Put on a happy face! – Trade Observer
Hey dark Gus, reverse that frown!
Because despite all the shouting about the state of the market, the raw numbers were much better in the first half of the year than in the first half of 2021. According to a report by Cushman & Wakefield, New York City achieved approximately $21.6 billion in investment sales, a 99% increase from compared to the first half of last year!
The good data was spread across all sectors: multifamily was up 373.1 percent; office grew 168.1%; industrial, up 83.8%. Even retail, the industry’s red-haired son-in-law, saw a 57.7% increase.
And we see the proof of that in the case that was concluded this week.
The rental in Manhattan was…damn good! Capital One made a 78,000 square foot affair at 11 West 19th Street, and that’s right after you’ve done a 60,000 square foot expansion at 114 Fifth Avenue for a total of 116,926 square feet at the address. Also at 11 West 19th Street, fashion designer Tory Burch signed another jaw-dropping Renewal of 130,000 square feet. At 123 William Street in FiDi, the General Services Administration renewed its 48,211 square foot space.
In Brooklyn, there were also notable biggies. Huge, the marketing firm, grabbed a, well, huge 71,000 square foot lease at Rudin Management’s Dock 72. And Lidl, the grocery store, took a lease of 25,000 square feet at Billy Macklowe’s 120 Fifth Avenue in Park Slope. (Lidl wasn’t the only grocery store to sign something in Brooklyn last week; Boxed took 14,795 square feet at 470 Vanderbilt Avenue in RXR.)
Sales also had an interesting week. Management of related funds invested $61 million for a 337,659 square foot mixed-use building in Long Island City, and Capital Automotive Real Estate Services disbursed $54 million for a Jaguar and Land Rover dealership at 809 Neptune Avenue in Coney Island.
Even the flex offices seemed to have some not-so-awful times. Revenue rose at WeWork, according to its latest earnings report, and the occupation finally reached pre-pandemic numbers. (Although losses also increased.)
On the other hand …
Well, we admit there are headwinds in the market – or, as Vornado’s Steven Roth put it on call for investors this week“rough conditions”.
“There are signs of a slowdown all around a rapidly slowing housing market, declining consumer confidence and companies announcing hiring pauses or even layoffs,” Roth noted. “Although we are protected by long-term leases with approximately 1,500 tenants, we expect to be prepared for choppy conditions.” (In Starwood’s results, Barry Sternlicht’s call seemed equally cautious, though Starwood could point $212 million in profit in the second quarteran 83% increase over the previous year.)
And if you’re looking for it, yes, there are signs that everyone should at least be worried about.
American Dream Mall, for example, missed an $8.8 million bond payment. That’s not good news for the 3 million square foot colossus of Rutherford, NJ, which lost an estimated $60 million last year.
It’s also not like inflation isn’t a problem. New York City Building increased by 8% in costs last year, one of the largest of any city in the world. (Maybe President Biden’s Inflation Reduction Act will repress these numbers.) In addition, there remains a labor shortage.
“Construction hiring is up 14%, but the number of construction jobs posted is up 49%,” said Paraic Morrissey, associate director at Rider Levett Bucknall, which released a report on the industry. “The biggest pressure on the construction industry is the labor shortage.”
Those who have claimed a big claim in the metaverse haven’t had a good time lately either. According a report in L’Information (who called the situation a “crisis” – everyone’s favorite soothing term), along with the dipping numbers for crypto and NFTs, real estate prices in the metaverse fell by almost 80%.
Overall, a feeling of nervousness in the market calls for caution.
“I’ve had a number of trades that have been put on hold, likely due to interest rate uncertainty in the capital markets,” Kramer Levin’s Jay Neveloff said in cover of this week.
Neveloff is not alone in this case. Anecdotally, CO has spoken to many real estate professionals who are hustle much harder for fewer offers.
Back to the good stuff!
Challenging political press conferences On the government side, South Florida’s real estate luck has remained spectacular of late.
Whatever else you can say about the lending environment, Fort Partners was able to get $169 million to build an 11-story oceanfront condominium at 9165 Collins Avenue called Hillcrest by the Sea, just four blocks from the site of the Surfside condo collapse.
Federal Real Estate disbursed $181 million for the Pembroke Gardens shops of Jeffrey R. Anderson Real Estate. (See, we told you there was good news for retail! Although the seller paid $188 million in 2013. But that was then.)
And Citadel apparently never tires of signing a new real estate deal in Florida. Hedge fund took 90,000 square feet of office space at 830 Brickell while he constructs a permanent space.
The only bad thing this week, from a Miami property perspective, is if you have your own football team. If, say, you’re the real estate mogul who owns the Dolphins, you haven’t had a great week.
One last thing to worry about!
You know how every office owner nationwide is sweating through the work-from-home trend. Well, here’s another thing they should be worried about: asynchronous work!
Of course, the 9 to 5 schedule hasn’t really been in effect for very long. But you don’t have a schedule? (Which is more or less what asynchronous work is.) Do you just follow your colleagues on Google channels and Slack?
It’s a doozy. Nice story to give you the “Sunday Scaries” before heading back to the office tomorrow.
Oh wait – you don’t have to go to the office tomorrow because of WFH. And you don’t have to work tomorrow because of asynchronous work.
Help us, Bill Murray.
See you next week!