnow.com. | | | | | | | | On Our Radar Three Mile Island nuclear plant to reopen … to power Microsoft's data centers. The provocative move highlights the tech giant’s increasing power demand to support its AI dreams. Advocates claim tapping into nuclear is a reliable and sustainable choice, but experts told Bisnow over the summer it’s driven by desperation: “It may be the only choice.” Atomic power can provide data centers with 24/7 carbon-free energy. Indeed, Amazon is already sourcing nuclear energy from East Coast plants. However, diverting nuclear power from the U.S. grid could lead to higher reliance on natural gas, raising prices and hindering emissions reduction efforts. It can also lead to accidents, like the one that happened in 1979 at Three Mile Island itself. RELATED: AI costs the environment a bottle of water per email. “[Composing] a 100-word email generated by an AI chatbot using GPT-4 once requires 519 milliliters of water, a little more than 1 bottle.” Big banks split on what the Fed should do next. JPMorgan expects the Fed to cut rates more aggressively, citing cooling inflation and slower growth. Goldman Sachs, on the other hand, anticipates a gradual approach with smaller cuts spread over a longer period to avoid reigniting inflation. Citibank remains cautious, predicting the Fed will wait longer to confirm stable economic conditions before making noteworthy moves. U.S. jobless claims hit lowest since May. New jobless claims dropped to 219,000, the lowest level since May. This drop surpassed economist expectations of 230,000. Ongoing low jobless claims mean businesses are holding onto workers even as economic uncertainty persists. Best bets this weekend from Jay Rickey: On Saturday in the SEC, I like Arkansas +3 at Auburn. I've also got Oklahoma State -2.5 at home against twelfth-ranked Utah. For Sunday, I did a six-point tease to get the Chargers up to +7.5 in Pittsburgh and Cincy down to -1.5 at home against the Commanders. I also took the Ravens' top-five run offense against the Cowboys' bottom-five run defense and laid the points in Dallas (-1.5).
The First Draft Mailbag | | | | Pixabay/Anne-Onyme | | | | | | | | “An avid follower of FIRST DRAFT, I nevertheless do not get the handwringing over the interest rates. In 1977 Darrel and Judy Rippeteau were OVERJOYED to get a VA loan on a starter home at 8.25%! As our family grew, we needed more space, and still felt somewhat special to get a loan on a larger place at 10-3/8%, in 1988. Many home-buyers paid higher rates. Everybody kept on trucking in those days, despite the interest rates. And as you know, winters were much longer then, and the snow was deeper, and we had no flying cars, either.” Darrel Rippeteau
Owner, Rippeteau Architects PC
Washington, D.C. Today’s Deep Dive: DOJ Lawsuit Against RealPage Forcing Change In How Landlords Price Rents | | | | | | | | Bisnow/created with assistance from OpenAI's DALL-E | | | | | | | | It has been less than a month since the U.S. Department of Justice filed an antitrust lawsuit against RealPage for its revenue management algorithm, but that action has already spooked some apartment managers into changing the way they set rents. Apartment landlords and third-party managers are increasingly sensitive to whether the algorithms used to determine rental rates are being fed private proprietary data from other competitors. That concern is fostering a sea change in the way apartment landlords and managers derive market-rate rents. Many multifamily companies are “moving away from RealPage products, moving away from revenue management software that uses private information and moving away altogether from revenue management [software],” said Kenneth Racowski, an antitrust lawyer and partner at Holland & Knight. Read the full story here. This Morning's News RETAIL — Theater Chains Plan $2.2B In Upgrades (Reuters): AMC, Regal and other U.S. theater chains are investing $2.2B to modernize and enhance the moviegoing experience, with features like luxury seating, expanded food options and even pickleball courts. Here's to more reclining seats.
URBAN DEVELOPMENT — CushWake Unveils Urban Blueprint Report (Cushman & Wakefield): There is apparently an optimal product mix for real estate markets: 42% work, 32% live and 26% play. The firm’s report applies this strategy to reshape 15 cities. Dive into the report.
FINANCE — Morgan Stanley Plans Bond Sale Of Signature Bank Loans (CoStar): The offering includes 149 commercial real estate loans secured by 146 properties — predominantly multifamily — with a balance of $490M. Signature Bank originated the loans over 10 years..
| | | | | | | | Bisnow/Jon Banister | | | | | | | | RESI — Adam Neumann’s Flow Expands Into Saudi Arabia (Bloomberg): Flow, Adam Neumann’s real estate venture, is making its first global move by entering Saudi Arabia. Working with local investors, Flow will develop and own three apartment buildings in Riyadh with about 920 units. Two of the buildings will open in Q1.
DATA CENTERS — Data Centers Are Growing Taller … And More Stylish? (WSJ): The emergence of data centers in more populated areas has operators replacing the low-slung, windowless look that defined data centers for years with taller buildings and sleek designs. Here's why.
INVESTMENT — Investors Taking Larger Risks Following Population Shifts (WSJ): Property investors following relocating retirees and young professionals aren't paying attention to weather patterns that might affect future values of real estate, even as shifts in weather are already impacting returns in some markets. Property investors following the population booms are faced with increasing risks.
ENTERTAINMENT — South Street Partners Swings Into Golf (Forbes): Nearly half of all golf course projects under construction or in planning have a real estate component, but only 23% of the current golf course supply is tied to a real estate resort complex or a residential community. Learn where golf communities are most popular.
M&A — Andrew Farkas Seizes Blackstone Portfolio (TRD): Andrew Farkas' Island Capital landed a $270M loan to pay off a distressed loan on a multifamily portfolio previously owned by Blackstone. Here's what you need to know.
PEOPLE — Silverstein CFO Moves To New Jersey Development Firm (Bisnow): Silverstein Properties’ CFO has been appointed as CEO of a New Jersey-based development company, marking a leadership shift in the region's real estate sector. Discover more about the move.
CAPITAL MARKETS — Rate Cuts Aid Office REIT Recovery (CoStar): The spread between what buyers are offering and what owners are willing to accept is reportedly shrinking. Read more here.
| | | | | | | | Bisnow/Jon Banister | | | | | | | | OFFICE — Rate Cuts Unlikely To Revive D.C.’s Office Market (Bisnow): Despite expected rate cuts, Washington, D.C.'s distressed office market remains challenged, though other real estate sectors could benefit from lower borrowing costs. Read why "ground zero" for office distress needs more than rate cuts to be revived.
FINANCE — Chinese Giant Plans Equity Injection For London Tower (Bisnow): A major Chinese developer is preparing a significant equity injection to refinance a London tower, aiming to stabilize its investment amid challenging financial conditions. Dive into the tower's specs here.
LEGAL — Developer Gets 5 Years For Fraud (WTRF-West Virginia): A real estate developer has been sentenced to five years in prison for committing fraud in multiple West Virginia property deals. The developer forged documents, claimed he had TIF financing when he didn't and said banks were nearing financing for deals when they weren't. He also said he received approval for historic tax credits when he had not. Get the details about the case.
ECONOMY — Wage Growth Rebounds, Led By Tech, Finance (Bloomberg): Job postings for developers and finance workers show accelerating wage growth even though those industries have seen a pullback in hiring. Middle- and low-wage sectors are also seeing growth. Dig into the numbers behind the growth. *** The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at first...@bisnow.com. | | | | | | | | | | | | | | | | | | | | | |
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