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Weekly Market Report - December 10, 2021

Before the Omicron variant surfaced overseas last month, employers throughout the U.S. were preparing to call back employees to the office after the holidays. Now, a small but rising number of companies have modified or delayed plans as uncertainties swirl over the severity of the variant and its resistance to vaccines. That list includes Lyft Inc., Ford Motor Co. , Uber Technologies Inc. and Alphabet Inc.’s Google, though not all point to the new variant as the reason. A reduction in the number of employees returning to work next month would be painful for office-building landlords who have been struggling with high vacancy and uncertainty over the long-term impact of the pandemic. Sales at restaurants, bars and other small businesses near office buildings have suffered for nearly two years, causing these operators to scramble to make rent payments and keep their operations alive. Currently about 82% of the U.S. population ages 12 and up has had at least one dose of the vaccine, and the rate is much higher in cities such as New York and San Francisco, according to the Centers for Disease Control and Prevention. That compares to only around 62% of the eligible population as the country headed into the Labor Day weekend, the CDC said. Companies have indicated they might delay plans based on new findings related to the Omicron variant. Pfizer Inc. and BioNTech SE said last week that a third dose of their Covid-19 vaccine neutralized the Omicron variant in lab tests but the two-dose regimen was less effective at blocking the virus. ***

Tuesday, JPMorgan began requiring vaccination proof for all employees and visitors to enter its New York office buildings, a step other banks had taken before.

The work-from-home order is considered temporary, and the bank is studying potential other solutions to deal with the state order. JPMorgan also relaxed mask requirements for vaccinated employees in the New York corporate offices. “It seems unfair to require our vaccinated employees to wear masks all day at their desks,” the bank said in the memo. More than 90% of JPMorgan staff based in Manhattan are vaccinated, according to the memo. JPMorgan, the biggest bank in the U.S., has taken a relatively hardline approach on curtailing work-from-home, telling many workers this summer that they needed to come back to the office. Chief Executive Jamie Dimon has said that remote work doesn’t make sense for clients or employees. The Omicron variant has muddled the picture for many companies. In recent days, companies as varied as Facebook parent Meta Platforms Inc., Ford Motor Co. and Alphabet Inc.’s Google have delayed return-to-office dates or given employees the option to stay home longer.


Brookfield Asset Management Inc. is exploring a sale of a stake in One Manhattan West, an office tower constructed as part of its development project in the Hudson Yards area, according to people with knowledge of the matter. The firm is soliciting interest from potential bidders in a share of the property that would value it at about $2.8 billion, said one of the people, requesting anonymity because the talks are private. Brookfield said in August 2020 that it borrowed $1.8 billion, including $1.5 billion in CMBS loans, to refinance the skyscraper. DBRS Morningstar said at the time that long-term, institutional tenancy “should largely shield the property from any short- or medium-term dislocations in the Manhattan office market resulting from the ongoing Covid-19 pandemic. “One Manhattan West is one of six buildings in a mixed-use complex that spans from 31st to 33rd streets between Ninth and 10th avenues. Brookfield is developing the project in partnership with Qatar Investment Authority. Tenants at One Manhattan West include the law firm Skadden, Arps, Slate, Meagher & Flom and the National Hockey League.


The de Blasio administration is poised to achieve another victory just weeks before the end of the mayor’s final term, as the controversial SoHo/NoHo rezoning is ready to cross the finish line following modifications by the City Council. The council’s zoning subcommittee and land-use committee both approved the rezoning with changes at hearings on Thursday, sending it back to the City Planning Commission and clearing the way for a vote before the full City Council at its meeting next week. The CPC, which voted unanimously to approve the rezoning in October, plans to review the changes at its Dec. 13 or Dec. 15 meeting. The changes to the plan include lowering the maximum height and reducing the density of buildings in many parts of the area, banning college dorms from anywhere in the rezoning area, limiting the sizes of new restaurants and bars, and requiring a special permit for retail establishments larger than 10,000 square feet on narrow roads and 25,000 square feet on wide ones. The council has also tried to ensure deeper affordability in the plan by removing an option that would have allowed developers to make 30% of units in their buildings affordable for households earning 80% of the area's median income–$62,150 annually for a family of three. “Study after study showed that the plan is likely to produce little if any affordable housing and is almost surgically designed to discourage the construction of affordable housing,” Executive Director Andrew Berman said, “and the modifications made by the City Council will do little to change that."


Tishman Speyer paid $90.4 million to acquire 10 of the 11 building sites that will make up Edgemere Commons, according to public records. The transaction closed in mid-November. Ground was expected to be broken on the 2.2 million-square-foot project in Far Rockaway, Queens, in early 2020, Crain’s previously reported. Affordable housing developer Arker Companies, which retained one of its buildings, is expecting to break ground in January 2022. The firm told Crain’s the complex would be built in five phases over the next 15 years. Edgemere Commons will include 2,050 affordable units surrounded by public space, a community center and retail shops. There will also be medical space, though it isn’t part of the first scheduled construction site. A spokesperson for Arker previously attributed the postponed groundbreaking to city-related delays of affordable housing projects. The spokesperson last month said 2020 was not a “hard deadline,” but a date for when ground was expected to be broken. Gary Rodney, head of Tishman’s affordable housing platform TS Communities, said Edgemere Commons fit the mold for the type of development the firm envisions. Arker filed a permit application in September 2020 to construct a 257-unit, 220,478-square-foot mixed-use building at 51-19 Beach Channel Drive. That parcel was one of the ten included in Tishman Speyer’s acquisition, records show.


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