Sunday Summary: Pow! Powell Packs a Potent Punch


We all waited with bated breath for Wednesday afternoon.

That was the day that Jerome Powell, head of the Federal Reserve, was going to announce the Fed’s latest posture toward interest rates.

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And it felt a little like waiting for test results from our doctor. Would there be more pain? More procedures? Would we at least get some good drugs to carry us through the worst of the coming months?

Days after the last Fed meeting in February it was revealed that the unemployment rate dropped to its lowest rate since 1969, which made those who were hoping that the Fed would ease up on interest rates gird themselves for probable hikes.

But after SVB blew up on March 10 (only two weeks ago?! Sheesh!) and after all of the collateral damage had been absorbed (albeit with lots more likely to come), the assumption was that the pace of the rate rises would at least slow down, if not halt altogether.

On Wednesday we’d hopefully receive some clarity from the Fed.

Because we don’t know how much more we can take after the last two weeks. There are all sorts of lingering questions that we, for one, have been wondering about, including, say, how will the market react to the shotgun marriage between UBS and Credit Suisse (CS)? What happens with the roughly $60 billion in Signature loans that are now in receivership now that New York Community Bank acquired the SVB-exposed Signature Bank (SBNY)? What banks are still vulnerable? With billion-dollar-plus lifelines being thrown to banks like PacWest, how come depositors are still running away from them with the velocity of Will Ferrell trying to outrun the fuzz?

The last thing we need is more mystery from the Fed.

In the end, Powell announced a 25 basis point rise. Not as bad as it could have been. Not as good as some in the real estate business had hoped. Presumably it means Powell thinks the economy and the banking system are strong enough to accept a small rise. (Which is good.) But not strong enough that the Fed can keep fighting inflation like nothing happened. (Which is bad.)

“It’s possible that these events will turn out to have very modest effects on the economy, in which case inflation continues to be strong, in which case the path may look different,” Powell said in his post-meeting press conference. “It’s also possible that this potential tightening will contribute significant tightening in credit conditions over time, and in principle that means monetary policy may have less work to do. We simply don’t know.”

Somehow, Jay, this did not make us feel better.

Meanwhile in New York…

At almost the exact time that Powell was making his statement to the press, legendary real estate power player Jeff Gural was standing at the steps of 60 Centre Street, waiting to bid on one of the greatest pieces of New York real estate — the Flatiron Building — which was being sold at auction.

Gural is already one of the owners of the building along with Newmark, Sorgente Group and ABS Partners Real Estate, all of which have been embroiled in a lawsuit against the majority interest holder, Nathan Silverstein.

Despite Gural’s earnest efforts to take control of the building, he quickly hit a wall when a rival popped up during the bidding: Jacob Garlick of Abraham Trust.

Garlick won the auction with a $190 million bid.

“Truthfully, I thought we were going to pay about $80 million, but I guess when you’re in an auction it just takes one other bidder,” Gural told Commercial Observer. “I was totally shocked that somebody would bid so much money for the building. It’s a beautiful building, but not really worth that much.” (There’s been a lot of auction fever going around lately. We learned this week that rare rabbinic texts are being auctioned off online for hundreds of thousands of dollars.)

There were other interesting sales and would-be sales going on around the city, which is a relief in these weird times. (We’re using the word “weird” somewhat euphemistically. In addition to the SVB-related woes, did you see that Amazon laid off 9,000 more employees last week? And that the February CMBS loss numbers were gruesome? Oy.)

RFR, for instance, took a piece of 2139-2159 Broadway, until 2018 the address of the Upper West Side Barney’s, which had been owned by Vanbarton Group.

St. John’s University is putting its Staten Island campus on the market for an undisclosed amount.

Taconic released its plans for a 200,000-square-foot life science research lab on the Upper East Side.

And Florida is getting in on the action because, well, it’s Florida. Terra just offered up $500 million to buy out residents at the 4-acre oceanfront condo at 5445 Collins Avenue where they could build something ever more spectacular.

Let’s talk about leases

While Louis Vuitton waits for its store at 1 West 57th Street to be renovated, the luxury retailer is moving across the street to 6 West 57th Street. (You might have heard of the landlord of 6 West 57th Street; he dabbles in politics and has had recent legal problems.)

The antitrust and business law firm, Garwin Gerstein & Fisher, signed a 10-year lease to resize down to 7,662 square feet at 88 Pine Street.

Meanwhile Kimmeridge, the energy-focused investment firm, is rightsizing up, from 13,335 square feet to 16,845 square feet at 15 Little West 12th Street.

And Bathhouse, a Brooklyn spa, is jumping from 10,000 square feet to 18,000 square feet by expanding into the old Brooklyn Brewery warehouse space next door at 56 Berry Street.

On this Sabbath day…

If you’re reading this before or after Sunday church, well, you better enjoy it while you can.

Because down in Florida church property is getting too valuable to simply waste on Sunday services. To wit, a number of properties are being sold to developers. (This is not the first time we’ve written about this phenomenon in Florida. In fact, it’s not the first time this month!)

But, still, we invite you to sit and relax. Enjoy a nice story. Like the one about the knock-down, drag-out fight between Virginia and Maryland over who gets to build the next FBI headquarters.

See you next week!