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Spring’s in the Air: How Palm Springs Went From Desert Getaway to Hipster Playground

Los Angeles is the second-least affordable city in the U.S., for both home renters and buyers, according to the 14th Annual Demographia International Housing Affordability Survey: 2018, a fact that has many heading east—more specifically to Palm Springs.

A desert town located at the base of the San Jacinto Mountains, synonymous with midcentury modern architecture, Palm Springs may have been the playground of the Hollywood elite and retirees, but of late it has become a hotspot for hipsters, telecommuters and members of the LGBTQI community, all looking to reside full-time in a more reasonably priced and slower-paced locale.

Moreover, serious real estate investors see the area’s potential: earlier this year The Desert Sun reported that BlackRock had picked up 167 acres of land with a potential to build some 1,100 homes in the Palm Desert. The price wasn’t immediately available and attempts to reach BlackRock were unsuccessful.

The city of Palm Springs, 106 miles from L.A., was first developed in the 1930s as a weekend getaway L.A. dwellers, but it wasn’t until the 1950s that it gained a broad appeal when Alexander Construction built more than 2,000 contemporary, stylish and affordable tract homes. Today the Alexander homes go for around $500,000, and are a cherished investment.

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In 1908, Palm Springs was practically empty but became a popular winter resort. Getty Images.

Flinn Fagg, the director of planning services for the City of Palm Springs, said in the three years since he’s lived in Palm Springs, his office has seen a marked increase in entitlement requests, primarily for building small-lot single-family homes—one of the greatest indicators in assessing the need for to the city.

“People are looking for detached homes with yards and pools,” Fagg said. “We’ve been busy in terms of applications. If you compare between 2010 until now, we’ve easily increased the applications from 1,200 to 1,700 per year.”

As of January 2018, the average price for a single-family home in Palm Springs was about $495,000, and a condominium unit about $220,000, according to Zillow.

The median sale price for a single-family home in Los Angeles is $704,500 with a 2.9 percent projected increase by 2019 and the median monthly rent is $3,500, Zillow indicates.

Palm Springs is building largely to keep up with those who’re flooding to the desert for an easier and more reasonably priced lifestyle with all the amenities of a vacation destination.

Brad Shuckhart, the division president for the California region of Freehold Communities—a group of developers focusing on lots in Texas, Tennessee, North Carolina, Florida and California—and the project director for Miralon, a Palm Springs-based master-planned community in the works, explained that communities such as Miralon are anomalous in Palm Springs primarily because it is an older community. But developers are confident they must build it, because people are already coming.

“We expect to have a fairly broad draw from millennials to retirees,” Shuckhart said. “The desert does skew older, but it’s unique in the Coachella Valley, which contains the resort cities of Palm Springs and Palm Desert, as well as Indio, La Quinta, Indian Wells and Cathedral City, as there’s a vibrancy that you don’t find in similar communities—meaning there’s more activity across the age spectrum and the lifestyle spectrum.”

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Cate Blanchett at the 27th Annual Palm Springs International Film Festival Awards Gala. Photo by Jason Merritt/Getty Images for PSIFF

He added: “We’ve seen interest in this community from people up and down the West Coast, as well as the Midwest and even parts of Canada. If you are a telecommuter or are retired or going to retire, and you’re looking at cost of living, the desert offers a more affordable way to continue with a lifestyle you’ve become accustomed to, but no longer want to pay for—at least to the extent you’d pay for it in L.A.”

With its year-round population of almost 48,000, historically Palm Springs’ youngest residents tend to leave after finishing high school, but today the city is finding its millennials returning to start their own businesses; three of the desert’s hippest bars and restaurants are owned by four members of Palm Springs High School’s class of 2002.

Between the annual Palm Springs International Film Festival,and the 77,500 people who descended on the town for Modernism Week 2016, it’s clear this little desert resort town has become a cool 21st-century destination.

Taking a unique approach to target a new buyer, Miralon has spent the last several months working with the city to convert the greens (the property was originally built as a golf resort), to what its executives believe is a more diverse and inclusive use of space.

“We’ve changed it to a system of plantings, which are largely olive trees, the fruit of which will be harvested by the [home owners association] through a contract, and pressed into olive oil and made available to future residents and members of the community,” Shuckhart said. “We believe that there is a better way to use the open space that’s more inclusive that would appeal to a broader range of people. Whereas golf may appeal to a subset of those, we believe everyone will enjoy this active open recreational space.”

Miralon will also leverage the existing golf space into hiking trials, offering what it calls “social spaces,” seating areas, Wi-Fi hotspots, community gardens, fireplaces and a club house—an 11,000-square-foot facility with seven or eight buildings all connected by a large shade structure—offering pools, spa, exercise rooms, and even a bar that will operate to the benefit of the HOA, according to Shuckhart.

When Miralon is finished this fall, it will offer 1,150 units, 400 of which will be affordable townhouses priced between $300,000 and $400,000. The balance will be traditional and larger single-family homes with prices in the mid-$700,000s, all built in a modern aesthetic.

In addition to planned communities and new homes, the activity in downtown Palm Springs isn’t just hot hotels like the luxe Arrive hotel, which opened in 2016, or a new Kimpton, which bowed at the end of 2017, but a number of new restaurants, and the tony Uptown Design District (Ezra Callahan, Facebook’s sixth employee, is one investor)—a two-mile stretch chock-filled with over 50 unique interior design boutiques, galleries, shops and galleries located inside stunningly-restored midcentury modern buildings.

“What created the resurgence of Palm Springs is it became accessible,” Tara Lazar told The New York Times in March of 2017. She is a lifelong resident who bought and renovated the Alcazar Palm Springs hotel in 2009 and now owns and operates three local restaurants and a bar called Seymour’s. “It was always for the elite and the wealthy,” Lazar said, “and then all of a sudden, other people could afford to come and stay. There is now a middle market. We have young people in Palm Springs, and that hasn’t happened in more than 20 years.”

The annual Coachella Valley Music and Arts Festival have also raised the profile of the area. Palm Springs has always had the marquis name, but now the city of Coachella has been put onto the map.

Thriving with diversity, all one needs do is take a stroll down the rainbow-flag strewn Palm Canyon Drive, to see that Palm Springs has one of the largest LGBTQI communities in SoCal. Once a conservative outpost, it has become an internationally known place of residence for gays and lesbians.

The city is ranked first in California and third in the U.S. among cities with the most same-sex couples (per 1,000 households), according to analysis of U.S. census data by the Williams Institute at the UCLA School of Law.

The community has a thriving year-round LGBTQI culture for residents and the Palm Springs Pride Festival is hugely popular, honoring the history of the gay rights movement. In November 2017, the city elected an all-LGBTQI city council.

“Palm Springs has become a very inclusive community to LGBTQ folks,” said Gretchen Gutierrez, the CEO of the Desert Valleys Builders Association. “It’s more affordable and it’s a community that has wholly embraced LGBT people.”

She said that although building in the desert isn’t easy, she can’t deny that there is absolutely a demand for housing. And although things can take a couple of years to build after filing for entitlements and permits, it does appear that the building market is growing.

Fagg said he hopes the city doesn’t become too crowded with L.A. folks, as what people like about Palm Springs is that it isn’t L.A. or Orange County.

“It’s a low-rise city,” Fagg added. “It prides itself on having open space and a relaxed style of life. The roads aren’t crowded. It’s walkable and bikeable. If you want to get coffee, you just jump on your bike and go. You don’t have to sit in traffic for 20 minutes, and additionally it’s more affordable than L.A.”

It should be said that Palm Springs is still California, so on-average the cost of living is higher than it would be in the Midwest or a small town, but definitely less than cities such as New York or Boston, and about 8 percent less than the California average.

With additional reporting provided by Max Gross and Lauren Elkies Schram.

Source: commercial

‘Everything is on the Table’ in China Real Estate Sell Off

“Everything is on the table.”

That is how one executive from a prominent New York-based landlord described the current position of the Chinese government’s freshly imposed, forced liquidation of its top conglomerates’ most valuable trophy real estate assets.

In June 2017, Beijing singled out HNA Group, Anbang Insurance Group, Fosun International and Dalian Wanda—its four largest private conglomerates—as having borrowed too aggressively for offshore transactions. And in August 2017, China’s State Council formalized restrictions on foreign acquisitions.

“I think those firms that have been identified are trying to aggressively unwind what they did,” the New York-based landlord executive, who’s firm is a potential bidder on major Chinese assets that have hit the market, said on the condition of anonymity. “You’ll see transactions from those companies to recapitalize or release the assets in order to get relief and repatriate capital back into China.

“They’re all acting with a degree of urgency as they’ve been told that they need to manage through these [assets] quickly,” the executive added. “I think Fosun’s purchases were made earlier in the process so they’re in better shape.”

Chinese conglomerates and private companies have been a seemingly unstoppable investment force over the last few years, pouring hundreds of billions of dollars into real estate, sports and entertainment ventures.

“The Chinese view real estate like having gold stashed in your mattress,” said Adams Lee, an international trade lawyer for Seattle-based law firm Harris-Bricken.

But those mattresses are now overstuffed because Chinese dealmakers have overreached, according to Chinese government regulators. The government’s solution was a clampdown on the superabundance of risky, debt-fueled offshore investment and a forced liquidation of assets in order to bring cash back to China and insulate the country’s slowing economy.

And it shows. Chinese investment in U.S. commercial real estate fell roughly 65 percent to $5.5 billion in 2017 from approximately $16.1 billion the previous year, according to a January 2018 report from Los Angeles-based asset manager TCW Group.

This has put some of China’s highest-profile U.S. trophy assets, held by its richest entities, on the market, leaving many local industry players in gateway markets in limbo, waiting on the first sales to take place. Which domino will fall first, however, is unclear.

“We’re looking at the New York-area properties [that could be sold],” the anonymous landlord said. “I think for those [major conglomerates], it’s probably their entire portfolio [is on the table]…Will [Anbang Insurance Group] keep the Waldorf? Is Anbang going to sell the [Strategic Hotels] hotel portfolio? They’re looking closely at these assets, but I don’t think they’ll fire sale them.

“They’re looking for ways to create liquidity and a reduction of debt, and the problem is they overpaid for a bunch of these assets, so that’s going to make it harder,” the landlord added. “What we’ll see is more structured transactions to help them liquidate a substantial portion of the asset but that keeps them in [a deal] so they can play in recovery and long term growth over time.”

HNA Group—which owns roughly $14 billion of real estate across the globe, according to information from Real Capital Analytics—set its target at $16 billion in assets it’s looking to sell in the first half of this year as it deals with a $29 billion debt shortfall over the next few quarters, according to Bloomberg. It has been marketing some of its commercial properties in New York, Chicago, San Francisco and Minneapolis—valued at $4 billion, according to a marketing document seen and reported first by Bloomberg in early February. Its New York assets include 245 Park Avenue, a 1.8-million-square-foot office tower purchased for $2.2 billion in May 2017, 850 Third Avenue and 1180 Avenue of the Americas. The latter was sold to Northwood Investors for $305 million on Feb. 15—HNA nabbed the 327,766-square-foot building for $259 million from the Carlyle Group in May 2011, according to records filed with the New York City Department of Finance.

“The sheer sizes of these transactions will limit the players [who can compete for them], but there will be enough players to create a competitive environment—it just depends on what the deals look like and what they’re willing to do,” the landlord said. “Like 245 Park Avenue, [HNA] paid way above the market, so they’ll have a hard time selling it outright, but if they want to engage in a structured transaction, they may find success where they subordinate some of their position.

“I think right now that’s kind of where things are,” the source added. “They’re definitely out there, trying to transact, so I think you’ll see a flurry of activity over the next few months, and we’ll start to see what the deals look like. The Chinese have had the outlier bid for a few years, and that’s what’s upped bid prices. Now that it’s removed itself from the market, it has to settle itself with price discovery.”

HNA is currently weighed down by $90 billion in debt, Bloomberg reported in late January. That month, the conglomerate told creditors in a meeting in the Hainan province—where it’s based—that it was facing $2.4 billion in maturing debt in the first quarter. HNA said at the meeting that it expects this to be offset as 2018 progresses and as it ramps up the offloading of its assets.

But Chinese regulators are waiting to get a full lay of the land as it relates to potential offers for its trophy assets, one New York-based real estate lawyer close to the dealings told Commercial Observer. “I’d be very surprised to see if there’s an auction,” one official at a Chinese investment bank told CO. “They could be sold off if they like the price, but there’s not any hurry on their part.”

Anbang and Fosun International thrust themselves into the public eye with a couple of high-profile deals a few years ago. Anbang purchased the Waldorf Astoria for a whopping $1.95 billion in February 2015—a record for a single hotel asset—and Fosun helped bolster the initial investment surge with its $725 million purchase of Chase Manhattan Plaza—now 28 Liberty Street—in October 2013, which Deutsche Bank and HSBC refinanced for $800 million in November 2017, as CO first reported.

Anbang didn’t stop there, though. It then bought the Strategic Hotels & Resorts portfolio from Blackstone Group for $5.4 billion in March 2016, just before abruptly abandoning its $14 billion offer in a bidding war with Marriott International for Starwood Hotels & Resorts at the end of the month. Anbang also scooped up 717 Fifth Avenue—a 26-story, roughly 350,000-square-foot office tower and home to its U.S. headquarters—from Blackstone in February 2015. Anbang and Blackstone have been in talks recently for the private equity giant to reacquire the Waldorf and the 16-property Strategic Hotels & Resorts portfolio, The Real Deal reported. A source close to  the proceedings recently told CO that Blackstone is unlikely to pursue the Waldorf.

“A joke we’ve had here is that Blackstone is going to end up buying back the properties they sold,” the Chinese bank official said. “We’ve been expecting this for a year. We knew about Anbang for a while now. There’s going to be a lot of interest in Anbang’s assets.”

In March 2017, on a high from previous record-setting acquisitions, the insurance giant backed out of discussions to buy a stake in Jared Kushner’s 666 Fifth Avenue office tower, as part of a $7.5 billion plan to redevelop the property into a condo and retail building.

“[The negative press] on 666 Fifth didn’t help [Anbang’s case, leading up to the crackdown,] at all,” the Chinese bank official said. “I think it’s more that the regulators gave warnings to the Anbang chairman, and they felt he wasn’t paying attention. I think [President Xi Jinping] felt [Anbang Chairman Wu Xiaohui] was trying to sneak by with whatever he could while he could.”

In January, Bloomberg reported that Dalian Wanda was looking for a buyer for its stake in a roughly $1 billion project called Vista Tower, a 98-story skyscraper in Chicago. In November 2017, Wanda’s partner in the project, Magellan Development disputed claims that Wanda was looking to sell its stake in the project. Vista Tower is one of two of Wanda’s roughly $5 billion in remaining overseas holdings, including a $1.2 billion hotel and condominium complex in Beverly Hills, Calif.

Wanda’s wave of activity came in the wake of its founder Wang Jianlin’s March 31 deadline to pay $510 million in bank loans used to finance the firm’s decade-long offshore expansion.

“President [Xi Jinping] looks like he’s trying to consolidate power on his side and trying to rein in the big mega-conglomerates in China that have gotten out of control in terms of their acquisitions, which were very random and haphazard,” Lee said. “I guess the question now is, Is it going to happen to Fosun next? Is it Alibaba on the chopping block, or Tencent? It’s not like those companies haven’t been purchasing assets, but it seems those companies have had more of a strategic plan in purchasing, and maybe that’s why they haven’t been targeted. Some of the others [like HNA and Anbang] seem to be buying randomly.”

Some Chinese entities may be safer than others, one executive from a private equity firm who works with Chinese investors said.

“The Chinese government will allow their favorites to go out and do business,” the executive said. “What they don’t like is Anbang’s drawing attention, showing wealth and power. Wealth and power in China is the Communist Party. I’m amazed how we get approval sometimes; they’re scared to take it to their bosses. It has to be perfect. They are sensitive.”

HNA Group Chairman Chen Feng told Reuters in January that a liquidity problem exists because the conglomerate engaged in a number of mergers, even as the external environment became more troublesome and China’s economy “transitioned from rapid to moderate growth,” which impacted the group’s access to new financing.

“Rate hikes by the Federal Reserve and deleveraging in China caused a liquidity shortage at the end of the year for many Chinese enterprises,” Chen told Reuters. And, in a surprise showing of optimism, he added, “we’re confident we’ll move past these difficulties and maintain sustained, healthy and stable development.”

Last month, the Chinese government and President Xi Jinping seized temporary control over the debt-burdened Anbang Insurance Group, after first detaining its founder, Wu Xiaohui, last summer, charging him with fraud and embezzlement in Shanghai, according to Bloomberg. It was the first public sign of the government’s crackdown on its overly aggressive conglomerates. By the end of February, it was reported that Chinese government officials had pivoted their position on HNA and had been encouraging state-owned banks to keep lending to the conglomerate, people familiar with the matter told The Wall Street Journal.

“The window was not going to last forever to invest out of China,” the Chinese bank official said. “[Wu] invested as much as he could. Around this time, Chinese currency was depreciating, and in his currency, he’s got a profit. So, he didn’t care what people were bidding but wanted to get in quickly and in a hurry. As a result people think he overpaid.

“The way to think about it is that in China, [Wu] was drawing attention to himself while all the attention was going to one leader recently,” the Chinese bank official added. “Meanwhile, several of the big private real estate names were being told to stop drawing attention to yourselves. [Wu] was not fitting with the country’s policy, which was that capital was meant to be invested externally, but only if beneficial for the government.”

After the Anbang seizure, the government instituted rules—like a 36-point investment code of conduct for its private companies—significantly restricting some forms of investment, including real estate acquisitions, and outright prohibiting others.

“Commercial real estate is restricted. It’s not prohibited,” said Jerome Sanzo, the head of real estate finance at the Industrial and Commercial Bank of China (ICBC). “It’s not going to completely dry up, so the net effect is that you’re not likely to see another acquisition like the Waldorf or 245 Park. Those days are over, but real estate investment overseas is not completely prohibited. I would say generally, there will still be investment, but it will be a much less speculative play. I don’t think you’ll see the large, splashy investments.”

This may open up a flurry of competition in the near term. The expectation is that high-profile funds and local players in gateway markets will come to the fore now that the Chinese have  been ejected.

“The funds that raised these billions over the last several years, like Blackstone, Blackrock, Apollo, the companies with serious available cash that they can deploy when they see a good opportunity and there’s so much local cash on the sidelines—they’re all just waiting,” one New York-based real estate lawyer who represents Chinese buyers said.

While it remains to be seen how these trophy assets unfold on the market, many industry players expect strong Chinese outbound real estate investment to return to the fold in the very near future, once the country’s economy stabilizes.

“[The Chinese] are still in the mix of things, and they want to know what’s going on,” the New York-based landlord executive said. “They’re still interested in opportunities, shifting into more demographically right areas like assisted living and student housing, and they’re looking for potential opportunities on the retail side.”

The real estate attorney who represents Chinese buyers told CO that Chinese investment arms are planning a purchasing comeback, but that they aren’t expecting to be comfortable until late 2019 at the earliest.

Source: commercial

Gibson Dunn’s Joanne Franzel Is Making Serious Deals in Meatpacking and Hudson Yards

Joanne Franzel is a partner in global law firm Gibson, Dunn & Crutcher’s New York office, doing deals with Related Companies on Hudson Yards and scooping up properties for Jamestown in Manhattan and beyond.

Not bad for a part-timer.

Gibson Dunn had a policy requiring attorneys work full time for 18 months prior to becoming partner, and Franzel—a member of the firm’s real estate practice—wasn’t interested in going full time. But the policy was eliminated, and after about 35 years at the firm, Franzel was promoted to partner two years ago.

After she had her older son David, now 30, in 1988, Franzel started working flextime, and she hasn’t looked back.

“During all those years raising my kids, I would never have gone back to a full-time schedule,” Franzel said. “By the time they were out of college, I was in a groove, working on a flex basis and able to work on interesting and challenging deals, while keeping a semblance of work-life balance. I increased my overall hours somewhat, but I just wasn’t willing to change my life in a big way.”

Eric Feuerstein, a partner at the firm and a co-head of the real estate practice group, said Gibson Dunn is committed to accommodating “these priorities so stars like Joanne can thrive here.”

Franzel, 62, paved the way for a few other part-timers to obtain partner status this year.

“She was certainly the trailblazer,” said Danielle Katzir, of counsel at Gibson Dunn in the Los Angeles office, who became one of those part-time partners, the only two in the real estate practice. “She…was an incredible role model for us and the face of the firm’s commitment to a flextime policy.”

Trailblazer does indeed feel like the right word but not just in the area of getting a better deal for women at her law firm but also for the work she’s actually doing.

Franzel lobbed a huge grenade last month when she led Jamestown’s first foray into the Bronx. The landlord picked up a 10-story, 280,000-square-foot office building with retail at the base at 260 East 161st Street a few blocks from Yankee Stadium from Acadia Realty Trust for $115 million. (She declined to say anything about the deal.)

Franzel has helped Jamestown nab some notable properties like the Falchi Building in Long Island City, Queens (which she also sold for Jamestown).

She represented the company in its $310 million 2008 purchase of 1250 Broadway (along with MHP Properties) at the corner of West 32nd Street, and then she worked on Jamestown’s behalf last summer in the property’s sale for $565 million.

chelsea market Gibson Dunns Joanne Franzel Is Making Serious Deals in Meatpacking and Hudson Yards
LAW AND ORDER: Franzel has tied up a slew of small deals for tenants at Chelsea Market.

But it is at Jamestown’s 1.2-million-square-foot office and retail property at 75 Ninth Avenue between West 15th and West 16th Streets, Chelsea Market, where Franzel focuses a considerable amount of her attention on retail leases.

You know, these are little deals, and you know you could sort of look down your nose and say, eh, it’s only a few hundred feet but the whole is greater than the sum of its parts,” Franzel said. “And for me it’s just been really exciting to be part of what Jamestown has done creatively in making this one of the top tourist destinations in town.”

Michael Phillips, a principal and president of Jamestown, said of Franzel, “She’s insightful, collaborative, knowledgeable, understands uniquely the types and breadth and width of the tenants we deal with from small license agreements to multinational long-term leases.”

And in addition to heavyweights like Jamestown, Franzel worked with a joint venture of Related Cos. and Oxford Properties Group at Hudson Yards on the Far West Side.

With Hudson Yards, not only does Franzel get to work on the largest private real estate development in U.S. history, but from her office at 200 Park Avenue, she has a direct view of the site (at least until One Vanderbilt is erected), which runs from West 30th to West 34th Streets between 10th and 12th Avenues.

When talking with Commercial Observer, Franzel proudly pointed to the new buildings rising from what will become an 18-million-square-foot commercial and residential city within a city, talking about the deals her firm has done there.

Her personal transactions have included Time Warner’s 1.5-million-square-foot office space acquisition at 30 Hudson Yards, the lease and development and construction agreement for Blackrock to relocate its headquarters to 847,000 square feet in 50 Hudson Yards and Milbank, Tweed, Hadley & McCloy’s lease in more than 250,000 square feet at 55 Hudson Yards (at that site, she also handled the land acquisition for the office tower).

Franzel said Hudson Yards “is one of the most exciting projects I’ve worked on in my entire career.”

She explained, “Related and Oxford are essentially building a small city along the Hudson River, which is development on a massive scale and incredibly complex and requires the input and cooperation of many parties, both public and private, profit and not-for-profit. Seeing how all of these forces interact to create a new environment for people to live, work and play, and having a small role in this visionary project, has been a major thrill.”

Franzel’s 26-year-old son Jonathan Franzel, an associate at Newmark Knight Frank, has been able to take advantage of his mother’s acumen in his own real estate deals.

“When I was a year into the business and running around with tenants and drafting contracts or reading leases, she taught me a lot of the technical skills and things to look for in reviewing a lease and how to find what’s important to your client, whether it be a landlord or a tenant,” Jonathan said. These days he consults her on how to handle “people issues and relying on her judgment with the best way to solve [them] without offending anyone.”

Heather Mutterperl, a principal of Invest-corp, said Franzel has been Investcorp’s attorney in probably 15 property sales across the country since 2000. The deals have ranged in size from $25 million to over $100 million with the last one being a hotel that traded for $37 million in October 2015 in the Midwest.

Mutterperl said she appreciates that Franzel doesn’t get worked up when things go awry.

“She’s steady, attentive, and she doesn’t get rattled,” Mutterperl said. “She maintains her cool when things are not going right. She works extremely well when opposing counsel is difficult, neutralizing some tough situations.”

20171127 joanne franzel 041 Gibson Dunns Joanne Franzel Is Making Serious Deals in Meatpacking and Hudson Yards
PLAYING THE GAME: Franzel has been a part-timer at Gibson Dunn for 30 years, and while she has enjoyed her work-life balance, she recognizes that had she worked more hours, she could have become “a playa” and “one of those high-share partners.” Photo: Sasha Maslov

In addition, Mutterperl said of Franzel, “Joanne has an ability to synthesize a ton of information, distill it down to layman’s terms. She’s a problem-solver dealmaker.” (Like the attorneys cited in this story, Mutterperl was wary of providing specific examples.)

Last month Franzel represented the West Side Montessori School on a pro-bono basis. The school is launching a new preschool program in cellar-level space at the Annunciation Greek Orthodox Church at 302 West 91st Street. The deal logistics, Franzel said, included handling “interesting facilities issues, trying to find ways to accommodate the day-to-day needs of two not-for-profit entities with unique uses and with any not-for-profit there are always unique compliance issues relating to rules of the New York attorney general and other governmental requirements for these types of users.”

The Long Island native acquired her bachelor’s from Brown University and law degree from the University of Pennsylvania. After graduating, Franzel commenced working for Gibson Dunn in the Los Angeles office. (It was during her interviews for a job that she met the person who ended up introducing her to her future husband.)

“I fled to L.A. because I didn’t want to work on Wall Street,” Franzel said.

It was there that she got to work on a real estate deal—a French-speaking investor buying Beverly Hills houses—and realized she liked it. One of her big first deals in New York City was selling a 29-property Bing & Bing portfolio to real estate entrepreneur Martin J. Raynes in 1985. The sale price exceeded $250 million, according to Brick Underground.

Before the sale, Franzel and her husband moved into one of the buildings, at 235 West End Avenue between West 70th and West 71st Streets. In 1990, the couple moved two blocks north into a co-op, where the Franzels still reside.

Even while always handling a serious work load, it was important to the transactional attorney to be home on Fridays and weekends with her musician husband, Jeff, and their sons Jonathan and David—the latter works in cybersecurity.

To facilitate that, Franzel avoided clients that would require night and weekend hours.

50hudsonyards costar Gibson Dunns Joanne Franzel Is Making Serious Deals in Meatpacking and Hudson Yards
LAW AND ORDER: Franzel has tied up large deals like an agreement for Blackrock to relocate its headquarters to 847,000 square feet at 50 Hudson Yards (building on left). Image: CoStar Group

She acknowledged that, had she taken a more aggressive approach to her career, she could have been a bigger shot.

“If I worked more hours, I’d make more money,” Franzel said. “If I had made that decision years ago to run for partner, I would have been further along. I’d like to think I could have been one of those high-share partners if I had chosen that route. And there certainly are other women at the firm, and at other firms, that have chosen that route, to develop a big book of business and be the big shot, be ‘the playa.’ It’s not for everybody, and it wasn’t for me. It was too important for me to be able to leave here at 6 o’clock and go home, and Jeff would pick up the food at Fairway, and I would cook dinner, and I’m sitting down at that table with my kids.”

While her kids are grown up, Franzel still enjoys working part time—fielding calls in the morning and drafting documents late into the night with The Late Show With Stephen Colbert playing in the background.

In her free time, Franzel enjoys Gyrotonic training sessions and classes. “It is my addiction,” she said. “Whenever I’m on vacation I find a gyro studio and I go workout for an hour. I found one in Valencia, when I was there.” And she hangs out with friends and watches her husband perform. On summer weekends (and less frequently during other parts of the year), the couple can be found at their Westport, Conn., home. After renting what Franzel calls “my shitty little house” for a number of summers, the Franzels purchased it this August.

Whether she’s on vacation, at her country house or enjoying personal time, Franzel pulls her weight at work. “I always kind of joked because part time for her is really full time for any other profession,” Jonathan said.

“Joanne,” Feuerstein said, “is truly a standout example of how someone can work on a self-tailored schedule and always provide outstanding service to our most demanding real estate institutions on their most sophisticated deals.”


Source: commercial

Related Closes on $4B Financing for 50 Hudson Yards

Related Companies, Oxford Properties Group and Mitsui Fudosan America, Inc. have closed on $3.8 billion in financingincluding a $1.5 billion senior construction loanfor 50 Hudson Yards, according to a news release detailing the transaction and as first reported by the The Wall Street Journal.

This transaction marks the final round of financing, the total of which has now exceeded $18 billion, for the project’s first phase of development.

Wells Fargo, Deutsche Bank, HSBC, Bank of China and Sumitomo Mitsui Banking Corporation arranged the $1.5 billion senior construction loan, and the development partners provided the remaining equity to complete the transaction.

“This transaction represents the final piece of financing for the entire eastern rail yards, which now totals over $18 billion in capital from marquee investment partners, and the full capitalization of 50 Hudson Yards,” Related Companies Chief Executive Officer Jeff Blau said, in prepared remarks.

Blake Hutcheson, president and CEO of Oxford Properties added: “Fully capitalizing 50 Hudson Yards is an achievement that speaks volumes about the success of the project and the strength of our partnership.”

The Real Deal first reported that the lenders would collaborate on a $2.5 billion financing package for the property, with a roughly $700 million equity injection and a $1.8 billion senior loan.

“We are pleased to again collaborate with Related and Oxford with the financing of 50 Hudson Yards,” said Mark Myers, head of Wells Fargo commercial real estate in prepared remarks. “The transformation taking place on the west side of Manhattan is phenomenal.”

The roughly 2.9 million-square-foot tower was designed by architecture firm Foster + Partners, and will be anchored by global investment management firm BlackRock, Inc., which has pledged to take 850,000 square feet across 15 floors, Commercial Observer reported last December.

The 985-foot tall, 58-story building—expected to be completed in 2022—is set to become the fourth largest commercial office tower in New York City.

The building will feature private sky lobbies, outdoor terraces as well as executive valet parking and drop off service in a private porte-cochèreIt for its marquee tenants.


Source: commercial

BlackRock to Pay Related and Oxford $1.25B in Move to Hudson Yards

Global investment management firm BlackRock will pay landlords Related Companies and Oxford Property Group a base rent of $1.25 billion over 20 years for its lease at 50 Hudson Yards, according to the equity giant’s public filings today.

BlackRock “entered into an agreement” yesterday to lease 847,000 square feet at the building, which will be located at the intersection of 10th Avenue and West 33rd Street, with the lease expected to begin on May 1, 2023, the filings indicate.

BlackRock is moving from 55 East 52nd Street between Park and Madison Avenues.

In the deal, BlackRock will pay a rent of $50.8 million annually for the first five years. The rent will increase every five years to $58.4 million, then $66.1 million and then $73.7 million. BlackRock will also foot the bills for operating expenses and property taxes.

A spokeswoman for Related did not immediately return a request for comment and nor did a spokesman for BlackRock.

Commercial Observer reported last December that BlackRock pledged to take 850,000 square feet across 15 floors of the 2.9-million-square-foot property.

BlackRock will also receive tax credits worth $25 million, because it is keeping 2,672 jobs in Manhattan and promises to create another 700, The New York Times reported last year.

Reuters first reported the news of BlackRock’s filings today.

The 985-foot tall, 58-story 50 Hudson Yards, which is designed by Foster + Partners, is expected to be completed in 2022.

In a statement last year, Rob Goldstein, the chief operating officer of BlackRock, said: “We’re proud to have our name on the marquee of our future home, 50 Hudson Yards. This state-of-the-art building will be equipped with the design, technology and resources to attract and retain the best talent in the industry to serve our clients.”


Source: commercial