Is this the end of expensive office space in New York??

David Goldsmith

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Trophy office towers could become a thing of the past in London
Plummeting demand and fears of density could change how developers build

Some London developers could find themselves building office space for tenants that don’t exist, if they already aren’t.
The economic downturn brought on by the pandemic is also likely to mean at least a temporary end to the type of monumental office projects born from the optimism of the last several years, according to the Financial Times.
Number 22 Bishopsgate, a 62-story Class A tower that will be the tallest office block in the city when completed, could be the last of its kind for a while. AXA IM Real Assets was set to complete the project between March and June.

There’s around half a million square feet of space unleased in the tower. The firm’s head of development in the U.K., Harry Badham, said he’s confident about leasing because of the uniquely large floor plates and interest from renters looking to move in a year from now.

Chris Lewis, director at office tenant advisor DeVono Cresa, said the project “probably marks a high-water mark for skyscrapers,” but said developers will have a tough time justifying such large-scale projects in a post-coronavirus world and that the pandemic could discourage tenants from renting in a building fit for 12,000 people.

Work started on 5 million square feet of office space in London from October 2019 to March 2020. New projects could get nixed — around half of developers surveyed by Deloitte at the end of March said they planned to scotch them. All of those developers surveyed said they were pessimistic about the London office market.
 

David Goldsmith

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Manhattan office leasing inches up
Sublet availability tightened in May despite worries about glut of space

Manhattan’s office leasing market last month continued to slowly rebound from a brutal March, though leasing volume was still less than half of historical levels.
Leasing activity across the borough’s main office markets totaled 1.42 million square feet, up 5.2 percent from April but less than half the amount seen a year before, according to research from Colliers International.
Leasing activity varied significantly by submarket. Midtown’s volume of 970,000 square feet was in the ballpark of pre-coronavirus figures, as the month’s top three deals all occurred in that part of Manhattan. Video-sharing app TikTok led the way with a 232,000-square-foot lease at the Durst Organization’s One Five One, followed by a pair of six-digit lease renewals from law firm Allen & Overy and Japan’s Mitsubishi International.
Meanwhile, Midtown South saw leasing activity rise 50 percent from April to 320,000 square feet, still well below historical levels, and Downtown leasing volume crashed, falling by 75 percent to just 130,000 square feet.
Although widespread adoption of work-from-home arrangements has led industry insiders to predict an uptick in sublet space, that has yet to materialize. Manhattan’s sublet availability rate actually shrunk slightly to 2.2 percent, while overall availability held still at 10.3 percent and asking rents dipped to $79.24.
Manhattan-Office-Leasing-Volume-060420-705x468.png
Office Leasing Activity in Manhattan, by Month and Market (May 2020)
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MarketMay 2020April 2020May 20192019 Monthly Average
Manhattan1,420,0001,350,0002,990,0003,580,000
Midtown970,000620,0001,150,0001,320,000
Midtown South320,000210,000920,0001,370,000
Downtown130,000510,000920,000890,000
Showing 1 to 4 of 4 entries
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SOURCE: Colliers International Research
 

David Goldsmith

All Powerful Moderator
Staff member
Brookfield doubles down in risky market.

Brookfield buys out another tenant at 666 Fifth
Brookfield’s 5th buyout in past year is part of plan to empty out then renovate tower

Brookfield has bought out another tenant at 666 Fifth Avenue in the leadup to its massive renovation of the tower.
The tenant that accepted the $8.5 million buyout is listed as Kadima Realty Associates and was based on the 15th floor, according to property records. The deal marks Brookfield’s fifth buyout of the year in the Midtown property for a total of $22.7 million.
Brookfield purchased a 99-year ground lease from Kushner Companies for the tower in a controversial $1.3 billion deal in 2018. It plans to spend between $300 million and $400 million to renovate and reposition the tower and is trying to empty it out by early next year as part of those renovation efforts. It is also rebranding the infamous property as 660 Fifth Avenue.
Kushner Companies itself is among the tenants leaving 666 Fifth Avenue. It plans to sublease 20,500 square feet of space from the Brazilian bank Itau Unibanco Holding on the top floor of the GM Building.
Brookfield declined to comment on the buyout. However, in a recent interview, Brookfield Property Partners CEO Brian Kingston told The Real Deal he was not concerned that the pandemic and amount of people currently working from home would lead to a widespread decline in demand for office space.
“The idea of working from home full-time does not seem to have much appeal,” he said. “I think we’ll see certain changes in the way that companies utilize their offices, but we don’t see this as an existential threat.”
 

David Goldsmith

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These office landlords are most exposed to Big Tech’s #WFH movement
Facebook, Twitter and Shopify, which occupy 12.6M sf of US office space, are migrating toward more remote work

Big Tech has been a major driver of office leasing activity in recent years. But that may soon change.
The coronavirus pandemic has heralded a remote-work revolution, with heavyweights Facebook, Twitter and Shopify all announcing plans to shift toward more permanent work-from-home setups. Now, other tech companies — seeing the potential cost savings — could follow suit.
But until then, it’s something that Facebook, Twitter and Shopify’s landlords will watch for. Altogether, the companies lease 12.6 million square feet of office space in the U.S., according to data from CompStak. So which landlords and cities will be hit hardest when those three tenants leave the office world behind?
Shorenstein Realty is the landlord most exposed, with more than 1.5 million square feet leased to Facebook and Twitter, according to CompStak. The San Francisco-based firm’s real estate holdings span 25 million square feet nationwide, according to its website, meaning those two tenants account for 6 percent of its entire portfolio.
The next three landlords on the list include San Francisco-based Jay Paul Company (1.49 million square feet); a joint venture between Mitsui Fudosan America, Related Companies and Oxford Properties (1.22 million) and Palo Alto-based Peery Arrillaga (1.2 million).
In New York, the most exposed include the Mitsui Fudosan America, Related Companies and Oxford Properties joint venture, Vornado Realty Trust (769,633) and Columbia Property Trust (664,196). (And Facebook is reportedly near a deal for another 740,000 square feet at Vornado’s Farley building.)


As for the most exposed markets, Facebook, Twitter and Shopify’s leases are largely clustered on the coasts. These companies have leased up nearly 7 million square feet of office space in California, 3.2 million in New York and 1.6 million in Washington. By contrast, those firms only have about 300,000 square feet in active leases south of the Mason Dixon line.
It’s no surprise that most of the West Coast leases are concentrated in the Bay Area, where many tech companies are headquartered. The top five cities with the most exposure are: New York City (3.2 million square feet), San Francisco (2.4 million), Menlo Park (1.2 million), Fremont (1.2 million) and Sunnyvale (1.1 million).
 

David Goldsmith

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29% by the end of this year?
“Very gradual return”: Wall Street tenants, landlords lay out reopening plans
Partnership for NYC study shows just 29% of workers to return to office by year end

When Wall Street employees return to work, there will be a very different office awaiting them.
New York City’s reopening kicked off on Monday, and offices are set to be allowed to operate at 50 percent capacity in a matter of weeks. Financial workers will be returning to a new normal, with body temperature scans and socially distanced elevators, the New York Times reports.
“There’s a high degree of anxiety, as you can imagine,” RXR Realty CEO Scott Rechler told the Times. “Officing is going to be different than it was before.”
RXR, whose tenants include financial firms like UBS and Bank of America, has created an app to help tenants coordinate workdays and arrival times, minimizing social contact. Workers will also be able to view heat maps of restrooms, and request deep cleaning of workstations with the scan of a QR code.
Even with precautions in place, it appears likely that a large portion of the workforce will continue to opt to work from home well into the coming year. A recent poll by the Partnership for New York City found that companies expected just 10 percent of their employees to return to the office by August 15, and just 29 percent by year’s end.
“There’s a sense that a significant portion of workers will continue to work remotely,” Partnership president and CEO Kathryn Wylde said, noting that it would be a “very gradual return.”
Because of the logistical challenges of reopening, many companies are taking their time. Private equity firm TPG plans to keep employees working at home until after Labor Day, as does the Carlyle Group. Hedge fund Point72 and private equity firm Bain Capital have not yet set a timeline for returning to the office.
 

David Goldsmith

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Bad to worse: Manhattan office leasing sees slowest quarter since 2009
Availability rate in Q2 inches up to 6-year high; i-sales also plummet

When coronavirus slammed Manhattan’s office leasing market at the end of the first quarter, it was enough to drag quarterly leasing activity to a seven-year low. Now that numbers are out for the first full quarter in the shadow of Covid-19, things look even worse.
Manhattan office leasing activity in the second quarter of 2020 totalled just 3.18 million square feet, according to the latest quarterly report from Colliers International. That’s half what it was in the prior quarter and down 72 percent year-over-year. The total represented the slowest quarter for office leasing since 2009.

“Without a doubt, the second quarter of 2020 ranked as one of the most challenging periods in the history of the Manhattan office market,” Colliers senior managing director for New York research Franklin Wallach said in a statement.
“However, Manhattan’s asking rent average was resilient with only a slight decrease while sublet supply has so far held firm. Nonetheless, any prolonged effects of the pandemic on the office market will be revealed over the next several quarters,” he continued.

Investment sales have also slowed down dramatically, according to the report, with the second quarter seeing just 55 deals totalling $4.3 billion, down from 237 deals totalling $14.6 billion a year prior.
“We are currently in a bit of a liquidity crisis where pockets of tenants in certain asset classes have struggled to pay rents due to Covid-19,” Colliers managing director for capital markets Andrew Jacobs said. “The inevitable market correction will create opportunity for value-seeking investors.”

While leasing activity inched up month-over-month in both April (1.35 million square feet) and May (1.42 million), that momentum wore off in June, which accounted for the remaining 410,000 square feet of activity in the quarter.
As usual, leasing was led by firms in financial services, insurance and real estate (FIRE, 37 percent) and technology, advertising, media and information services (TAMI, 22 percent) sectors. Co-working firms in particular leased just 77,000 square feet of space in the quarter, the lowest figure for the industry since 2013.

The Midtown submarket saw 1.88 million square feet in leasing activity in the quarter, down 52 percent year-over-year. The largest deal of the quarter in Midtown was video-sharing app TikTok’s 232,000-square-foot lease at the Durst Organization’s 151 West 42nd Street in Times Square, also known as One Five One.

Without any six-digit deals to speak of, the Midtown South submarket saw leasing activity collapse 87 percent year-over-year to just 640,000 square feet. The submarket’s largest deal went to dating app company Match Group, which signed a 41,000-square-foot lease at Aurora Capital Associates and William Gottlieb Real Estate’s 60-74 Gansevoort Street.

Downtown was home to the largest lease of the quarter, with the U.S. Securities and Exchange Commission taking up 241,000 square feet at 100 Pearl Street, formerly known as 7 Hanover Square. Nonetheless, leasing activity in the submarket fell 73 percent year-over-year to 660,000 square feet.

The limited leasing activity led Manhattan’s overall availability rate to increase 0.4 percentage points to 10.6 percent, the highest since early 2015. An availability rate of 10 percent is considered to represent market equilibrium. Meanwhile, sublet availability held at 2.3 percent.
 

David Goldsmith

All Powerful Moderator
Staff member
40% of bank execs plan to reduce real estate footprint: survey
Many financial firms considering 3-days-in-office, 2-days-remote model

A survey by professional services firm Accenture found that about 61% of bank executives don’t expect to call all employees back to the office, and more than 40% of those surveyed are also planning to reduce their real estate footprints accordingly. (iStock)
While banks have begun the slow, careful process of returning employees to the office, most executives aren’t expecting everyone to come back.
A survey by professional services firm Accenture found that about 61 percent of bank executives don’t expect to call all employees back to the office. And more than 40 percent of those surveyed are also planning to reduce their real estate footprints accordingly.

Manyfirms are considering a model in which employees come into the office three days a week and work remotely the other two, as some aspects of the office environment are difficult to replace.
“One of the things the traders have said they miss is that informal dialogue and idea sharing that happens,” Accenture’s capital-markets practice head Laurie McGraw told Bloomberg.

“All of that is gone now. You talk with the people that are on your meeting schedule for the day for the most part. And the fluidity of idea exchange is missing in a lot of cases.”
Earlier this month, JPMorgan Chase had to pause plans to return workers to the office in Columbus, Ohio, as cases in the state jumped. Citigroup says it is unlikely to return even half of its workers to the office until a vaccine is available.

For office landlords, increased space requirements per employee may offset the decreased number of employees somewhat.
“They’re having to shut down every other desk, and the traders on the trading floor are all spread out,” McGraw said. “You almost need the same amount of space to bring half your staff back in a socially distant way.”
 

David Goldsmith

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State bill would soften blow for commercial tenants who break leases
Assembly measure seeks to help Covid-affected businesses, but real estate attorneys say it forces landlords to accept lower rents

Commercial landlords may soon need to follow some of the same rules that govern residential property owners when a tenant breaks the lease.
On Wednesday, the state Assembly passed a bill that would require commercial landlords to minimize damages against a tenant who vacates their property before the lease expires.
When a tenant breaks a lease, the bill would require landlords to “take reasonable and customary actions to rent the premises at fair market value or at the rate agreed to during the term of the tenancy, whichever is lower.” With a new tenant in place quicker, the landlord would seek to recover less from the previous tenant for violating their agreement.
The bill is sponsored by Democratic Assembly member Steven Otis.
As part of its overhaul of New York’s rent law, the state legislature applied the so-called “landlord duty to mitigate damages” to residential properties. Several other states have similar rules for commercial and residential properties. A memo for the bill, which was proposed last year and now heads to the Senate, acknowledges that commercial leases often already contain mitigating language.

“This legislation is especially important given the Covid-19 crisis and related closure of businesses due to the pandemic,” the memo states. “The duty for commercial landlords to minimize damages will benefit small businesses struggling to survive the crisis.”

Otis said the bill is now “more time sensitive” given the pandemic but thinks it is important to incentivize getting properties back on the market and occupied. He added the bill also increases that chances that businesses will recover after defaulting on their lease.

The measure follows another recent blow to commercial landlords. In May, the New York City Council approved a measure that temporarily bars the enforcement of personal liability provisions in commercial leases or rental agreements.

Real estate attorneys criticized the state bill for targeting landlords who are already facing significant losses in revenue due to the pandemic, and for deterring owners from keeping a space vacant until the market picks back up. Attorneys said the language, specifically “reasonable and customary actions,” is too vague and unfairly exposes landlords to claims from a tenant who violated the lease.

“You are putting a landlord in a position where because of the actions of a defaulting and breaching tenant, they are now on the spot,” said Bradley Kaufman, a partner at Pryor Cashman, who represents commercial tenants and landlords. “It changes the whole dynamic.”

Joshua Stein, a commercial real estate attorney, said the bill “flies in the face of contract law,” by requiring landlords to accept lower rents than what the defaulting tenant had agreed to pay, while potentially denying landlords a claim against the tenant for the shortfall.

“You’d think they might decide to lay off the real estate industry for a while after the damage they’ve done over the last couple of years,” he said, referring to state lawmakers. “But they are on a roll.”
 

David Goldsmith

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Office landlords, beware: More of corporate America is looking to reduce space
An analysis of earnings calls found that 25 big companies are planning to shed offices

It’s not just tech firms. Corporate America is looking to trim office space as companies shift to remote work and look to reduce costs.
An analysis of quarterly earnings calls by Reuters found that more than 25 large companies across different sectors are planning to downsize their office footprint, posing a threat to office landlords’ bottom lines.
Ronald Philip O’Hanley, CEO of financial services company State Street, said on his company’s earnings call last week that observers “should expect and hold us to a much lower footprint really starting quite soon.”
Regions Financial Corp. said it was “confident overall office square footage will continue to decline.”
After the pandemic triggered state shutdowns in March, workers across the country transitioned to working from home, which many companies have reported to be a largely positive experience.

Though some in the real estate industry have questioned how longlasting the shift will be, in recent months, Twitter, Facebook and Mastercard have all announced permanent moves toward remote work.
A recent survey showed that 40 percent of bank executives planned to cut back on real estate holdings.

In June, Morgan Stanley forecasted that remote work will increase vacancy rates in office buildings going forward. Vacancy rates are expected to reach 10 to 12 percent in New York in the next two to five years — up from 8.7 percent now.
 

David Goldsmith

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Where is everybody? City workers still home
Under 10 percent back in Manhattan offices; Google extends work-from-home

Echo, echo, echo…
Although New York office buildings have been allowed to reopen, not even 1 in 10 workers have returned.
The world’s largest commercial real estate servicer, CBRE, told the Wall Street Journal that only 9 percent of workers had returned to Midtown and 8 percent to Downtown.

William Rudin, whose Rudin Management Company oversees 16 office towers and 10 million square feet of Class A space, told the Journal that “people are being rightfully careful.”
Workers’ reemergence varies depending on their industry, with some of the biggest companies looking to reduce their office footprint.

Financial firms that rely on technology difficult to replicate at home have been more eager to bring their employees back to the office, although even JPMorgan Chase and Citigroup have kept occupancy to about 20 percent.
Technology companies, however, have not pushed workers to return, in part because their operations are typically possible from anywhere with broadband.

Google just decided to keep its workers remote until July 2021, Microsoft continues to recommend that employees do so, and Twitter has made optional work-from-home permanent.
John Vazquez, head of real estate at Verizon Communications, said that whether schools reopen in the fall will be a litmus test for many of its employees.

Were schools to reopen for two or three days a week, as New York City is planning, “that’s not enough for working parents,” Vazquez said, suggesting that anything less than a full reopening would keep many of its employees home for longer.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
The Google news that employees work from home until next July is huge - https://www.wsj.com/articles/google...er-2021-amid-coronavirus-pandemic-11595854201

We are still in a changing environment, waiting for answers and hope for a safe vaccine. Unfortunately, looks like this sector will be in flux for years unless we get vaccine clarity earlier or therepeautics that stop people from dying, obv the former being most important
 

David Goldsmith

All Powerful Moderator
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I know I have mentioned before - perhaps towards the beging of NY's lockdown? - that until/unless retail rebounds I don't see people wanting to be in NYC as much. Perhaps we are in a bit of a Catch-22 situation because without the traffic from office workers (and certainly very little tourism) retail is having a very hard time in NYC.
 

David Goldsmith

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The Outlook: Industry experts break down Manhattan’s office condo market
Less than 100K sf of space sold in the first six months of 2020, and a recovery won’t be quick, experts tell TRD

The coronavirus pandemic put brakes on the office condominium market in Manhattan. And the recovery likely won’t be quick, according to industry veterans.
Manhattan’s office condo market saw a 66 percent decline in sales volume during the first six months of 2020 compared to the last six months of 2019, according to data from Rudder Property Group. The figure, about 98,000 square feet, is the lowest amount of square footage sold in a six-year period in more than a decade, Rudder found.

New York City’s office real estate market has been facing grave uncertainties as many workers haven’t returned to their offices since mid-March when the coronavirus took hold of the region.
Manhattan’s office condo market consists of about 11 million square feet, or about 2 percent of the borough’s total office space.

But the impact of the pandemic has been visible in this niche sector, said Michael Rudder, whose brokerage focuses exclusively on office condo sales. He noted that the office condo sales that occured in the first half of 2020 were already negotiated months before Covid-19.

“I think if you were to take from the shutdown to today, basically nothing has been sold. And I suspect over the next half year, the stats will be even lower than that,” Rudder said.
The average sales price to date in the first half of 2020 also decreased to $826 per square foot, down 6.8 percent from the roughly $886 per square foot in the second half of 2019.

Notable sales during the first half of the year included the 19th floor of 633 Third Avenue for $12.5 million ($631 psf); the third floor of 305 Seventh Avenue for $7.5 million ($791 psf); the fourth floor of 141 Wooster Street for $7.2 million ($872 psf); the 11th floor of 25 West 31st Street for $4.5 million ($776 psf); and unit 600B at 36 West 44th Street for $4 million ($1,007 psf).

Because of the uncertainties due to the pandemic, many companies and investors are holding off a decision to purchase office condos, said James Nelson, a principal and head of investment sales in the tri-state for Avison Young.
“I think a lot of companies and investors are probably on the sidelines, taking a little bit of a wait-and-see approach,” Nelson said. “But we have no doubt that when the rest of the market returns, so will office condos and co-ops.”

Avison Young broker David Lawrence added that some investors, particularly international firms, would rather purchase an office condo than an entire building, which requires a larger capital outlay.
“That’s an area where we’ll see a little bit more demand going forward,” he said.

The full report is available by clicking here.
 

David Goldsmith

All Powerful Moderator
Staff member
Zillow’s employees can work remotely forever
With 5,400 employees, listings giant has 1M sf office footprint

In April, as the nation was in the thick of lockdown, Zillow CEO Rich Barton tweeted that his “personal opinions about WFH have been turned upside down over the past 2 months.” He’s now ready to reflect that thinking in long-term company policy.
Effective immediately, the Seattle-based listings giant is allowing 90 percent of its 5,400 employees to work from home indefinitely, at least part-time, the company disclosed in a blog post Wednesday. The move will be significant for the U.S. office market, as Zillow leases over 1 million square feet of space in New York, Atlanta, San Francisco, Irvine, Calif., Denver, Phoenix and Overland Park, Kan. According to the company’s annual report, its operating lease expenses were $29.1 million in 2019. In New York, Zillow subsidiary StreetEasy increased its office footprint in 2018, leasing 130,000 square feet at 1250 Broadway in NoMad.

In the blog post, executives acknowledged a “drastic” shift for Zillow, which historically discouraged remote work. “Our old preferences have been debunked during the pandemic,” wrote Dan Spaulding, Zillow’s chief people officer.

“When conditions permit us to re-open our offices, our employees’ health and safety will remain our top priority,” Spaulding added. “Our offices will be there for individuals and teams to enable productivity and collaboration — but they won’t be the only place where those things happen.”
Zillow closed its headquarters in early March after Seattle became an early hotspot for coronavirus. In the early weeks of the pandemic, the company slashed expenses by 25 percent, froze hiring and suspended its instant-homebuying program.
In April, employees were told they could work from home for the rest of 2020. During Zillow’s Q1 earnings call in May, Barton joked about the need for a home office. “I’m right now in my bedroom because I have three kids on Zoom school right now all over the house,” he said.

By extending the policy indefinitely, Zillow is following in the footsteps of other major tech companies and raising serious questions about the value of office space.
In May, Twitter, which has north of 215,000 square feet in Manhattan’s Midtown South, told employees they could permanently work remotely. Facebook, which has commitments for over 2.5 million square feet of space in Manhattan and is in talks for another 740,000 square feet, told employees that it expected half of the company’s employees to work remotely within the decade. Google said this week that employees can work from home until at least the summer of 2021. When Google made that announcement, Spencer Rascoff, who was CEO of Zillow until February 2019, tweeted that the company’s decision would have a “big ripple effect.”

“WFH, or hybrid, is the new normal,” Rascoff said.
 

David Goldsmith

All Powerful Moderator
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1. Apple: 11 Pennsylvania Plaza
11 PENNSYLVANIA PLAZA, NEW YORK, NY 10001
GettyImages_120375863.0.jpg

In February 2020, Apple signed a lease for office space in Midtown’s 11 Penn Plaza. The company signed a five-year deal to move into the 11th through 14th floors (220,000 square feet) of the Art Deco building owned by Vornado Realty Trust, according to the New York Post.
11 Pennsylvania Plaza
New York, NY 10001
2. Amazon: 410 Tenth Avenue
410 10TH AVE, NEW YORK, NY 10001
New_Entrance_and_Park.0.jpg

Less than a year after withdrawing its plans to bring their HQ2 to Long Island City, in Queens, last week, Amazon signed a lease for 335,000 square feet in a building that’s close to the Hudson Yards megaproject. The space, located within SL Green’s 410 Tenth Avenue, will be for more than 1,500 employees of the e-commerce giant.
410 10th Ave
New York, NY 10001
3. Amazon: 5 Manhattan West
450 W 33RD ST, NEW YORK, NY 10001
170226_17_42_40_5DS_7730.0.jpg

In 2017, Amazon inked a deal with Brookfield Properties to lease 360,000 square feet at 5 Manhattan West, the retrofit of the old Brutalist building that once housed the New York Daily News. It’s just down the block from SL Green’s 410 Tenth Avenue, where the company recently snapped up office space.
450 W 33rd St
New York, NY 10001
4. Amazon: 7 West 34th Street
7 W 34TH ST, NEW YORK, NY 10001
Amazon Books retail storefront in Manhattan...

Amazon has leased more than 400,000 square feet in this Midtown office building, located across from the Empire State Building, since 2014. In 2017, an Amazon Books outpost opened on the ground floor.
7 W 34th St
New York, NY 10001
5. Amazon: Staten Island Fulfillment Warehouse
546 GULF AVE, STATEN ISLAND, NY 10303
US-ROBOTICS-SCIENCE-LABOR

Amazon has operated a $100 million, 850,000-square-foot fulfillment center in Staten Island’s western shore since September 2018. The e-commerce giant’s warehouse is located on the Matrix Global Logistics Park complex, which is situated in a formerly abandoned 676-acre site. There are more than 2,000 full-time employees at the warehouse, who reportedly work alongside robots.

546 Gulf Ave
Staten Island, NY 10303
6. Facebook: Hudson Yards
10 HUDSON YARDS 24TH FLOOR, 347 10TH AVE, NEW YORK, NY 10001
An aerial view of Hudson Yards and the many tall city buildings that surround it.

In November, Facebook officially signed a lease at Hudson Yards, confirming rumors from earlier this year. The tech giant confirmed that it will lease more than 1.5 million square feet of office space across 30 floors and three buildings at Hudson Yards: 1.2 million square feet in 50 Hudson Yards; 265,000 square feet in 30 Hudson Yards; and 57,000 square feet in 55 Hudson Yards.

10 Hudson Yards 24th Floor, 347 10th Ave
New York, NY 10001
(212) 801-1000
7. Facebook: Penn-Farley Complex
FREDERICK DOUGLASS BLVD, NEW YORK, NY 10024
180906_09_32_33_5DS23993.0.jpg

Despite the pandemic, Facebook is betting big on New York with a lease for all the office space in the James A. Farley Building in Midtown Manhattan. The deal’s announcement came as somewhat of a surprise because Facebook, which had expressed interest in the Farley Building for months, has given most of its employees the option of working from home during the pandemic.
Frederick Douglass Blvd
New York, NY 10024
8. Facebook: 770 Broadway
770 BROADWAY, NEW YORK, NY 10003
shutterstock_1227672406.0.jpg

Facebook’s NYC HQ is currently located at 770 Broadway, the former Wanamaker Department Store building, where it leases nearly 700,000 square feet. The social media giant has leased office space at the building since 2013.
770 Broadway
New York, NY 10003
9. Google: 111 Eighth Avenue
111 8TH AVE, NEW YORK, NY 10011
190921_07_33_10_DSC00090.0.jpg

Back in 2010, Google bought the former Port Authority building at 111 Eighth Avenue for $1.9 billion from Taconic Investment Partners; the tech giant has housed its NYC headquarters there ever since. The 2.9-million-square-foot structure occupies a whole block between Eighth and Ninth avenues and 15th and 16th Streets.

111 8th Ave
New York, NY 10011
10. Google: St. John’s Terminal
315 HUDSON ST, NEW YORK, NY 10013
02_SJT_Houston_Street_Angle___COOKFOX_Architects.0.jpg

A year ago, Google announced that it will create a new 1.7 million square foot campus (“Google Hudson Square”) across three parcels in lower Manhattan, at 315 and 345 Hudson Street, and 550 Washington Street—aka St. John’s Terminal, the development site that has been in limbo for several years.
315 Hudson St
New York, NY 10013
11. Google: Chelsea Market
75 9TH AVE, NEW YORK, NY 10011
A building with a sign that says “Chelsea Market” on an awning.

Back in March 2018, Google bought the Chelsea Market building, located in front of their NYC headquarters, for $2.4 billion. Google had already been leasing offices at the Chelsea Market building for a decade.
75 9th Ave
New York, NY 10011
(212) 652-2111
12. Google: Pier 57
HUDSON RIVER GREENWAY, NEW YORK, NY 10011
190522_18_43_28_5DS23914.0.jpg

Google agreed to lease thousands of square feet of space at the redeveloped Pier 57 site. That includes at least 300,000 square feet of office space, 50,000 square feet for public programming, and adding a landing for ferry service, Crain’s reported back in early 2018.
Hudson River Greenway
New York, NY 10011
(212) 627-2020
13. Google: 450 West 15th Street
450 W 15TH ST, NEW YORK, NY 10014
Back in May, Google purchased the building at 450 West 15th Street, known as the Milk Building, for $600 million. The move exerted the tech giant’s dominance over that area, as it now leases nearly all the commercial property between West 15th and West 16th streets, from Eighth Avenue to the Hudson River, according to Crain’s.
450 W 15th St
New York, NY 10014
14. Netflix: 333 Johnson Avenue
333 JOHNSON AVE, BROOKLYN, NY 11206
US Online Streaming Giant Netflix : Illustration

Netflix already has a presence in the city, with series like Orange Is the New Black, The Unbreakable Kimmy Schmidt, and, most recently, Russian Doll filming throughout the five boroughs. But the streaming service has typically filmed its series at other sound stages in city, including Silvercup Studios and Kaufman Astoria Studios in Queens. Earlier this year, it announced that it will lease 161,000 square feet in Brooklyn to build six new sound stages, which will eventually be capable of holding thousands of jobs.
333 Johnson Ave
Brooklyn, NY 11206
15. Netflix: 888 Broadway
888 BROADWAY, NEW YORK, NY 10003
1_00847_7501.nLpMOZVt__1_.0.jpg

As part of its larger production hub deal, Netflix will also lease around 100,000 square feet in the Flatiron District. To get Netflix to New York, the Empire State Development Corporation offered $4 million in tax credits via its Excelsior program, which ties that incentive to job creation. Netflix must create 127 promised jobs in its corporate office by 2024 to get the full reimbursement. The new office and production space is expected to bring back about $100 million back to the city.
888 Broadway
New York, NY 10003
 

David Goldsmith

All Powerful Moderator
Staff member
Manhattan’s office leasing sees busiest month since January
Sixfold increase from June, but activity still down 54% from a year ago

Manhattan’s office leasing activity in July was the strongest since January, but that doesn’t mean the market is on its way to recovery.
Leasing volume last month was 2.39 million square feet, nearly six times more than the volume in June when only 0.42 million square feet was leased. However, July volume was less than half of the 5.17 million square feet leased a year ago, according to a report by Colliers International.

Notably, 71 percent of July leasing was driven by renewals, including several short-term extensions — a complete reversal from last year as a whole, when 71 percent was new leases and expansions.

Some major renewals — including NBCUniversal Media’s 334,000-square-foot lease at 1221 Avenue of the Americas and Stroock & Stroock & Lavan’s 192,000-square-foot lease at 180 Maiden Lane — were short-term, meaning less than five years, said Franklin Wallach, Colliers’ senior managing director for New York research.

Such deals typically mean a tenant is unsure about its future needs or hopes to “revisit the situation a year or two later if they think the situation is going to be more in their favor,” Wallach said.
Another sign of caution: Office availability in July reached its highest point since 2014 at 11 percent, up 0.4 percentage points from June and 1.5 points from a year ago.

“Supply was still outstripping demand,” Wallach said. “So that’s an indicator that the market is still impacted.”
And net sublet availability went up by nearly 1 million square feet, reaching 22 percent of total availability. Wallach said if the figure is less than 20 percent, the market is considered healthy.

“When it’s 20 to 25 percent, there’s some yellow warning light. You keep an eye on the situation. When it is north of 25 percent, you have a glut of sublet space,” Wallach said. “That usually puts downward pressure on pricing because it competes with direct space that landlords are marketing.”

Monthly absorption was negative 2.25 million square feet, and the average asking rent went down by 0.4 percent since June to $79 per square foot.
One noteworthy new lease in July was by American International Group for 218,000 square feet at 28 Liberty Street, according to the report. The lease is part of the insurance giant’s effort to relocate its headquarters from 175 Water Street.
 

David Goldsmith

All Powerful Moderator
Staff member
Nationwide office leasing demand hits two-decade low
Negative net absorption totaled 22M sf in second quarter; San Fran saw massive decline in demand

The coronavirus pandemic and its economic aftermath have put a damper on office leasing across the U.S. By one measure, the decline in demand for office space in the second quarter was the largest the country has seen since the dot-com crash.
Net absorption in the U.S. office market — the amount of space leased minus vacated space and new space — turned negative for the first time a decade in the second quarter, totalling 21.5 million of negative absorption, according to a new report from CBRE. That’s slightly worse than the 21.2 million single-quarter decline seen at the peak of the financial crisis, but still well behind the massive 41.2 million square foot decline from the third quarter of 2001.

As the below chart from the report shows, the 2008 financial crisis led to four consecutive quarters of negative net absorption in office markets nationwide. It remains to be seen how long the impact of the current disruption will last.

%EC%8A%A4%ED%81%AC%EB%A6%B0%EC%83%B7-2020-08-03-16.49.17-705x338.png

Other office leasing metrics also point to a major slowdown in the market. Leasing volume fell by 35 percent from the prior quarter and 44 percent from the same period last year. Vacancy ticked up 0.7 percentage points to 13 percent.

The slowdown hit some markets more heavily than others, with the NYC metropolitan area, California and Texas accounting for 72 percent of negative demand. Meanwhile, about a dozen markets in Southeast, Midwest, and Washington, D.C., still saw positive absorption.

The San Francisco market saw the most negative absorption of all, at 2.3 million square feet. At the other end of the spectrum, Tampa saw positive absorption of 360,000 square feet, the largest of any market.
Even after the massive decline in demand, San Francisco’s office market was still the second tightest in the country at 7 percent vacancy, surpassed only by nearby San Jose’s 6.7 percent.

The amount of available sublease space has begun to grow significantly in some parts of the country, with Phoenix and Salt Lake City seeing large increases in the second quarter. CBRE notes that this is “perhaps due to a greater ability to tour space than other markets that were more acutely affected by Covid-19 restrictions early in the crisis.”

Manhattan, for example, has yet to see a widely expected increase in sublet availability, while Los Angeles has seen sublease availability hit record levels.
Rents have also yet to drop noticeably despite the decline in demand, although CBRE notes that downward pressure is growing as landlords offer more concessions. But for now, “a significant difference in pricing expectations has emerged between landlords and tenants,” the report says.
 

David Goldsmith

All Powerful Moderator
Staff member
Who’s returning to the office? Almost no one
Just 8% of employees are back; real estate industry is exception

Three months ago, New York City’s major employers thought only 10 percent of their workers would be back in the office by now.
It turns out that things are not as bad as expected. They’re worse.

Only 8 percent of their employees have returned to workplaces, according to a follow-up to a late-May survey by the Partnership for New York City, a leading business group.

Moreover, just 26 percent of them are expected back by the end of the year, and 54 percent by July 2021, the survey — answered by 146 employers — found.
One exception was the real estate industry, where 53 percent of workers are already at their desks and 94 percent are anticipated to return sometime this year.

Tech employers were also relatively optimistic, as they expect 74 percent of staff to be back by July 2021. In the 50 percent range were finance, insurance and consulting firms.

Bringing up the rear were accounting, media and entertainment, sports, and hospitality companies. It is unclear when arenas and theaters will be allowed to welcome customers again.
Slightly more than three-quarters of companies cited Covid as the primary reason that so many of Manhattan’s 1.2 million office workers would not soon return, and 10 percent ranked it No. 2. What could possibly be a greater worry? “Transit safety” was the next-greatest concern, but that was undoubtedly also because of Covid — even though the subways have not been a significant source of coronavirus transmission, thanks to rapid air recirculation and high rates of mask-wearing.

Next on the list of reasons to work from home was a lack of child care. If schools and day care centers are not open, parents will be doing Zoom calls at home with their kids running amok or attending school remotely. Public schools are scheduled to open next month, but most students will not be allowed to attend them every weekday.

In one hopeful sign for office landlords and the thousands of businesses that rely on commuters, the least important factor cited by survey respondents was employees’ desire to continue working from home. That suggests that once people can safely come back to work, most of them will.

Two-thirds of respondents were from Midtown and 18 percent were based in the Financial District.
Last month the Partnership for New York City released a blueprint for the Big Apple’s economy to recover. It estimated that as many as one in three of the 230,000 small businesses in the city’s commercial corridors might never reopen.
 

David Goldsmith

All Powerful Moderator
Staff member
Tech deals give hope to shaky office market
Amazon, Facebook make long-term commitments, but immediate future brings challenges

Amazon and Facebook both made major commitments in the past two weeks to a New York City office market with an uncertain future. But that shot in the arm belies the fact that many companies are still in wait-and-see mode.
“A lot of tenants are punting on the whole topic and saying they’re going to continue working remotely,” said Grant Greenspan, a principal and head of office leasing for the Kaufman Organization.
Greenspan added that the jobs associated with the recent deals will take a few years to be filled.

“There’s going to be a three-to-five-year recovery where tech tenants are going to be the driver of the city’s economy,” he said.
But there’s an ominous opposing force: a flood of sublet space that will hit the market and drag down the office recovery.

“In the near term,” he said, “there’s a lot of negativity about where the market’s going to go.”
Seattle-based Amazon this week said it plans to add 3,500 corporate jobs at hubs in six U.S. cities. That includes 2,000 positions at its New York City office in the former Lord & Taylor building. The rest will be in Phoenix, San Diego, Denver, Detroit and Dallas.

The news came just two weeks after Facebook signed its long-anticipated lease for 700,000 square feet at Vornado Realty Trust’s Farley Post Office redevelopment and follows TikTok’s lease of more than 230,000 square feet at the Durst Organization’s One Five One office tower in Times Square.

The string of high-profile deals arrives as future demand for office space in cities like New York is very much in question as companies move further toward work-from-home models.
But the Amazon and Facebook deals had been set in motion before the pandemic. Amazon made plans to expand when it hammered out a deal to buy the Lord & Taylor building sometime around February for $1 billion. Facebook’s lease had been in the works since at least November.

“Amazon always said they were planning to increase jobs, particularly Amazon Web Service jobs in New York,” said Kathryn Wylde, president and CEO of the Partnership for New York City. “So I don’t think it’s a surprise, but it’s consistent. And the good news is there’s a continuity of this desire to be in New York.”

Wylde pointed out that Amazon is part of a group of companies including JPMorgan and Google pledging to help 100,000 disadvantaged New Yorkers find jobs by offering training, apprenticeships and entry-level positions.
Her view on Amazon’s jobs expansion, though, was somewhat bittersweet, given the opposition that led the e-commerce giant to scuttle plans for a second headquarters in Long Island City early last year. Wylde said she hopes the announcement of new jobs will get a warmer welcome this time around.

“We’re seeing the private sector step up and kind of bridge the gap for New Yorkers left on the other side of the digital divide,” she said. “It’s extremely important to not allow the naysayers to say that doesn’t matter.”
Julie Samuels, executive director of Tech:NYC, a nonprofit that has come to speak for the city’s tech industry, said Big Tech office decisions are still driven by intense competition to recruit the best engineers. When the likes of Amazon, Facebook and TikTok make monster deals, she said, lots of companies take notice.

“These companies signing big leases is in many ways a bellwether for tech,” she said. “I think that’s true even beyond tech.”
Greenspan added that the ecosystem around all those Amazon and Facebook jobs will help new businesses form. And he said even in a space as challenged as restaurants, he is seeing new businesses starting up.

“There are plenty of entrepreneurs out there who know they’re going to be back in business,” he said. “It gives me encouragement to know there’s a light at the end of the tunnel.”
 

David Goldsmith

All Powerful Moderator
Staff member
Got space? Manhattan office availability hits 7-year high
Leasing down 21% in August as sublet space dilutes market

Manhattan’s office real estate market weakened in August as leasing volume was down 21 percent from a year ago while the availability rate hit a seven-year high, according to a monthly market report by Colliers International.
Manhattan’s availability rate in August jumped by 0.8 percentage points from July to 11.8 percent, the highest since 2013. The rate is 2.1 percentage points higher than a year ago. The spike resulted partly from net sublet availability increasing by 1.31 million square feet for the month.

Sublet inventory accounted for 23 percent of Manhattan availability, the highest share since 2010.

Businesses typically avoid putting sublet on the market in August because it is a slow month, said Franklin Wallach, Colliers’ senior managing director for New York research. But it appears the pandemic has changed things.

“The trend of sublet space coming back into the market, which we saw picking up toward the end of the second quarter and in July, certainly continued in August,” Wallach said. “August 2020 was a very unique August.”
One notable example of newly listed sublet space is 103,000 square feet of Zillow subsidiary StreetEasy’s 130,000-square-foot office at 1250 Broadway in NoMad. The Seattle-based proptech giant announced in late July that it would offer 90 percent of its 5,400 employees the option of working from home at least part-time.

A Zillow spokesperson, responding to an inquiry about whether its sublease decision was related to its remote-work policy, said, “We’re informally exploring what options we have to right-size our office space in the city. While no decisions have been made, Zillow will continue to have a physical presence in New York City.”

Manhattan’s leasing volume was 1.3 million square feet in August, down by 20.7 percent from 1.64 million a year ago. Average asking rent was $78.01 in August, down by 2.5 percent from a year ago.
“Unless the demand picks up, the availability is poised to continue to increase through the rest of the year,” Wallach said.

Despite the slowdown, August had the biggest deal this year: Facebook’s 730,000-square-foot lease at the Farley Post Office redevelopment owned by Vornado Realty Trust.
Two other major new leases in August were in Midtown: Raymond James Financial leased 144,704 square feet at 320 Park Avenue and FTI Consulting inked a 120,720-square-foot lease at 1166 Sixth Avenue.
 
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