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Weekly Market Report - March 24, 2021


15 Reasons Why Office Demand Will Remain Robust Post Covid

Some office landlords and employers believed that flex work due to the pandemic would be disastrous, but 95% of employees want to return to the office. Employees want to be in close-proximity to senior management and their bosses to enjoy camaraderie and showcase their work ethic. People don’t want to be forced to take a pay reduction for working from home. Most employees are more productive when they work in the office, away from the potential distractions from being home. The demand for office-space nationally could be booming post-COVID as people return to work.

“The office is no longer the center of business”

- The New York Real Estate Journal

Businesses are transitioning from physical spaces to remote work and other alternatives seem to be unavoidable during these unprecedented times, which have proven that the efficiency of business may not fully rely on the physical building. Only 1 in 5 workers have indicated they want to go back to the office full-time, which means 80% of workers are comfortable working remotely full-time. In the commercial real estate world 83% of survey respondents said they would prefer to take a virtual tour before a physical walk through.

“Companies Wrestle with Hybrid Work Plans”

- The Wall Street Journal

U.S. Companies are grappling with what new schedules employees should follow, where people should sit in the redesigned offices and how to include remote employees to in-office impromptu talks. Some executives are saying that it would be much easier if every employee returned to an office, or all stayed remote, but surveys have repeatedly indicated that most workers want a combination of both. Another poll indicates that employees enjoy working remotely but miss the planning, ideation and collaboration that takes place in person. Human resource professionals are saying that employers have little choice but to accommodate their employees’ demands, as an inflexible workplace could drive employees away.

“Dining, Hotels, Gyms Gain Steam”

- The Wall Street Journal

With Covid-19 vaccinations, falling business restrictions, extra home savings and the federal stimulus funds the U.S. economy is recovering. Americans are spending more on personal services, travel, and dining out. U.S. Hotel occupancy hit a 20-week high of 49% in the second week of March. Spending on gyms, salons and spas recently climbed the highest levels since the pandemic first hit. Household savings totaled $3.9 trillion in January, up from $1.4 trillion in February 2020.

“The future of work is flexible: Reimaging office designs”

- The New York Real Estate Journal

As offices are opening back up and employees are coming back to the office, employers are now figuring out the best office design. Flexibility is vital, but what does that look like? Before committing to permanent changes, some companies are conducting 60 day trial periods of new workplace designs. The larger offices may be adopting strategies and implementing the hub & spoke model which maintains the central office while connecting with remote workers. With this shift to incorporate flexibility, transformational technology is playing a crucial role. Firms have already adopted this status quo and are leveraging digital tools to improve the business operations and communication.

“Battered SoHo Shows New Signs of Life”

- The Wall Street Journal

SoHo’s is showing signs of recovery with lower rents and new opportunities. The Italian women’s fashion brand, Pinko recently closed their Madison Ave & West Broadway locations and has signed a sublease at 143 Spring Street. This property is 4,925 square feet and will be used to create Pinko’s new U.S. flagship store. The SoHo district ahd retail availability of 29.5% in the fourth quarter of 2020, which is up from 23.8% at the end of 2019. Close to one-third of the space in the neighborhood from Houston Street to Canal Street was vacant or available for use.

“Google to Invest $7 Billion in Offices”

- The Wall Street Journal

Google says it will spend $7 billion this year on expanding its footprint of offices and data centers across the U.S., including pouring $1 billion into its home state of California. This year’s investment plan is focused on the existing sites but Google will be creating three new office sites in Minnesota, Texas, and North Carolina. They were one of the first major U.S. corporations to extend the time period for employees to remotely work until July 2021 but they now expect employees will return this fall with a few work days remote.

“Gyms Navigate New Territory, Uneven Protocol”

- The Wall Street Journal

America’s gyms are reopening to a significantly altered fitness world as restrictions are lifted and vaccinations are distributed. One fitness franchise plans to open a dozen new locations, while another is selling digital memberships. The pandemic’s impact on the fitness industry has been profound: almost half of the 3 million jobs in the health club industry disappeared last year along with more than half of the industry’s revenue. An owner of two dozen Crunch Fitness franchises plans to open another dozen locations over the next year.


Developer moves forward with plans for 23-story Upper West Side tower

Fetner Properties filed plans for a 23-story, 171-unit tower at 270 w96th St., between Broadway and West End Avenue. The building will stand 235 feet tall and span about 150,000 SF, and include space for a community facility. Last year was the slowest construction year in New York, as the industry was confronted with the Covid-19 pandemic. Other significant projects developers have filed plans for this year include a 47-story, 453-unit tower at 550 10th Ave. from the Gotham Organization, a 33-story, 121-unit building at 12 E. 37th St. from B&F Management and a 10-story, 50-unit project from Minrav Development at 305 First Ave.


Cheap rent, more vaccinations show opportunity is there for restaurants

Last year a record number of U.S. restaurants closed their doors for good. Now landlords are offering more concessions than ever to fill space, which presents more opportunity for restaurant openings heading into next year. For instance, Chipotle Mexican Grill is planning on opening 200 new locations this year. C3 which operates fast-casual chains and to-go kitchens expects to sign 300 new leases.

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