New York City shows signs of hope in real estate market

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

On the dark side, office towers occupied a high-historical vacancy rate of about 15 percent, and 85 percent remained physically deported. The sale of the investment has stalled. In a new report, Partnering for New York City, the companies say states that are too eager to leave states including Florida, Texas, North Carolina and Maryland “set up aggressive programs to recruit talent and attract jobs from New York Done… Literally every New York employer is being stopped. “

A disaster of retail may worsen. According to the New York City Hospitality Alliance, 90 percent of the restaurants did not pay their December rent – raising the possibility that thousands more dark eaters would soon swallow the vacancy plague.

and yet . . . and yet. Indications of underlying stability and renewed energy are increasingly common. Apartment sales are increasing, most notably in Brooklyn. According to Douglas Elliman and analyst Jonathan Miller, more Manhattan rental leases were signed in December than in a dozen years – based on lower rents – though vacant units remain at nearly all high levels.

January 2021 saw a $ 6 billion investment and a 38 percent increase in residential sales in January 2020, the New York Real Estate Board found – badly needing transfer-tax revenue at a cost of $ 190 million to the city and state , Which is 31 percent higher than the previous. January.

MetroTech of Downtown Brooklyn has seen a total renovation of 132,000 square feet since the start of the fourth quarter of 2020. Signing for New York’s SoulCycle and Hartshare Human Services – which mostly has a complex development in the banking back office under new owner Brookfield. A destination for tenants as diverse as slate and think! Architecture and Design. MetroTech now has 91 percent of its leases in 5.5 million sq ft.

Solid evidence of overall market stability also allows the Vornado Realty Trust’s 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 to a net profit of $ 193 million a year earlier. But this is typical of the results for publicly traded REITS during the epidemic.

CEO Steve Roth reported in the call that Vornado closed a $ 1 billion apartment at 220 Central Park South – “a large number that added to our cash balance and boosted 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.” “

Vernado CFO Michael Franco stated that “even with CO-COVID leasing activity down dramatically, we still leased 2.2 million square feet and 54 separate leased transactions in New York”.

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

The year ended at 93.4 percent at the Manhattan office in Vornado. Despite having extensive rental stories, Vornado recovered 95 percent of outstanding rents in the fourth quarter – 97 percent off-rent from office tenants and 88 percent from retail tenants, according to 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 office rent and 80.8 percent retail rent for the entire year.

Even in a less demanding market, SL Green’s assets 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 the lease of Beam Medicare for 11,000 square feet at 11 Madison Avenue, with an initial rent of about $ 90 per square foot.

Beam Suntory will move its US headquarters from Chicago to New York, keeping some space in the Windy City – a sign that companies still see value in being here.
It can also be expected that this year office workers will return to their desks. The widely followed Castel back-to-work barometer reported an increase in physical office occupancy from 13.3 to 14.7 percent last week. The needle has been stuck for months but may introduce enhanced immunization and public safety afresh.

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