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Manhattan’s ‘trophy’ office buildings begging for tenants



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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Nevada Gov. Steve Sisolak wants to build crypto-run private desert cities




Nevada Gov. Steve Sisolak wants to build crypto-run private desert cities

Nevada, the state of legalized gambling, prostitution and marijuana, is about to add another layer to its Wild West reputation: Desert cities formed by companies and run entirely on blockchain technology.

Nevada Gov. Steve Sisolak held a press conference on Friday to lay out his futuristic plan to open “Innovation Zones” on thousands of acres of privately owned desert that would allow private corporations specializing in emerging technology to form local governments complete with the right to impose taxes and create school districts or even courts.

It was Sisolak’s most detailed discussion of the plan, which has not yet been introduced to the legislature. He said the cities would be run entirely on blockchain technology, the digital ledger primarily used to transfer cryptocurrencies, allowing residents to buy goods, pay bills, transfer property deeds and obtain marriage licenses all using cyber coins. 

One big winner would be Jeffrey Berns, the founder and CEO Blockchains LLC, who purchased almost 70,000 acres of Nevada desert east of Reno in 2018 and said he wants to found a blockchain-based community.

Elon Musk’s massive Tesla battery gigafactory is also located in the same county as Berns’ recent landgrab. While there’s no indication billionaire electric car tycoon wants in on the plan, he would seem to be an ideal candidate given Tesla’s surprise and market-moving $1.5 billion investment in Bitcoin earlier this month.

Of course, for Tesla to build its own autonomous zone, Musk would need to add almost 48,000 acres to meet the 50,000 acres of contiguous, uninhabited land required for a company to meet the rules of the proposed legislation. The rules would also require a $1 billion investment over 10 years.

During a Friday afternoon press conference addressing the plan, Sissolak said Nevada needs a bold new vision to recover from the ravages of the pandemic on the state’s tourism-centric economy.

“This is different than anything that’s ever been proposed before,” he said, hammering home the vision of interconnected modern communities bringing jobs and commerce to unused land. “Companies can collaborate on a future together that would make Nevada not just a national but global leader in Blockchain technology.

While short on some details, like how a so-called Stablecoin would be designed to facilitate a fully Blockchain economy within a US state, and who would pay for roads in and out of what would be essentially private cities, the governor asked Nevadans to think big.

“There’s gonna be a lot of naysayers,” he said at the end of the presser. “I get that, but take a moment to look at the proposal.”

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United Airlines to pay $49.5M to settle mail contract probe




United Airlines to pay $49.5M to settle mail contract probe

United Airlines agreed to pay $49.5 million to resolve criminal charges and civil claims relating to fraud on Postal Service contracts for transportation of international mail, the US Justice Department said Friday.

“United defrauded the US Postal Service by providing falsified parcel delivery information over a period of years and accepting millions of dollars of payments to which the company was not entitled,” the Justice Department’s acting criminal division chief Nicholas L. McQuaid said.

United did not immediately comment.

The Justice Department said between 2012 and 2015, United defrauded the US Postal Service (USPS) by submitting false delivery scan data. The government said United submitted automated delivery scans based on aspirational delivery times. The government said some individuals at United sought “to hide the automation practices included efforts to revise the falsified delivery times to make the automated scans appear less suspicious to USPS.”

United agreed to strengthen its compliance program and to submit yearly reports to the Justice Department detailing the status of remediation and implementation of United’s compliance program and internal controls.

The government cited United’s prior history, including a 2016 non-prosecution agreement relating to potential criminal bribery violations arising out of United’s establishment and operation of a non-stop route between NJ’s Newark Liberty International Airport and Columbia Metropolitan Airport in South Carolina.

In 2019, American Airlines, paid $22.1 million to settle claims it falsely reported the times it transferred possession of US mail to foreign postal administrations or other intended recipients, the Justice Department said.

USPS contracted with American to take possession of receptacles of US mail at six locations and then deliver it to numerous international and domestic destinations. The settlement resolves claims American Airlines falsely reported the times it transferred possession of the mail. American did not immediately comment.

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Bill Ackman tells investors to follow him on Twitter




Bill Ackman tells investors to follow him on Twitter

Billionaire Bill Ackman appears to be taking a page from Elon Musk with plans to start announcing market-moving news on Twitter.

The billionaire investor’s blank check company, Pershing Square Tontine Holdings, issued a press release on Friday highlighting Ackman’s Twitter feed and saying it may be used as a venue for official announcements.

“Investors should follow this account for information about the company,” the release said.

Ackman’s #FollowFriday campaign comes as retail traders wage their second campaign on “meme stocks” like GameStop, prizing sentiment and social media posts over fundamentals and pumping so-called “stonks” unloved by mainstream Wall Street investors.

Ackman was up late Thursday night engaging with Twitter users who asked him about a second Pershing Square blank check company, aslo known as a SPAC. His terse answers thrilled some followers who seemed to read into the ambiguous responses.

When asked if investors in the first SPAC could be given priority to invest in the second, Ackman tweeted “We have the technology” leading users on Twitter and Reddit to proclaim that Ackman was about to acquire payment platforms Stripe, Plaid, or even trading app Robinhood, with dozens of users posting that Ackman’s tweets indicate he would announce a merger on Friday, on Twitter.

Despite Ackman appearing to have gained more than 1,000 new followers in a matter of hours, shares in Pershing Square Tontine were trading slightly down at midday after spiking in early trading.

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