Eight years ago, as Superstorm Sandy ravaged the East Coast, those in real estate noted that a crane at one of the most coveted buildings in the city — One57 — was flapping precariously over Billionaires’ Row.
It became the shorthand image of that (now seemingly quaint) crisis.
It happened again last week, this time from a crane working down the block at JDS’ 111 West 57th Street, which had a cable snap and rain down debris on the hallowed corridor.
There’s a lot of reasons why we’re feeling a sense of deja vu this weekend.
For one thing we’re gearing up for an election. In two days, the perennially most-important-election-in-our-lifetime (which, actually, really, really feels that way this time) will take place. Some are greeting it with foreboding and gloom; others with passion and optimism. But it feels like we’ve been here before.
What will it mean for real estate? Actually, not very much, according to a Cushman & Wakefield report.
Gloom and room
While we can’t really weigh in on that C&W report, we will say this: Be it a Biden administration or a Trump second term, New York is going to need a long time to recover from 2020.
Exhibit 1: Givenchy and its parent company LVMH just paid a whopping $24.5 million to not finish their leaseat Jeff Sutton’s 747 Madison Avenue.
That’s how bad retail has gotten along Madison Avenue. It’s worth taking a $24.5 million hit and leaving in 2022, rather than waiting around until 2029.
Exhibit 2: While room rates have been spiraling down and vacancy rates exploding, there is a cold war between hotel owners and hotel workers that has been ongoing since COVID-19 struck. This can’t be good for an industry that has been closing hotels left and right.
Exhibit 3: Sublease space is exploding. According to a recent report by Savills, there is some nine million square feet of available sublease space in Manhattan. This will mean a lot of downward pressure on asking rents.
Exhibit 4: Coworking is still bloated and not fully operational.
Exhibit 4(a): This week, Knotel cut 20 people from its North American workforce.
However, one good thing that we will say about coworking: some of the gutsier, riskier ventures have decided to take a second look at their real estate and start treating their space much more carefully. This might have been a long time coming, but, as they say, better late than never.
Exhibit 5: Remember all that talk about gender equality in the workplace?
It’s still talk.
At least, that was the finding from CREW Network’s diversity report, which found that the proportion of women in commercial realty has been flat over the last 15 years, with women making up only nine percent of C-suite level executives (a modest increase from 2005), and that the number of senior- and vice president-level women had actually dropped from 27 to 22 percent.
Can we get some good news?
Manhattan saw its biggest retail lease of 2020!
Home Depot has taken 120,000 square feet at the soon-to-be-former Bed Bath & Beyond store at Gazit Horizons’ 410 East 61st Street.
And some have put real capital down on a recovery.
“We’ve put a lot of money to work since the pandemic hit — over $1 billion,” Starwood Capital Group’s Barry Sternlicht told Commercial Observer this week. “We’ve bought some CMBS securities, we’ve bought some bonds at a discount, stuff we’d be happy owning the assets if they defaulted. We took some stock positions in the pandemic, in stocks we thought were super cheap, and we continue to hold most of those positions because we know there will be a recovery one day.”
Your mouth to god’s ear, Barry.
There were two big hires last week that we learned about.
Deutsche Bank’s global head of real estate, Matt Borstein, jumped ship for Oak Hill Advisors as a partner. Bornstein had been at the German bank for 10 years. Deutsche’s Dino Paparelli, who had handled the bank’s European real estate portfolio, will step into Borstein’s role.
And Shah Alam was named president at Fairstead Management after a stint as a senior vice president at Related Companies.
See you next week!