Flatiron Building Set for Transformation into Luxury Condos

Plus: Find out why more healthcare companies are moving into traditional office spaces.

Flatiron Building Set for Transformation into Luxury Condos

Plus: Find out why more healthcare companies are moving into traditional office spaces.

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Good morning. The Flatiron Building in NYC will be converted into residential apartments by the Brodsky Organization and Sorgente Group. Algorithms used by RealPage and Yardi Systems continue to face allegations of rent collusion among landlords. Meanwhile, more healthcare providers are moving into traditional office spaces.

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Brodsky Teams Up to Convert NYC Flatiron Building Into Apartments

Flatiron Building Being Converted to Residential

The Flatiron Building in Manhattan (Getty Images)

Following a recent auction, NYC's iconic Flatiron Building, vacant since 2019, may soon transition from offices to residential apartments pending city approval.

History in the making: Built over 120 years ago, the Flatiron Building is one of New York City's most recognizable landmarks. Until the recent turn of events, the building's owners, including Jeff Gural's GFP Real Estate, Sorgente Group, ABS Partners, and investor Nathan Silverstein, struggled with deciding the future of the then-vacant office structure.

Auction drama: The indecision among the building's owners led to an auction in spring. This auction witnessed unexpected drama as an unknown investor, Jacob Garlick, won the bid at $190 million but failed to provide the necessary deposit. This mishap necessitated a second auction, with Gural’s group emerging victorious with a $161 million bid.

Conversion cost: The 255,000 KSF Flatiron Building, which has remained vacant since 2019, requires substantial renovations estimated at $100M for accelerated leasing. The Brodsky Organization, known for rehabbing buildings and developing condos, recently partnered with Avery Hall Investments for a 350-unit building in Gowanus and is also involved in the Pacific Park megaproject.

Needs approval, first: Before the conversion can proceed, approval from the Landmarks Preservation Commission is required. Marketing materials for the property indicate the possibility of a complete residential conversion or a mix of residential, office, or hotel use for the building's different sections.


End of an era: The Flatiron Building may very well be one of the most recognizable office landmarks in the country, making its conversion to residential symbolic, in a way. As plans progress and city approvals are obtained, the success of this groundbreaking venture will not only benefit the partners involved but also contribute to the preservation of the city's architectural heritage.


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  • Facing financial fears: Persistent inflation and potential losses in the CRE market are top concerns, according to a Federal Reserve survey.

  • For sale today: Gatsby Enterprises lists 800 Brickell Avenue, a 209 KSF office building with potential for an 80-story tower, for sale.

  • The neglected green opportunity: Congress is offering tax incentives for energy-efficient buildings, but few firms have taken advantage due to uncertainty and cost concerns.

  • From bad to worse: Nightingale Properties' Elie Schwartz faces a new lawsuit from JP Morgan (JPM), alleging he owes over $10M on a line of credit.

  • The Pickleball Kingdom: A former grocery store in Plano has been converted into the largest pickleball facility in Texas, with 15 indoor courts, a food cafe, and corporate event space.

  • Clearing the confusion: Dallas-based real estate firm Nanban Ventures is addressing fraud allegations by the SEC, cooperating and vowing to protect investors.

  • Transforming vacancies: Arlington, VA is battling a 22% office vacancy rate, prompting officials to launch a program transforming vacant offices into breweries, arcades, and farms.

  • Invited to do business: Invitation Homes (INVH) signed a deal with Starwood (STWD) to manage over 8,500 homes, amid limited inventory and expansion challenges.

  • Discounted delight: MacKenzie Capital Management offers Blackstone Real Estate Income Trust (BREIT) shareholders $9.27 per share, a 38% discount to net asset value.

  • Reaching new heights: Tishman Speyer has opened The Spiral, a 2.8 MSF office skyscraper in Manhattan, featuring terraces on every floor and various amenities.


Allegations Rise Against Firms Over Rent Manipulation Tactics

RealPage and Yardi continue to face allegations that their rent-pricing systems enable collusion among major apartment owners, reducing competition and leading to higher rents for tenants.

Impact of algo pricing: Landlords have increasingly used algorithmic pricing systems to determine rents. These systems automatically analyze vast amounts of data and provide precise directions for rent increases. Some landlords discovered that raising rents, even at the cost of higher vacancy rates, could result in higher profits. RealPage and Yardi are two prominent providers of such pricing systems.

Lawsuits and investigations: Two lawsuits, brought by tenants in federal courts, claim that RealPage and Yardi's rent-pricing systems enable an exchange of confidential pricing data among landlords, reducing competition and leading to increased rents. The US Justice Department is investigating RealPage's practices and is considering a potential enforcement action. The case is part of a broader effort by antitrust enforcers to look out for the interests of consumers.

Debate on pricing decisions: RealPage and Yardi defend their algorithmic pricing systems, stating that they analyze supply and demand to efficiently manage buildings, not solely to raise rents. They also claim that their systems consider factors like occupancy rates and navigate market fluctuations to maintain tenants and maximize profits. However, critics point to the lack of transparency in the algos and potential collusion among landlords.


To AI or not to AI? The allegations of rent-setting collusion facing RealPage and Yardi have prompted investigations by the Justice Department. While these companies defend their systems' aim to analyze market dynamics and efficiently manage buildings, the lack of transparency and potential sharing of confidential pricing data raises questions about the impact on competition and affordability.


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Medical Providers Adapt to Changing Healthcare Real Estate Market

The healthcare real estate sector is far from immune to today’s economic and staffing hurdles


The US healthcare real estate market is undergoing significant changes, with medical providers facing multiple challenges. Steve Brown, founder of Forte Real Estate Partners, highlights key trends in the sector.

Healthcare challenges: Higher interest rates and supply chain issues have made it difficult for healthcare providers to expand and build new facilities. Additionally, the staffing shortage caused by the pandemic is impacting the ability of medical providers ability to meet the demand for services. The bundling of these challenges has created a complex environment for healthcare real estate.

Emerging trends: Due to rising construction costs, healthcare providers are opting to move into existing traditional office spaces instead of building new facilities. This trend allows medical professionals to save costs and take advantage of lower rents in the current high-vacancy office market. However, finding suitable spaces that meet healthcare requirements, such as parking and easy patient access, is key.

Challenges of staying put: Remodeling existing spaces is an alternative for healthcare providers trying to avoid the costs of building new facilities. However, renovating comes with its own set of challenges, including disruption to ongoing operations and increased labor and material costs. Successful remodels require hiring talented architects and contractors who can be cost-effective.


Balancing risk and reward: Medical providers continue to face financial challenges and the need for facility upgrades. As they navigate staffing shortages and recovery from the pandemic, they must make strategic decisions about whether to move, renovate, or stay in existing outdated facilities. Finding the right balance between cost-effectiveness and creating a professional and functional space will be the key to success.


In 2023, average farm loan volumes have reversed for small and large US banks. From 2020 to 2022, small bank farm loan volumes kept going down, compared to pre-pandemic levels, but have shot up this year. Big banks did the exact opposite.

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