Sunday Summary: It’s Unofficially Fall. Let’s Get Serious.
In the waning days of August, a lot of people in the real estate industry could tell themselves one thing:
It’ll get better after Labor Day.
The return-to-work rate was still pretty meh in August, but once the bosses stopped going out to the Hamptons every weekend, once kids were back in school five days a week, once the COVID variants died down, normalcy would return.
And, yes, some have gotten the memo. Bloomberg had reporters on the 5:38 a.m. train from Summit, N.J., on Tuesday, where it was standing room only among the commuters.
Everybody from Goldman Sachs, to Morgan Stanley have been issuing mandates to their employees: It’s time to come back.
“As the leverage swings back to employers, they’ll use that leverage momentum to insist that people be back [in] the office,” Related’s Jeff Blau predicted to Bloomberg.
Which is all very well and good, but the real answer to what tenants are thinking can likely be found in the leasing data.
Are they actually signing leases?
We saw some encouraging news this week. Colliers issued a report saying that Manhattan leasing volume is the best it’s been since January 2020. Leasing volume jumped 7.8 percent in August from the previous month and is up 39.5 percent from last August.
That’s a relief!
But the key word was “Manhattan.” The rest of the country’s news is far less rosy. VTS issued a report saying that nationally the demand for office space fell 17.5 percent from June to July. That’s less encouraging.
Specifically, CO saw some leases signed in the last week. Some were smaller retail leases, but they were catering to the Midtown lunch crowd. Panera Bread signed a 10-year lease for 2,100 square feet at the base of 1359 Broadway. Acai bowl seller Playa Bowls took 1,359 square feet across the street at 1350 Broadway. (The landlord on both deals, ESRT, also signed Le Café Coffee at The Victory, their rental at 10th Avenue and West 41st Street.)
There were also bigger restaurant leases signed, too, in Midtown: The Hospitality Department — the restaurant group owned by Franklin Becker, Stephen Loffredo and Tora Matsuoka — is taking 10,000 square feet at the MetLife Building for a new seafood venue.
There were interesting retail deals that reached well beyond Midtown. In the Financial District, Printemps — a high-end French retailer focused on beauty, fashion, accessories and menswear — took a whopping 54,365 square feet at One Wall Street, and at 73 Fifth Avenue in Union Square Warby Parker took 2,500 square feet of space.
Nobody Told Me, a Morningside Heights restaurant and cocktail lounge, decided to expand its reach into Brooklyn, taking 2,810 square feet at the corner of Bridge and Front streets in Dumbo.
Art institution the American Academy in Rome (AAR) took 4,295 square feet at the Dia Art Foundation’s 535 West 22nd Street in Chelsea. (American Academy in Rome … in America?)
And, yes, there were office leases, too. California-based venture capital firm Lightspeed Venture Partners is opening its first New York City office at 799 Broadway; investment firm Corsair Capital snagged a healthy 23,919 square feet at 550 Madison Avenue, and South Korea’s Shinhan Bank America signed a lease for 15,279 square feet at 750 Seventh Avenue.
Stop Being So Obsessive About Office
There are other things in life, you know. Like industrial. Despite the many, many industrial deals CO writes about it, the market has a seemingly insatiable appetite for more.
A report by industrial real estate brokerage AEBOV found that Brooklyn, Queens and the Bronx saw a 40 percent increase in the number of transactions from the first half of 2021 to the first half of 2022, amounting to some $1.4 billion in deals.
But this applies well beyond the borders of Gotham. The Houston-based Lovett Industrial just took its first steps into Southern California, buying a 13-acre property in Highland, Calif., for $51 million.
And multifamily remains as in-demand as ever. Cushman & Wakefield found there were 367 multifamily asset sales in South Florida in the first part of the year, for a total of $4.96 billion. (That’s the second-highest six-month period in South Florida history.)
New York ain’t no slouch, either. It pulled in $7.6 billion in sales in the first half of the year, according to Ariel Property Advisors.
Multifamily is so in demand in New York City we wonder why we don’t see more cranes in the sky …
Oh, wait. Maybe because funding a construction project is a nightmare these days.
Which isn’t to say financings aren’t happening. Even big ones — like Lincoln Property Company and Kairoi Residential scoring $675 million from Blackstone Mortgage Trust for their Downtown Austin high-rise called Waterline — are crossing the finish line. Or massively big ones like RXR nailing down a $1.3 billion package from Morgan Stanley, Apollo Global Management and American International Group for 5 Times Square.
Still, we have to wish sincere luck to the good folks at Oceanwide Holdings, which is trying to jump-start a second attempt at finishing Oceanwide Plaza in Downtown L.A., because that will be a heavy lift.
There were some interesting personnel changes last week.
Evan Margolin, Scott Ansel and Ben Levy, who had been doing leasing at Savills, have jumped over to JLL’s tenant representation business.
Mehul Patel, the chief operating officer of Midtown Equities, has jumped ship to run Rudin Management’s office portfolio.
In the D.C. area, Managing Director James Huckaby left Goldman Sachs to be a partner and chief investment officer of residential and industrial for The Meridian Group.
It’s always a big professional change to go from one firm to another. It’s almost like one minute you were free safety for the Cincinnati Bengals, next thing you know you’re with the Oakland Raiders. Before you know it, you’re heading your own development firm!
That’s actually the professional trajectory of Chinedum Ndukwe. And to learn more about his career (he actually started Kingsley while he was in the NFL) read more here.
See you back at work on Monday!