New WeWork CEO to Face Challenges
WeWork has named its new chief executive officer, real estate-industry veteran Sandeep Mathrani. He is supposed to take over later this month. Mathrani’s biggest challenge will be bringing the company out of the hole dug by former CEO Adam Neumann. Since the beginning of 2019, WeWork’s value has dropped 80 percent. In the third quarter, WeWork lost $1.3 billion and only made $934 million in revenue. The company is still expanding faster than executives would prefer.
Top City Property Sales in Second Half of 2019
For the second half of 2019, the largest property sale in the city was the Coca-Cola Building at 711 Fifth Avenue. It was purchases for $946 million. The Morgan North Post Office on 341 Ninth Avenue was bought for $798 million and 685 Third Avenue was bought for $451 million. Manhattan property sales have held steady for the past three years. The smallest property sale in the past six months was the St. Regis New York on 2 E. 55th Street. It was purchased for $310 million.
Amazon Inks Mega deal in Staten Island
In 2017, Amazon opened its 855,000-square-foot distribution center on Staten Island’s West Shore. Now, the company is leasing a 450,000-square-foot warehouse right next door. This warehouse is going to become a new delivery station to speed up delivery times for customers. It will also provide hundreds of new job opportunities. Both of Amazon’s warehouses are part of a multi-million square foot industrial hub, which is called the Matrix Global Logistics Park.
Commercial Retail Properties Rent Control Bill isn’t Going to Solve the High Vacancy Rates
The City Council is trying to issue a bill that establishes commercial rent regulation. While they hope the bill will do good, it is not going to solve the real crisis in the city, which is small businesses are being tested on all front. There isn’t one reason why there are so many retail vacancies; there are wide range of factors including transit access, construction, zoning regulations, and more. Under the proposed bill, commercial rent increases would be controlled by a Commercial Rent Guidelines Board that will be overseen by the mayor. The bill is going to create an unfair negotiating environment for commercial lease renewals. It will be “constricting the ability of property owners to make independent decisions about their properties and adapt to market trends that will help revitalize local retail.” This could result in loss of businesses, fewer jobs, and damage to the city’s economy. Elected officials should focus on using the tools already at their disposal and get a better understanding of the vacancies rather than pushing to fix everything at once.
City Property Values Rise to 4.7% on Construction Boom
For the fiscal year beginning last July, the city set a value of $1.38 trillion for its more than one million properties. That is a $62 billion increase from the prior period. The value of new construction has also reached its highest level in the past 10 years, and the new construction boosted the market value of city property by $14 billion and rose 4.7 percent. The General Motors Building on Fifth Avenue is still the city’s single most expensive building, valued at more than $1.8 billion. Hudson Yards, the 28-acre development on the Far West Side of Manhattan, is the largest mixed-use private real estate project in the country, and it is valued at $3.8 billion. The World Trade Center complex was valued at $4.4 billion.
Meatpacking District Evolving into Hotspot for Office Tenants
Last spring RFR Realty said it would lease its 53,000 square foot office component of its building at 875 Washington Street to the Soho Works co-working company. While the Meatpacking District is known for high-end retail, nightlife, and luxury condos, it is now becoming popular in the office sector as well. It started a year ago when Google acquired Chelsea Market, taking in 1.3 million square feet and adding it to the company’s plan to double its employee count. Also, between 2015 and 2019, developers added almost 1.1 million square feet of office space. Office rents have increased as well. The average asking rent for Class A space went from $49/foot to $89/foot.