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Conde Nast blasted for skipping out on $2.4M in rent at One WTC

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Conde Nast blasted for skipping out on $2.4M in rent at One WTC

The landlord for Conde Nast has blasted the glitzy publisher of Vogue, Vanity Fair and The New Yorker for withholding some $2.4 million in rent for its now largely vacant headquarters at One World Trade Center.

“Conde claiming that they cannot pay their rent while their parent company is reaping billions in the stock market is not credible,” said a spokesman for the Durst Organization.

As The Wall Street Journal reported earlier this week, the publisher has told the landlord it’s withholding January’s rent and that it could withhold rent for other months, too, as it seeks to reduce its square footage and its rent per square foot at the landmark office tower.

Conde’s parent company is Advance Publications, which is owned by the billionaire Newhouse family.

Advance is a large shareholder in Reddit, the chat forum at the center of last month’s bizarre rally in small stocks like GameStop. It recently doubled its valuation to $6 billion following a $250 million funding round.

It owns The Ironman Group behind triathlons of the same name is also “among the largest shareholders” in cable giant Charter Communications and TV network Discovery, its website said.

Conde Nast itself, however, is believed to be losing tens of millions of dollars as the pandemic has pummeled advertising.

The Post reported last summer that Conde Nast was scouting for a new location in midtown Manhattan. It was the anchor tenant at One WTC, where it leased over 1 million square feet, but had been subleasing some of the space as it downsized even before the COVID-19 pandemic forced it to vacate in March.

More recently, Bloomberg reported that the company was scouting sites across the river in New Jersey.

“Advance continues to be in discussions about bringing the lease in One WTC into line with current market conditions and its ongoing needs at that location,” said a spokeswoman. “We are also considering alternative solutions to address these requirements.”

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Real Estate

Retail Sales Fell In May. So What?

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Shoppers in the early evening at the Ala Moana Center in Honolulu

Retail sales fell 1.3% in May. Should we worry that consumers are running out of steam as the boost from stimulus checks received earlier this spring fades? An unexpected slowing of consumer spending could have negative implications for the economic recovery, as well as for the embattled retail commercial property sector and retail REITs.

A brief look at recent history dispels these fears. Retail sales in May were still elevated; in fact, even after the decline in last month, spending was 10.9% above the pre-pandemic trend, not far from the 12.8% by which retail sales exceeded trend in April.

How are brick & mortar sales holding up in recent months, following the surge in e-commerce sales during the pandemic? In-store sales had been facing stiff competition from the growing online channel for several years prior to the COVID-19 pandemic, weakening conditions in the retail property markets and impacting retail REITs (note: I am senior economist at Nareit, the worldwide voice for REITs and listed investments in real estate).

The e-commerce share of retail sales (excluding food service, motor vehicles, and gasoline) jumped in April 2020 to 24.8%, from 18.3% just prior to the pandemic. Since then, however, the e-commerce share has drifted lower, and in May was 1.3 percentage points above its trend growth.

The high level of total retail sales and the moderation of the e-commerce share has resulted in brick & mortar sales in May that were 11.1% above recent trends. As vaccination rates rise and the risk of exposures to COVID-19 decrease, more and more shoppers are returning to the stores and malls. Brick & mortar sales are likely to return to the pre-pandemic trend as the boost from stimulus checks runs its course, but robust job growth and rising household incomes are expected to sustain the spending trend.

That’s good news for the economy, for retail commercial real estate, and for retail REITs.

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Real Estate

Home Price Surge – Boom Or Blip?

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American Suburban Houses

In the past year, home prices rose 10 percent in Tampa, 12 percent in Salt Lake City and 18 percent in Boise.

That’s not supposed to happen during a recession. In the first year of the previous recession – in 2008 – the only big market with a gain in prices was Houston, where they rose 3 percent.

Some analysts (me) thought prices in 2020 and 2021 would rise only slightly because of the great uncertainty about people’s financial future.

So, what’s happening? And of more importance, what should we now expect over the next year? Will prices continue to rocket upwards? Must you make an investment right now, before it’s priced out of reach?

To get some perspective, let’s examine plausible reasons why home prices could rise so much at this particular time, with the US economy still in the red.

The California Effect. We’ve seen this before: after a long period of prosperity and a run-up in home prices, the California economy goes into a slump and people leave the state. They go to Portland, Boise, Denver, Salt Lake City, Phoenix, Albuquerque and Texas; and they go with a big chunk of home equity in their pocket. So when they get to Boise they think nothing of paying half-a-million dollars for a home.

Pre-Pandemic Growth. Before the pandemic a dozen big markets added jobs to their economy at a rate of more than three percent a year, including Boise, Austin, Phoenix, Dallas, Raleigh and Salt Lake City. Even a pause in growth doesn’t catch up with such high demand for housing.

Ultra-Low Interest Rates. Mortgage rates under three percent not only encourage home buying – they virtually demand that investors consider buying property – whether a rental, a second home or just a house sitting empty for a while – because the returns on similarly-safe investments like bonds or CDs are close to zero.

Pandemic Effects. It’s unjust, but lower-paid workers have been hit harder by job losses than those with higher pay and greater wealth – those who can afford to buy homes. Also, the pandemic has encouraged people to re-locate out of crowded city centers. On the other hand, a lot of people who might ordinarily have moved – Americans usually do – decided to hunker down and stay put; so there have been fewer homes to buy.

That this last phenomenon plays a bigger role right now is hinted at by the big price hikes in such unlikely places as Buffalo, New Haven and Allentown, where jobs and population have stagnated for years. Typically about 5 percent of the homes in a market are sold every year, not a lot; so even weak demand will quickly jack up prices if nobody wants to sell.

That doesn’t explain higher prices in Boise but it does allow us to predict where prices will probably keep going higher, and where the recent sharp increases are temporary.

If limited supply has been a major factor in higher prices, what will happen as the pandemic recedes and ‘normal’ behavior returns? Yes, more supply but also more demand. I’m guessing that the normal balance between supply and demand also returns when it’s not just well-off people driving demand. Boom markets will go higher, blip markets will level out. (Yes, I know, I was wrong about 2020…)

Our table shows 20 markets where home prices were at least 9 percent higher in the past year. Based on recent population growth I’ve classified them as booms, where prices will keep rising briskly in the next year – or blips, where prices may still increase but much more moderately. And some markets are in-between.

Just a last word about the boom markets: Boise is already dangerously over-priced, at some point a bust will follow. Phoenix and Tampa aren’t that risky yet but could be soon.

The important advice for investors in boom markets is that they should not factor expected equity gains into their return calculations; be sure the income stream from rents provides the return you need. If it doesn’t, you’re speculating more than you probably want to.

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Real Estate

Boxer Sugar Ray Leonard Seeks $46.5 Million For Mansion In Los Angeles

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sugar ray leonard house at 1550 Amalfi Dr Pacific Palisades, CA los angeles usa

Boxer Sugar Ray Leonard is hoping for a knockout in the real estate market. He recently relisted his Pacific Palisades estate for $46.5 million, tapping a trio of agents, including luxury real estate specialist Drew Fenton of Hilton & Hyland, to handle the sale.

The gated and hedged 1.7-acre property features a seven-bedroom, 16,700-square-foot home designed custom for Leonard by AD100 architect Richard Landry, who has worked with other athletes and celebrities, including football quarterback Tom Brady and ice hockey player Wayne Gretzky. Inspired by Florentine villas, the home features a terracotta tile roof and rustic wood-beamed ceilings. Highlights include a two-story family room, a screening room and a solarium. 

The property also has a pool, a full guest house, a lit tennis court with a viewing area and a separate putting green. Views take in the surrounding mountains and ocean.

Pacific Palisades is a highly coveted area in Los Angeles’ wide market. The neighborhood features a charming tight-knit community and a secluded Westside location largely insulated by lush greenery and coastal views. In addition to Getty Villa and numerous parks, the area is home to some of the best hiking trails in Los Angeles, including access to Will Rogers State Park and Temescal Canyon Park. Because of these attributes, the median price for single-family homes in Pacific Palisades now hovers above $3.82 million. 

The Leonard estate is currently the most expensive home for sale in Pacific Palisades, where the April sale of media mogul Shane Smith’s compound for $48.67 million set a new record in the Westside community. Last month, the sale of the Barron Hilton estate for $61.5 million set the 2021 record high for Los Angeles.

Leonard, 65, an Olympic gold medalist and world champion boxer who has competed in five different weight classes, shares the property with his wife, Bernadette Leonard. He retired in 1997 after two decades and was inducted into the International Boxing Hall of Fame that same year.

According to public records, the Leonards previously listed the property in September 2019 for $51.995 million but removed it from the market at the end of October.


Hilton & Hyland is a founding member of Forbes Global Properties, a consumer marketplace and membership network of elite brokerages selling the world’s most luxurious homes.

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