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Weekly Market Report - August 25, 2021

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“Delta is affecting the when”: Covid variant complicates NYC’s recovery


One executive with a major stake in New York City’s office market believes a post-pandemic recovery is coming — he just isn’t sure when yet, with the Delta variant sowing chaos into the process. “I think the return to the office is a ‘when’ question, not an ‘if’ question,” Boston Properties CEO Owen Thomas told the New York Times. “Delta is affecting the when.” Boston Properties has felt the effects of the Delta variant firsthand. The company owns approximately 12 million square feet of space in the city. Its buildings had returned to around 40 percent of their pre-pandemic occupancy by the beginning of the summer, but that figure has since receded to around 30 percent this month, according to the Times.


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Remote Work May Now Last for Two Years, Worrying Some Bosses


With the latest wave of return-to-office delays from Covid-19, some companies are considering a new possibility: Offices may be closed for nearly two years. That is raising concerns among executives that the longer people stay at home, the harder or more disruptive it could be to eventually bring them back. Many employees developed new routines during the pandemic, swapping commuting for exercise or blocking hours for uninterrupted work. Even staffers who once bristled at doing their jobs outside of an office have come to embrace the flexibility and productivity of at-home life over the past 18 months, many say. Surveys have shown that enthusiasm for remote work has only increased as the pandemic has stretched on. “If you have a little blip, people go back to the old way. Well, this ain’t a blip,” said Pat Gelsinger, chief executive officer of Intel Corp., whose company has benefited from the work-from-home boom. He predicts hybrid and remote work will remain the norm for months and years to come. “There is no going back.”


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Employees Feel Pressured as Bosses Order Them Back to Offices During Pandemic


The Houston-based oil refiner couldn’t have a viable business if people didn’t return to their daily commutes, Chief Executive Greg Garland said in an internal video seen by The Wall Street Journal. Phillips 66 would have to do its part. “If we in the energy business are reluctant to go back to the office, why should other people go back? How can we get our economy going again?” he said in the video. By early June, Phillips 66 had recalled the majority of its employees to its main Houston office, which houses around 2,300 people. It has stayed mostly full as Texas has emerged as a hot spot for new infections that have strained the state’s hospital system. Employees at the company have been discussing what they describe as lax safety protocols on issues like masks and an onerous approval process to work from home, according to several people familiar with the conversations.


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John Rogers bets on city rebound with Madison Square Garden


Ariel Investments founder John Rogers said, he’s betting New York’s hottest entertainment hubs will rebound from the Covid-19 pandemic—one of the reasons his firm bought shares of Madison Square Garden Entertainment Corp. “It’s an iconic brand,” Rogers said Friday in a Bloomberg Television interview. “As the delta variant eventually ends, people will be back in the Garden watching the Rangers, watching the Knicks, going to concerts. It’s going to be an extraordinary business.” The pessimism that rocked markets at the height of the pandemic created significant opportunities to find value, Rogers wrote in a recent note to clients. While some of those have since vanished, there’s still value to be found, he added—particularly among small and mid-size companies like Madison Square Garden Entertainment, which owns the eponymous Manhattan arena, the Rockettes and other holdings.