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U.S. urban office market, stung by pandemic, hopes tech firms drive comeback

The growing footprint in New York of major tech companies like Amazon.com Inc, Facebook Inc and Alphabet Inc’s Google has given property owners and brokers hope that once the coronavirus has been conquered demand for office space will quickly return to pre-pandemic levels.

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NEW YORK (Reuters) – The growing footprint in New York of major tech companies like Amazon.com Inc, Facebook Inc and Alphabet Inc’s Google has given property owners and brokers hope that once the coronavirus has been conquered demand for office space will quickly return to pre-pandemic levels.

FILE PHOTO: The Met Life Tower (L) and Chrysler Building in Manhattan’s midtown east skyline are seen out the windows from the 54th floor of the 77-story One Vanderbilt office tower, in midtown Manhattan, New York City, New York, U.S., September 9, 2020. REUTERS/Mike Segar

But the popularity of working from home and the exodus of people from expensive coastal cities will likely weigh on demand and change workspace requirements, leaving office buildings that do not adjust less valuable.

Big Tech’s expanding real estate clout already hides declining values for lower-quality properties.

Prices for premier workspace in U.S. gateway cities have held or even risen during the pandemic in a flight to quality. But leasing volumes and number of buildings sold have plummeted, with valuations at the lower end falling, data shows.

The pandemic has left a massive question mark hanging over the office sector, said Joe Gorin, head of U.S. real estate management and value-added investing at Barings in New York.

“I know how people are going to use the hotel coming out of the pandemic. How are people going to use office buildings?” he asked. “There’s going to be some pain because we’re going to have to go through a restructuring of how people use space.”

Companies need to make the office more compelling and allow busy work to be done at home, which means workspace demand might not grow, Gorin said. Buildings that cannot provide a great environment will become obsolete.

“If you can own or create the right stuff, it’s going to be valuable,” he said. “Office can become more important and shrink as much as it can expand.”

Limited data suggests buildings classified below the top Class A industry designation already have suffered a drop in value during the pandemic and could be poised for a further slide if a decline in demand persists.

The amount of available office space has soared as tech companies have dumped excessive workspace, a sign of uncertainty among management about a company’s future workspace needs.

Institutional investors have put transaction decisions on hold, with the sale of buildings in Manhattan valued at more than $100 million falling more than half to just 32 last year, research by brokerage Newmark Group Inc shows, using Real Capital Analytics data.

Leasing activity has picked up after the New Year but is still far below pre-pandemic levels.

The office sector is the hardest in commercial real estate to assess because leases generally are long-term commitments, said Sam Isaacson, president of Walker & Dunlop Investment Partners in Denver.

“Eventually the cash flow streams have to match up with the asset value appreciation and when that doesn’t occur, that’s when we’re going to see some real pain,” Isaacson said.

WAITING TO MEET THE BOSS

The number of virtual tours brokers conducted with clients fell 61% in December from a year earlier in seven U.S. gateway cities, according to data from View The Space Inc. Tours declined 74% in New York, the biggest drop outside of an 80% plunge in Seattle, the property technology firm said.

A reversal of Seattle’s early recovery from the pandemic may suggest a significant embrace of more remote work in the city over the long-term, VTS said in the report.

“Our data is pointing to the fact tech companies are still really comfortable working from home and they’re probably going to be the last ones to return to the office,” said Ryan Masiello, co-founder and chief strategy officer at VTS.

Of the 115 people VTS has hired since March, Masiello has met none of them because they are all working remotely, he said.

Tech companies led other industries for the second straight year in Manhattan leasing activity, brokerage CBRE Group Inc said in January. A decline in the technology sector’s real estate footprint would be significant for a property market looking to ride the growing digital economy.

Brokers point to Amazon’s $978 million purchase of the Lord & Taylor building on Fifth Avenue last year and Facebook’s leasing of the Farley Building across from Madison Square Garden, as prime examples for Manhattan’s real estate prospects.

The Amazon deal was valued at $1,466 a square foot, more than 10% above last year’s top-quartile average price, while Google’s billion-dollar deals in Chelsea and Hudson Square have redefined swaths of the city’s Far West Side.

Scott Rechler, chief executive and chairman of closely held RXR Realty, one of the largest office building owners in New York, sees a growing disparity between high- and lower-quality properties.

Companies need to re-imagine the workspace and how they engage with employees who expect properties to be well-located, energetic and have health and wellness centers, he said.

“For buildings that can’t do that – they’re not in the right location, they’re older, they’re obsolete – it could be a meaningful free-fall in value,” Rechler said.

Graphic-Tenant interest in Manhattan office space by category :

Reporting by Herbert Lash in New York; Editing by Alden Bentley and Matthew Lewis

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Source: https://www.reuters.com/article/us-usa-property-tech/u-s-urban-office-market-stung-by-pandemic-hopes-tech-firms-drive-comeback-idUKKBN2AQ2KV

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Reuters

Myanmar security forces with rifle grenades kill over 80 protesters – monitoring group

Myanmar security forces fired rifle grenades at protesters in a town near Yangon on Friday, killing more than 80 people, the Assistance Association for Political Prisoners (AAPP) monitoring group and a domestic news outlet said.

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(Reuters) – Myanmar security forces fired rifle grenades at protesters in a town near Yangon on Friday, killing more than 80 people, the Assistance Association for Political Prisoners (AAPP) monitoring group and a domestic news outlet said.

Details of the death toll in the town of Bago, 90 km (55 miles) northeast of Yangon, were not initially available because security forces piled up bodies in the Zeyar Muni pagoda compound and cordoned off the area, according to witnesses and domestic media outlets.

The AAPP and Myanmar Now news outlet said on Saturday that 82 people were killed during the protest against the Feb. 1 military coup in the country. Firing started before dawn on Friday and continued into the afternoon, Myanmar Now said.

“It is like genocide,” the news outlet quoted a protest organiser called Ye Htut as saying. “They are shooting at every shadow.”

Many residents of the town have fled, according to accounts on social media.

A spokesman for Myanmar’s military junta could not be reached on Saturday.

AAPP, which has maintained a daily tally of protesters killed and arrested by security forces, has previously said 618 people have died since the coup.

That figure is disputed by the military, which says it staged the coup because a November election won by Aung San Suu Kyi’s party was rigged. The election commission has dismissed the assertion.

Junta spokesman Major General Zaw Min Tun told a news conference on Friday in the capital, Naypyitaw, that the military had recorded 248 civilian deaths and 16 police deaths, and said no automatic weapons had been used by security forces.

An alliance of ethnic armies in Myanmar that has opposed the junta’s crackdown attacked a police station in the east on Saturday and at least 10 policemen were killed, domestic media said.

The police station at Naungmon in Shan state was attacked early in the morning by fighters from an alliance that includes the Arakan Army, the Ta’ang National Liberation Army and the Myanmar National Democratic Alliance Army, the media reported.

Shan News said at least 10 policemen were killed, while the Shwe Phee Myay news outlet put the death toll at 14.

Myanmar’s military rulers said on Friday that protests against its rule were dwindling because people wanted peace, and that it would hold elections within two years.

Ousted Myanmar lawmakers urged the United Nations Security Council on Friday to take action against the military.

“Our people are ready to pay any cost to get back their rights and freedom,” said Zin Mar Aung, who has been appointed acting foreign minister for a group of ousted lawmakers. She urged Council members to apply both direct and indirect pressure on the junta.

“Myanmar stands at the brink of state failure, of state collapse,” Richard Horsey, a senior adviser on Myanmar with the International Crisis Group, told the informal U.N. meeting, the first public discussion of Myanmar by council members.

Reporting by Reuters Staff; Writing by Raju Gopalakrishnan; Editing by Pravin Char

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Source: https://www.reuters.com/article/us-myanmar-politics-idUSKBN2BX0D5

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Reuters

Factbox: Russian central bank considers digital rouble in 2023

(Refiles to remove superfluous word in headline; no change in text.)

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(Refiles to remove superfluous word in headline; no change in text.)

FILE PHOTO: A Russian flag flies over Russian Central Bank headquarters in Moscow, Russia December 3, 2018. REUTERS/Maxim Shemetov/File Photo

(Reuters) – The Russian central bank is considering limiting future transactions with a digital rouble to smooth the impact of its implementation, planned for 2023, Deputy Governor Alexei Zabotkin said on Thursday.

Russia is working on introducing the digital rouble on top of existing cash and non-cash roubles, to facilitate payments for individuals and businesses and make the use of its currency more global in the face of Western sanctions.

“The emission of the cryptorouble will be akin to cash emission,” Zabotkin said.

“It will be feasible to introduce limits on the transactions from non-cash form into the digital rouble,” Zabotkin said, adding that the central bank will stand ready to compensate for possible liquidity shortages when introducing the digital rouble.

Russia is joining other central banks across the world that are stepping up efforts to develop digital currencies to modernise financial systems, speed up payments and counter a potential threat from other cryptocurrencies.

Below are the key aspects that are known about Russia’s digital rouble project:

* The central bank first floated the idea of the digital rouble in October, citing the need to make payments more convenient;

* The digital rouble will be issued by the central bank and will not substitute for cash in circulation or accounts in banks;

* The first test-drive stage is planned for 2022 and will include transactions with banks. Other operations, such as tax payments and budget settlements, will be tested later;

* Russia is leaning towards a two-tier system for its digital rouble, with banks opening digital wallets with the central bank and serving as intermediaries for customers and companies;

* Russian banks expressed concern about the digital rouble, pointing at cyber risks, possible liquidity shortages and damage to their profits;

* Russia gave cryptocurrencies, such as bitcoin, legal status in 2020. But it banned them from being used as a means of payment, stressing that only currencies issued by central banks can be used for that;

* Russia eyes the digital rouble introduction at times when major central banks including the U.S. Federal Reserve have teamed up with the Bank for International Settlements (BIS) to explore central bank digital currencies.

Reporting by Anna Rzhevkina and Elena Fabrichnaya; editing by Andrey Ostroukh, Larry King

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Source: https://www.reuters.com/article/us-russia-cenbank-rouble-factbox/factbox-russian-central-bank-considers-digital-rouble-in-2023-idUSKBN2BV2AH?il=0

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Reuters

Left-wing party opposed to big mining project wins Greenland election

A left-wing party that opposes a large rare earth mining project has become the biggest in parliament after securing more than a third of votes in a snap election.

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COPENHAGEN (Reuters) – A left-wing party that opposes a large rare earth mining project has become the biggest in parliament after securing more than a third of votes in a snap election.

Members of IA (Inuit Ataqatigiit) celebrate following the exit pools during Greenland’s election in Nuuk, Greenland April 6, 2021. Ritzau Scanpix/via REUTERS

The result of Tuesday’s election casts doubt on the mining complex at Kvanefjeld in the south of the Arctic island and sends a strong signal to international mining companies wanting to exploit Greenland’s vast untapped mineral resources.

The Inuit Ataqatigiit (IA) party won 37% of votes, compared to 26% in the last election four years ago, overtaking the ruling social democratic Siumut party which secured 29% of votes, according to official results.

The pro-mining Siumut party has been in power most of the time since 1979.

Though not opposed outright to mining, IA has a strong environmental focus. It has campaigned to halt the Kvanefjeld project, which aside from rare earths including neodymium – which is used in wind turbines, electric vehicles and combat aircraft – also contains uranium.

“This will without doubt hamper mining development in Greenland,” said Mikaa Mered, lecturer on Arctic affairs at HEC business school in Paris.

While most Greenlanders see mining as an important path towards independence, the Kvanefjeld mine has been a contention point for years, sowing deep divisions in the government and population over environmental concerns.

“It’s not that Greenlanders don’t want mining, but they don’t want dirty mining,” Mered said, referring to uranium and rare earth projects. “Greenlanders are sending a strong message that for them it’s not worth sacrificing the environment to achieve independence and economic development.”

CHALLENGES AHEAD

The island of 56,000 people, which former U.S. President Donald Trump offered to buy in 2019, is part of the Kingdom of Denmark but has broad autonomy.

IA leader Mute Egede, 34, will be first to try to form a new government. A potential government ally could be the Naleraq, an independence party that also opposes the Kvanefjeld project.

Support from Prime Minister Kim Kielsen and his governing Siumut party helped license-holder Greenland Minerals gain preliminary approval for the project last year, paving the way for a public hearing.

The Australian firm has already spent more than $100 million preparing the mine and has proven processing technology through its Chinese partner Shenghe Resources.

“The challenge for IA will be to explain to the world that Greenland is still open for business and still an attractive mining jurisdiction,” said Dwayne Menezes, head of London-based think-tank Polar Research and Policy Initiative.

Reporting by Jacob Gronholt-Pedersen; Editing by Andrew Heavens and Timothy Heritage

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Source: https://www.reuters.com/article/us-greenland-election-idUSKBN2BU0V1

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