?? A year of cost-cutting for two top brokerages; SL Green president to step down … and more

Here’s THE RUNDOWN:??

?? Compass and Anywhere Real Estate have been in cost-cutting mode for the last year. Both firms have had to strike a difficult balance of reducing expenses without harming revenue. Now it’s time for a progress report.

?? Andrew Mathias’s 25 year run as president of SL Green, New York’s biggest office landlord, will end this year. Meanwhile SL Green’s trophy asset, One Vanderbilt, is hosting a leasing gallery for a project that could become its competition – an RXR office tower being built across the street.

?? Everyone knows that America is in the midst of a housing supply crisis. So how is it that there are more than 5 million empty homes across the country? The answer is complicated.

?? Former Google CEO Eric Schmidt has an expensive hobby: buying homes in Miami Beach. Last month, Schmidt purchased two adjacent homes on Sunset Island II for a combined $63 million. But Schmidt isn’t new to the island – he already owned three homes there.

?? Fitch Ratings downgraded WeWork’s credit rating following news that the coworking firm skipped $95 million worth of debt payments, taking its rating from CC to C. The rating reflects the likelihood that WeWork will repay its $1.4 billion debt.

?? While most of LA’s office market heads downward with the rest of the nation, Century City has emerged, as one broker called it, as “the best office market in the country.”

THE DETAILS:

?? Here’s where Compass, Anywhere stand after year of cost-cutting

Compass and Anywhere Real Estate have had to walk a tightrope over the last year, as the firms slashed hundreds of millions in costs while fighting to maintain revenues. The effort has been successful… kind of. Compass reduced expenses by nearly a quarter, while Anywhere trimmed them by 22 percent. Both firms cut staff while actually adding agents throughout the year. Anywhere’s agent count is up by a whopping 10,000. Compass’ fell earlier in the year, but recovered thanks in part to a few recent acquisitions. But adding agents isn’t always enough to overcome a lagging market. And, for these two firms, it shows.

?? SL Green president Mathias steps down after 25 years

After 25 years at the helm of the biggest office landlord in New York, Andrew Mathias is stepping down as president of SL Green. Mathias will vacate the role at the end of the year, when his contract is up. But he’s staying on as a member of the board of directors and as an advisor to CEO Marc Holliday.

It hasn’t been the easiest time recently for SL Green, given the firm’s overwhelming exposure to the office market. But one bright spot has been One Vanderbilt. SL Green’s Midtown tower is the epitome of success, with occupancy sitting proudly at 99 percent. One new tenant is SL Green’s competitor RXR, which is running a leasing gallery for its own planned office tower. Scott Rechler’s firm is building a 1,575-foot high office building at 175 Park Avenue, just one block away from One Vandy.

?? Five million homes vacant while US grapples with housing shortage

The real estate market is full of paradoxes. Here’s a gloomy one: there’s a housing shortage in the US, yet more than five million homes across the country are sitting empty. How is that possible? First, over a quarter of those homes are empty because they are available for rent. Second, 17 percent are only used part-time, often because they’re the owners’ second homes. A few hundred thousand need repairs or renovations. Still, the data paints a bleak picture of the housing market, where economists have long pointed out that the problem is on the supply side of the equation. They aren’t wrong. But, while the solution is obvious (build more homes), it isn’t always easy.

?? Tech billionaire Eric Schmidt is buying up waterfront homes in Miami Beach

Billionaires have always loved South Florida real estate. Hedge funder Ken Griffin and the Bezos family have both made splashy purchases in recent years as they built luxury portfolios in the region. But Ex-Google CEO Eric Schmidt has amassed an impressive portfolio of his own, with an obvious preference for a single Miami Beach locale. Schmidt owns five homes — with a cumulative cost of over $110 million — on Sunset Island II, a large man-made island that’s part of Miami Beach. He also owns two more homes across the water on Sunset Island I. And that’s not the end of Schmidt’s investment in the area. He’s also working on an office project just down the street.

?? WeWork downgraded after skipping $95M in payments

Earlier this month, WeWork announced that it would be skipping $95 million of debt payments. Investors didn’t respond kindly to the news, with the firm’s stock plummeting 24 percent the day after the announcement. Now, Fitch Ratings has downgraded its credit rating, officially labeling the likelihood that WeWork will default on $1.4 billion in outstanding debt. The good news? The credit rating can’t dip much further. It’s currently at a C. The only lower ratings are RD (restricted default) and D (default).

?? How Century City became “the best office market in the country”

The average LA office building is asking $3.86 per square foot per month. In Century City, that number is as high as $12. The neighborhood has thrived this year while the rest of the region’s office stock struggles. Rents are on the rise, and vacancy is sitting comfortably at about 16 percent, 10 percentage points better than the rest of the city. What’s the secret to the success? Low crime and close proximity to luxury housing have played a key role. Now, investors are looking to enter the market, but Century City’s office owners aren’t keen to let them in.

THE CLOSE:?

What’s next for the two cost-cutting resi giants? Did they set themselves up for success by maintaining agent headcount? Or did they pave the way for low-commission brokerages to take over? Keep reading TheRealDeal.com to find out.?