Each month, Common’s real estate team will be rounding up the most relevant news from across the multifamily housing industry. In February, we saw further evidence for the case against master leases as two flexible office space companies faced two very different futures. Remote work also continues to shift the habits of workers and the priorities of national and local governments.
During the global health crisis Zillow has seen searches for Boise, Phoenix, and Atlanta rising fastest among people who live in coastal cities, like Los Angeles and New York. This tether between home and office is the basis of urban economics and a shift to remote work has a domino effect that lead to this journalist’s four predictions.
The predictions include the rise of the super-commuter, the decline of coastal supercities, the distribution of “Silicon Valley” beyond geography, and the rise of the rest — an increase in home value and population across what were once tertiary cities.
In late February, CBRE Group acquired a 35 percent stake in Industrious, becoming the brand’s largest shareholder. The news was announced shortly after Industrious shared its plans for expansion in New York City. Industrious has accredited its success compared to other flex-office providers to its focus on customer service and a pivot to management agreements.
Knotel filed for bankruptcy under chapter 11 in the US Bankruptcy Court for the District of Delaware. The bankruptcy filing, although chaotic, wasn’t totally unpredictable — many people close to the company noted that the company’s decline began before the pandemic and the rise of remote work. There were many signs ahead of the downfall including questionable spending, subpar offices and repeated promises of profitability masking financial struggles. The pandemic worsened the company’s financials as their master lease agreements made it near impossible for them to pay rent.
Popular vacation destinations are taking advantage of the increase in remote work by creating programs and spaces tailored to “digital nomads.” Madeira, Portugal recently launched a community dedicated to remote workers, and other countries are exploring the concept of “digital nomad visas” which would allow travelers to stay in the country for longer periods of time as they work remotely. The trend is reflective of the increase in remote work, and the opportunity it holds for smaller cities across the globe.
432 Park, one of the wealthiest addresses in the world, faces some significant design problems, including water damage, elevator malfunctions, and creaking walls. The problems at the building, which can be attributed to its height, are proof that even the most luxury apartments aren’t exempt from residential issues that result from poor management or design.