Sunday Summary: Dusting Ourselves Off?
By The Editors May 17, 2020 8:30 am
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It’s Sunday, and that means we can offer praise to the good lord: A big lease was signed!
Yes, Policygenius, an insurance purchasing startup, took 85,000 square feet at RXR’s 32 Old Slip in the Financial District. And it signals a major expansion for the firm which previously had less than half the square footage (31,000 square feet) at 50 West 23rd Street. Hallelujah!
Could this signal — dare we say — the first spring buddings of a return to normalcy? Well, there were mixed signals.
On the Positive Side…
Gov. Cuomo opened five out of 10 New York regions on Friday and said beaches would reopen the Friday before Memorial Day.
Plus, while return to normalcy seems a long way off, a lot of New York’s fine dining chefs have decided that they’re not going to wait around for the miracle to be presented to them like an amuse bouche on a silver platter. Steve Cuozzo spoke to some of the biggest names in fine dining: Eric Ripert, Shelly Fireman and Michael Lomonaco, all of whom are getting reopening, delivery and contingency plans ready.
And while subway ridership indicates that the MTA will have a long and winding road before it returns to normalcy, it looked like it took its first steps along that route this week.
In California, we saw that the fact that everyone is sitting on their couches watching Netflix has been a positive for L.A.’s office and studio stock. (Thank you, Joe Exotic!)
We even saw an interesting business initiative: It looks like Amazon is partnering with the magazine Vogue to launch a digital department store. (Wait a second … Bezos, what are you up to?)
On the Negative Side…
Sadly, there are probably too many negatives to count.
Remember when the March retail figures came back and they were the worst ever month-to-month drop on record with sales plummeting 8.7 percent? It turns out we didn’t know how good we had it. The April figures were twice as bad, with a 16.4 percent drop from March, with clothing stores taking it on the chin having a whopping 79 percent drop. (Wait a minute … Might this be the reason Bezos is making moves?!)
Another week went by and another 3 million names were added to the unemployment rolls, bringing the total to more than 36 million Americans.
And while New York is bullish on reopening the economy, it seems like Los Angeles has taken the opposite tack; despite the wonders it might have done for the streaming business, an executive from the L.A. County of Public Health announced on Tuesday that shelter-in-place orders are expected to be in effect until August, while the city has been cracking down on nonessential business openings.
Moreover, the ongoing crisis has ignited more and more ire from essential workers; the moves towards unionization and collective benefits hasn’t been this high in years, as CO reported this week.
Splitting the Difference
This leaves a lot of real estate professionals wondering what it all means. The big elephant in the room for many is the question of new construction, a topic CO examined in depth this week.
Who will plunk down premium rents for Class A office space in a recession which will likely dwarf the 2008 collapse? Especially when the white-collar firms that could afford new office space have proven to themselves during this period that office space is less critical to getting work done than previously believed?
On the other hand, nearly everybody is begging to be allowed a break from their beloved families.
Plus, while costs will no doubt be important, there are certain things that new construction can do that older stock can’t. Integrating the new technology that is no doubt going to become essential in the coming years will likely be a new construction feature.
We’re going to say an extra sabbath prayer that the optimists are right.
