Connect with us

Business

New York City real-estate market shows signs of hope

Published

on

New York City real-estate market shows signs of hope

New York City’s pandemic-battered property world resembles a nerve-wracking “seesaw” of “flights and drops,” as Henry James wrote of his neurotic protagonist’s mood in “The Turn of the Screw.” With any luck, Gotham will come through in better shape than James’ tragic heroine.

On the dark side, office towers hit a near-historic high vacancy rate of 15 percent, and remain 85 percent physically unoccupied. Investment sales have grounded to a halt. The Partnership for New York City, in a new report, says that companies are so eager to leave that states including Florida, Texas, North Carolina and Maryland “have established aggressive programs to recruit talent and attract jobs from New York . . . literally every New York employer is being courted.”

Retail’s a disaster and might worsen. Ominously, 90 percent of restaurants didn’t pay their December rent, according to the New York City Hospitality Alliance — raising the prospect that thousands more dark eateries will soon swell the vacancy plague.

And yet . . . and yet. Signs of underlying stability and renewed energy are increasingly common. Apartment sales are up, especially in Brooklyn. Stimulated by reduced rents, more Manhattan rental leases were signed in December than for the month in a dozen years, according to Douglas Elliman and analyst Jonathan Miller — although vacant units remain at a near all-time high.

Investment and residential sales of $6 billion in January 2021 saw a 38 percent jump over January 2020, the Real Estate Board of New York found — yielding the city and state $190 million in badly needed transfer-tax revenue, 31 percent more than in the previous January.

Downtown Brooklyn’s MetroTech has clocked renewals totaling 132,000 square feet since the start of the fourth quarter of 2020. The signings — including for SoulCycle and HeartShare Human Services of New York — reflect the complex’s evolution under new owner Brookfield from mostly a banking back-office into a destination for tenants as diverse as Slate and Think! Architecture and Design. MetroTech’s 5.5 million square feet are now 91 percent leased.

Concrete evidence of overall market stability also permeates Vornado Realty Trust’s just-released 10-K annual SEC filing for 2020 and its fourth-quarter earnings call last week.
The giant developer/landlord saw a net loss of $209 million for the quarter, compared with net gain of $193 million the year before. But it’s typical of results for publicly-traded REITS during the pandemic.

CEO Steve Roth noted in the call that Vornado closed on $1 billion of apartments at 220 Central Park South — “a big number which was added to our cash balances and enhanced our financial strength.” His company is spending more than $1 billion to redevelop the Farley building — where Facebook signed the largest office lease of 2020 at 750,000 square feet — and the Penn 1 office tower “off our balance sheet without debt.”

Vornado CFO Michael Franco said on the call that even “with post-COVID leasing activity down dramatically, we still leased 2.2 million square feet and 54 separate leasing transactions in New York” in 2020.

Starting rents remained strong at $89.33 per square foot, and the average lease term was for 14.4 years, Franco said.

The year ended with Vornado’s Manhattan office occupancy at 93.4 percent. Despite anecdotal tales of widespread rent holdouts, Vornado collected 95 percent of owed rents in the fourth quarter — 97 percent including rent deferrals from office tenants and 88 percent from retail tenants, according to the 10-K.

Meanwhile, SL Green, the city’s largest commercial landlord with interests in 29 million square feet of offices, reported similar strength in its fourth-quarter results.
The REIT collected 97.9 percent of office rent and 80.8 percent of retail rent for the entire year of 2020.

Even in a low-demand market, SL Green properties saw 464,000 square feet of deals in the fourth quarter and 1.25 million square feet for the full year. The most recent major commitment was Beam Suntory’s lease for 100,000 square feet at 11 Madison Ave., with a starting rent of around $90 per square foot.

Beam Suntory will move its US headquarters to New York from Chicago while keeping some space in the Windy City — a sign that companies still see value in being here.
There might even be hope that office workers will return to their desks this year. The widely followed Kastle Back-to-Work Barometer reports an uptick in physical office occupancy last week from 13.3 to 14.7 percent. The needle’s been stuck for months but could start to move with increased vaccinations and a renewed sense of public safety.

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Philanthropist MacKenzie Scott marries Seattle science teacher

Published

on

By

Philanthropist MacKenzie Scott marries Seattle science teacher

MacKenzie Scott — the ex-wife of Amazon founder Jeff Bezos — has married a science teacher who works at a Seattle private school, according to a report.

Scott, one of the world’s richest women noted for her philanthropy, wed Dan Jewett, a teacher at Lakeside School, a source told the Wall Street Journal.

In a December blog post to Medium, Scott said she donated nearly $4.2 billion to charity in a span of four months to support struggling American during the COVID-19 pandemic.

Scott helped Bezos start Amazon in 1994. The two divorced in 2019.

Her Amazon author page currently says she “lives in Seattle with her four children and her husband, Dan,” the report said.

Continue Reading

Business

Boeing CEO waived pay but got compensation worth $21 million

Published

on

By

Boeing CEO waived pay but got compensation worth $21 million

Boeing CEO David Calhoun declined a salary and performance bonus for most of last year but still received stock benefits that pushed the estimated value of his compensation to more than $21 million, according to a regulatory filing Friday.

The aerospace giant struggled last year with the continuing fallout from two deadly crashes involving its 737 Max jetliner and a downturn in demand for planes because of the pandemic. Boeing lost nearly $12 billion and announced plans to cut about 30,000 jobs through layoffs and attrition.

Calhoun, who became CEO in January 2020, received $269,231 in salary for the period before he disavowed his salary in March. He also got $289,715 in other compensation, mostly perks such as the use of company planes, retirement benefits and home-security expenses.

The company said Calhoun gave up about $3.6 million by declining most of his salary and a $2.5 million bonus.

But most of Calhoun’s compensation — valued by Boeing at more than $20 million — came in the form of stock benefits that will vest in the next few years, assuming he remains CEO.

Those grants include $7 million worth of stock for returning the Max to service after it was grounded in 2019, $10 million worth of shares to compensate for pay he left behind at his previous job at The Blackstone Group, and $3.5 million in long-term incentive awards. All would vest over the next three years.

Calhoun, 63, was a longtime Boeing board member before being named CEO after the firing of Dennis Muilenburg in December 2019.

The Chicago-based company filed its proxy statement ahead of its April 20 annual shareholder meeting, which will be conducted online.

Shareholders will elect 10 directors. Pension funds in New York and Colorado are suing current and former board members and executives, including Calhoun and Muilenburg, in a Delaware state court. The funds accuse directors of lax safety oversight during the development of the 737 Max and after the first of two crashes that killed 346 people.

Continue Reading

Business

Tech rebound pulls stocks out of a slump and to weekly gain

Published

on

By

Tech rebound pulls stocks out of a slump and to weekly gain

Wall Street ended sharply higher after a volatile session Friday, with the Nasdaq rebounding at the end of a week that saw it extend losses to about 10 percent from its previous record high.

All three main indexes bounced back from losses earlier in the day, with investors in recent sessions spooked by rising interest rates that offset optimism about an economic rebound.

Microsoft rallied 2.15 percent, boosting the S&P 500 more than any other stock, with gains in Alphabet, Apple and Oracle also lifting the index.

The benchmark 10-year U.S. Treasury yields hit a new one-year high of 1.626 percent after nonfarm payrolls increased by 379,000 jobs last month, blowing past a rise of 182,000 forecast by economists polled by Reuters.

Focus is also on a $1.9 trillion coronavirus aid bill as a sharply divided U.S. Senate began what was expected to be a long debate over a slew of amendments on how that money would be spent.

The Nasdaq logged its third straight weekly decline after a recent spike in Treasury yields dented demand for high-flying technology stocks.

Rising interest rates disproportionately hurt high-growth tech companies because investors value them based on earnings expected years into the future, and high interest rates hurt the value of future earnings more than the value of earnings made in the short term.

The tech-heavy Nasdaq is around 8 percent below its Feb. 12 closing high.

Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, said his firm in recent days has bought shares in a handful of growth companies whose prices have been pummeled in the recent selloff.

“Next week, I would expect volatility to continue, with pockets of opportunity, with certain things that sold off potentially rebounding,” Dollarhide said.

The Dow Jones Industrial Average rose 1.85 percent to end at 31,496.3 points, while the S&P 500 gained 1.95 percent to 3,841.94.

The Nasdaq Composite climbed 1.55 percent to 12,920.15.

In a busy session, volume on U.S. exchanges was 17.4 billion shares, compared with the 15.3 billion average for the full session over the last 20 trading days.

For the week, the S&P 500 rose 0.8 percent, the Dow added 1.8 percent and the Nasdaq lost 2.1 percent.

In Friday’s session, the S&P 500 energy sector index surged 3.9 percent to over a one year high as oil prices soared.

Oracle jumped more than 6 percent after Barclays upgraded the business software maker to “overweight” expecting improvement in the IT spending environment.

Advancing issues outnumbered declining ones on the NYSE by a 2.86-to-1 ratio; on Nasdaq, a 2.12-to-1 ratio favored advancers.

The S&P 500 posted 55 new 52-week highs and no new lows; the Nasdaq Composite recorded 225 new highs and 134 new lows.

Continue Reading

Trending