Sunday Summary: The Big Cuomo Bombshell
Some of us cynics who have watched the career of Andrew Cuomo for a long time did not believe that the “New York Tough” governor would ever, ever, ever willingly cede power.
There was some precedent for this. Other governors and presidents (particularly in the last couple of years) have looked scandal squarely in the eye and responded to calls to resign with their own personal equivalent of: “I’d like to see you make me.”
Cuomo seemed like he was destined to fall into that category… until Tuesday when he announced he was leaving in two weeks.
In real estate, the reaction was largely positive.
“I think everybody’s breathing a sigh of relief today,” Jeff Gural, chairman of GFP Real Estate, told Commercial Observer the day of the resignation. “I agree with the governor that the state couldn’t function with an impeachment trial and all this other stuff. He did the right thing.”
The Real Estate Board of New York (which had been a little more muted in their criticism of Cuomo than others, calling for an “impeachment process” but not necessarily removal) also sounded reasonably pleased with the way things worked out.
“Governor Cuomo made the right decision and is doing what is best for the state and its residents,” said James Whelan, president of REBNY. “It is critical that we all stay focused on advancing New York’s economic recovery from the pandemic. We are committed to working with incoming Governor Kathy Hochul and all elected officials on efforts to ensure a strong and equitable recovery for all New Yorkers.”
Real estate could have reacted very differently; whatever else you can say about Cuomo, he did not lack for ambition when it came to his public works plans (Cuomo has spoken admiringly of Robert Moses and he always seemed to uncritically pitch himself as Moses’s rightful heir in that regard) and there could have been some justified worry that his successor would not be as warmly disposed to real estate interests.
However, none of that is to suggest that Cuomo’s ambitious programs are doomed.
Kathy Hochul, who will be the very first female governor of the State of New York, was not in Cuomo’s inner circle despite serving in the same administration (which she’s probably extremely relieved about) and only has a staff of about nine, as of this week. She will likely inherit a lot of Cuomo people. Moreover, there is still a lot of support for most of Cuomo’s favored projects.
The question is how they will be executed, and Cuomo’s departure also probably means that city officials (from the next mayor to the City Council) will very likely take on a much greater role in crafting state policy in regard to the city. We’ll see how that shakes out but nobody is shedding too many tears for the 56th governor of New York.
Cuomo isn’t the only mighty figure to have fallen
There was a time when Barneys was one of Manhattan’s giants, a capitalist palace where a sleek crocodile Fendi handbag could retail for more than $30,000 and its dressing-room mirrors alone could break through into pop culture. But it declared bankruptcy in 2019, and now its Seventh Avenue location is… a Halloween pop-up?
Now that’s scary. We learned this week that the Seventh Avenue outpost of Barneys New York in Chelsea is being turned into a Seasonal Halloween store. (It’s still pretty rough out there for retailers; ABC Carpet & Home is facing a takeover from its lender)
On the plus side you can get, like, waaay more costumes for $30,000 at Seasonal Halloween than fancy handbags.
Screw it, we’re pushing return to office to January
Among the more bullish actors in the last 18 months when it came to an eventual return to the office has been Facebook.
When the social media behemoth’s head of real estate spoke to CO back in June he said the company was committed to physical office space.
“Our workplaces are the heart of our culture and important to building connections,” said John Tenanes via email. “We’ll continue expanding as we grow, and our offices will thrive again once it’s safe to return.”
But did you catch that last part? The “safe to return” part? Because last week Facebook decided that the office won’t be safe to return to until at the earliest January of 2022.
We’ve been seeing a lot more firms revising their return-to-office plans. A few weeks ago everybody was going to be back by Labor Day. Now, in addition to vaccine mandates, we’re starting more and more to see that date being scrapped.
We’ve been keeping a running tab of everyone’s back-to-work plans that we invite you to check out.
On a happier note…
There were deals this week. Big deals!
The biggest was Blackstone (BX) because, well, Blackstone does everything. They purchased industrial REIT WPT for $3.1 billion. And remember back in June when they delved headfirst into single-family rentals for more than $6 billion? (SFR, incidentally, has been sucking up a lot of funding from CMBS lately.)
In the world of flex office, Cushman & Wakefield (CWK) and WeWork (WE) struck a $150 million partnership on co-working space. (WeWork is not sitting still during this pandemic; they also announced that they’re operating co-working spaces in Saks Fifth Avenue.)
In terms of leasing, Patagonia opened its first Brooklyn outpost in Williamsburg; at 34 East 51st Street in Midtown hedge fund Northwood Liquid Management and private equity firm Broad Sky Partners both took space. In Miami, Uber expanded its footprint at 3 MiamiCentral and in Washington, D.C., Swingers, the U.K.-based golf entertainment company, announced the opening of a second location at the Navy Yard.
Thor bought the Amazon-anchored Northeast Philadelphia Last Mile Transportation Portfolio for $27.5 million
In finance, Gazit refinanced its Home Depot-anchored property at 410 East 61st Street for $134.4 million.
And, in Surfside, the empty disaster site of Champlain Towers South just drew a $110 million bid.
One more happy note to leave you on: Despite everything going wrong in office today, one place has truly made the best of a bad situation and that place is One Vanderbilt.
Its rents and occupancy would be considered a smashing success during any period but given all the surrounding circumstances it seems doubly impressive.
And that has actually been the story with a lot of Class A office space. The pandemic didn’t hurt it nearly as much as one expected. Class B, on the other hand, has had a more difficult time reinventing itself. Check out CO’s dive into this topic.
See you next week!