Great American Family Vacations — personified by Clark, Ellen, Audrey and Rusty Griswold — is apparently alive and well and saving the hospitality industry!
Those who predicted that bustle-crazed Americans would take big, big vacations once out of the pandemic woods turned out to be very profitable. Nationally, leisure travel will have accounted for $97.8 billion in 2022, according to new data from the American Hotel and Lodging Association, a 14% increase over 2019 – which was a record year.
Well yes. But not as great as it sounds. New York has not generated the same interest as other cities. (There’s never been a “New York vacation for National Lampoon,” has there? Call Mr. Chevy Chase. Call your office.) , India and Brazil.
That would make sense; business travelers from China, for example, still have to go through strict quarantine rules on their return, and Indian and Brazilian visa applications are reportedly suffering a six-month backlog. A full recovery shouldn’t really be expected until 2024, according to Vijay Dandapani of the New York Hotel Association.
But one thing that could help New York’s tourist scene? A great, big casino right in the middle of Times Square.
This is precisely what SL Green Realty and Caesars Entertainment offer, with 1515 Broadway as casino In the question.
Given that Caesars is the second operator that SL Green has been in talks with (SL Green previously wanted to open a Hard Rock casino, but Hard Rock chose to focus on plans for a casino in Queens instead), it seems that a casino is something the REIT is pretty solidly behind.
“Times Square is the center of the entertainment universe,” SL Green CEO Marc Holliday said in a statement. “Because we offer renovation, once licensed, we can open faster than other facilities, which require entirely new construction, changes to the law and will disrupt their local communities.”
You know what Times Square could also use? A Puttshack. The boozy, gluttonous, tech-soaked mini-golf company just took over a 29,000 square foot space at 1850 Reston Row Plaza in Reston, VA, and we think a high-tech mini golf course would be a great addition to Crossroads of the World.
Traffic blues in the office and on foot
While reasonably good numbers are coming in for hospitality, some not so big numbers took office from CommercialEdge, which said nationally, rents are down (2.4% year-over-year) and vacancy is up (180 points basic).
Gateway cities do the worst in terms of construction starts, and the numbers are worth digging into and quietly crying over. New York, for example, has gone from 3.2 million square feet of office projects from 2019 to… 754,000 this year?
As bad as it sounds, Los Angeles has it much worse. LA ended 2019 with 3.6 million square feet of office projects beginning construction, and 61,000 sqft this year.
However, the city with the biggest drop in square foot construction was Washington, DC, which fell from 4.7 million to 1.1 million.
I think we can all say: Yeah.
And, despite employer mandate after employer mandate, foot traffic stubbornly persists a shell of his old self.
According to retail data analytics firm Springboard, foot traffic in Midtown, SoHo and Fort Greene, Brooklyn, in September was 26.8% lower than it was in 2019.
“The narrative that people will come back — I don’t see any evidence of that,” said Dianne Wehrle, director of marketing and information at Springboard. “I’m on the side of the people [thinking that] it’s the new normal and it’s how people will choose to work.
Nuts to your “new normal”
We can think of a few tenants who clearly disagree with Wehrle. And they put their money in their mouths by signing serious leases.
The most important was Medidata Solutions, which renewed a huge 177,000 square foot lease at 350 Hudson Street. But other important leases have been signed with Metro-Goldwyn-Mayer Studios taking up 50,462 square feet at 260 Madison Avenue and the Sapir Organization’s 1-800Accountant taking 12,344 in the same building; Health Summit took 21,000 square feet at 1345 Avenue des Amériques; CSM, the sports and entertainment marketing company, took 11,940 square feet at 80 Ninth Avenue; and Hudson Companies attracted a couple of tenants at the East Williamsburg warehouse they converted to The Breeze at 315 Meserole Street, including blockchain tech developer BlockApps and marketing firm Ghost Robot.
And at least one flex office provider has made significant progress on a really big turnaround. (And no, we’re not talking about WeWork.) Knotel has started signing leases across the country and recently unveiled a new club/work concept in London.
“Now is a new dawn for coworking,” said Sam Rosen, CEO and Founder of Deskpass. Newmark [which owns Knotel] going to get there faster, building on an established brand, than someone starting from scratch.
The house always wins
The latest numbers from the New York Building Congress are in, and while they suggest a serious boost for the city’s construction industry, it’s complicated. No less than $86 billion in construction spending is expected by the end of 2022, in addition to the 71.5 million square feet of homes that are expected to come online this year. There are also 30,000 new units planned by 2025. And, while those numbers are certainly impressive, they won’t keep up with demand.
“We need to find a suitable replacement for the expired 421a program, streamline the land use review process, and increase capacity for zoning as of right,” Building Congress CEO Carlo Scissura said in a statement. “Not only does the city’s economic recovery depend on it, but our current housing crisis demands it.”
This demand could explain why this might be an opportune time to sell. At least that’s what we think RXR thinks. CO learned this week that the company is putting three A-classes in New York residential developments on the marketas well as a fourth development in Glen Cove and a fifth in Stamford, Connecticut, comprising some 1,831 units.
The industrialist is tearing up this casbah!
From coast to coast, no one doubts just how rocking the industry has been, with even more evidence this week.
On the east coast, partners MCB Real Estate, Invesco Real Estate, Curated Development Group and Birchwood Capital announced an industrial and logistics development of 2 million square feet called Currwood Logistics Park, and they’re starting the project without even a tenant in hand.
“Our team is pursuing this development program with tremendous confidence, based on the strong fundamentals that exist in the Western Maryland and Washington County region,” said MCB Managing Partner and Co-Founder, P David Bramble, in a statement.
To the west, Nuveen fair invested $151.2 million for a fully leased 337,125 square foot Class A distribution facility in Los Angeles purchased from Clarion Partners.
Oh, and did we mention that’s almost double what Clarion paid two years ago? Well it is.
Speaking of big LA projects, the the fallout continued of the scandal where a number of city council members were filmed disparaging others in racist terms. Don Peebles, the developer of Angels Landing in downtown Los Angeles, has called on City Councilman Kevin de León to step down because Nury Martinez did after the scandal broke.
And speaking of Don Peebles, he hosted Commercial Observer’s Future Forward event in Miami at the Bath Club (owned by Peebles) which saw some of the brightest names in real estate present and sitting on panels – from Andrew Farkas, to Michael Shvo, to Miki Naftali, to Nicole Kushner Meyer, to Howard Lorber, to Casey Berman and many more, who have taken advantage of Miami’s sunny outlook when it comes to even the office market.
“Unlike the rest of the country, the commercial office market here is strong, growing, with significant pent-up demand,” Peebles said. “There is a huge demand.”
One of the things we like to do every Sunday is have a nice long article, and last week’s issue of CO had two articles that make it a leisurely read.
Cathy Cunningham took a deep dive in the tripartite dispute between Amtrak, Ashkenazy Acquisition Corp. and Rexmark.
Rexmark is the New York-based mezzanine lender for South Korean bank Kookmin, which attempted to take over Union Station in Washington, DC from Ashkenazy after it defaulted. The case was already complicated enough before Amtrak filed an eminent domain claim in April to take over the station.
Overall, it gives a fascinating look at the intricate maneuvers of each game. (And that probably provides an interesting window into what we can expect as more defaults become de rigueur in the coming year.)
But for a slightly more uplifting read, check out Commercial Observer’s first-ever list of top proptech players.
It’s a strange time for proptech; there have been a number of consolidations over the past year, and likely more to come, and confidence within the sector has waned. But, as CREtech Founder (and Power Proptech Honorable Mention) Michael Beckerman told CREtech earlier this month“We’re only in the second round!”
Power Proptech offers a comprehensive view of an entire landscape of innovative people that anyone in commercial real estate needs to know.