Jump to content

the death of the urban office building


Guest cherzeca

Recommended Posts

  • Replies 298
  • Created
  • Last Reply

Top Posters In This Topic

Microsoft will let employees work from home half the time

 

 

https://www.cnbc.com/2020/10/09/microsoft-implements-new-hybrid-remote-work-policy.html

 

Actually, it is more than that.  In the same article, it says:

  • Employees can work from home full time with manager approval.
  • They can also move to a new location for remote work, with salaries adjusted based on geography if their manager approves.

 

Imagine the repercussions on currently expensive real estate prices close to Microsoft. All it would take is a small percentage of people moving to exurbs for big estates or closer to their families in other cities to impact the incremental supply/vacancy rate. 20% vacancy/incremental supply had a huge impact on Detroit house prices.

 

Link to comment
Share on other sites

JPMorgan sticks with plan to build giant New York headquarters

 

https://www.reuters.com/article/us-jpmorgan-results-realestate/jpmorgan-sticks-with-plan-to-build-giant-new-york-headquarters-idUSKBN26Y2HP?il=0

 

Interesting metaphor, to say the least:

 

An illustration by Lewis Garrison, a 3-D architectural illustrator who likes to make video flyovers of skylines, here envisions JPMorgan's new headquarters towering over Midtown Manhattan, a T-Rex in what might seem like a field of dinosaurs.

 

Link to comment
Share on other sites

Larry Fink Wants Future With Just 50% of Workers in Offices

 

https://www.bloomberg.com/news/articles/2020-10-13/larry-fink-wants-future-with-just-50-of-workers-in-offices?srnd=premium

 

 

 

.

 

 

Dropbox is the latest San Francisco tech company to make remote work permanent

 

https://www.cnbc.com/2020/10/13/dropbox-latest-san-francisco-tech-company-making-remote-work-permanent.html

Link to comment
Share on other sites

On the Hunt for Office Space, Companies Stay Low to the Ground

 

Groundscrapers have been considered less exalted than their soaring brethren, but their ability to house an entire company on a single floor has made them more desirable in the pandemic.

 

 

https://www.nytimes.com/2020/10/13/business/groundscraper-landscraper-skyscraper.html

 

Link to comment
Share on other sites

Haha. They are just citing the MRQ total debt to ebitda.  They both have ~55% TL/TA.  Lazy balance sheets.  SLG is weird because it has like a mini merchant bank on the BS (should be levered like 5/1 LFG).  They seem to be harping on the VNO retail exposure. 

 

The most troubling thing to me is that they are actually a fan company (did we already exhaust that joke <groan>)?.

 

Link to comment
Share on other sites

Apparently not all types of office, city or not is struggling. Pretty incredible gain(all things considered) on a 4 year investment given the backdrop of everything else. ARE continues to look pretty damn good.

 

https://therealdeal.com/2020/10/16/blackstone-bets-big-on-life-science-buildings-with-14-6b-deal/

 

Life science properties look good. Ventas sprinkled a cool billion of coin across the Bay from me.

 

 

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/ventas-to-buy-3-south-san-francisco-buildings-for-1b-60429754

 

 

The class A properties include the 721,000-square-foot Genesis Towers complex at One & Two Tower Place, and the 72,000-square foot four-story building at 4000 Shoreline Court.

 

The buildings comprising a mix of office and laboratory space are being sold by Bain Capital Pvt. Equity LP and investment firm Phase 3 Real Estate Partners Inc., according to the report. Eastdil Secure represents the sellers.

 

The Chicago-based healthcare real estate investment trust will receive a $415 million 10-year loan from Citigroup and JPMorgan for the transaction. Citigroup will reportedly provide 70% of the mortgage.

 

Link to comment
Share on other sites

Office REITs Cut at Evercore ISI With Workers Slow to Return

By Felice Maranz

(Bloomberg) -- The slow pace of workers returning to offices and high levels of new supply are “just too much” for the office REIT sector to deal with, Evercore ISI’s Steve Sakwa wrote in a note downgrading Boston Properties, Kilroy, Paramount and Vornado.

Sakwa sees vacancy rates soaring to more 17% from 13.8% to by the end of 2021, as an additional 75m sf of space is delivered, while demand stays negative

That means office stocks will stay under pressure, with investors likely to shun the sector until there’s a “clear path to occupancy recovering and pricing power stabilizing”

Cut PTs by avg. 5%; lowered BXP, KRC, PGRE to in-line from outperform and VNO to underperform from in line

Keeps top picks Alexandria, which is “focused on the life science sector where work from home is much less of a threat,” and Corporate Office, which focuses on U.S. government and defense contractors, who are generally not able to work from home

BXP fell 0.5% in premarket trading on Monday

NOTE: Earlier, Urban Office REITs Face Leasing Risks Amid Strong Collections: Bloomberg IntelligenceRelated tickers:

Link to comment
Share on other sites

  • 2 weeks later...

Can't be positive for high cost and high tax cities and states...

 

 

https://redditblog.com/2020/10/27/evolving-reddits-workforce/

 

What about employee compensation?

To help drive the idea home (pun intended), we’ve reimagined our approach to compensation in the US. To support employees to live where they want to and do their best work, we are eliminating geographic compensation zones in the US. It means that our US compensation will be tied to pay ranges of high-cost areas such as SF and NY, regardless of where employees live. We believe this is the right balance of flexibility and support for employees, recognizing the varied tradeoffs people consider when deciding where to live. Internationally, we have had one pay range per country, and now the US will be consistent with this approach.

Link to comment
Share on other sites

  • 3 weeks later...
  • 2 months later...
  • 2 months later...

https://seekingalpha.com/news/3678908-office-reit-stocks-lag-broader-market-gains-as-office-occupancy-stays-low

Is retail vs office still a debate? 

Dont get me wrong, premier trophy properties are still gold, especially in the era of Project Zimbabwe. But as an asset class or lets say for instance, if you are the owner of a large pool of these...its hard to imagine meaningful improvement over the short to mid term. With tax increases looming, companies have further incentive to squeeze savings. How does it play out? If you have a current lease everyone will at some point head back to the cubicles and corner offices. But there's definitely going to be serious discussions when renewal comes up; at least much more so than there was in 2019. The occupancy rates as it stands arent great, but are also misleading because of supply coming to market and additionally the nature of an office leases(IE long term, so really the only people who's shift has been reflected are folks who's leases expired in 2020 or 2021). Is there a catalyst or angle to be a hardcore office bull right now other than relative value? 

I am by no means in the short camp, for the simple reason that March 2020+ threw things so out of whack that you could buy things with terrible issues and still make money, but as things in RE-world continue normalizing, eventually the fundamental issues will become the valuation driver. So when "not all going BK" gets crossed of the list of catalysts, and it shifts more over to "expanding sq/ft and occupancy"...whats this going to look like?

Link to comment
Share on other sites

  • 3 months later...

The World’s Financial Centers Struggle Back to the Office

 

https://www.bloomberg.com/graphics/2021-return-to-office/

 

Vacancies in the city’s commercial real estate market suggest a rebound will be slow-going. The amount of office supply in Manhattan reached the highest level in at least three decades in the first quarter. Sublease space available reached 22 million square feet (2 million square meters), 62% higher than before the -pandemic and more than the levels seen after the great financial crisis and 9/11 terrorist attacks, according to Savills.

Link to comment
Share on other sites

Yea the NYC office market was like a game of Thin Ice pre covid. Of course there are a couple exceptions...youre always OK if you own the best assets...but otherwise, its a dumpster fire and won't likely get straightened out for awhile. If you like NYC, just buy some CLPR and call it a day. 

Link to comment
Share on other sites

  • 2 weeks later...
38 minutes ago, Gregmal said:

 

lol...we for sure know how you feel 🙂

 

 

.

I'm cautiously optimistic with the likely Adams mayoralty. 

 

https://www.bloomberg.com/news/articles/2021-07-27/wall-street-s-return-to-manhattan-dims-suburban-office-dreams

 

Wall Street’s Return to Manhattan Dims Suburban Office Dreams

 

New Jersey retains the highest office vacancy rate in U.S.

Citigroup’s exploration outside New York didn’t lead to deal

 

.

.

.

Andrew Cuomo’s Penn Station ‘rescue’ is a monstrous boondoggle

https://nypost.com/2021/07/18/andrew-cuomos-penn-station-rescue-is-a-monstrous-boondoggle/

 

Must be a positive for VNO. 

Edited by fareastwarriors
Link to comment
Share on other sites

  • 3 weeks later...
  • 3 weeks later...

CXP being taken out by Pimco after strategic review involving 90 interested parties. 
 

about a 5.3% cap rate on NOI that’s down a bit.
 

Stock about 100% off low, -20% from pre covid peak, -50% to those who bought CXP as a non traded REIT at $40 (someone told me this, this has not been confirmed by me) 

 

 

Link to comment
Share on other sites

  • 2 weeks later...

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now



×
×
  • Create New...