New Developments
New York City has a 10.5% unemployment rate, almost twice the national average. The city has lost around 500,000 jobs since the start of the pandemic that have yet to be replaced.Mayor Bill de Blasio announced that the vaccine mandate would begin on August 17 and require many indoor businesses to check for proof of vaccination before allowing patrons to enter. At that point, penalties for compliance failure will begin at $1,000 and can rise to $5,000 for repeat offenders.
63% of the city’s population is at least partially vaccinated, with 56% of the population fully vaccinated.
New York City appeared to be trending in the right direction but Delta variant and the rise of the anti-vaccine movement has reversed that progress, forcing many companies to delay return-to-office plans and spurring the city’s new vaccination requirements.
Office landlords have increased use of their ventilation systems to keep Covid exposure limited. In April 2020, office buildings were down to 15% occupancy, but still used 76% of the electricity. By July 2021, office energy use was back up to an annual pace of $29 billion, or 91%, despite buildings being just 34% occupied. New York City has a new law setting tight emissions caps effective in 2024. Office energy use in the city is just slightly below the national average.
Rolex filed an application with New York’s Department of Buildings to begin demolishing its 1970s-era, 12-story headquarters at 665 Fifth Avenue. The Swiss company is partnering with architect David Chipperfield to build a 25-story office tower in its place.
L.H. Charney Associates landed a $148 million refinancing loan package for its 387,000-square-foot office building at 1410 Broadway. The 33-story Garment District building is 78% leased, primarily to fashion and professional services companies.
Gazit Horizons has refinanced its retail property at 410 East 61st Street for $134.4 million. Home Depot, is set to open in that location after signing a 20-year lease of 120,000 square feet and will be paying about double the rent paid by the previous tenant, Bed Bath & Beyond.
Businesses and governments are increasingly mandating staff members to get vaccinated.
Landlords are bringing back or continuing mask mandates in lobbies, elevators, retail spaces and other common areas, even for those who have been vaccinated.
Retail was an exception to the growth trend. It shed 5,500 jobs last month, although that is a tiny fraction of the more than 15 million people the industry employs.
The Durst Organization is suing the arthouse theater chain for $49 million in damages and unpaid rent at its Landmark 57 West location. Landmark signed a 20-year lease for the space in 2016.
The valuation of Thor Equities’ 6,600-square-foot building at 470 Broadway has dropped to $5.6 million from $29.2 million nine years ago.
JetBlue has decided to stay in New York and will instead expand its flagship terminal at John F. Kennedy International Airport in Queens. The company will also add jobs at all three regional airports: JFK, LaGuardia and Newark.
Around 66% of adults in the city are fully vaccinated, while 72% have their first shot.
Paramount wants Equinox to pay $1.57 million under its original lease, including $1.3 million which Paramount was willing to defer until 2022. The gym agreed last September to pay half its approximately $138,000 base rent for 28,000 square feet at 1633 Broadway, plus a percentage equal to any capacity permitted under government Covid restrictions.
In the first quarter, nearly 100 million square feet of industrial space was absorbed within the industrial and logistics market. By the end of May, a record 376 million square feet of warehouse space was under construction . Rents for industrial properties have been booming, buoyed by rising e-commerce and falling availability. First-year base rents on leases of at least a year rose nearly 10 percent this year.
U.S. commercial real estate investment bounced back in the second quarter, reversing the downward trend of the previous year. Total dollar volume was $130.9 billion, up 169.5% from a year ago and just 2.2% shy of 2019’s figure, which was the No. 2 second quarter on record.
Office, hotel and multifamily cap rates in the second quarter declined by between 6 and 9 basis points year-over-year, while retail cap rates rose by 15 basis points.
