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Weekly Market Report - August 5, 2022


During an interview on "Mornings with Maria" Friday, Peebles Corporation founder and CEO Don Peebles weighed in on the volatile housing market, arguing that New York City is suffering from a record-breaking number of commercial office vacancies because businesses are moving to "low tax environments." DON PEEBLES: All cities aren't created equally. New York City has changed dramatically. People are not coming back into their offices. And as a result of the decline in commercial office space, demand, is very significant. Record-breaking vacancies, record-breaking low occupancy numbers, and that's affecting, of course, the retail around it and businesses that depend on that. But then if you look and say Miami, where Citadel just announced last week or the week before that they're moving their Chicago office to Miami and other firms are moving.


The benefits of working from home are obvious: freedom, no commute; it’s easier to be there for family, the dog, the dentist appointment. Less time wasted in goofy office wide meetings. I’ve wondered if there is another aspect, that office life was demystified by what began in the years before the pandemic, the rise of HR complaints and accusations of bullying, bad language and sexual misconduct. Add arguments over masks and vaccines, and maybe office life came to be seen less as a healthy culture you could be part of and more like a battlefield you wanted to avoid. Arguments against working from home are largely intangible, and I focus on these. They are less personal, more national and societal. My mind goes first to the young.

People starting out need offices to learn a profession, to make friends, meet colleagues, find romantic partners and mates. Without working in person, there will be less knowledge of the workplace, of what’s going on, of the sense that you’re part of a burbling ecosystem. There will be fewer deep friendships, antagonisms, real and daily relationships. The primary location of daily integration in America—the coming together of all ages, religions, ethnicities and political tendencies, all colors, classes and conditions—has been, during the past century, the office. It is where you learn to negotiate relationships with people very different from you, where you discover what people with different experiences of life really think. You discern all this in the joke, the aside, the shared confidence, the rolled eyes. And with all this variety you manage to come together in a shared, formal mission: Get that account, sell that property, get the story, process those claims. Daily life in America happened in the office. If it doesn’t, where will America happen?


Twitter told employees Wednesday that it will shutter its 1 10th Street office in San Francisco and consolidate it into its Market Street headquarters, located behind its 10th Street space, Bloomberg first reported. Twitter also ditched plans to open an Oakland, Calif., office and is considering closing its outposts in various cities around the world. Tech firms provided a beacon of hope to Manhattan’s office market during the pandemic, with Facebook inking a massive 730,000-square-foot deal at the Farley Post Office and Amazon announcing plans to open a 2,000-person office at the former Lord & Taylor flagship on Fifth Avenue. Such moves helped tech overtake finance as the biggest driver of office leasing in the borough. However, tech firms have cut back on space in recent weeks. Yelp closed its offices in New York City, Washington, D.C., and Chicago and shrunk its outpost in Phoenix.

Meta, the parent company of Facebook, dropped plans to add 300,000 square feet to its footprint at 770 Broadway and paused plans to build out its Hudson Yards offices. Amazon pulled out of its sublease with JPMorgan Chase at 5 Manhattan West and halted work on the construction of 4 million square feet of new space in Washington state and Nashville. Netflix announced plans to sublease about 180,000 square feet in Los Angeles, while Salesforce​​ put more than 412,000 square feet up for sublease in San Francisco. Overall, the share of Manhattan office space leased to tech firms has declined in the past three quarters from a high of 31 percent in the fourth quarter of 2021 to 18.7 percent in the second quarter of 2022.


Madison Square Garden held talks about moving to Hudson Yards, a move that would have freed space to build an entirely new Penn Station. No agreement was reached because Garden executives didn’t like the plan put forward by Related Companies. Detailed renderings were produced, but the proposal died during the spring. Kastle customers are in more than 2.600 buildings in 138 cities. The barometer reflects swipes of Kastle Access controls from the top 10 cities, averaged weekly. It summarizes recent weekday building access activity among our business partners, not a national statistical sample.


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