Great. Exactly what we needed. Another [shockingly good]( jobs report landed Friday. (There were 353,000 new jobs added to the economy in January, according to the Department of Labor. Far more than expected.) Those who were hoping that interest rate cuts were just around the corner are no doubt cursing under their breath at all of Americaâs damned economic resilience. Cheer up. We kinda figured that the Fed was taking things in stride even before Fridayâs epically disastrous news. The previous day Fed Chairman Jerome Powell announced that benchmark interest rates were [going to stay]( at between 5.25 percent and 5.5 percent for the time being and that he wants to see inflation come down further before any cutting begins in earnest. âWe believe that our policy rate is likely at its peak for this tightening cycle, and that if the economy evolves broadly as expected it will likely be appropriate to begin dialing back policy restraint at some point this year,â Powell said. âAlmost everyone on the committee is in favor of moving rates down this year, but the timing of that is going to be linked to our gaining confidence that inflation is on a sustainable path down to 2 percent.â Of course, this is not terrible news for all sectors of real estate. âOverall, with low unemployment and rising real wages, our target renter demographic remains in good shape,â said Equity Residentialâs Mark Parrell during that company's [earnings call last week](. âThey are likely to rent with us longer as the prospect of homeownership in the near term seems less likely with scarce inventory and relatively high mortgage rates.â But if youâre not an extraordinarily well-capitalized owner of a zillion apartments, we can understand why Parrellâs view would be an outlier. Indeed, [more data]( came out last week about 2023âs New York real estate investment sales market, and it was ugly. There was only $11 billion in sales in Manhattan, a 45 percent drop in sales from 2022, according to Ariel Property Advisors. Multifamily saw a huge dropoff in sales, with only $2.3 billion for buildings with 10 or more units; in 2022 the same asset class saw $6.8 billion in trades. It was almost the exact same story for office with only $2.8 billion in sales, down from $6.8 billion the previous year. (And a third of the office figure can be attributed to a single sale: a $1 billion stake in 245 Park Avenue to Mori Trust.) The only asset that improved was hotels, which reached $2 billion in sales â the best number since 2019. (Hey, we saw a nice $30.3 million sale this week! Holiday Inn Club [is buying]( nine commercial units and 21 vacation units at the former Roger Smith Hotel.) We want names! Some of the dreaded new jobs were, indeed, in real estate. Christopher Laughton, who was a managing director at Bank OZK, was [just named head of originations]( at Nuveen Green Capital. Mark Mueller, Glenn Ulick and Kaitlyn Thomas are [leaving their perches]( at Broad Reach Retail Partners for Lee & Associates-Maryland, where Mueller and Ulick have been named senior vice presidents and Thomas will be an associate. NewPoint Real Estate Capital made [a play for four managers]( from Grandbridge Real Estate Capital: Paul Aanonsen, Patrick Brown, Jake Tinordi and John Stewart. And Colliers tapped Gregg Shutan of CBRE to become [president of the eastern region]( of the company. Although, if theyâre just switching jobs we suppose that doesnât quite count as adding jobs to the economy. OK, fine. Congratulations then. We guess. Leasing It was a pretty good week in New York City leasing (itâs actually been a pretty good [couple of months]() but Manhattan wasnât reaping all the benefits. It was largely the boroughs. Four out of the five biggest leases reported last week were in Brooklyn or Queens. The NYPD renewed [its 42,179-square-foot lease]( for the full building at 45 Nevins Street in Downtown Brooklyn, which is where its Special Victims Division is located. Meanwhile, over at Dock 72 in the Brooklyn Navy Yard, the Pratt Institute took [62,570 square feet]( on the third floor. This was quite a coup for the Rudin- and BXP-owned property, but it wasnât the biggest deal there. While WeWork is busy [renegotiating or walking away]( from leases, Dock 72 was one location that [they decided to keep](, and their lease at the site is a whopping 200,000 square feet. Finally, the biggest of the week was LaGuardia Community Collegeâs [210,334-square-foot extension]( at The Feil Organizationâs 30-20 Thomson Avenue in Long Island City. (Whatâs with all the educational institutions taking space? New York University is also getting in on the real estate action â but considerably [farther south](.) Of course, itâs not as if there was no leasing in Manhattan. The Pilecki Institute, which is dedicated to Polish history, took [35,000 square feet]( at Thorâs 88 Greenwich Street; the Journey Church is renewing at 247 West 37th Street; and, finally, Del Friscoâs steakhouse renewed its hulking [25,246-square-foot spot]( at 1221 Avenue of the Americas. (You can always wash down your steak with [some tequila]( from The Rockâs Siete Bucks Spirits location at the Moinian Groupâs 245 Fifth Avenue. Yes, [that Rock](.) That last one shouldnât be such a surprise. With [all those Avenue of the Americas leases]( weâve seen in the last two months, itâs no wonder somebody has to feed the drones pouring into Sixth Avenue. Speaking of Brooklyn⦠Last week CO put out its Brooklyn issue and there was a lot to talk about. Brooklyn had been [primed to be the next big office market]( for a number of years and has seen a ton of product come on the market ⦠but the pandemic threw a big monkey wrench in the process. Only 119,000 square feet of office space was leased in the last quarter of 2023, an abysmal figure. It will take a long time to pick up the pieces. However, there are pockets of activity. Like, say, the âInnovation Coast,â essentially a marketing gimmick from the New York City Economic Development Corporation that actually [became a self-fulfilling prophecy](: a number of tech companies have been taking space along the waterfront from Sunset Park to Williamsburg. And despite the grim real estate news itâs not as though Kings County doesnât have incredible fundamentals. âI believe that rumors of the death of office are greatly exaggerated, and that eventually the hypothesis for having Brooklyn office will re-emerge as a strong investment,â said David Kramer of Hudson Companies, who [sat down]( with CO to talk about all things Brooklyn. âGoing back in time, there used to be very little office space in Brooklyn, other than, letâs say, some in Downtown Brooklyn Metro Tech. But you have so much of the workforce who were commuting to Manhattan from Brooklyn, [so I believe] a lot of the decision-makers at companies would begin to pivot to picking Brooklyn locations so that they, as the head of the company, might have an easier commute, but, more importantly, so that their employees would be excited to work in Brooklyn. I think youâre seeing that concept play out.â And itâs not as if the offices havenât poured a tremendous investment of time and consideration into their design and look. They have great amenities, but still a Brooklyn haimishness. Take Monadnockâs new HQ along the Gowanus Canal. âYou can have Class A office space with a neighborhood feel,â said Monadnock Chief Operating Officer Frank Dubinsky on [a recent tour](. âDo you want to work in Midtown Manhattan or do you want to be able to walk over to Court Street where itâs a little quieter?â He added, âHow do you make that experience of going to the office more like being at home? Where do you have more neighborhood amenities?" His answer: Brooklyn. "Where youâre not stuck on the train jam-packed like sardines.â Sounds good to us. Of course, perhaps the biggest issue for Brooklyn (and New York writ large) is the issue of housing and the political paralysis about getting zoning or tax changes that might foster it over the finish line. Thankfully, there are some politicians who are thinking about the problem, such as Brooklyn Borough President Antonio Reynoso. The beep sat down with CO to [discuss his 200-page]( Comprehensive Plan for Brooklyn, which covers not just housing but also office, schooling, transit and more. All of which should make for some solid Sunday reading. See you next week! [View in Browser]( | [Advertise]( | [Forward to a Friend](
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This newsletter was published 02/04/2024