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Manhattan’s ‘trophy’ office buildings begging for tenants

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Manhattan's 'trophy' office buildings begging for tenants

The dreaded “G-word” — as in glut — overhangs nearly 8 million square feet of space up for grabs in “trophy” office buildings that just opened or are set to open by the end of 2022.

The tally we did with help from CBRE means nearly three Empire State Buildings’ worth of Manhattan’s most expensive floors have yet to be claimed during the worst leasing crisis in the city’s history.

Overall Manhattan availability has leapt to 15 percent from 11 percent since early last year. Physical occupancy is a mere 15 percent as employees continue to work from home.

Glamorous, “starchitect”-designed additions to the skyline set the tone for the entire city. A load of unleased space at them would shadow the market for years as did over-built Times Square in the 1980s.

But the coming wave of new offices, where most rents will top $100 per square foot, might be timed just right for companies that increasingly gravitate to state-of-the-art products. Tenants like Pfizer, Skadden Arps and Time Warner could have saved a lot of money at cheaper, older locations but preferred to pay more for amenities at their new Hudson Yards-area homes.

Developers boast about their signed early commitments, such as Pfizer’s 800,000 square feet at The Spiral. But pandemic-battered builders must still find takers for jumbo blocks at their new skyscrapers. The largest available blocks are 1.4 million square feet at Brookfield’s Two Manhattan West, 1.2 million sf at Tishman Speyer’s Spiral and 807,000 sf at Related’s 50 Hudson Yards.

Immediate or imminent large availabilities also exist at works-in-progress 550 Madison Ave. and 660 Fifth Ave., both undergoing major redesigns, and at older properties like Three and Five Times Square which will be virtually new following top-to-bottom upgrades.

Gloom-mongers call every short-term surplus a “glut.” But brokers’ rosy forecasts can’t be entirely trusted either. Their argument that 7 million square feet are a minute fraction of Manhattan’s 440 million square-foot inventory is little comfort to a landlord with a half-million vacant square feet and lenders breathing down his neck.

Although demand is weak, one possible suitor for a Manhattan base is much-in-the-news Robinhood, which the Real Deal reported is interested in 60,000 square feet. The day-trading shop might well be drawn to the bells-and-whistles — and prestige — of a brand new building.

For perspective, we went to analysts with neither agendas to promote nor axes to grind.
Real Capital Analytics senior vice president Jim Costello noted that “Is Manhattan dead?” scenarios overlook the “long term.”

“People have been talking about the death of cities since the Black Death,” Costello said. What can’t be accomplished via Zoom — meeting new clients and business partners and creative collaboration — “are what cities make easy. I believe those features don’t go away.

“At some point, demand comes back. But at the same pace? That’s the big unknown. If it takes longer, then maybe some developers don’t have the wherewithal to get through it.”

Online research and operating platform VTS, which does extensive research to support its mission as a marketing tool for commercial real estate professionals, found a bright side.

Its VODI (VTS Office Demand Index), while noting that “demand [is] still 74 percent down from pre-COVID-19 levels,” cited better tidings for new projects. The index — which counts “tire-kicking” tours by prospective tenants — said, “Leasing demand in New York City has shifted towards Trophy and Class A office space and away from Class B properties post-COVID-19.

“Tours of Class A and Trophy spaces are taking up more than their typical share in the market at 69 percent in the last quarter of 2020, signaling the financial strength of tenants still active in the market.”

That means that firms are chasing advanced technological, sustainability and environmental features that exist primarily at buildings such as Two Manhattan West and The Spiral.

SL Green, Daniel Boulud team up

Collaboration between SL Green and superchef Daniel Boulud on a pricey new restaurant at One Vanderbilt catalyzed a Herculean food-relief campaign for the city’s pandemic-era neediest — including the homeless, front-line health workers and others suffering economic calamity.

Twelve months since its launch, the partners’ Food1st Foundation delivered its 500,000th meal last week — far exceeding an initial goal of 150,000.

As work on One Vanderbilt and restaurant Le Pavillon moved along early last year, SL Green CEO Marc Holliday kick-started Food1st with a $1 million seed contribution in April 2020. He enlisted his friend and eatery partner Boulud to provide the culinary expertise.
Restaurants shuttered by the lockdown included several at SL Green buildings.

“Marc told me he was very sorry for our industry and wanted to help,” Boulud said.

The 501(c)(3) nonprofit drew $4 million more from other donors. The original effort to feed 2,000 emergency health workers staying in hotels grew into a sprawling campaign “to help our restaurants and to provide meals to those on the front lines and those who are food-needy,” said SL Green vice president Harrison “Harry” Sitomer.

The foundation pays 26 local eateries from fast-casual Just Salad and Little Beet to high-end Armani Ristorante and Avra to prepare fresh meals tailored to recipients’ needs. Boulud’s own prep kitchen in Soho also pitches in.

“Helping people, serving people, that makes me feel like I’m in heaven,” said Pepe Castro, a chef at Just Salad.

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Goldman Sachs reportedly plans to move more than 100 bankers to Florida

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Goldman Sachs reportedly plans to move more than 100 bankers to Florida

Working from home is no longer an option at Goldman Sachs — but working from Florida might be another story.

More than 100 key Goldman Sachs employees are reportedly poised to migrate from the firm’s New York headquarters to a new office in Palm Beach, Florida.

The snub to the Big Apple — which comes as Goldman bankers reported back to the office on Monday after more than a year of working remotely — would mark a shift in Goldman’s more than 150-year-old, New York-centric strategy at the hands of Chief Executive David Solomon.

The Florida expansion is in the early stages and a few employees have made firm commitments, according to a report from Business Insider (paywall). Among those who have expressed interest in moving are partners in the firm, whose salaries start at $950,000 not including bonuses and other perks.

“High-performing managing directors or vice presidents are also being encouraged to relocate, to signal that the office won’t be considered a backwater that kneecaps their Wall Street career,” the report said, citing an unnamed source.

Staffers who move to Florida will not be expected to take a pay cut, according to the report.

Goldman executives at the global markets division, which includes the the core sales and trading operations, will select which members of the team to send, with the idea that “each cluster would be an offshoot of a larger team based in New York and made up of as many as eight or 10 people,” the report said.

Marc Nachmann, co-head of the trading division, commutes regularly from Boca Raton, which could be part of the reason behind the migration. The other head of trading, Ashok Varadhan, is based in New York.

Florida’s sunshine and low taxes made it a haven as coronavirus has shut down New York City. But it’s unclear whether CEO Solomon — who called working from home during the pandemic an “aberration” that was not a “new normal” — will be pleased with large swaths of employees moving to Florida permanently.

As reported by The Post, Goldman’s Asset Management division had been planning to expand its presence in Florida but a lack of interest has stalled those plans. When employees were polled on the cost-saving idea — with managers informally sounding out the rank-and-file, and the company even sending out an email survey — the bank was met with a notable scarcity of snowbirds, sources told The Post.

Goldman has previously dismissed the idea that the firm is planning major relocations.

“As announced at our investor day in January 2020, we are executing on the strategy of locating more jobs in high value locations throughout the US, but we have no specific plans to announce at this time,” Goldman said in a statement.

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El Salvador volcanoes to power bitcoin mining

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El Salvador volcanoes to power bitcoin mining

Bitcoin is red-hot in El Salvador — and the country says it plans to use power from its volcanoes to mine it.

El Salvador President Nayib Bukele — just hours after the country’s legislature approved the “Bitcoin Law,” making it the first to accept Bitcoin as legal tender — revealed Wednesday that the nation’s state-owned geothermal electric company will harness volcanic energy to mine the cryptocurrency.

Bukele said the country is already designing a mining hub that will use “very cheap, 100% clean, 100% renewable” energy from volcanoes to power the operation, which effectively would be a bank of super-powered computers that solve the complex mathematical equations required to mine Bitcoin.

“Our engineers just informed me that they dug a new well,” Bukele tweeted, saying it would generate 95 megawatts of energy — enough to power more than 500 homes for a year. “What you see coming out of the well is pure water vapor.”

Bukele — who is looking to lower transaction fees on the $6 billion in yearly remittances sent to its citizens from abroad — has yet, however, to reveal when the new operation will be live or how many Bitcoins he expects to be able to mine.

It’s been a bullish week for Bitcoin in El Salvador. The digital coin can now be used as payment for goods, services, and taxes in the public and private sector. Bitcoin rose 6 percent on the news, according to data from Coindesk.

According to a study by Cambridge University, Bitcoin mining consumes more energy per year than the Philippines. Elon Musk has met with Bitcoin miners about environmental concerns, recently citing them as he announced Tesla would no longer accept Bitcoin as payment.

Details about the mining efforts and how El Salvador will widely adopt Bitcoin remain vague. The law states it will provide “the necessary training and mechanisms” to allow the 70 percent of its citizens that don’t have access to traditional banking services to understand how they can use Bitcoin but didn’t elaborate.

Still, Bukele remains an enthusiastic advocate for the currency and his mining project. Late Thursday he tweeted drone footage of the new mine with a rainbow in the background.

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China arrests 1,100 crypto users on money laundering charges

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China arrests 1,100 crypto users on money laundering charges

China’s crackdown on cryptocurrencies is heating up with a series of arrests that suggest digital currency users can be traced.

More than 1,100 people who allegedly used cryptocurrencies to launder profits from frauds were arrested Wednesday, the country’s Ministry of Public Security said in a statement. 

The busts involved 170 criminal groups who authorities say hired “coin farmers” to open crypto accounts after bank accounts they used for their alleged scams had been seized.

“The high illegal income attracts a large number of people to participate, causing serious social harm,” the ministry said of the alleged plots.

The arrests may cast further doubt on the supposed un-traceability of cryptocurrencies. On Tuesday, the price of bitcoin fell almost 12 percent after it was revealed that US authorities were able to reclaim most of a bitcoin ransom that Colonial Pipeline paid to hacker group DarkSide in May. 

“Criminals have been using bitcoin because of the supposed inability of governments to get at it,” Anthony Denier, CEO of trading platform Webull, told the Post on Tuesday. “If governments can claw it back, that hurts its appeal.” 

Wednesday’s arrests are part of a broader Chinese crackdown on crypto. They come less than a month after the government called for greater regulation of digital currencies.

A committee presided over by a member of China’s Politburo wrote in May that it is necessary to “crack down on bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field.” 

Worries about bitcoin’s traceability and the looming threat of government regulations have sent the cryptocurrency plummeting from its peak of more than $63,000 in April. Bitcoin was trading at about $37,600 Thursday morning. 

Additional reporting by Will Feuer

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