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Month: March 2023

WeWork Doesn’t Work and It Never Didwework office nyc

WeWork Doesn’t Work and It Never Did

Published on March 20, 2023

It’s been nearly a year since we last checked in on WeWork when we wrote a blistering critique of its founder, Adam Neumann, who has demonstrated an uncanny ability to fail upwards and amass obscene wealth in the process.  The WeWork narrative is one of shareholder pain and suffering coupled with broken dreams and empty promises. Neumann is doing just fine though: he walked away with a whopping $1.7 billion (yep, that’s a “b”) while the company currently teeters on collapse with a market value of approximately $700 million and trading under $1 per share. So the stock is in the crapper but perhaps operationally the company is doing better? Nope, WeWork recorded a loss of $527 million in the fourth quarter of 2022 (better, however, than a year earlier when the company lost $803 million).  Revenue for the first quarter of 2023 is expected to come in well under analyst estimates and the cash burn for the year is pegged at $210 million.

The company is undertaking a financial restructuring that will involve its largest shareholder converting debt to equity and extending the maturity of its existing loans at higher interest rates no doubt. CEO Sandeep Mathrani—putting on his best game face—claims the company is “methodically executing his plan to achieve profitability.” Call me Groucho Marx and count me out of this club of financial chicanery. That said, you almost can’t blame CEO Sandeep as he was handed something unsalvageable and asked to conjure up a nearly impossible turnaround. WeWork was doomed from the start with an easily duplicable business model exacerbated by bad execution and insider grift.  The next update on WeWork will likely find the company in the bankruptcy bin. See you then.

Stribling, Dees. “WeWork, Now Trading below $1, on Verge of Financial Restructuring.” Bisnow, 16 Mar. 2023, www.bisnow.com/national/news/coworking/fresh-capital-infusion-for-wework-from-softbank-reportedly-in-the-offing-118131.
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Can We Get More Nuanced Numbers on NYC’s Office Vacancy? Now, We Can.

Published on March 17, 2023

Understanding the office occupancy rate in NYC is important to a host of various stakeholders and, until now, the numbers have been reported broadly without much nuance. That is, the return to office numbers have focused on a single market average which shows directional trends but fails to capture the difference between building classes. The company responsible, Kastle Systems, measures building entry swipes but it doesn’t cover properties owned or managed by Rudin Management, Brookfield Properties, Silverstein Properties, Rockefeller Group, Tishman Speyer, Boston Properties (formerly Boston Properties) and Related Companies. That’s a problem as these guys own some of the best-in-class office towers where many law firms, banks and financial-services firms call home. These tenants also have more employees at their desks than, say, tech, creative and media firms.

For a more accurate read of daily occupancy office numbers, REBNY (Real Estate Board of New York) recently issued a report that relied on Placer.ai, which uses location intelligence data to measure the movement of mobile devices in and out of office towers across the city. Specifically, it covers 250 towers of all classes, including many of the larger owners of Class A buildings. As a result, the numbers are more nuanced with Placer.ai and can measure differences in occupancy between Class A and Class B buildings and get more granular on office occupancy on any given day of the week or even times of the day.

Placer.ai could probably tell you which industries have the hardest working employees (investment bankers or corporate attorneys), measure the differences in occupancy of all buildings in an owner’s portfolio (and extrapolate from the data why some may be underperforming others) or determine which professions/businesses have higher occupancy levels to help owners strategize which tenant types to target. A few takeaways from the REBNY report include occupancy rates exceeding 50% of pre-pandemic levels for nearly two-thirds of all buildings and, more interestingly and not surprisingly, Class A buildings were at 66.3% of pre-pandemic levels while Class B buildings were only at 53.6% of pre-pandemic levels in 2022. We are in the early innings for sure but expect companies like Placer.ai to play a greater role in measuring key performance indicators for all asset classes and not just NYC office buildings.

Cuozzo, Steve. “Rebny’s New Return-to-Office Gauge Paints Bright View for ‘Trophy’ Towers.” New York Post, 26 Feb. 2023, nypost.com/2023/02/26/rebnys-new-return-to-office-gauge-paints-bright-view-for-trophy-towers/.
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Does Your NYC Skyscraper Have That “Je Ne Sais Quoi?”

Published on March 3, 2023

In a city like no other where bravado and ego are measured not by the size of your wallet or the quality of your ride, NYC developers duel over the size and amenity richness of their high-rise towers.

Take SL Green’s One Vanderbilt, NYC tallest midtown skyscraper, which stands 1,300 feet above the ground, has 73 floors plus an area on top with bars and something called SUMMIT, three levels of immersive space with mirrors, waves of color, shape-shifting visuals and mind-bending digital images.

Refusing to be outdone, Stephen Ross’s Related Companies, allows, the more adventurous among us, to scale the side of 30 Hudson Yards, the highest external building climb in the world. Daring climbers, fitted with harnesses, can traverse a series of open-air platforms and stairs slanted at a 45-degree incline over a course that takes about 45 minutes and culminates with a celebratory glass of champagne.

Never one to sit on the sidelines, Extell Development’s Gary Barnett, sees monsieur Holliday and Ross and raises the stakes. Earlier this week, he revealed plans for a power drill-shaped (and somewhat phallic) 56-story tower with a mix of hotel rooms, fine dining, shopping and thrill rides at 740 Eighth Avenue. One attraction envisioned is a 260-foot indoor freefall inside the high-rise, which is double the distance of Disney World’s already petrifying freefall drop.

Great views high in the sky of the world’s greatest city seem to no longer be enough, the market is now calling for death-defying experiences.

Rebong, Kevin. “Extell’s Theater District Highrise Lines up for Major Tourism.” The Real Deal, 22 Feb. 2023, therealdeal.com/new-york/2023/02/21/plans-revealed-for-extells-740-eighth-avenue-tower/.
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