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The Bisnow Weekender: Yardi. Yardi? YARDI?!

National
National
May 2, 2024 Mark F. Bonner, Editor-in-Chief

Thanks for reading the Bisnow Weekender, my personally curated roundup of the most impactful news, notable quotes, binge-worthy show recommendations and other colorful highlights from the Bisnow world of commercial real estate and beyond. 

CRE tilted their heads and said the following word out loud this week: “Yardi?”

Yardi, the property management software company, is set to become WeWork's majority owner as part of a $450M deal to guide the coworking giant out of bankruptcy. Adam Neumann always contended (much to the derision of others) that WeWork was a tech company. Well, now it's going to be owned by one. 

This surprising move changes the stakes for WeWork, especially as the coworking titan desperately tries to stabilize its operations by the end of May. Neumann’s attempt to reclaim the company he was ousted from is effectively dead. 

So, wait, who is Yardi exactly? And why is it buying a deeply wounded coworking company? We wondered, too, and what we discovered is that some people think the deal is actually “fucking brilliant.”

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Unsplash/Denise Bossarte

We explored another transformative development this week, the potential impacts of the Federal Trade Commission’s proposal to ban noncompete agreements and what it could spell for CRE. With noncompete clauses being a staple in many brokerage firms, for instance, their elimination could ignite a wave of new business formations and possibly enhance wages across the industry. 

This worker-friendly shift could fundamentally alter how talent and trade secrets are managed — promising a more open but competitive “Wild West” landscape.

Our coverage this week also included a sobering update on real estate's decarbonization efforts. Despite the urgent calls from environmental scientists and global policy shifts, major real estate firms are still lagging in their commitments to reduce carbon emissions. 

Why? The market stinks, there is a lack of any financial imperative to tackle the problem and those who do are hampered by red tape that prevents progress. Join the club.

Welcome to the weekend, folks. 

— Mark F. Bonner, Bisnow Editor-in-Chief

 

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Voices From The CRE Battlefield

 

 

 

The Best Of Bisnow News: April 29-May 3

Yardi To Become WeWork's Majority Owner In $450M Bankruptcy Exit Plan — New York Reporter Sasha Jones

Under the terms of WeWork's proposed financing deal to exit bankruptcy, the company's senior lenders agreed to inject WeWork with $50M to keep it running until it expects to emerge from bankruptcy May 31, then an additional $400M to cover the cost to exit restructuring.

Yardi will take a 60% stake in a private WeWork after agreeing to contribute $337M of the $450M the company needs to exit bankruptcy. It will do so through its Cupar Grimmond affiliate, a largely unknown entity that controlled around 35 million shares in WeWork prior to its Chapter 11 filing. 

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Off With The ‘Handcuffs’: How A Noncompete Ban Could Change CRE — National Reporter Patrick Sisson

There aren’t any CRE-specific numbers on the prevalence of these agreements, but anyone close to the industry knows they are widespread. According to stats from the Economic Innovation Group, a public policy organization, 32 million Americans, or 1 in 5 workers, are covered by such agreements.

The ban’s benefits would be significant, according to FTC regulators. Business formation would grow 2.7% annually, or more than 8,500 new businesses each year, and increased competitive pressure would push up the average worker’s wage by $524 annually. 

But many in CRE — especially brokerage, where noncompetes are particularly prevalent — fear repercussions in terms of competitiveness, trade secrets and early career training for brokers. 

Bisnow spoke with attorneys, academics, headhunters, brokers and industry figures to understand how a ban might impact the industry. 

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One Year On, Little Has Changed In Real Estate’s Decarbonization Efforts — UK Editor Mike Phillips

Experts Bisnow interviewed identified myriad reasons for the lack of action by big real estate firms: sustainability slipping down the agenda in the wake of a market downturn, a lack of any immediate financial imperative, and regulation creating increased burdens that actually hinder rather than help the push for decarbonization.

“I’m optimistic, but there is more the sector can do,” said Shuen Chan, the head of responsible investment and sustainability at British property giant LGIM Real Assets.

Warnings from scientists have become increasingly urgent in the last 12 months about the likelihood the world won't achieve the goal of keeping temperature rises below 1.5 degrees Celsius above pre-industrial levels by 2050. Society needs to radically change commercial practices to reduce emissions and global warming. 

But real estate hasn't heeded these warnings. 

 

More Big News From The Week …

— Powell: Rate Hike 'Unlikely' Next Move As Hope For Cuts Fades

— Republic First Bank Seized With $1.7B Of CRE Loans On Its Books

— Cannabis Reclassification Would Likely Boost Cash Flow, Opening Doors For CRE Moves

— A Decade Of Demolition Without Substantial Development Has Reset Retail

— AI Worsening Supply Chain Issues For Data Center Users And Developers 

 

My Slightly On/Off-Topic Media Diet

The Economy Needs To Take One Of These 2 Paths Before The Fed Cuts Interest Rates, Powell Says (Business Insider): “Further data to prove that inflation is moving toward the Fed's 2% target or an ‘unexpected weakening in the labor market.’ The labor market has continued to be strong, dampening any urgency the Fed may have to cut rates. The US added 303,000 jobs in March, with Julia Pollak, the chief economist at ZipRecruiter, previously calling that data ‘the Fed's holy grail: strong job market with non-inflationary growth.’ With inflation still above target, rate cuts aren't yet in the picture.”

Where To Invest In Real Estate Right Now (Bloomberg): “For savvy investors, crises present opportunities. To identify where those lie in the current environment, Bloomberg News interviewed four real estate experts and asked for ideas for individual investors with cash to deploy in property. Their answers varied from student housing to publicly traded office REITs and funds that invest in apartment buildings. One also made the case for buying land, seeing an opportunity to capitalize on the shortage of homes available for US buyers.”

Even With Gaza Under Siege, Some Are Imagining Its Reconstruction (NYT): “On a December morning in central London, more than two dozen people drawn from influential institutions across the Middle East, Europe and the United States gathered in a conference room to pursue an aspiration that, at that moment, verged on preposterous. … Members of the international establishment discussed how to eventually transform Gaza from a place defined by isolation and poverty into a Mediterranean commercial hub centered on trade, tourism and innovation, yielding a middle class.”

Say Goodbye To Ruby Tuesday And Chili’s. These Are The Hot New Restaurants At The Mall (CNN): “The amount of space dedicated to food in malls has grown from 5% in the 1990s to 15 to 20% today, according to Deloitte. ‘Food and beverage is an anchor today,’ said Mark Hunter, a managing director at commercial real estate investment firm CBRE who specializes in malls. ‘It has replaced some of the department stores that left. More and more landlords are looking to invest in it.’ 

Black Entrepreneurs, Frustrated By High Rates, Look To The Election (NYT): “Kimberly Jolasun, a 32-year-old entrepreneur in Atlanta, has never voted for the Republican candidate for the presidency. That may be about to change. … Black Americans are disproportionately affected by higher interest rates on mortgages, credit cards, student loans and business debts. Start-up companies owned by people of color — especially Black Americans — confront substantial barriers in raising funds, making them more vulnerable to increased borrowing costs, according to a survey of minority-owned small businesses by the Federal Reserve. … Black and Hispanic entrepreneurs tend to be rejected on applications for financing even after accounting for differences in credit ratings, suggesting that racial profiling is an issue.”

U.S. v. Google: As Landmark 'Monopoly Power' Trial Closes, Here's What To Look For (NPR): During the trial, the government showed that Google paid billions of dollars every year for exclusive agreements with these companies. In 2021, it spent a total of $26.3 billion to ensure it was the default search engine on phones and web browsers, according to witness testimony. Apple, which had the most lucrative deal, was paid around $18 billion in 2021.”

Zero Luggage Lost: Japan's Kansai Airport Keeps 30-Year Record Going (Nikkei Asia): “The airport handled about 10 million baggage items in fiscal 2023.”

There Are Plenty of Power Publicists. But Only One Works for Taylor Swift. (WSJ): “The devil works hard, but Tree Paine works harder.”


Bisnow Weekend Interview Preview

In the ranks of commercial real estate brokerage, there are those veterans who have lived and worked through several recessions, many downturns and maybe even a crisis or two. They’re the ones operating in today’s uncertain market with a calmer head than perhaps their younger counterparts.

This level of perspective has come as a great benefit for Barbara Perrier, a vice chair at CBRE in Southern California focusing on industrial leasing. SoCal’s industrial market is among the largest and most active in the country but has seen big changes in the last year. After reaching a vacancy rate of basically zero earlier this decade, the market is now slowing. But Perrier isn’t panicking, Bisnow Los Angeles reporter Bianca Barragán found when she sat down to speak with the industrial leasing legend.

Bisnow: Interest rate hikes over the past couple of years have significantly impacted the commercial real estate market just overall. Now, it seems like we're going to have to wait at least a little bit longer for those rates to come down. You mentioned things are probably going to be a little bit choppy. How are you planning for the months ahead?

Barbara Perrier: I think a lot of people woke up in January 2024 feeling like they didn't do much in 2023 and, for whatever reasons, they need to do something. They need to get their money out or they have to sell to pay redemptions. There's reasons why business is going to get done this year, more business than last year, and it's just our job to advise where the market is.

There are some people that will continue to wait. We're hearing that a little bit on the West Coast, where some people are saying they don't want to sell because it's trading at a discount right now. It's basically on sale. There will be others that will sell because it is so liquid. Again, don't get excited just because there are bumps in the road. This too shall pass.

The Weekend Interview goes live every Friday evening — head to www.bisnow.com over the weekend to check it out!


Jobs! Jobs! Jobs!

Vice President of Investments — Oversee new loan originations and management of existing loan portfolio comprised of land, construction, bridge and stabilized deals across all asset classes.

Chief Financial Officer — Oversee all aspects of financial operations, with a focus on supporting commercial real estate acquisitions and investment.

Senior Vice President — Lead strategic planning to maximize the performance and value of a substantial CRE investment portfolio.

Deputy Economic Development Director — Responsible for planning, developing, implementing, and managing the operations related to the city’s Economic Development programs. 


Hey, Jay, What Are You Going To Binge This Weekend?

I just finished Shameless, a show I only watched while running on the treadmill. 134 episodes! It's a little weird when you invite characters from a show like that into your life for such a long time and then it just ends. I need a bit of a break from that, so this weekend I'll be binging a lot of sports. My 16-year-old son will be going for his ninth straight win for his high school tennis team on Saturday, and my daughter — future Georgetown Hoya '28 (#HoyaSaxa!) — has a swim meet on both days. But we also have three potential hockey playoff game sevens this weekend! As I write this on Thursday afternoon, the oddsmakers seem to think only one of the remaining three series will go to game sevens, but I'm really hoping for the Saturday night Bruins-Maple Leafs matchup at TD Garden. If that game doesn't happen, my wife and I have been hoping to find time to start watching season three of Slow Horses. 

— Jay Rickey, Director of Newsletters 

 

Upcoming Bisnow Events And Webinars

Tuesday, May 7 (Houston): Houston State of the Market

Wednessday, May 8 (London): Healthcare Real Estate Outlook

Wednesday,  May 8 (Boston): Boston Suburbs: Multifamily & Mixed-Use Development

Wednesday, May 8 (Chicago): Chicago Public-Private Partnerships

Wednesday, May 8 (Denver): Denver Office Update

Wednesday, May 8 (Portland): Portland Multifamily and Affordable Housing Summit

Thursday, May 9 (Tampa): Tampa Multifamily Annual Conference

Thursday, May 9 (London): Life Sciences Spring Social At The Shard

Thursday, May 9 (San Francisco): Northern California Student Housing and University Development Summit

Thursday, May 9 (Los Angeles): Finance And Deal-Making Conference & Cocktail 

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How did I do? You can send all love letters and dissents directly to me at mark.bonner@bisnow.com. 

Contact Mark F. Bonner at mark.bonner@bisnow.com
Related Topics: Yardi Systems, yardi, Bisnow Weekender