Manhattan hasn’t had this much available office space since 2003, according to a report by Colliers International, Bloomberg News reported. The availability rate rose to 13.5 percent in November, with more companies looking to sublease their offices, Colliers said. The pandemic has emptied out Manhattan offices and prompted companies to reconsider how much space they need as they try to trim costs. That’s weighed on the shares of prominent New York building owners SL Green Realty Corp. and Vornado Realty Trust. Vornado is redeveloping the area around Pennsylvania Station, a bustling commuter hub that has largely gone quiet with many office workers staying home. The company said Tuesday it was cutting jobs and reducing compensation as it trims costs. For November, 790,000 square feet (73,400 square meters) was leased in Manhattan, down nearly 80 percent from a year earlier, according to Colliers. With space flooding the market, average asking rents have dropped more than 3 percent this year and are now at the lowest level since June 2018.
A month after filing for chapter 11 protection, the U.S. Bankruptcy Court for the District of Delaware on Monday approved a pre-packaged restructuring plan for mall owner Pennsylvania Real Estate Investment Trust (PREIT), the Philadelphia Business Journal reported. The Philadelphia company expects to emerge from bankruptcy in early December, later than its initial expectation to be done with the proceedings by the end of November. PREIT is hopeful the reorganization will give it more time and money to become a stronger company. Under the plan, the shopping mall owner will have access to $130 million in new financing as it relates to a senior unsecured facility and the elimination of a $20 million revolving facility designated for repaying mortgages. The company also said that as part of the reorganization, its debt maturity schedule will be extended by three years. None of these proposals are final until the agreements are executed and the company emerges from bankruptcy. PREIT voluntarily filed Nov. 1 for chapter 11 protection after Strategic Value Partners, which owns 5 percent of PREIT’s debt, objected to a restructuring plan that 95 percent of PREIT’s other lenders approved. Strategic Value Partners finally relented and approved the pre-packaged plan. PREIT has continued to operate its malls during bankruptcy. When it filed for bankruptcy, PREIT listed $2.4 billion in total assets and total debt of just over $2 billion. Of its debt, $913 million is an unsecured loan with Wells Fargo, which is its largest creditor.
U.S. employees started heading back to the office in greater numbers after Labor Day but that pace is stalling now, delivering another blow to economic-recovery hopes in many cities, the Wall Street Journal reported. The recent surge in COVID-19 cases across the country has led to an uptick in Americans resuming work at home after some momentum had been building for returning to the workplace, property analysts said. Floor after floor of empty office space is a source of great frustration for landlords and companies, which have invested millions of dollars in adapting building plans and developing new health protocols to make employees comfortable with a shared location. About a quarter of employees had returned to work as of Nov. 18, according to Kastle Systems, a security firm that monitors access-card swipes in more than 2,500 office buildings in 10 of the largest U.S. cities. That rate is up sharply from an April low of less than 15 percent, which largely consisted of building-maintenance and essential workers. The office return rate climbed steadily during the summer and early fall, but it has flattened out after reaching a high point of 27% in mid-October, Kastle said. The rate for last week was down even more sharply than in previous weeks but likely reflected the Thanksgiving Day holiday.
The Federal Housing Finance Agency announced a new baseline conforming loan limit for Fannie Mae and Freddie Mac in 2021: $548,250, HousingWire.com reported. This is a 7.5 percent increase from 2020’s limit of $510,400 and marks the fifth consecutive year of increases from the FHFA. In 2016, the FHFA increased the Fannie and Freddie conforming loan limits for the first time in 10 years, and since then, the baseline loan limit has gone up by $131,250. The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. For high-cost areas, where 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit is higher than the baseline loan limit. HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling” on that limit of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2020, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $822,375 — or 150 percent of $548,250.
Recent coronavirus case spikes, new lockdowns and the expectation of minimal family outings during the holidays has turned a year of bad news for the country’s cinemas into an outlook that’s simply bleak, Bloomberg News reported. In early October, when Regal Cinemas shuttered all 500-plus locations nationwide, that darkened more than 7,000 screens alone. The industry has already seen a cinema cull in the U.S., per the National Association of Theatre Owners, with the number of movie theaters shrinking from around 7,200 in 1996 to roughly 5,500 as of late 2019. But that may just be a preview. John Fithian, head of the National Association of Theatre Owners, told Variety that unless Congress passes the Save Our Stages Act, a bipartisan push to support concert venues and theaters that have seen their businesses decimated by Covid, “probably around 70% of our mid- and small-sized members will either confront bankruptcy reorganization or the likelihood of going out of business entirely by sometime in January.” In past economic downturns, theater owners tried stunts like “dish nights” — giving away different pieces of a table setting, such as a saucer or salad plate, to lure Great Depression patrons. That probably won’t work this time, leaving a lot of moviegoing real estate in need of a reboot. There’s a long tradition of adaptive reuse when it comes to the older generation of neighborhood moviehouses, many of which died off in the second half of the 20th century as new suburban multiplexes appeared. These smaller facilities often see a second life as community theaters, churches, gyms and bookstores. But modern multiplexes can be poor candidates for adaptive reuse, theater owners and real-estate experts told the Wall Street Journal, because of their sloped floors and subdivided spaces. That’s especially true at a time when the malls they are often attached to are struggling reinvent themselves. Closed theaters may fare better on the real estate market as available land in need of a demolition; a shuttered Regal Theater in North Charleston, S.C., for example, was simply demolished, with plans to build an apartment building in its place. Some developers do see sequel potential in modern movie theaters, though. Last year, PMB, a development firm focused on the medical field, turned a 1980’s multiplex in Goodyear, Arizona, into a collection of medical offices. And Walter Crutchfield, co-founder and partner of the Arizona development firm Vintage Partners, turned a Flagstaff movie theater into perhaps the country’s most creative department of motor vehicles.
Bankruptcy lawyers cleaning up after the collapse of Philadelphia’s historic Hahnemann University Hospital are seeking help from a judge in getting answers from affiliates of Joel Freedman, the California investor who controlled the hospital, about real-estate transactions, WSJ Pro Bankruptcy reported. Freedman led the 2018 buyout of Hahnemann and its sister institution, St. Christopher’s Hospital for Children. By mid-2019, he was wrangling with Pennsylvania health authorities over plans to shut down a hospital that anchored the city’s services to the poor and homeless, as well trauma victims. Now he is being pressed for documents in bankruptcy court where Hahnemann and St. Christopher’s wound up last year, out of money and looking for buyers. Creditors have mounted “a total assault on our attorney-client privilege,” Edward Moss, lawyer for Freedman’s affiliates, said at a Friday court hearing on the dispute over documents.
Landlords wrongfully acted to evict metro Phoenix renters during the height of the COVID-19 pandemic, despite a federal law protecting tenants from losing their homes if they couldn't pay rent, USA Today reported. More than 900 evictions were filed against tenants who likely should have been protected by the federal CARES Act, according to an investigation by the Arizona Republic, part of the USA TODAY Network. Most of those renters also were wrongfully charged hundreds of dollars in late and legal fees. Many had no lawyer to help them navigate the eviction process, no one to tell them about legal protections and nowhere to go when they were locked out of their homes. The CARES Act, passed by Congress on March 26 to provide fast economic help to people hurt by the pandemic, stated landlords with federally backed mortgages couldn’t evict tenants before July 26 for not paying rent. Nearly half of the nation's mortgages are federally backed. Tenants living in apartments, condominiums or rental homes with federally backed mortgages didn't have to prove they were impacted by COVID-19. Under the CARES Act, they were automatically protected from eviction for not paying rent. An Arizona Republic investigation into the more than 8,000 evictions filed in Maricopa County, Arizona's most populous county and home to Phoenix, during that period found more than 10 percent appeared to violate the CARES Act. Not all of those 900-plus tenants were kicked out. Some paid their rent in time to stop the evictions, even though they weren’t required to, and others had their cases dismissed for unknown reasons. However, the CARES Act should have stopped landlords from even starting the eviction process in court.
