New York City Pandemic real estate world resembles a nerve-wracking “seesaw” from “Flügen unddrop” as Henry James wrote in “The Turn of the Screw” about the mood of his neurotic protagonist. With a little luck, Gotham will get through better than James’ tragic heroine.
On the dark side, office towers achieved an almost historically high vacancy rate of 15 percent and 85 percent remain physically unoccupied. The investment sale has come to a standstill. The New York City Partnership said in a new report that companies are so eager to leave the country that states like Florida, Texas, North Carolina and Maryland are “putting in place aggressive talent and job-finding programs in New York to have. . . literally every New York employer is courted. “
Retail is a disaster and it could get worse. According to the New York City Hospitality Alliance, 90 percent of restaurants didn’t pay their December rent. This raises the prospect that thousands more dark restaurants will soon swell the void plague.
And yet . . . and yet. Signs of underlying stability and renewed energy are becoming more common. Apartment sales have increased, particularly in Brooklyn. Douglas Elliman and analyst Jonathan Miller said more leases were signed in Manhattan in December than in a dozen years – although vacant units remain at near all-time highs.
Investment and home sales of $ 6 billion in January 2021 were up 38 percent from January 2020, New York Real Estate Board found. This brought the city and state $ 190 million in much-needed transfer tax revenue, 31 percent more than January last year.
MetroTech in downtown Brooklyn has seen a total of 132,000 square feet of extensions since the fourth quarter of 2020. The signings – including for SoulCycle and HeartShare Human Services in New York – reflect the development of the complex from a bank back office to a banking business under new ownership, Brookfield, a destination for tenants as diverse as Slate and Think! Architecture and design. MetroTech’s 5.5 million square meters are now 91 percent let.
Concrete evidence of overall market stability also pervades the just released 10-K-year SEC filing of Vornado Realty Trust for 2020 and the fourth quarter profit tender last week.
The giant developer / rental company posted a net loss of $ 209 million for the quarter, compared to a net income of $ 193 million a year earlier. However, this is typical of public REITS results during the pandemic.
In the solicitation, CEO Steve Roth noted that Vornado had closed $ 1 billion worth of homes on 220 Central Park South – “a large number that has been added to our cash balance and our financial strength.” His company is spending more than $ 1 billion renovating the Farley Building – wo Facebook signed the largest office lease 750,000 square feet by 2020 – and the Penn 1 office tower “removed from our balance sheet without debt”.
Michael Franco, CFO of Vornado, said on the conference call that even after a drastic decline in leasing activities following COVID in 2020, we still rented 2.2 million square feet and 54 separate leasing transactions in New York.
Starting rents stayed strong at $ 89.33 per square foot and the average rental length was 14.4 years, Franco said.
The year ended with Vornado Manhattan office use of 93.4 percent. Despite anecdotal reports of widespread rental income, Vornado collected 95 percent of rents owed in the fourth quarter – 97 percent including rent deferrals from office tenants and 88 percent from retail tenants, according to the 10-K.
Meanwhile, SL Green, the city’s largest commercial landlord with interests in 29 million square feet of office space, reported similar strength in fourth quarter results.
The REIT collected 97.9 percent of office rent and 80.8 percent of retail rent for the full year 2020.
Even in a low-demand market, SL Green Real Estate had 464,000 square feet of business in the fourth quarter and 1.25 million square feet for the full year. The last big engagement was Beam Suntory’s lease for 100,000 square meters at 11 Madison Ave., with a starting rent of around 90 US dollars per square meter.
Beam Suntory will move its US headquarters from Chicago to New York while retaining space in the Windy City – a sign that companies still value being here.
There is even hope that office workers will return to their desks this year. The widespread Kastle Back-to-Work-Barometer reports an increase in physical office use in the past week from 13.3 to 14.7 percent. The needle has been stuck for months, but it could start moving as vaccinations increase and a renewed sense of public safety.