When Trump got elected into office four years ago, people didn’t know what to expect. However, fast forward to now, and Trump is facing impeachment. Since the beginning, half of the country didn’t see Trump as a real estate mogul. Douglas Durst, chairman of the Durst Organization, says Trump “has been a disaster… he is using the office to further his own political goals”. While people aren’t surprised at his behavior, some hoped he would rise to the occasion and be better. But he has not. More than half of dozen real estate executives in New York said they don’t agree with Trumps social views saying that “he isn’t even particularly well liked in the real estate community”. Most see Trump as an entertainer and a marketer, not a real estate guy. Some say he crushed everybody in New York after changing the tax code and ensuing pain on the residential side. Everybody is treading more lightly, but real estate executives aren’t looking forward to welcoming Trump back into the area.
Dock 72, Brooklyn’s first ground up commercial development in more than a decade, has been completed and made its debut a few weeks ago at the Brooklyn Navy Yard. The building is 675k sf, and WeWork is their anchor tenant with 222k sf. While WeWork has been in the news recently for not good things, its new co-CEO Sebastian Gunningham said he was happy to be among friends and show off the beautiful building. CEO of Rudin Management, who owns the property, says he is not worried about WeWork’s troubles and that it won’t damage Dock 72 in the long run.
Since the beginning of 2019, U.S. retailers announced the closing of almost 8,600 stores, a number far surpassing last years number. And by the end of the year, almost 12,000 stores will be closed. People in the retail real estate industry says that this has been an ongoing, tired story, “its just the world we live in”. Some say that NYC’s retail market has needed correction for some time. In the Q3, Manhattan asking rents dropped to 5.7% to $756 per square foot. That is a 4.5% decline from the previous quarter. There are over 214 ground-floor availabilities across Manhattan’s 16 top shopping streets. Malls are also feeling a pinch where there are over 1,200 malls across the U.S currently, and it could decrease to a couple 100 once the dust settles. While there are so many empty stores, retailers are saying they are opening close to 3,600 stores this year, 300 more than last year.
Current list of stores closing below:
· Forever 21 – filed bankruptcy in September, closing 178 stores, $20.9 million in debt
· Payless – filed bankruptcy in February, closed almost all 2,500 stores, $450 million in debt
· Barney’s – filed bankruptcy in August, planning to shut 15 of its 22 outposts
· Gymboree – filed bankruptcy in January, closing almost all 800 stores
· Charlotte Russe – filed bankruptcy in February, had liquidation sales at all 500 stores, reopened as online presence
· Bed Bath & Beyond – closing 60 stores
· Pier 1 Imports – closing 45 of 1,000 stores but may close 15% of its entire portfolio
Knotel is falling short of renting up their spaces. Almost 260k sf of Knotel’s space is empty, and in the next six months, 574k sf will be vacant. That put together is almost a third of the company’s NYC portfolio. Knotel tried to be different than WeWork and focus on larger office users and corporate tenants. However, these types of tenants usually plan their move in advance, almost a year to 18 months before moving. This could leave Knotel with a sheet of unprofitable locations. Knotel is telling a different story, though. According to them, they added almost two million sf in the city in the past 12 months and are rapidly signing new leases.