Sunday Summary: Hot to Pot!
By The Editors October 9, 2022 9:00 am
reprints
For the last decade or so, one by one, the states have been reassessing America’s federal strictures on marijuana, and — one by one — coming to the conclusion that the U.S. has gone too far in its regulations and punishments regarding cannabis.
However, even as 37 states (and the District of Columbia) have allowed for some form of medical or recreational marijuana use, the federal government has remained adamant in keeping the laws making the possession of weed a federal crime and categorizing cannabis as a Schedule 1 drug, like heroin and ecstasy.
Well, as of last week the federal government’s stance has gone to pot.
On Oct. 6 President Biden announced he is pardoning some 6,500 people convicted by the federal government of marijuana possession , reviewing pot’s status as a Schedule 1 drug, and asking governors to similarly consider mass pardons for people convicted of simple possession.
This comes at an interesting juncture for the legalized retail marijuana business. There already is a thriving but not exactly street legal weed bodega scene touching nearly every neighborhood in the city. Let’s be blunt: These places are “flat-out illegal” as we note in Commercial Observer’s story about them. And as rules are clarified and licenses are awarded, these stores will likely be more difficult to start or maintain.
“It’s a tough industry,” said 420 Property’s Ryan George. “I would say it is probably three to four times more difficult than starting a liquor store, and probably 10 times more difficult than any other business.”
Funtime is over
Despite the feelgood nature of President Biden’s announcement, thunderclouds seemed to stalk the week.
Remember how every landlord in commercial real estate was doing anything they could think of short of creating giant gingerbread houses to lure tenants back to the office? Remember the auditoriums, and private gyms, and Michelin chefs providing catering?
Well, it remains a pleasant memory, but it sure isn’t the present case any more.
Goldman Sachs (GS), for one, has yanked its free coffee cart. (They’re taking away coffee??) They also are doing away with free meals and car rides to and from the office. And they’re not the only ones: JPMorgan Chase (JPM) and Morgan Stanley (MS) have stopped giving free tickets to ballgames and tennis matches to their top earners.
This probably represents a power shift from worker back to boss.
“Perks are difficult to remove once people have gotten used to them,” Allison S. Weiss, principal and founder of CRE Recruiting, told CO. “Maybe the pendulum has shifted from a candidate-driven market to an employer-driven market again.”
Watch it, landlords. Last month’s job numbers might have been middling, but you don’t want tenants to take drastic action like putting everything in storage as they work out their real estate options. ’Cause that’s what certain companies have begun doing.
“People did not come to the office, and companies decided to break their lease or not renew their lease,” said Lior Rachmany, the CEO of Dumbo Moving and Storage. “In terms of storage, there’s not a lot of moving back into the office. Day to day, in 2022, we see a lot more downsizing. They’re hiring us to remove the furniture and deliver items to liquidation centers or dumping areas.”
And beyond just the perks, there were other pieces of not-exactly-welcome news this week.
Remember how tech firms were going to be the thing that saves New York real estate, and how they have-more-money-than-god-and-just-don’t-worry-they’ve-got-this?
It turns out there are limits to how much, say, a Facebook will take real estate-wise.
Last week Meta, Facebook’s parent company, announced that it was ditching the 200,000 square feet of space it had at 225 Park Avenue South. (Although this is not as bad as it sounds; the property was always a sort of stopgap as Meta rolled out bigger real estate plans. “225 Park Avenue South has served as a great bridge space to get us to our new offices at Hudson Yards and Farley,” spokesperson Jamila Reeves said.)
And, as its most risky bonds sank in value thanks to risk of default, Credit Suisse (CS) saw its stock price tumble at the beginning of the week before rebounding after the bank offered to buy back $3 billion in bonds.
We didn’t even mention the lawsuits, downsizing and defaults that we saw this past week.
Hey, cheer up, people!
Maybe we’re just hangry. There’s a solution to this. At the end of September Urban Hawker, a Singaporean food hall, opened on West 51st Street between Seventh Avenue and Avenue of the Americas and attracted boldfaced names like Eric Adams to the opening.
The very next night, thousands of people jammed into the Tin Building, the new food hall from the Howard Hughes Corp. that Jean-Georges Vongerichten curated, where folks feasted on caviar, sushi, gourmet sliders and Iberian ham.
It’s as if there’s a nice revival of New York’s food hall scene (which understandably suffered during COVID-19).
And in continuing last week’s streak of monster leases there was a massive one at 1 Court Square in Long Island City, where the New York City Schools Construction Authority took a 20-year, 350,000-square-foot lease. (Bet they’re still getting coffee!)
It looks like the (somewhat controversial) rezoning application for 2945 Bruckner Boulevard in the Bronx to be rebuilt as 349 apartments is advancing to the City Council for a vote after getting approval from the Committee on Land Use, so there’s that.
And it’s not as if Florida didn’t have a better week than it did the last week of September, and that includes in real estate!
Cohen Brothers scored $534 million in refinancing for properties in New York and Fort Lauderdale; One Financial Plaza in the aforementioned Florida city signed 17 (!) leases totalling 52,000 square feet, and Related Companies secured a $242.5 million loan on One Flagler, the West Palm Beach office tower designed by David Childs.
On the move
CO’s old friend Jordan Barowitz, the longtime spokesman for the Durst Organization, announced that after 16 years he’s leaving to form his own consultancy firm.
Down south (way, way south — Florida south) we learned that Colliers hired Stephanie Rodriguez away from Duke Realty to lead its national industrial business. (This comes after Prologis finally closed on its acquisition of Duke for $23 billion.)
And, in a surprise move, Denis Hickey stepped down as CEO of Lendlease’s U.S. office, and handed the reins over to Claire Johnston.
Recharge your battery
Tomorrow is Indigenous Peoples Day, so it’s a good time to rest up and let go of one’s real estate obsession for 24 hours.
Maybe spend it thinking about electric cars instead. Because there’s a lot of money being apportioned to bringing much-needed charging stations to various spots around the country. A perfect thing to ponder on your day of leisure. (Just don’t think about the guy who’s churning out all those electric vehicles and what he’s up to with Twitter. Only he knows that.)
See you next week!
