Adam Neumann is Back to Selling Big Dreams With Little Cash Flow

Wednesday, May 7, 2025

• Cash Flow: Adam Neumann’s new startup Flow just raised another $100 million at a $2.5 billion valuation but can the company live up to this inflated valuation?

• Hunker down: EQR’s latest earnings call shows that low turnover might be a positive impact from the current economic uncertainty.

• Bargain shopper: Brookfield has amassed an impressive war chest for their goal of buying distressed properties at significant discounts.

• Multifamily outlook webinar: Join us May 20th to learn how data and tech are helping multifamily leaders adapt to tighter margins and rising renter demands. Sign up

Multifamily

Adam Neumann is Back to Selling Big Dreams With Little Cash Flow

Adam Neumann is back in the real estate spotlight with Flow, a venture aiming to redefine multifamily living through a blend of community-building and technology. Backed by a $350 million investment from Andreessen Horowitz, Flow has launched properties in Miami and Fort Lauderdale, boasting high occupancy rates. Neumann envisions Flow as more than just housing; it's about creating a sense of belonging, integrating amenities like wellness classes and co-working spaces to foster community among residents.

But, Flow’s $2.5 billion valuation looks wildly out of step with the numbers. Even assuming 500 stabilized units at premium rents of $3,500 a month, the total annual rent roll is about $21 million. If Flow earns a 7 percent cut through management or tech fees, that translates to just $1.5 million in revenue. By typical industry multiples, its operating value would land somewhere between $3 million and $15 million. The gap suggests the valuation is driven more by hype and Neumann’s brand than by actual performance.

Despite these concerns, Neumann remains optimistic, emphasizing lessons learned from his WeWork experience. Flow's expansion into international markets like Riyadh and ventures into media with The Flow Trip magazine indicate a broader strategy to build a lifestyle brand. As Flow continues to grow, the real estate industry watches closely to see if Neumann's vision can materialize into a sustainable and transformative model.

Overheard

Lower Turnover Might Be the Silver Lining of the Trade War

Residential real estate REIT EQR reported its first quarter earnings results this week. The company posted strong earnings, driven by the lowest tenant turnover rate in the company's 30-year history. Navigating uncertainty from tariffs was a central theme of the earnings call. “Like most market participants, we see a higher-than-usual level of uncertainty in the forward path of the economy given various recent governmental actions relating to tariffs and other matters,” EQR CEO Mark Parrell said. 

Low turnover might be the silver lining of all of the current economic uncertainty. With little clarity into how many industries will be able to survive with the addition of tariffs from most of our major trading partners, people are deciding to forgo major changes like moving apartments. “When there’s ambiguity, people tend to bunker down,” Chief Operating Officer Michael Manelis said.

Brookfield Is Going On a Distressed Building Shopping Spree

Brookfield Asset Management's successful $5.9 billion fundraising in the first quarter of 2025—bringing its total to $16 billion for its latest real estate fund—signals a shift in sentiment toward the distressed commercial real estate market. Like bargain hunters arriving at a clearance sale, institutional investors are stepping in as prices bottom out. With property values falling 20% to 40% from their peak, Brookfield is snapping up foreclosed assets and undervalued buildings, such as apartment complexes and warehouses, often for less than replacement cost. This flurry of activity suggests the worst may be over for a market battered by post-pandemic shifts, rising interest rates, and mounting loan defaults.

This surge comes amid a broader rebound in private-equity real estate investing, with total first-quarter fundraising across the sector jumping to $57.1 billion—up sharply from the year prior. Brookfield, now based in New York City, joins giants like Blackstone in seizing the moment as construction slows and investors brace for economic volatility, including new U.S. tariffs. Ironically, those same tariffs could benefit existing commercial properties by making new development more expensive. As Brookfield’s Chief Investment Officer, Lowell Baron, noted, “People in general are nervous and uncertain. That keeps competition away.”

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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