WeWork CEO Adam Neumann stepped down after a board meeting on Tuesday. Since 2010, he has built “one of the most valuable start-ups in the world” by persuading investors into giving him billions of dollars. These ways are what brought him down and forced the resignation. From his failed attempt to take the company public, directors and investors started putting the pressure on him. This past January, WeWork was worth $47 billion; Neumann said it would be worth more once the company goes public. Behind the scenes, Neumann had a tremendous amount of control over WeWork. He used it to fund his pet projects and to maintain his lavish lifestyle with private jets and gorgeous homes. After it was listed to go public, investors started to see how the business model and Neumann’s behavior was not good at all. Just last week, WeWork decided to delay its public opening after investors and bankers determined that the company was only worth $15 million.
Uber will sign a lease at 3 World Trade Center where they will relocate New York headquarters to. This will give the company seven floors, more than 300k SF, with an option to take the eighth floor for an additional 50k SF. This comes after Uber’s struggle on the stock market after its public release in May at $45. On Friday, it was down 2.4% to $33.25/share, giving Uber a market value of $56.5 billion. Rents at 3 World Trade Center are in the high $80’s/foot.
WeWork’s fall in trying to go public has brought people to ask if this will cause a crash in New York City’s tech economy. It will not. The company is not like other tech companies. For example, Uber and other companies have benefited from the unlimited availability of venture capital. We’s business model has always been risky, and its strategy for trying to hide the risk has failed since landlords caught on. Tech companies, such as Even Financial, Kasisto, Fund That Flip, etc., have earned at least $10 million each this past year. People’s obsession with WeWork has clouded their judgement on the rest of the tech world. For example, Peloton, a classic New York tech company, is expected to go public next month. It is targeted towards consumers with a way to disrupt established businesses i.e. gyms and cycling studios. People have raved about these bikes, and it shows in the company’s profits. Just last fiscal year, it made over $915 million in revenues and only lost $195 million. WeWork is on track to lose $2 billion this year.
Last Spring, New York City enacted a landmark legislation that will “dramatically reduce the greenhouse gas emissions of large buildings”. The proposal, The Climate Mobilization Act, is being hailed as aggressive and bold. All buildings in the city contribute nearly 70% to the city’s carbon emissions. The new legislation is just a small part to NYC’s plan to be carbon neutral by 2050. Under Local Law 97, all buildings larger than 25K SF, which is 50K buildings, will have set emission caps. We are talking about 3.15 million SF, 59% of buildings are residential and 41% are commercial. Their goal is to achieve, “40% overall reduction of emissions by 2030, and 80% in 2050”. However, the first deadline is in 2025 when the “dirtiest” buildings (20% of all buildings) are expected to reduce their emission using formulas created by the city. Those who do not comply can face fines with the maximum penalty being the difference between a buildings annual emission’s limit and its actual emissions multiplied by $268.
E-commerce sales in the Q2 of 2019 were 10.7% of total retail sales and $146.2 billion of the country’s sales. Experts are predicting those sales will rise to 15.1% and $605.3 billion of sales during the rest of 2019. With more people shopping online, New York City has seen an increase in the number of vacancies in commercial real estate properties and commercial lofts. However, brokers, landlords, and property owners have opened up to a new marketing approach: They are collaborating with artists to host public and private events in their vacant spaces. They are also being opened up to the public to host personal and life events, such as birthdays or baby showers. This has turned into an effective approach as entrepreneurs are seeing these spaces and their potential, as well as, industrial spaces are being turned into “vibrant and inviting micro neighborhoods”. These opportunities are giving local businesses an increase in sales.