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WeWork's lease halt could slow NYC market; Forever 21 files for bankruptcy

Commercial real estate

* WeWork Cos. Inc.'s decision to stop signing new leases with landlords in a bid to cut costs amid a delayed IPO and management changes comes as "a fresh blow to New York City's already softening commercial real-estate market," according to The Wall Street Journal.

A spokesman for WeWork parent The We Co. said the company expects the rate of new lease signings to be slow over the next few quarters as the company targets more strategic growth, the publication reported. Some landlords have scrapped lease deal negotiations with WeWork, and some landlords are considering terminating existing leases with the coworking giant in cases where spending on capital improvements has not commenced, according to the Journal.

The publication noted that WeWork's fall from grace could further weigh down the city's office market, which is already under pressure amid a supply glut. Other office markets such as Chicago, Boston, Los Angeles and San Francisco could also be affected as landlords have been relying on WeWork to fill up excess space and attract startups. Citing CoStar Group data, the report noted that coworking firms have been responsible for more than 16.5% of office demand nationally since the beginning of 2017.

* Commercial Observer reported that WeWork has leased 362,197 square feet at 437 Madison Ave. in Manhattan, N.Y.'s Plaza District. The 40-story property is owned by the William Kaufman Organization, which carried out a $60 million repositioning of the 850,000-square-foot property. WeWork is slated to occupy the second through 11th floors, as well as its own entrance and space at the base of the property in 2021.

* Apparel retailer Forever 21 Inc., which has 800 stores worldwide, has filed for bankruptcy protection and plans to close a total of 350 stores, including up to 178 stores in the U.S., the Journal reported. Landlords Simon Property Group Inc. and Brookfield Property Partners LP had reportedly been in talks to acquire a stake in the distressed retailer.

* Washington, D.C.'s Watergate office building has been sold for the second time in less than three years, the Washington Business Journal reported. Rockwood Capital sold the 214,508-square-foot property at 2600 Virginia Ave. NW to an affiliate of Friedman Capital founder Brian Friedman for $101.5 million.

Rockwood had paid almost $75 million for the property in December 2016. The buyer plans to add amenities to the property, including a coworking space.

* Broadtree Residential Inc. said it acquired the 296-unit Aspire Perimeter multifamily apartment community in Sandy Springs, Ga., in the Atlanta metro area. The property comprises 11 residential buildings developed in 1996 and renovated from 2016 through 2018.

The Atlanta Business Chronicle reported, citing Fulton County property records, that the asset traded for $69.2 million and was sold by a partnership led by Lincoln Property Co.

* The Phoenix Business Journal reported that Lincoln Property is planning a $115 million speculative industrial project, dubbed Park303, in Glendale, Ariz., that will have a single 1.26 million-square-foot building or two buildings spanning 705,531 square feet and 488,995 square feet, respectively.

The project is slated to commence in January 2020 and is expected to be completed in the third quarter that year.

* The Design Review Board of Miami Beach, Fla., is slated to consider plans on Oct. 2 for a 22-story mixed-use tower in the North Beach Town Center district, the South Florida Business Journal reported. The Galbut family and Matis Cohen are planning a tower totaling 373,587 square feet with 283 multifamily units, 12,511 square feet of retail/restaurant space and 269 parking spaces. The multifamily units would include 125 micro-units.

Two existing buildings on the 1.73-acre site would be demolished, while a 9,120-square-foot building leased to the U.S. Post Office would remain, the report noted.

* Kansas Public Employees Retirement System is placing its core real estate investment mandate on hold for the remainder of 2019, IPE Real Assets reported, citing a board meeting document. The pension fund said its core real estate assets, especially shopping malls, were being repriced in the market, according to the report. The fund has invested $130 million of its $200 million real estate allocation for 2019.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng lost 0.33% to 25,954.81, while the Nikkei 225 dropped 0.77% to 21,878.90.

In Europe, around midday, the FTSE 100 slipped 0.25% to 7,407.99, and the Euronext 100 shed 0.06% to 1,092.48.

On the macro front

The Chicago PMI and the Dallas Fed manufacturing survey are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

Now featured on S&P Global Market Intelligence

WeWork slipping into 'negative spiral' as IPO hopes dim: Academics said the spate of negative events around WeWork's delayed initial public offering has damaged trust among market participants, with negative consequences for the coworking giant's day-to-day operations.

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