America’s Office Slump Is Gutting City Budgets and Taxpayers Are Paying the Price

• No office, no taxes: Cities around the country are facing tax deficits due to the stalled office market.

• Experience luxury: A massive development is planned for Beverly Hills that will include retail, housing, and activity space.

• Acquisition awareness: The Financial Industry Regulatory Authority is looking into any possible insider trading activity prior to the Douglas Elliman acquisition of Anywhere Realty.

• Mulitfamily centralization webinar: Streamlined operations are helping apartment owners cut costs, reduce risks, and improve resident experiences. Sign up

Office

America’s Office Slump Is Gutting City Budgets and Taxpayers Are Paying the Price

City budgets across the country are being reshaped by falling office values, a reality that is forcing tough fiscal trade-offs. In New York, billions in assessed value have evaporated, translating into more than a billion dollars in lost tax revenue. While rising income taxes have so far kept the city afloat, budget officials admit the shift makes finances more volatile, leaving them more vulnerable to downturns.

Washington, D.C. and Philadelphia show the next stage of the challenge. With federal belt-tightening amplifying local office vacancies, D.C. is bracing for double-digit revenue declines and floating sales and gambling tax hikes to compensate. In Philadelphia, steeply discounted tower sales have spurred a wave of appeals, slashing official valuations. The city’s wage tax cushions the blow, but public schools and improvement districts that rely more heavily on property levies are already feeling the pinch.

Boston may face the sharpest reckoning. Property taxes account for more than 70 percent of its budget, and a joint study suggests office buildings could lose nearly half their value within five years. That would leave the city with a multibillion-dollar gap, pushing more of the burden onto homeowners. Proposals to raise commercial property taxes are stalled, and political appetite for deep cuts remains uncertain. The fight over who pays promises to define Boston’s fiscal and political future—and serve as a warning for other cities hoping discounted office sales or conversions will be enough to soften the blow.

Overheard

The $10 Billion Development Testing Demand for Experiential Real Estate

One Beverly Hills is a $10 billion, 17.5-acre redevelopment rising at the gateway to the city’s luxury corridor, led by Cain International and Oko Group. Anchored by Aman Beverly Hills—a 78-suite hotel with two branded residential towers—the project layers in roughly 200,000 square feet of designer retail and dining, plus 10 acres of botanical gardens and open space (about half publicly accessible). Construction began early last year and is targeting completion ahead of the 2028 Los Angeles Olympics; the Beverly Hilton on site is being renovated, and a separately owned Waldorf Astoria shares the campus.

The retail plan aims to relieve a severe space crunch in one of the nation’s priciest luxury markets. Rodeo Drive is 99% leased with average rents around $1,000 per square foot, trailing only New York’s top corridors. One Beverly Hills is expected to add up to 45 boutiques and restaurants; leasing is roughly 40% pre-committed, with tenants like Dolce & Gabbana (adding a second local store), Casa Tua Cucina, and Los Mochis. Brokers say the project gives brands a path into Beverly Hills or a chance to relocate for better parking and amenities while avoiding tourist congestion.

On the residential side, Aman-branded condos are being marketed from $20 million to over $40 million, far above recent Beverly Hills condo benchmarks; Cain says the first tower is nearing $1 billion in contracts and commitments. Residents will have access to a private Aman club with pricing expected to mirror New York (about a $200,000 initiation and $20,000 annual dues). The development emphasizes fire-resistant design and on-site water storage, with financing from JPMorgan Chase and Vici Properties and a total gross development value topping $10 billion.

One Beverly Hills underscores how mega-projects can still attract global capital by blending luxury residences, branded hospitality, and scarce high-street retail into self-contained lifestyle ecosystems. Developers are repositioning retail as an anchor use in mixed-use projects, using new inventory to satisfy unmet demand in top corridors. It’s also part of a larger trend toward experiential real estate, where places are designed as destinations in their own right. That trend spans from ultra-luxury enclaves like Beverly Hills to unconventional models such as surf-park anchored communities, where lifestyle amenities drive residential, hospitality, and retail value.

Regulators Turn Spotlight on Brokerage Merger Practices

The Financial Industry Regulatory Authority (FINRA) is scrutinizing trading activity surrounding Anywhere Real Estate’s failed bid for Douglas Elliman, asking for board minutes, communications with advisers, and details of stock trades ahead of the deal. The probe follows a 50% surge in Elliman’s share price on May 23, 2025, and highlights concerns around potential insider trading.

This raises the stakes on brokerage M&A, when consolidation gets messy, regulatory risk becomes a material consideration. As Compass moves to absorb Anywhere, and as rivals eye further consolidation, deals are not just about brand and agent networks—they’re about governance, disclosure, and how well firms manage internal windows of nonpublic information.

Going forward, brokerage consolidation will increasingly need to pass a regulatory litmus test, not just a strategic one. A misstep in disclosure or timing can derail transactions, spook markets, and introduce legal overhangs. Consolidation will continue in brokerage, particularly if transaction volume does not increase. But now any M&A activity will be put to the test for regulators looking for any trace of unfair practices.

Office-to-Residential Playbook

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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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