“I’m extremely proud of the team for a true team effort. Raising this order of magnitude of capital in a very difficult capital raising market was a feat,” de Haan told CO. “But the pullback from the banking system, and this interest in private credit, is the story of the day.”

“We are facing this cascade of market opportunity, lending opportunity, because the demand for commercial real estate debt is extraordinarily high,” he added. 

Specializing in deploying bridge credit and equity into troubled capital stacks, ACORE has originated approximately $40 billion since 2015. Aside from funding acquisitions across asset classes, the firm specializes in refinancings and funding the purchase of performing loans being sold at discount by traditional lenders in need of liquidity. 

“ACORE is at the forefront of the tip of the spear of being a financier of that entire ecosystem, and that’s very attractive for a lot of people,” said de Haan. “But you can’t get there if you don’t have the team and you can’t get there if you don’t have the track record.”  

The $1.4 billion fundraise includes a combination of repeat investors and new clients, according to de Haan, who was unable to name specific clients and investors, but said the firm received capital commitments from a mix of sovereign wealth funds, family offices, U.S. pension plans, endowments and insurance companies. 

The firm’s Credit Partners II fund was nearly three times bigger than its Credit Partners I fund which closed June 2019 with $556 million in capital commitments. 

“By virtue of that it required re-ups of existing investors, and they like what we do, they like our market position, they like our reporting standards, they like our institutional quality asset management,” said de Haan. “There was a larger percentage of new investors just by virtue of the sheer size of the fund and those investors came from various places from around the globe.” 

PERE reported that U.S. pension fund investors in the fund include New Mexico State Investment Council, Virginia Retirement System, West Virginia Investment Management Board, and Los Angeles Water and Power Employees Retirement Plan. 

De Haan believes that pension plans have become increasingly attracted to investing in real estate private credit due to the higher yield rates that private debt investments are able to generate in the current CRE marketplace. 

“Those pension plans are seeking safety, they’re seeking cash-on-cash returns, and whether it’s an up market or a down market, predictability of cash flow is a big deal to them,” he said. “That’s clear from the flows and certainly our investor base.” 

De Haan added that the new fund will primarily target investments in real estate projects that are in the top quartile of markets and existing business plans, but are besieged by bad capital structures. He noted that 2021 and 2022 saw the highest origination volume in the history of American finance, but many of those loans were granted as floating rate debt carrying two-year interest rate caps that are now expiring. Not surprisingly, the changing interest rate landscape has scuttled the assumptions of many of those business plans. 

“Their cost of capital and the loan is coming due, it needs to be refinanced in one way, shape or form, and we will certainly be there to refinance those situations,” he said, noting that the firm will first look at multifamily, industrial, and hospitality assets. “We are also there to provide mezzanine capital to help bridge some of these business plans to the other side, and the bridge capital will be more expensive.” 

Brian Pascus can be reached at bpascus@commercialobserver.com 

Asking rents on the base floors of the 15-story converted factory range from $65 to $76 per square foot, according to Alyssa Zahler, who represented Two Trees in-house with Jarad Winter.

Celebrity hairstylist Sarah Potempa dreamed up the patented design for the Beachwaver iron and teamed up with her sisters Erin Potempa-Wall and Emily Potempa to found the company in 2010, according to its website.

Beachwaver has steadily amassed more space at its Waukegan, Ill., headquarters and quality control center, signing on to expand its space to 43,036 square feet in 2022. Now, it will move at least part of its operation to the Williamsburg waterfront.

“We’re thrilled to have found a curated office space perfect for our team,” Sarah Potempa said in a statement. 

The Williamsburg outpost will be a blend of office and studio space, Potempa added. She said the historic setting “aligned with our team’s creative aspirations.” 

It’s unclear if Beachwaver will also look for industrial space on the East Coast.

Colliers (CIGI)’ Robert Gallucci arranged the deal for Beachwaver and did not immediately respond to a request for comment.

Aside from Beachwaver, Two Trees also recently signed three other deals at the Kent Avenue landmarked property, which has begun a new chapter as an office building after the former sugar factory sat vacant for decades. 

The other newcomers include visual commerce startup Eko, which signed on for 3,191 square feet; digital marketplace company Whop, which leased 9,554 square feet; and event venue development firm Skylight, which grabbed 2,631 square feet.

Gym chain Equinox also inked a deal last fall to open a new location at the 460,000-square-foot property, as Commercial Observer previously reported.

Abigail Nehring can be reached at anehring@commercialobserver.com.

San Francisco-based Swig acquired the 12-story, 216,000-square-foot tower in late 2011 for $38.8 million, or roughly 47 percent more than what it got for the same property nearly 15 years later. It’s also the lowest price paid per square foot for any office tower in Downtown L.A. since the COVID-19 pandemic began four years ago, per TRD.

JLL (JLL) began marketing the property in November, pitching it as eligible for residential or hotel conversion, according to TRD, citing JLL marketing materials at the time. JLL has since removed the listing from its website.

Shomof has experience with such conversion projects — in 2015 he purchased an abandoned 14-story office tower in L.A.’s Panorama City for $12.5 million, and reopened it five years later with nearly 200 units. 

Swig, Shomof and JLL did not immediately respond to requests for comment.

Total office availability rate in L.A. remains at record highs, rising to over 27 percent in the first quarter of this year, according to a quarterly market report. Downtown L.A.’s rate was close to 30 percent after the first three months of the year.

Nick Trombola can be reached at ntrombola@commercialobserver.com.

Justin Landau, co-CEO and co-founder of El Car Wash, said the investment wave has brought a new level of professionalism to the space — which has some negative connotations in pop culture. 

“There’s this misperception from ‘Breaking Bad,’” Landau said.

The crime series’ star used a car wash to launder drug money, but Landau noted that El Car Wash accepts only credit card payments — so there are no stacks of cash to stash in briefcases. But El Car Wash is green in another way — the tunnel washes reclaim and recycle most of the water used.

El Car Wash completed a recapitalization with Warburg Pincus in 2022. Landau, who co-founded the chain with Geoffrey Karas, spoke with Commercial Observer about his business strategy. 

This interview has been edited for length and clarity.

Commercial Observer: In April, you paid $6.5 million for a site in Pembroke Pines. Is that a typical price for a location?

Justin Landau: Yes and no. That was a turnkey site — land plus building. If we have a much bigger property, we might spend a lot more on it. The typical price range is $6 million to $10 million.

Why has private equity gotten so interested in car washes all of a sudden?

It’s been a trend now for five to seven years. The membership model allows for operators to better serve our customer base. The value of our enterprise went up in the same way that the value of gyms went up when gym owners changed to selling memberships from charging to visit one time. You have a much more sticky customer base. You have a much more stable cash flow. Those factors led to private equity investing more.

There’s also a next generation of investors and operators coming in and thinking of this business in a different way. We’re really trying to service our customers, and car washes are just the service we happen to offer.

What’s your biggest challenge?

There’s so many. Our biggest challenge is hiring talent. Because we’re at the forefront of the industry — at least we think we are — we’re setting the bar. It’s not like we can hire from outside. We have to create our own training programs from the ground up. As simple as it is to say, “You go through the card reader, the gate opens, and your car comes out of the tunnel clean,” there’s probably 500 little processes that go into it. There’s mechanical issues with the car wash itself. There are also the micro-interactions with the staff. Did they greet you with a smile when they waved you in? Was their uniform looking right?

Second on the list is land that is of the right size, in an area we want to do business in, that can be permitted as a car wash and that is priced reasonably. We typically look for similar pieces of land to Chick-fil-A, Wawa and Racetrac.

In your new locations, there’s no store selling air fresheners and bottles of Coke. Why give up that revenue stream?

What we give up in not having conveniences, we make up in focusing on the customer experience. Customer satisfaction and retention is more important to us than trying to upsell small items.

Amid the building spree of car washes, there have been complaints — these locations are noisy, they bring traffic, they don’t generate many jobs. How do you respond?

We’re not drawing additional traffic, because it’s mostly drive-by traffic. Your customer base is typically people who live within three to five miles of your store, or it’s on the route of travel to work, shopping and picking up the kids. In Lantana, where there’s a residential neighborhood nearby, we spent an extra $250,000 on a blower system silencer. Our goal is to change how people think about car washes.

If you wash a car in your driveway, you use 100-plus gallons of water. There are probably some solvents in the product you’re using, and the runoff is going into the storm sewers. At our locations, we use 15 to 25 gallons of fresh water. We use reclaimed water for most of the process. It’s only at the very end, when you really need your car to be spotlessly clean, that we use fresh water. And we fully treat our wastewater before we deliver it to the sewer system.

Jeff Ostrowski can be reached at jostrowski@commercialobserver.com.

Two years ago, the Sunny Isles Beach-based developer, led by Gil Dezer, secured $40 million for the Bentley-branded project, also from City National Bank of Florida. The new financing, an accordion feature of the existing loan, brings the total debt amount to $65 million.

Since 2022, over 40 percent of units have sold, amounting to more than $550 million, according to Arthur Gallagher, chief investment officer at Dezer Development. Douglas Elliman is in charge of sales, with prices starting at $5.5 million. The sales center itself cost $10 million to build.

Construction got underway in February and is expected to be done in the fourth quarter of 2027. The 3-acre site was previously home to the Thunderbird Hotel, a five-story property that was built in 1955 and which the Dezer family had owned since 1996. 

Like Dezer’s previous car-branded condo project in Sunny Isles Beach, the Porsche Design Tower Miami, units at the Bentley Residences will have access to a car elevator, dubbed the Dezervator, allowing owners to bring their cars directly to their doors.

Julia Echikson can be reached at jechikson@commercialobserver.com. 

The 10,000-bed portfolio is spread across the U.S. but include properties near Auburn University, Arizona State University, Penn State, the University of Virginia and Virginia Tech, a source familiar with the transaction told Commercial Observer.

KKR’s new investment is being made via the firm’s KKR Real Estate Partners Americas III fund, and the transaction has an anticipated closing date of the third quarter. 

“Student housing is a sector that we have long-term conviction in,” Justin Pattner, head of real estate equity in the Americas for KKR, said in a statement. “We are pleased to be working with Blackstone to complete this transaction, which will add a diverse mix of high-quality properties to our portfolio.” 

Jacob Werner, co-head of Americas acquisitions for Blackstone Real Estate, gave the deal an A+, describing it as “an excellent outcome for BREIT’s investors, and demonstrates the strong demand for the high-quality assets in attractive markets that BREIT owns.” 

BREIT acquired the portfolio in June 2018 with joint venture partner Greystar Real Estate Partners for roughly $1.2 billion. At the time, the deal was executed in conjunction with Greystar’s purchase of Education Realty Trust — an owner, developer and manager of student housing — and the partners selected assets based on proximity to universities with strong enrollment growth, according to a release at the time. BREIT led the JV in a 95 percent/5 percent split, with the Greystar and Education Realty team managing the assets. 

When the transaction closes, that baton — err, diploma — will be passed to University Partners to oversee the portfolio instead, with the transaction bringing the Dallas-headquartered firm’s managed portfolio to $4 billion of property value across 25,000 beds. 

“Approximately half of the portfolio is in markets where we have existing operating experience, and this transaction will enable us to expand our presence into a number of attractive new markets,” Travis Roberts, CEO of University Partners, said in a statement. “We believe student housing in the top university markets will continue to benefit from strong enrollment growth and structural constraints on new supply.”

Blackstone’s commitment to the student housing sector is far from, ahem, “dorm-ant,” however. The firm continues to expand American Campus Communities, a BREIT portfolio company, which today is the largest student housing owner in the U.S. with 140,000 beds across 190 properties. 

School’s in!

Cathy Cunningham can be reached at ccunningham@commercialosberver.com. 

Washington, D.C., brought in almost $1 billion in office asset deals, which averaged $463 per square foot, and accounted for the highest dollar volume in the nation through March. PRP Real Estate’s acquisition of Market Square for $323 million propelled the market to the top. That would be an encouraging sign.However, the seller, Columbia Property Trust, purchased Market Square for $611 million in 2011, and Blackstone purchased a 49 percent stake at a $595 million valuation in 2015. 

Miami saw the second-most dollar volume at $207 million in office real estate transactions, while Los Angeles recorded just $131 million in sales in the first quarter, which is a 62 percent drop from last year.

Approximately 87.9 million square feet of office space is under construction nationally, although only 2.8 million square feet of that broke ground in 2024, which “indicates a massive drop-off in office development,” and a 40 percent drop in the past two years. The amount of space underway is expected to continue to decline.

“Falling office demand, increasing capital costs and tightening standards for construction loans converged to slow development,” CommercialEdge reported.

The nation’s life sciences hubs are responsible for a major share of the nation’s construction pipeline, and life sciences projects account for 27 percent of all office projects set to be delivered this year. As expected, the Boston area, the nation’s life sciences capital, has 13.9 million square feet underway, which makes up more than 15 percent of the national total space under construction. The San Francisco Bay Area, the second-largest life sciences market, has the second-largest office pipeline at 10.5 million square feet, “mostly driven by the life sciences sector.”

CommercialEdge previously projected nearly 22 million square feet of life sciences space would be completed in 2024, which is six times as much as in 2019. Last year, 7.9 million square feet of life sciences space was completed. Further, research & development space makes up another 4 million square feet this year underway, and the medical office sector accounts for a further 8.6 million square feet.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com. 

The Balsa 94, a bulk carrier headed for St. John, Canada, was the lucky contender to make the maiden voyage after the bridge collapse, guided through the waterway by two tug boats. Four other vessels were left stranded at the Port when the bridge collapsed, according to the AP.

Yet, the newly cleared channel is a temporary one, just 35 feet across compared to the 700 feet when the channel was fully operational. Pieces of the bridge are still blocking chunks of the 50-foot-deep waterway. 

The Port of Baltimore is one of the busiest ports in the nation, handling 52.3 million tons of international cargo, valued at some $81 billion, in 2023 alone, according to Maryland state data. It also regularly ranks first among all American ports in terms of car shipments, with 850,000 cars and light trucks handled last year. 

While the newly reopened channel is good news for maritime shipments, it remains a huge headache for trucking logistics and daily commuters.

The bridge, which spanned 1.6 miles across the Patapsco River, was used by about 31,000 vehicles per day, or well over 11 million per year, according to the Maryland Transportation Authority. Those drivers have two bad and one worse detour options: either pass through the Fort McHenry or Baltimore Harbor Tunnels, which already see respective averages of 116,000 and 77,000 vehicles per day, or circumvent the city altogether using the notoriously construction-laden Interstate 695 (Baltimore Beltway). 

A replacement bridge isn’t expected to be completed until 2030 at the earliest.

Nick Trombola can be reached at ntrombola@commercialobserver.com.

“Our ability to provide tenants with high-quality space and exceptional service make the building an attractive destination for companies seeking a home in the desirable Flatiron District,” Kate Hemmerdinger Goodman, co-president at ATCO, said in a statement.

Lee & Low wasn’t the only tenant putting ink to paper in the building.

Real estate law firm Goldstein, Rikon, Rikon & Levi signed a five-year renewal for its 4,409-square-foot space on the ninth floor, which it has occupied since 2014, the landlord said.

The firm, which was founded in 1923, has made a name for itself for handling eminent domain cases in the city and was named one of the top law firms in 2021 by New York magazine.

Meanwhile, Forefront Communications will remain in the 1,824-square-foot office it has occupied on the seventh floor since 2019 for at least three more years.

Robert Tunis, Kyle Berlinsky and Joseph Mangiacotti of Colliers (CIGI) negotiated on behalf of ATCO in the Lee & Low Books deal while the landlord had in-house representation. Colliers did not immediately respond to a request for comment.

Hemmerdinger Goodman represented ownership in-house for both renewals, and David Kahane of DAK Commercial Realty negotiated on behalf of Goldstein, Rikon, Rikon, & Levi. Kahane did not immediately respond to a request for comment.

Mark Hallum can be reached at mhallum@commercialobserver.com.

A residential conversion is perhaps the logical step forward for the beleaguered Financial District building, which occupies a full city block. The tower has sat half-empty since insurance giant AIG left its 800,000-square-foot office there in late 2021, according to TRD. 

Despite Rudin’s renovations of the building that same year, for which it acquired nearly $40 million in refinancing from PGIM at the time, the firm has struggled to find tenants large enough to fill the void. 

Representatives for Rudin and Bushburg did not immediately respond to requests for comment. 

Eastdil Secured’s Gary Phillips and Will Silverman brokered the deal, which was listed late last year. Phillips and Silverman declined to comment. The pair have worked with Rudin in the past on a similar deal, brokering Rudin’s $180 million sale of 55 Broad Street to Silverstein Properties and Metro Loft Management in 2022, also for a residential conversion.

Current tenants at 80 Pine Street include tuberculosis research nonprofit TB Alliance and injury law firm Elefterakis, Elefterakis & Panek, though Bushburg, led by CEO Joseph Hoffman, hopes to ride the office-to-resi wave kicked into overdrive by New York State’s recently passed budget, which includes incentives for such conversions. 

New York City Mayor Eric Adams, for his part, has also pushed for more residential conversions at a time when office vacancies in the Big Apple are at record highs. 

The city said there were 46 conversion projects in the pipeline as of earlier this year, according to the Office Conversion Accelerator program the mayor launched in August 2023. Those projects included GFP Real Estate, Metro Loft and Rockwood Capital’s $535.8 million facelift of 25 Water Street, Vanbarton Group’s $273 million renovation of 160 Water Street and The Moinian Group’s projects at 90 John Street and 17 Battery Place, all in the Financial District. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.

Asking rent in the building was $74 per square foot in a deal signed early last year, as CO previously reported.

“We are seeing strong leasing momentum along Third Avenue and interest in DurstReady leases,” Jonathan “Jody” Durst, president of the Durst Organization, said in a statement, referring to the brand name for the company’s pre-built spaces. DurstReady presents an attractive offering for a wide variety of tenants, providing a beautiful, fully move-in ready office in a sustainable LEED Gold, Class A building.” 

Durst handled the deal in-house via Thomas Bow, Ashlea Aaron and Bailey Caliban while Elite was represented by Haley Templeton, Adam Ardise, Stephen Bellwood, Lei-Lani Keelan and Rachel Rosenfeld of Cushman & Wakefield (CWK).

C&W did not immediately respond to a request for comment.

Also leasing in Durst’s pre-built space at 675 Third Avenue is Treo Asset Management, which took 2,246 square feet with representation from Jonathan Anapol and Todd Abrams of Prime Manhattan Realty. 

Three Line Capital Services will move into 2,134 square feet on the 19th floor as well, with James Cassidy of DHC Real Estate Services negotiating on its behalf.

Prime Manhattan Realty and DHC did not immediately respond to requests for comment.

Mark Hallum can be reached at mhallum@commercialobserver.com.