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Multifamily News Roundup – February 2020
More Reforms in New York
In the beginning of February, renters in New York City received news that they would no longer need to pay a broker’s fee. For those unfamiliar, the fee, typically about 15% of annual rent, forms the bulk of the income brokers in the city receive, and tenants generally pay the fee directly to brokers. The new ruling indicated that brokers could still collect a fee, albeit paid by landlords rather than tenants, causing panic and confusion, as the decision appeared to impact transactions immediately.
After the surprise for both those in the industry and prospective renters, real estate groups quickly announced that they would appeal the decision. Shortly after their announcement, justice Michael Mackey temporarily blocked the ruling, and as of early March the judge’s order remains in place. The state’s progressive legislature guarantees more reforms will come as 2020 continues—those with exposure to New York state and New York City’s multifamily markets should remain attentive.
Cushman & Wakefield Acquires Pinnacle Property Management
Cushman & Wakefield announced the acquisition of Pinnacle Property Management Services in mid-February. Before the acquisition, Pinnacle was the third largest independent property management company in the United States, with 169,000 units under management. Cushman’s purchase means they can provide more services to investors already using their brokerage arm, so capturing more revenue. It also makes Cushman a more formidable opponent for other brokers like CBRE and JLL, and means the possibility of growth through mergers has become more difficult as the list of potential targets shrinks.
Home Building Permits Surge
Numbers released in February indicate that due in part to low mortgage rates, applications to build new homes surged in January, while housing starts fell 3.6% to 1.567 million. For those disappointed by the first decrease in housing starts in four months, take comfort in the fact that the number of permits issued has not been so high for since 2007.
Other headlines from February
- WeWork has a new CEO, Sandeep Mathrani, formerly of Vornado
- Amazon founder Jeff Bezos has set the record for the most expensive sale of a single-family home in California history
- CoStar has expanded its holdings by purchasing software company RentPath