Sunday Summary: Back to the Office
Labor Day might be a time to remember the achievements of the labor and union movements in this country — which brought us little things like the 40-hour workweek and unemployment benefits — but many companies are using the holiday as the end of something many workers want to continue: full-time remote work.
Goldman Sachs (GS) will lift all COVID-19 protocols in its offices — including vaccine mandates and mask-wearing — after Labor Day, which many see as a less than gentle nudge for all staff to come in five days a week. Meanwhile, archnemesis JPMorgan Chase has not been so quietly pushing its employees to do the same, and Apple wants its workers to return at least three days a week after Labor Day.
Those might be the largest firms calling workers back in droves, but they’re far from alone as companies large and small have started calling employees back. All of this might feel like we jumped into a DeLorean with Doc Brown and went back in time to 2021, but employers apparently mean business this time.
But a five-day-a-week, full-scale return to the office might be as elusive as the location of Jimmy Hoffa’s grave as study after study finds people want a hybrid model and many are willing to quit over the loss of their home office.
Apple has faced numerous complaints from workers about its return to office edict, causing the tech giant to pull back on the number of days required, while Google employees have been angry over the company’s three-day-a-week policy even after they keep contracting COVID.
Landlords are expecting a much larger return of tenants this week but many have more realistic expectations, with Silverstein Properties CEO Marty Burger telling CNBC he anticipates most companies to return only three to four days a week.
Feel the pain
It might have been a quiet week — as many surely holed up in vacationland for one final summer weekend — but there were still plenty of reminders of the current state of the U.S. economy.
Female-focused coworking provider The Wing announced that it would shutter its remaining six locations permanently after not enough members visited the spaces. The company debuted in 2016 with much fanfare and came out strong with $100 million in fundraising.
However, the wheels started to fall off and the company faced allegations of mistreatment of staff and people of color, lawsuits over its women-only admittance policy, and nearly went bankrupt in 2020.
On the retail front, Bed Bath & Beyond announced it would close 150 stores nationwide and lay off about 20 percent of its corporate and supply chain workforce after the struggling company secured $500 million in new financing to right its ship. And that’s after it shuttered 37 stores in February.
In other retail news, Urban Outfitters subsidiary Free People couldn’t break free of its bills as a judge ruled it will have to pay Delshah Capital $13 million in skipped rent for its 58-60 Ninth Avenue storefront.
And in a tale turning into a long and winding saga fit for a Bruce Springsteen song, the long-awaited Gateway tunnel project had its cost increase by $2 billion and the start of construction delayed a year.
The group shepherding the project — which calls for renovating an existing underground rail tunnel between New Jersey and New York and building a new one — blamed inflation for the bill increasing to $16.1 billion and has been seeking additional federal funding.
Labor Day deals
There was some good news last week as the deals kept flowing.
Luxury retail contractor Michilli and fashion designer PatBO each took 7,000 square feet at 126 Fifth Avenue; custom embroiderer Penn & Fletcher grabbed 3,400 square feet at 309 West 36th Street; and four tenants signed leases for a total of 21,000 square feet at 20 West 55th Street. And, in news sure to please bibliophiles, book seller McNally Jackson secured a 7,000-square-foot space at 1 Rockefeller Plaza for its fifth store, set to open in the winter.
But New York couldn’t hold a candle to the Sunshine State lease-wise. Newspaper the Sun Sentinel renewed the lease for its 290,503-square-foot printing plant in Deerfield Beach, Fla.; the State of Florida Department of Revenue inked a deal to relocate to 28,610 square feet within Doral; a Sports & Social bar will open a 20,000-square-foot Miami location; kid clothier Carter’s and The Great Greek Mediterranean Grill took a combined 7,142 square feet in a Boca Raton shopping plaza; and wine bar The Blind Monk will debut a 2,209-square-foot West Palm Beach outpost.
Meanwhile, in the equally sunny (but with far less alligators) Los Angeles, Hudson Pacific Properties acquired soundstage and production services firm Quixote Studios for $360 million, and BLT Enterprises bought the North American headquarters of South Korean video game developer Nexon for $27.3 million.
Don’t get too jealous, New York. The Big Apple had some major financing agreements this past week.
The Vanbarton Group landed $272.5 million in construction financing for its new office-to-residential conversion project at 160 Water Street; RXR secured a $260 million refinancing of 75 Rockefeller Plaza; a joint venture between Dynamic Star, Namdar Realty Group and Gorjian Acquisition sealed $70 million to refinance its planned mixed-use development in the Bronx; and First Elite Management got a $31.5 million construction loan for its condo development in Long Island City, Queens.
Long reads for the long weekend
What better way to drown out your family’s infighting during Labor Day barbeques than digging into some of Commercial Observer’s recent features.
Learn about how, even in the wake of politicians decrying ESG as part of a “woke agenda,” real estate has stayed the course in its efforts to make its buildings greener and its workforces more diverse. Or how Adam Neumann’s new, loosely defined startup could actually solve at least one housing problem, if it manages to live up to its billion-dollar hype. If not, we’re sure Jared Leto can’t wait to bust out his Israeli accent again.
Finally, read about how real estate power lawyer Terri Adler came from out West to launch a career in New York City, starting with what might be a record for the shortest job interview ever.
Until next time, solidarity forever!