In July 2018, the trade war with China had started. The U.S implemented its China-specific tariff, collecting a 25 percent tariff on 818 imported Chinese products. It is now starting to show its effects with local companies. The tariffs imposed are continuing to increase with a total of $550 billion, and it has created new uncertainties not only for U.S companies and consumers, but the Chinese economy as well. For the real estate market, these tariffs are confusing people and are bringing an unknown factor on what the outcomes will bring. Businesses want to relocate and purchase new buildings, but now, we can start to see a reduced interest with companies looking to expand and invest in real estate.
Brookfield Properties has just opened their building, One Manhattan West. The building is 67-stories tall and has over 2.1 million sf of office space. It is on the corner of Ninth Avenue and 33rd Street. This building is the first tower to open in Brookfield’s Manhattan West complex, which is an eight-acre district currently being developed on the West Side. Once the Manhattan West Complex is complete, it will have over six million sf of office space, 844 apartments, a boutique hotel, over 200k sf of retail, and a public plaza. Already, 90 percent of One Manhattan West is leased with only 97k sf available to be rented. Some tenants include The National Hockey League, Accenture, and more. Brookfield’s plan was to “create a timeless office tower that would help companies driving the world’s economy attract, retain, and get the most out of their workforce's”.
After getting scrapped by Amazon, their campus sites in Long Island City are being looked at again. Developers and the four companies that control the 22 acres of land are starting to come back to this area with new ideas. This time, however, the community around the sites, will have a big part of the decision making. The companies are talking to the community to see what their vision of this area is and how they can all come together to make it happen. The first public meeting focusing on these sites is today, November 21st at the Queensbridge Houses.
Queens is Thriving Without Amazon
Long Island City is doing just fine without Amazon. Commercial property owners have attracted new tenants thanks to the area’s low prices and the abundance of office space. Sales of commercial buildings rose 9 percent and over 1.2 million sf of office space was leased in the first three quarters, exceeding the 331,538-sf leased at this same time last year. The vacancy rate dropped to 14.7% from 18.4% and asking rents fell 7.5% to $40.65. Long Island City outperformed the rest of the city on most measures with the median rent being slightly higher than Manhattan.
Weeks before WeWork was going public, the Securities and Exchange Commission were still trying to iron out issues and concerns with the company. We Co., filed its draft prospectus in 2018, giving them months to work out any issues that arose. However, they didn’t. WeWork was scrambling to get things together while its IPO was crumbling. This led to them pulling the IPO and having former CEO Adam Neumann step down. One of the biggest concerns that the SEC was working on was on how WeWork framed its big losses. The company did it through a “bespoke profitability metric called contribution margin,” which was formerly known as “Ebitda”. The SEC ordered the company to take it down, but just a day before WeWork had hoped to go public, the metric measure was still up. WeWork’s resistance from taking the metric down was from Neumann, who had previously boasted about it to reporters and investors showing how the company is profitable.
WeWork is in talks with T-Mobile US Inc. Chief Executive John Legere to take over the company. We Co. is searching for a “CEO who can stabilize the company following the erratic tenure of its co-founder Adam Neumann. After the failed IPO, SoftBank Group Corp. bought a majority stake last month in a bailout. WeWork is looking for someone to join as soon as January. Legere has spent the last six years running T-Mobile, turning it around to the No. 3 US wireless carrier. WeWork executives Artie Minson and Sebastian Gunningham are currently serving as co-CEOs. In the latest news, Legere has decided he does not want this position.