The ex-presidential candidate getting into sustainable real estate

Tom Steyer is again putting his money where his mouth is.

The 2020 presidential candidate, climate evangelist and California political bankroller launched a new real estate “investment strategy” this month under the umbrella of his investment firm, Galvanize Climate Solutions.

He’s planning to buy and retrofit multifamily housing, industrial buildings, student housing and self-storage units, and has hired Goldman Sachs real estate veteran Joe Sumberg to oversee the strategy.

This interview has been edited for length and clarity.

You’re in San Francisco, where the downtown is not doing great. Is this a good time to get into commercial real estate?

We’re going to be doing real estate, but that doesn’t mean we’re going to be doing office buildings. That could include multi-family. That can include student housing, that can include industrial.

Obviously, if you live in San Francisco, because I think we’re sort of the eye of the storm, there’s a real question about not whether there’s a need for commercial real estate, but how much of a need is there for commercial real estate in terms of square feet.

And obviously in markets where there is as much demand as there is supply, then a whole bunch of things happen, including when vacancies go up, and that means rents go down and all kinds of valuation issues come into play. It’s not trivial to take a big office building and, okay, if it’s not going to be an office building, what the heck is it going to be?

How are you going to make money at this? What are the risks and what are the returns that you’re expecting?

Real estate is a huge investment area. And within that we believe that this strategy of actually doing sustainable real estate is something which is going to have higher returns that have a huge tailwind to it. We believe that the climate response is a gigantic investable area. We’re dedicated to climate response, but we also believe that it will lead to higher returns because it has to happen and there’s a huge demand for it.

You’re planning to focus on the Pacific Northwest, Colorado, California, Arizona and Texas. What’s driving that: policy, high real-estate values, exposure to climate vulnerabilities?

Econ 101: Location, location, location. You want to be in places that have the characteristics of a positive market to be in. Part of that is just regular old real estate. And part of it is that we want to be in places where we’re going to be able to put this through in a way so that we make sure that it adds to the returns.

When Joe’s talking about it, he’s looking at places where we can make good real estate investments and dramatically reduce carbon footprints and have better returns as a result.

Are you counting on the Inflation Reduction Act for anything?

We have people who are policy

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Millions of real estate documents to be amended in California county

Sonoma County’s recorder’s office has confirmed that millions of its real estate documents contain racial covenants meant to restrict people of color from owning property, and the county is now taking steps to rectify this.

California has a deep history of redlining, a racist practice dating back to the 1930s that prevented anyone who wasn’t white from living or purchasing property in certain neighborhoods. In Sonoma County, these practices involve including racially restrictive language in real estate documents.

“For example, there are a lot of properties that are restricted to only those of Caucasian descent,” said Deva Marie Proto, Sonoma County’s clerk-recorder-assessor.

Proto said that the recorder’s office is searching for an outside vendor to identify keywords and phrases in documents that may indicate the presence of racially restrictive covenants so that those covenants can be redacted. Some keywords include “Caucasian,” “African,” “Asiatic” and “Mongolian,” she said.

The racial covenants in places like Sonoma County differed from redlining practices in other parts of the Bay Area, which more often involved literal lines being drawn on government maps indicating which neighborhoods were “undesirable” and therefore off-limits to mortgage lenders and insurance providers.

“Racial covenants were even more specific than that and were written into the deeds of specific properties and sometimes entire developments to prevent the sale of those properties to certain groups,” said Holden Weisman, senior director for economic equity at the Greenlining Institute, an Oakland -based nonprofit that focuses on racial and economic equity in the Bay Area.

The racial covenants being identified in Sonoma County usually existed in whiter and wealthier areas, Weisman said. Even though they differ from the practice of outlining “undesirable” areas on a map, they still fit within the broader definition of redlining as the systematic practice of excluding communities of color from economic opportunities based on race.

“One big distinction that I’ll draw between them is that these covenants are generally found in what we would see as higher-opportunity, higher-income, more white areas now, because those were the areas that worked trying to exclude communities of color and other groups from entering those communities,” Weisman said.

The use of racially restrictive covenants was deemed unenforceable by the Supreme Court in 1948 and made illegal through the Fair Housing Act of 1968. However, the long-term effects of their use — and the use of redlining practices in general — are still felt across the state.

“We are seeing the lasting effects of these practices in terms of health disparities, in terms of the racial wealth gap that persists, in terms of environmental factors that different communities face, and in terms of just the general quality of life that different communities have access to. And that is tied directly back to both redlining and to these kinds of practices, like racial covenants,” Weisman said.

In 2021, Assembly Bill 1466 passed in California, which created a process for local recorders to identify and redact racially restrictive language within real estate documents.

So far, Sonoma County is

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Blackstone’s Real Estate Co-Head Reveals How It Will Spend New $30B Fund

Blackstone has just raised the biggest real estate fund in history. But amid the most volatile market in a generation, the big question is just how and when the world’s largest alternative asset manager will spend $30B of equity.

Blackstone Global co-Head of Real Estate Kathleen McCarthy told Bisnow where the new fund will be putting its money, and even more interestingly, where it won’t be following the final close of Blackstone Real Estate Partners X — the largest fund ever raised, not only in real estate but in private equity writ large.

She also explained why the current volatility is different to the post-Lehman crisis, but will still offer up great deals, outlining how the company will structure its giant portfolio to avoid becoming prey rather than predator when the market does turn.


Courtesy of Blackstone

Blackstone’s Kathleen McCarthy

“We made a huge pivot in our business,” away from US traditional office assets, toward industrial, rental housing, data centers and life sciences, with hotels holding a place in the firm’s heart, McCarthy said.

“Those sectors were 3{b5e4caabb46945dac267f6fa1789e0b2b1831cce91f79b27f72a0de22e4bb018} of our portfolio a dozen years ago, now they’re more than 80{b5e4caabb46945dac267f6fa1789e0b2b1831cce91f79b27f72a0de22e4bb018}. We’ve got that right, and that has allowed us to perform in a choppy environment, but [it has] also given us so much data to go on the offensive now in those sectors where we shine the brightest.”

Blackstone is a bellwether for the industry as the manager with the largest portfolio in real estate — $326B at the end of 2022. It got there by making large profits on huge deals during and after the 2008 financial crisis, so how it spends its latest opportunity fund in the most significant period of disruption since then will be closely watched by the market.

McCarthy told Bisnow where the new fund will be putting its money and where it will hold it back, namely traditional offices, and why the current volatility is different from the post-Lehman Brothers crisis, but will still offer up enticing deals.

“We’re starting to see interesting opportunities where you have willing sellers, what I’d call motivated sellers,” McCarthy said.

“Real estate is being painted with a pretty broad brush as if everything is the same, but the sectors we’re focusing on are actually in good shape. We’re starting to see deals where the assets themselves tend to be high-quality, we can build conviction around them. But the seller needs liquidity, and these are the most salable assets in their portfolio.”

Blackstone has been sitting on $24B of its $30B haul since the middle of last year. As of the end of 2022, it had only spent $674M of that, its annual report showed. Like everyone else in the market, the company has been waiting for the shrinkage of the gap between what sellers think an asset was worth yesterday and what buyers think it will be worth tomorrow.

That moment is coming, McCarthy said, as owners increasingly need capital to complete business plans and developments, or to

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How to Negotiate Price Down by Six Figures

  • Ryan Rogers says home buyers can take advantage of the current real estate market.
  • High interest rates have impacted home prices, allowing buyers more negotiating room.
  • Rogers recommends looking for properties that have been on the market for more than 30 days.

US mortgage rates have been on a gradual downtrend since early March, hitting an eight-week low on Monday. The 30-year fixed rate averaged about 6.62{b5e4caabb46945dac267f6fa1789e0b2b1831cce91f79b27f72a0de22e4bb018} on Wednesday, down from peaks of above 7{b5e4caabb46945dac267f6fa1789e0b2b1831cce91f79b27f72a0de22e4bb018} during the last quarter of 2022.

With rates still relatively elevated, many would-be home buyers believe that they’re at a disadvantage. But nothing could be farther from the truth, according to Ryan Rogers, a 23-year residential real estate agent with Douglas Elliman in Austin, Texas.

It’s sellers who are taking the hits, he said. Specifically, those who haven’t adjusted to the new normal and still hold unrealistic expectations for what they think their home is valued at. Since the start of the year, he has noticed an increase of properties that have been sitting on the market for 30 to 60 days. This made it easier to negotiate a better deal, he added.

“We’re seeing a lot of repricing and when you look at what’s currently on the market and what’s sold in the last 30 to 60 days in a specific neighborhood, most of the time, I’m noticing in our specific market, probably somewhere between six to as high as a 10{b5e4caabb46945dac267f6fa1789e0b2b1831cce91f79b27f72a0de22e4bb018} sale-price reduction from the price which they started to the price in which it closed,” Rogers said.

For example, a single-family three-bedroom, two-bathroom home in Austin, Texas had been on the market for about 90 days after it was initially listed for $779,000. The seller eventually reduced it to $725,000, Rogers said. But that was still too high. By the time he closed at home for his clients in January 2023, it had sold for $650,000, a $129,000 difference, he noted.

The number-one factor that made this steep price drop possible was that it had been on the market for three months, he said. The second factor was that they made an all-cash offer which could be closed quickly. Finally, he had to educate the listing agent on why the price was too high relative to the neighborhood comps, something Rogers says he has been doing a lot more recently.

He added that he’s going as far as requesting additional items like furniture. If it’s a waterfront property, he’ll request the boat docks and other recreational items, which wasn’t possible only a few months ago, he noted.

Taking the advantages

As early as seven to eight months ago, buyers were bidding 10 to 15{b5e4caabb46945dac267f6fa1789e0b2b1831cce91f79b27f72a0de22e4bb018} above the ask to secure a property, he noted. For example, a list price of $500,000 would be sold for $575,000. Today, that same house could be going for $490,000 or 480,000. So yes, the interest rate is going to be higher, but when you look at the payment difference, it’s not a huge delta, he added.


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Real-Estate Agents Face a Reckoning As Housing Market, Home Sales Slow

When Chrystina Arnold closed her first sale as a real-estate agent in December, she hoped it would provide a springboard to more deals and the start of a promising career. But almost four months later, Arnold is still trying to close a second sale.

Arnold, who lives in Port Huron, Michigan, paid $89 in October 2021 for a self-paced online course to become a real-estate agent. But by the time she got her license, in June, the typical mortgage rate had nearly doubled, leading to a dramatic slowdown in buying activity.

That drop-off has made the past year a struggle, Arnold told me. The first service she enlisted to help her find clients scammed her out of $600, and that December deal didn’t provide the financial windfall she needed. Even though Arnold represented both the buyer and the seller, the $57,000 sale netted her only a $2,300 commission — hardly enough to cover the various fees she pays to her brokerage, the National Association of Realtors, the company that sends her leads, and the multiple-listing service, a database where she can see homes for sale in her area. She’s occasionally worked at a bar or delivered pizzas to supplement her fiancé’s income and support her 6-year-old son. Despite the setbacks, she’s not giving up hope yet.

“I love my job. I love the flexibility of it,” Arnold told me. “The only thing I don’t like is the financial insecurity that comes with it.” 

Though she remains optimistic, Arnold knows the odds are not in her favor — agents with less than two years of experience earned a median gross income of just $8,800 in 2021, research from the National Association of Realtors found. But daunting statistics like that didn’t stop a wave of hopeful dealmakers from testing the waters earlier in the pandemic, when booming home prices promised hefty commission checks. The number of Realtors grew by more than 156,000 in the combined years of 2020 and 2021, according to the NAR, and peaked at a record high of 1.6 million in October. 

As the pandemic’s homebuying craze now seems like a distant memory, the slowdown in sales has forced a reckoning among real-estate agents who must decide whether the shrinking returns are worth the thousands of dollars and countless hours they’re pouring into their businesses. The challenges are most pronounced for newer agents who are still building up their networks, face fierce competition from their veteran counterparts, and haven’t yet weathered a downturn such as this one.

The spring homebuying season, when sales typically pick up and continue rising through the peak summer months, will be a crucial test for agents of all experience levels. A rising tide is no longer lifting all boats, and the industry is bracing to find out who’s in it for the long haul.

‘A low barrier to entry but a high barrier to success’

Jessica Reinhardt has seen this before. 

A second-generation Realtor, she’s watched plenty of people come and go from the

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