Big Rent Due

While I have written about the issues facing residential renters that is a double edged problem as some owners are small scale landlords with one or two investment properties that rent is the primary financial investment to pay the mortgages, taxes and incidental costs required to maintain and own investment properties. In 2008 many single investors bought numerous properties with the intent of owning as a method of long term investment and when that market collapsed it led many tenants in the lurch as banks foreclosed or the property was sold to larger REIT venture capitalists in which to again refurbish and resell or use as rental markets demanded including short term/Airbnb use. That too is another fallout post Covid for the small investor who are now listing furnished properties for rent with shorter leases in anticipation for the long term while others are simply moving to the more traditional means or trying to sell them. And once again the venture capitalists are quickly buying up such properties as well for their own long term gain.

That said the multiple family units be they condos or apartments are a market I have yet to see what will result as again I suspect many residents will want out of such hot boxes of confinement due to costs, lack of space and simply fewer demands to distance upon entering or exiting the property. The building behind me is one such example as an albatross that they stupidly accelerated and now will have multiple expensive units in which will go vacant for I suspect quite some time.

This from Forbes:  According to RealPage, about 370,000 new high-end units are to reach competition this year (although construction delays and disruptions could deflate this number), marking a 50% increase from the national supply that came online in 2019. 

“We have too much product that was either just completed or under construction and you’re not going to have people moving around as much as [it would be otherwise] typical in the near term,” says Willett. “It’s going be really hard to get that new product filled up.”

For the summer months, which usually see a peak in rental demand, it’s still hard to tell what the effects will be, despite the impacts already rippling throughout the industry.

“Everybody’s wondering what this all means for the summer leasing season,” says Robert Pinnegar, CEO of the National Apartment Association. “Traditionally, the summer period is when you see the most movement of people from property to property, from state to state, from city to the city.

“With the uncertainty that’s going on now, especially with the economy essentially being at a standstill, nobody really knows what that’s going to do. And the unknown factor here is what government policy is going to be with regards to how we interact when the businesses reopen.”

And if working from home becomes the norm it may mean larger plans other than just redesign and scheduling staffing needs for many companies as it too will have a ripple affect and nowhere will feel it more than Manhattan.

Which brings me to the issue of commercial properties which have been on the upswing in most markets, while housing lagged, this is one area of build that has not. Crane watch became the mantra of most business journals under some misguided (intentionally or not) to sell and market their cities to businesses in which to relocate their operations. Along with massive tax incentives that enables business to not pay income nor other revenue generating taxes for decades it become an inticing invite to enable business to hopscotch across America while small business are given no such breaks and they continue to generate the most jobs and in turn revenue to the state coffers. Then came Covid and that game changed.

Small business owners closed are already struggling with rent and now the added lootings we may see more closures and in turn that will affect overall taxes and mortgage burdens.   But it is not only the small businesses.

This from the Washington Post:   Nearly half of commercial retail rents were not paid in May. Companies as big as Starbucks say the financial devastation from the shutdown has left them unable to pay their full property bills on time. Some companies warn they will not be able to pay rent for months. And this from the New York Times:  If building owners cannot come up with enough money to pay their next property tax bill in five weeks, a deadline the city has refused to postpone, the city will be starved of an enormous revenue stream that helps pay for all aspects of everyday life, from the Fire Department to trash pickup to the public hospitals. It could lead to a bleak landscape of vacant storefronts and streets sapped of their energy.

But again like residential rents, commercial ones are not doing much to re-examine their balance sheets and rental agreements. This is from one such store owner in New York:  In 2018, even the national chains began closing more spaces than they opened. Rents have come down somewhat in a few heavy shopping arteries, but on the streets where I was looking to open stores, rents didn’t seem to budge. In 2019, rent for my NoLIta store jumped from $360,000 a year to $650,000.

And I laugh at the once adored WeWork that had everyone salivating at their “worth” that fell hard and fast before Covid and now it too has been infected with LayOff mentality and demands to reduce rents.

This is one new road we are going down and it sure as hell is like the rest of our infrastructure, rocky, bumpy and full of holes.

Office Towers Are Still Going Up, but Who Will Fill Them?

Developers around the country are grappling with the fallout from the coronavirus pandemic as tenants cancel plans and workers fear returning to the office.

The New York Times
By Kevin Williams
Published June 2, 2020

Before the pandemic shut down businesses, a robust economy had powered a building boom, sending office towers skyward in urban areas across the United States. The coronavirus outbreak, though, has scrambled plans and sent jitters through the real estate industry.

Skyscrapers scheduled to open this year will remake skylines in cities like Milwaukee, Nashville and Salt Lake City. Office vacancy rates, following a decade-long trend, had shrunk to 9.7 percent at the end of the third quarter of 2019, compared with 13 percent in the third quarter of 2010, according to Deloitte.

Developers were confident that the demand would remain strong. But the pandemic darkened the picture.

“There is a pause occurring as companies more broadly consider their real estate needs,” said Jim Berry, Deloitte’s U.S. real estate sector leader.

The timing is unfortunate for Mark F. Irgens, whose 25-story BMO Tower in Milwaukee opened in mid-April at the peak of the statewide lockdown in Wisconsin. A month later, a small fraction of typical daytime foot traffic was passing by as most businesses adhered to the governor’s stay-at-home directive, which expired last week. A restaurant that was slated for the ground level was canceled, and three potential tenants have delayed their plans.

Instead of showing off the building’s sparkling Italian marble floors and panoramic vistas of Lake Michigan, Mr. Irgens is worrying about who is going to pull out next and what type of corporate landscape he might face when the pandemic finally ends.

But he is not putting on the brakes. The BMO had been planned for five years, and he has leases to negotiate, investors to please, tenants to woo and loans to pay off.

“Development projects are different than making widgets,” he said. “You can’t stop; you can’t turn it off. You have to continue.”

Slowly, workers are filling their BMO offices. Managers, who were scheduled to report on Monday, constitute about 15 percent of the building’s occupancy. Mr. Irgens thinks it will be the end of the summer before it gets up to 50 percent. Without a coronavirus vaccine, it may be year’s end before the building approaches a “normal” occupancy, he said.

Other developers around the country are also dealing with the fallout, especially for towers with Class A space, regarded as the highest-quality real estate on the market. In most cases, new buildings are not fully occupied, and developers were counting on a strong economy to do the work for them. For instance, the BMO Tower was 55 percent leased before the pandemic.

The question facing the owners of office towers is: Will anyone still want the space when coronavirus crisis fades?

If the economic pain drags on, there could be long-lasting changes to the way people work and how tenants want offices to be reimagined, said Joseph L. Pagliari Jr., clinical professor of real estate at the University of Chicago’s Booth School of Business. Some of the changes — like more spacious elevators — could be costly to put into place, he said.

The pandemic could be a “pivot point,” Mr. Pagliari said, and that would be bad news for building owners. The office towers were designed to be “best in class,” he said, but the pandemic has suddenly made their most salable amenities — common areas, fitness centers and food courts — into potential liabilities.

The economic crisis could also spur high interest rates on debt, which would cause building values to fall, Mr. Pagliari said. That may happen even if the crisis diminishes in the weeks ahead.

“The current pandemic has raised perceptions about the likelihood and consequences of future pandemics,” Mr. Pagliari said. Developers who can factor in such events will gain an advantage, but any skyscrapers that are built with pandemic fears in mind are years away.

The prospect that workers may want to continue working from home does not worry John O’Donnell, the chief executive of Riverside Investment and Development, which is developing a 55-story tower at 110 North Wacker Drive in Chicago. The tallest office building erected in the city since 1990, it is scheduled to open in August and will be anchored by Bank of America. Other tenants include law firms, many of which are doing business from home.

“There is a need for collaboration, team building, common business cultures and a continuous desire to have social contact within a business,” Mr. O’Donnell said.

The building is 80 percent leased ahead of its August opening. One tenant signed for 40,000 square feet of office space at the height of the lockdown, which Mr. O’Donnell took as an encouraging sign.

The building is already being adjusted to meet post-pandemic needs, something Mr. O’Donnell said newer structures were better able to do. Amenities are being updated to be touch free. And owners are talking with tenants about walk-through thermal imaging to monitor workers and visitors for fevers.

The pandemic will result in a demand for more office space, not less, said Paul H. Layne, the chief executive of the Howard Hughes Corporation, a national commercial real estate developer based in Houston. Developers will move away from the industry-standard 125 square feet per person toward roomier workplaces.

But others say it is too early to tell when demand for office space will return. Jamil Alam, managing principal of Endeavor Real Estate Group, said the situation would vary by city.

“There will be winners and losers,” Mr. Alam said, explaining that he thinks denser metro areas like New York and Boston, which have been ravaged by the coronavirus, could find their luster lost in favor of smaller markets.

Endeavor, which is based in Austin, Texas, has a portfolio that includes 15.6 million square feet of commercial real estate in cities like Dallas, Denver and Nashville. One of its projects, the 20-story Gulch Union, will be the largest office tower in Nashville when it opens in August with 324,254 square feet of office space.

Smaller markets like Nashville are well positioned for companies wishing to pull up stakes from major metropolitan areas with higher density and costs, Mr. Alam said. Gulch Union has leased 27,000 square feet, and four more deals totaling 40,000 square feet are near completion.

“Deals are still being done,” he said.

There will be an appetite for urban, walkable, mixed-use office environments, Mr. Alam said, and changes will need to be made in buildings over time, like fewer touch points on handles and elevator buttons.

But projects that have not been started yet will be paused, said Chris Kirk, managing principal of the Salt Lake City office of Colliers, the commercial real estate brokerage firm.

“If you are a developer or landlord or C.F.O., you are concerned,” he said. “Everyone is feeling the impact.”

And the city is experiencing a building spurt downtown. A 24-story Class A tower developed by City Creek Reserve, the development arm of the Church of Jesus Christ of Latter-day Saints, is scheduled for completion next year. The building, which will have 589,945 square feet of office space, is already 80 percent leased.

Salt Lake City has been averaging a new Class A office high-rise every decade, and the pace is increasing. Still, the pandemic might put the brakes on that.

“Anyone who would be coming out of ground speculatively now without the commitment has got to be thinking about their timing,” Mr. Kirk said.

Mr. Irgens hopes to ride out the pandemic and continue with other projects. In February, his company broke ground on a six-story building in Tempe, Ariz., and it is moving forward with a 235,000-square-foot Milwaukee office project that is 42 percent leased.

“My partners in my business are working really hard to figure out how to have business continuity, and it is really hard to do that,” he said. “Things are changing daily.”

No to Both

The chant goes: No Justice No Peace and that could not be more true as the events have unfolded the past few days.   I am not sure what to make of what I watched and read from my home in Jersey City, relieved that Newark’s protest went without violence and destruction and that again made me proud of where I live.   That said, we were at the coffee shop talking about South Jersey and agreed that they are a different breed and it would be very different there. And sure enough Atlantic City decided to gamble on that plan but it was shut down quickly.  And Trenton too had a minor issue.  But many here have been very vocal about not harming small business as they are owned by many faces of color and minorities/immigrants and perhaps that may be why.  For whatever reason this part of New Jersey has figured this out and let’s hope it stays this way as the week unfolds with more memoriums and events scheduled in the area this week.

But I have to ask the million dollar question about how we are filming nation and not an active on unless it is a mass with no clear leadership or any actual plan of action other than stating our feelings. Great but you need more than signs, you need to know how to accomplish said goal, find the resources, individuals and long term organization to achieve them.  You know like back in the day  with the Women’s Suffragette movement,  the Civil Rights and Gay Rights/AIDS activists did. Remember them? Not all that long ago and perhaps they have some actual facts and history available to not only emulate but improve upon.   But that would require again doing more than yelling, staring down, walking and then going home and posting videos on social media to show everyone you care.

Now if I was murdered in the street by a Cop or by anyone and it was filmed as an individual kneeled on my throat for eight minutes and no one felt compelled to intervene, even risk there own life to try to stop this is one thing that has gone unnoticed.  Why no one ran up to even create a diversion that may have indirectly led him to lift his knee is one thing, the other, being his own colleagues just stood there and watched a fellow Officer commit murder.  All of this over an alleged accusation over a $20 bill.  What is the shopkeepers take on all of this? Funny of all the businesses destroyed has his been? And that too is another tragedy when many of the small businesses have been closed due to Covid to find themselves victimized again may find themselves permanently out of business which again lends to a community.  Building empathy comes from within and this is not the way to do it.

This is from the Wall Street Journal:

In some cities, smaller businesses bore the brunt of the damage. In Minneapolis, a family-owned liquor store, an Indian restaurant, a chiropractor and other businesses were left in rubble near the closed Lake Street Target.

Cynthia Gerdes, co-founder of Hell’s Kitchen in downtown Minneapolis, shut down her 18-year-old restaurant because of the coronavirus in March. She had drawn up plans to start offering takeout in July, but is now weighing how Mr. Floyd’s death and the resulting unrest will impact the city’s business and reputation going forward.

“It’s a double whammy. It’s a gut punch,” said Ms. Gerdes, whose business depends on conventions and office workers downtown.

Ms. Gerdes said her building near one of the city’s main police stations is now boarded up, with some windows smashed. She put up a sign in her restaurant’s windows supporting the protesters, but wonders about how long the impact will last.

“It’s just so surreal at this point,” said Ms. Gerdes, who said she was exploring options for her establishment and 138 employees.

Bob Grewal, a Subway franchisee and development agent for the sandwich company in the Los Angeles and Washington, D.C., areas, said one of the chain’s stores in downtown Washington was looted and had its windows smashed Saturday night. The store had just begun to reopen with limited hours after being closed for the coronavirus.

“They were just starting back up. It’s just horrible,” he said.

Police arrested looters that had targeted another Subway location in the hard-hit Fairfax District in Los Angeles on Saturday night, Mr. Grewal said. That store had just invested in food to get running again. Owners are contacting insurance companies and assessing the damage now, he said.

“It’s crazy. I was hoping to start opening back up. And then this happens,” he said.

“These business owners have nothing to do with this,” Mr. Grewal said. “They are suffering. The communities are suffering.”

And this brings me to Trump’s statement “When the looting begins so does the shooting” (further proving his insanity)  Well the looting began with SOHO in NYC taking the largest hit as it is luxury central for the “bougie” items and accessories coveted by many in the minority community.  An irony that is not lost that while this is excused as a retaliation for long term oppression, injustice and elitism are the same brands that are duplicated, sold and emulated if not outright purchased with hard earned dollars to demonstrate status.   As a white woman with means I would never wear or carry any of it but to those who think spending 5,000 dollars on a purse have at it, but there are better ways I choose to spend my money. Think of all the education, the travel, the way one lives that it could buy but instead you carry on your arm, walk on the streets or wear on your back. Funny I would not want to wear anything associated with oppression, racism and elitism let alone finance that.  And yet we all do or do we?  Again fashion is an industry that has made the idea that what one wears is what makes one better, brighter and shiner.  I quit giving a shit awhile ago and it doesn’t mean I have given up I just choose to be better, brighter and shiner without a label rubbing against my neck.

And this again makes me ask is this how any of us want to be remembered as the one who died on the street at the hands of police while being filmed and then denigrated as kids who share the same color of skin raid and vandalize businesses for personal gain or simply because they can.  And then have hundreds of people # and laugh about on social media?   Is that the image I would want my memory to be associated with?

I once explained to a kid why wearing pants around the base of his ass was offensive.  He said it was black culture and I asked him where in the cultural milieu of black history was showing one’s underwear as a statement.  He said it was music. And then I asked him where these musicians got the idea and he said it was what black youth needed to say about showing their ass.  It was clearly made up and again the same people who claim what women wear inspires rape need to examine how exposing your underwear is any different. And then I gave him the article about where that came from – prison culture.   One concept is that  young men wore them to indicate they were bottoms in the “relationship” and it was sexual assault only in the most tragic of ways to survive in prison.  Or that they were ill fitting so this was what they wore.  And there is one more, one again tied to slavery.  Either/or the story behind sagging may well be a statement about prison, but regardless, who wants to embrace that history?  And while we incarcerate black men at surreal rates I would not want any part of it, it is not a badge of honor and this does not make white people feel guilt nor shame and if that is a message that you want to make, why not wear orange jumpsuits full time then?  I don’t see the elite of black society doing it so why would you? This issue has been brought up by Bill Cosby now wearing said jumpsuit and by Barack Obama who attained the highest position in the world as a black man who never did, had this to say: “Having said that, brothers should pull up their pants. You are walking by your mother, your grandmother, your underwear is showing. What’s wrong with that? Come on. Some people might not want to see your underwear. I’m one of them.” so again why are you showing me your underwear?

For the record I find it repugnant that medical professionals wear scrubs to and from work. Please don’t.

Meanwhile as much of the looting, violence and damage was done by young black youths, there have been some not who were very much involved, including one man they believe was paying young black me to do so and my personal favorites are the two educated Attorneys that threw Molotov cocktails at the Police precinct in Brooklyn; One was a woman and the other a young black man so while I applaud that they were willing to risk their privilege to demonstrate solidarity is that the way you earn your stripes or are you that stupid?  I hope they enjoy wearing orange as that is the new black in fashion.

But in Seattle a white town of white privilege it was not exempt from the riots but again only in Seattle would a looter take an entire cheesecake and carefully carry it away as if it is was the royal jewels. Ah Seattle home of the WTO riots and a city that had been under a Justice Department watch for its own role in killing an Native American woodcarver. So again it is not just black individuals who are murdered by Police on the streets.  Even in Nashville there was a disruption in the city that did not surprise me in the least.  The division of race, class and of course culture has placed a city in a clear divide of the have and the many who have not.  And the reality is that I was afraid there every day, regardless of color I have never  met so many angry damaged children as I did there.  Poverty is the outlier that distinguishes it and the reality that it contributes to the racism and violence that perpetuates the city is the real issue first and foremost and all the rest falls into line.  And again the surrounding region enables the nuts who love the new white nationalism to travel into the city and take advantage of opportunities like this to wreak havoc and lay blame on the black community.  That is one group that has trauma that goes back generations that are yes racially based but now go way beyond just that attribute.

And in the same manner we do not want to generalize black individuals as a singular “type,”  we need to extend that to the Police as well.  I have struggled with that as my encounters with the Police have been horrific and I have the court transcripts to prove it and my rights taken from me while in a coma so again if you think I have white privilege think again.  But the Police are not all united in their rage and on Saturday several cops took to their knee to show solidarity with the protesters and in turn I find it interesting that there was no rioting in that area later.

But on a sadder note another officer took her life for reasons at this time unknown but it is clear that the weight of a profession so associated with murder, rage, violence, all the things they are supposed to protect us from cannot be easy.  Add to this she appears to be a Lesbian which again cannot be easy in a profession that is a culture of male superiority if not toxicity.

I read this essay by Roxanne Gay in the New York Times and she makes salient points about how one more story, one more death only shows that we are nowhere near the level of dialogue or change needed to make this end.  This again is a culture, history and way of belief that is ingrained in our social belief mores.   And I can assure you that for many watching the riots and lootings of the past few days have done little to change minds and hearts on anything more than a superficial level.  So expect more and less done in response.

Remember, No One Is Coming to Save Us

Eventually doctors will develop a coronavirus vaccine, but black people will continue to wait for a cure for racism.

By Roxane Gay
Contributing Opinion Writer.
The New York Times
May 30, 2020

After Donald Trump maligned the developing world in 2018, with the dismissive phrase “shithole countries,” I wrote that no one was coming to save us from the president. Now, in the midst of a pandemic, we see exactly what that means.

The economy is shattered. Unemployment continues to climb, steeply. There is no coherent federal leadership. The president mocks any attempts at modeling precautionary behaviors that might save American lives. More than 100,000 Americans have died from Covid-19.

Many of us have been in some form of self-isolation for more than two months. The less fortunate continue to risk their lives because they cannot afford to shelter from the virus. People who were already living on the margins are dealing with financial stresses that the government’s $1,200 “stimulus” payment cannot begin to relieve. A housing crisis is imminent. Many parts of the country are reopening prematurely. Protesters have stormed state capitals, demanding that businesses reopen. The country is starkly dividing between those who believe in science and those who don’t.

Quickly produced commercials assure us that we are all in this together. Carefully curated images, scored by treacly music, say nothing of substance. Companies spend a fortune on airtime to assure consumers that they care, while they refuse to pay their employees a living wage.

Commercials celebrate essential workers and medical professionals. Commercials show how corporations have adapted to “the way we live now,” with curbside pickup and drive-through service and contact-free delivery. We can spend our way to normalcy, and capitalism will hold us close, these ads would have us believe.

Some people are trying to provide the salvation the government will not. There are community-led initiatives for everything from grocery deliveries for the elderly and immunocompromised to sewing face masks for essential workers. There are online pleas for fund-raising. Buy from your independent bookstore. Get takeout or delivery from your favorite restaurant. Keep your favorite bookstore open. Buy gift cards. Pay the people who work for you, even if they can’t come to work. Do as much as you can, and then do more.

These are all lovely ideas and they demonstrate good intentions, but we can only do so much. The disparities that normally fracture our culture are becoming even more pronounced as we decide, collectively, what we choose to save — what deserves to be saved.

And even during a pandemic, racism is as pernicious as ever. Covid-19 is disproportionately affecting the black community, but we can hardly take the time to sit with that horror as we are reminded, every single day, that there is no context in which black lives matter.

Breonna Taylor was killed in her Louisville, Ky., home by police officers looking for a man who did not even live in her building. She was 26 years old. When demonstrations erupted, seven people were shot.

Ahmaud Arbery was jogging in South Georgia when he was chased down by two armed white men who suspected him of robbery and claimed they were trying perform a citizen’s arrest. One shot and killed Mr. Arbery while a third person videotaped the encounter. No charges were filed until the video was leaked and public outrage demanded action. Mr. Arbery was 25 years old.

In Minneapolis, George Floyd was held to the ground by a police officer kneeling on his neck during an arrest. He begged for the officer to stop torturing him. Like Eric Garner, he said he couldn’t breathe. Three other police officers watched and did not intervene. Mr. Floyd was 46 years old.

These black lives mattered. These black people were loved. Their losses to their friends, family, and communities, are incalculable.

Demonstrators in Minneapolis took to the street for several days, to protest the killing of Mr. Floyd. Mr. Trump — who in 2017 told police officers to be rough on people during arrests, imploring them to “please, don’t be too nice” — wrote in a tweet, “When the looting starts, the shooting starts.” The official White House Twitter feed reposted the president’s comments. There is no rock bottom.

Christian Cooper, an avid birder, was in Central Park’s Ramble when he asked a white woman, Amy Cooper, to comply with the law and leash her dog. He began filming, which only enraged Ms. Cooper further. She pulled out her phone and said she was going to call the police to tell them an African-American man was threatening her.

She called the police. She knew what she was doing. She weaponized her whiteness and fragility like so many white women before her. She began to sound more and more hysterical, even though she had to have known she was potentially sentencing a black man to death for expecting her to follow rules she did not think applied to her. It is a stroke of luck that Mr. Cooper did not become another unbearable statistic.

An unfortunate percentage of my cultural criticism over the past 11 or 12 years has focused on the senseless loss of black life. Mike Brown. Trayvon Martin. Sandra Bland. Philando Castile. Tamir Rice. Jordan Davis. Atatiana Jefferson. The Charleston Nine.

These names are the worst kind of refrain, an inescapable burden. These names are hashtags, elegies, battle cries. Still nothing changes. Racism is litigated over and over again when another video depicting another atrocity comes to light. Black people share the truth of their lives, and white people treat those truths as intellectual exercises.

They put energy into being outraged about the name “Karen,” as shorthand for entitled white women rather than doing the difficult, self-reflective work of examining their own prejudices. They speculate about what murdered black people might have done that we don’t know about to beget their fates, as if alleged crimes are punishable by death without a trial by jury. They demand perfection as the price for black existence while harboring no such standards for anyone else.

Some white people act as if there are two sides to racism, as if racists are people we need to reason with. They fret over the destruction of property and want everyone to just get along. They struggle to understand why black people are rioting but offer no alternatives about what a people should do about a lifetime of rage, disempowerment and injustice.

When I warned in 2018 that no one was coming to save us, I wrote that I was tired of comfortable lies. I’m even more exhausted now. Like many black people, I am furious and fed up, but that doesn’t matter at all.

I write similar things about different black lives lost over and over and over. I tell myself I am done with this subject. Then something so horrific happens that I know I must say something, even though I know that the people who truly need to be moved are immovable. They don’t care about black lives. They don’t care about anyone’s lives. They won’t even wear masks to mitigate a virus for which there is no cure.

Eventually, doctors will find a coronavirus vaccine, but black people will continue to wait, despite the futility of hope, for a cure for racism. We will live with the knowledge that a hashtag is not a vaccine for white supremacy. We live with the knowledge that, still, no one is coming to save us. The rest of the world yearns to get back to normal. For black people, normal is the very thing from which we yearn to be free.