Sunday Summary: A Dark Day in Midtown Manhattan

Last Monday night the news started coming in — there was a mass shooting at the office building at 345 Park Avenue in Midtown Manhattan.

Like a lot of New Yorkers, we followed along in shock and heartbreak as the details became clearer. One of the victims was Wesley LePatner, the CEO of Blackstone Real Estate Income Trust (BREIT), a tenant at the building, who was only 43 years old, and had been in the job for less than a year. She is survived by her husband and two young children

Another victim was the even younger Julia Hyman, an associate at Rudin (the building’s landlord) who was 27 and had graduated from college in 2020. A third victim was Aland Etienne, 46, a security guard at the building and father of two. The final victim of the massacre was NYPD officer Didarul Islam, 36, who was about to become a father for the third time.

The rest of the week played out very much under a dark cloud. There were statements of disbelief and grief (“The Rudin family and everyone at our company are devastated by yesterday’s senseless tragedy,” the landlord said in a statement) but the most unsettling question raised by this senseless tragedy was:

Can it happen again?

This is the second high-profile shooting in Midtown recently (after UnitedHealthcare’s Brian Thompson was gunned down last December) and it raises urgent security questions.

“There was probably nobody better trained than a current police officer in [this] situation,” said Michele Ehrhart, a crisis communications expert. “[But] I don’t think any amount of security in that lobby could have stopped this person from doing what they were trying to do. This was a senseless act of violence that no one could have been prepared for.”

The tragedy has certainly caused some landlords and property managers to re-examine their security protocols.

KPG Funds is in “ongoing negotiations with an Israeli-based artificial intelligence company” to enhance its current security system, said the company’s CEO Greg Kraut.

“[Our new technology] basically allows AI to detect advanced technology, to detect weapons and trigger silent alarms, which goes directly to the police headquarters,” Kraut said.

Likewise, Aurora Capital Associates is working with AI experts and brothers Cory and Jason Haber on real-time AI weapon detection.

“[Monday’s] horrific shooting shattered lives and reminded all of us that public safety is not theoretical — it’s urgent, immediate and personal,” said Aurora’s Jared Epstein. “We’ve made the decision to deploy [our system] now. Our city cannot afford delay, denial or ideological fantasy.”

Earnings calls

Well, it was quite a run, but the long stretch of positive economic news came back to Earth last week with weak July jobs numbers (as well as steep revisions downward for May and June) bumping up against the Trump administration’s August tariff deadline. (MSNBC reported Friday that the administration subsequently fired the head of the Bureau of Labor Statistics.)

Taking a conservative approach, the Federal Reserve declined to move rates for the fifth straight board meeting on Wednesday, despite calls to do so from the president. (The Fed’s “wait and see” approach was announced before the poor economic data was released.)

However, the quarterly reports for real estate firms kept coming in, and there was much positive news.

Acadia saw its occupancy rate rise from 91.7 percent to 92.2 percent with the expectation that it will hit 94 to 95 percent by 2026, tariffs or not. (No wonder they just bought two retail properties in Brooklyn’s Williamsburg for $50 million.)

BXP saw an excellent second quarter, with revenue hitting $868.5 million, up from $865.2 million in the first quarter (and from $850.5 million during the second quarter of 2024) and 1.1 million square feet of leases.

Gaming and hospitality REIT Vici Properties saw $1 billion in revenue (more than $15 million higher than the first quarter) and announced some major expansion plans, including the $510 million North Fork Mono Casino & Resort near Madera, Calif.

CBRE could boast that its revenues jumped 16.2 percent, and Newmark likewise came in ahead of expectations. (No wonder Manhattan office is still on track to have its best year since 2019!)

No real surprise that data center developer (and fourth-largest REIT in the country by market cap) Equinix had plenty to crow about, with revenues increasing 5 percent to $2.26 billion.

Speaking of data centers, Ares Management reported a 28 percent rise in its assets under management thanks in large part to the acquisition of data center operator GCP International.

And, even the less-than-stellar calls, like that of Paramount Group and AvalonBay, had some positives to report. (In Paramount’s case, they did about 400,000 square feet of leasing. As for AvalonBay, they didn’t have any bad numbers to report, but CEO Ben Schall warned that “expectations for job growth in the second half of the year are a little more muted than they were in January.”)

But the show stopper of earnings season would have to be KKR’s call, during which it reported that the firm’s assets under management rose by a staggering $130 billion from the second quarter of 2024, from $556 billion to $686 billion, with revenue for the quarter at more than $5 billion.

Purchases, financings and leases

The deals keep coming — and they’ve been plenty big.

There have been big portfolio deals, like Starwood Property Trust’s $2.2 billion purchase of triple-net lease owner and operator Fundamental Income Properties, which happened late last month and which CO got an exclusive play-by-play of here.

There were big purchases, like billionaire Tom Steyer’s Galvanize Real Estate (GRE) — the real estate arm of his Galvanize Climate Solutions — buying a five-property, 683,000-square-foot industrial portfolio in central Maryland from Link Logistics for $112 million.

There were big financings in the form of Metro Loft’s $345 million recapitalization of the office conversion at 180 Water Street and Blackstone’s $805 million loan for 19 industrial properties in Doral, Fla.

There were big New York office leases, like Verizon taking 203,000 square feet at Vornado Realty Trust’s 2 Pennsylvania Plaza, known as Penn 2; and there were big industrial leases, like iDC Logistics taking a combined 1.1 million square feet at two properties in L.A. and the nearby Inland Empire.

Think construction

Finally, for some Sunday reading, CO focused this week on the construction sector.

We spoke to Ed Broderick, the head of Gilbane, one of the biggest names in the business, about what it’s been like to take over the storied firm.

We looked at the high wages and high costs to build in one feature — and in a second feature about how difficult it is to start a construction company in said environment.

We examined the AI firms that are trying to predict mechanical failures in properties before they happen.

Finally, we looked at Opportunity Zones, now that they’re a more permanent part of the real estate landscape.

All in all, this should scratch anyone’s AEC itch.

See you next week!