immobiliare

West Village Claims Title for New York City’s Priciest Real Estate, Says The Wall Street Journal

By Columbus International,17 January 202417 January 2024

According to The Wall Street Journal, the West Village, located along the Hudson River in lower Manhattan, exudes the charm of old New York, and homeowners are willing to pay a premium for it. In December, the neighborhood’s 10014 ZIP Code claimed the title of the city’s most expensive residential real estate based on median price per square foot, reaching $2,366, as reported by Realtor.com (operated by News Corp, owner of The Wall Street Journal).

The high cost per square foot in this ZIP Code is attributed to the fact that much of the limited housing stock, spread across approximately 0.57 square miles, is located in a historic district. The Landmarks Preservation Commission reviews and approves any demolition of existing structures and new construction, keeping the housing supply relatively low, explains Jared Barnett, a real-estate agent and co-founder of Compass’s the Barnett-Bittencourt Team. He emphasizes that the scarcity in supply contributes to the higher prices in the area.

The West Village, with its rich cultural history rooted in arts and entertainment, also boasts some of the most sought-after restaurants and shopping destinations in New York City. Notable places include the historic jazz club Village Vanguard, the rustic Italian restaurant L’Artusi, the Cherry Lane Theatre (the oldest continuously running off-Broadway spot in NYC), The Stonewall Inn (a significant site for the LGBT civil-rights movement), and the literary haven Three Lives & Company. Following the West Village, Tribeca’s 10007 ZIP Code ranks second in New York City for the most expensive median price per square foot, reaching $2,136 in December. However, Tribeca’s 10013 ZIP Code claims the city’s highest median listing price at $4.93 million.

For potential buyers in the West Village, Columbus International recommends keeping in mind the various architectural styles, ranging from Greek Revival to Art Deco to Italianate. We suggest exploring the variety of housing options, including townhouses, classic doorman co-op buildings, historic homes, and modern residences, especially along the river. The price per square foot varies widely, from approximately $1,000 to $5,000 or more. To prospective buyers, we advise assessing the differences between co-ops, which involve rigorous approval processes, and condos, offering greater flexibility to owners, in order to make informed decisions in this diverse neighborhood.

Manhattan Real Estate Sees Record Cash Transactions Despite Mortgage Rate Surge

By Columbus International,4 January 2024

Manhattan’s residential real estate landscape is witnessing a historic surge in cash transactions for condominiums and co-ops, setting a new record despite recent signs of a slight easing in mortgage rates.

According to the Manhattan quarterly sales report by Douglas Elliman, compiled by appraiser Miller Samuel and released on Wednesday, cash sales accounted for over two-thirds of transactions in the fourth quarter, marking a significant increase from the third quarter’s 56.7%. This surge in cash purchases is attributed to a “sharp rise” in mortgage rates, reaching the highest levels since 2000.

Freddie Mac data reveals that by October, the 30-year fixed-rate mortgage had climbed to nearly 7.8%, a level not seen since 2000, driven by the Federal Reserve’s series of rate hikes over the past two years. However, there was a slight decrease below 7% in mid-December, and recent indications suggest a continued downward trend in rates. The Federal Reserve has hinted at the possibility of further rate cuts this year, which could potentially stimulate the sales market.

The fourth-quarter report also highlights a 5.1% year-over-year increase in the median sales price in Manhattan, reaching $1.16 million. This uptick marks the first increase in five quarters and represents the second-highest fourth-quarter level on record. Concurrently, the year-over-year listing inventory declined for a third consecutive quarter, contributing to the overall market dynamics.

Jonathan Miller, the President and CEO of Miller Samuel, anticipates that potential rate cuts by the Federal Reserve could invigorate the sales market, diverting demand from the highly competitive rental market. This shift in demand is evident in a separate Elliman report, revealing a drop in the median rent in November for the first time in over two years, signaling a cooling trend in Manhattan’s previously red-hot rental market.

New Gems of Italian Hospitality in 2024: From Florence to Capri, Here Are the Unmissable Hotels

By Columbus International,3 January 2024

Among the New Year’s resolutions, the enthusiasm for exploring new places and enjoying a bit more luxury during travels is inevitable. Tourist destinations in Italy are enhancing their offerings, with historic hotel groups and smaller boutique hotels ready to welcome tourists with high-quality services, pampering, and captivating designs.

Here’s an overview of the most anticipated hotels in Italy in 2024.

Florence: Collegio alla Querce, a Garden Hotel with a View of the Duomo
Auberge Resorts Collection expands to Florence with a complex that encompasses three 16th-century buildings, complete with original chapel and theater. In the former preparatory school, a new hotel with 61 rooms, 20 suites, and a 210-square-meter master suite has been created. Guests can enjoy baroque gardens overlooking the Duomo on one side and lush Chianti vineyards on the other. The heart of the hotel is an internal garden illuminated by a skylight, adorned with lemon trees, and featuring an impressive fireplace. Collegio alla Querce offers a complete experience with a restaurant, a glass-enclosed garden room, a bar, a cigar lounge in the former admissions office, and a poolside bar offering unique wood-based cocktails.

Florence: Anglo American Hotel Florence, Charm, and Sustainability
Hilton’s Curio Collection presents the new Anglo American Hotel Florence in the historic center of Florence. The structure reflects the city’s majestic charm and places particular emphasis on sustainability, with the restoration of original architectural features. The hotel’s outdoor courtyard hosts a Tuscan menu inspired by local flavors and traditions.

Milan: Max Brown Missori, Milanese Style and ’70s Vibes
The Dutch boutique hotel group Max Brown makes its entrance in Italy with a 64-room hotel in Milan, Max Brown Missori. The mission to infuse the cheerful and refined style of Sircle Collection was entrusted to interior designer Saar Zafrir, who, in collaboration with the in-house design team, renovated and redesigned the property drawing inspiration from ’70s vibes. Most of the original furniture has been restored, while others have been donated to local charities. Max Brown Missori aims to be a welcoming and charming place for travelers wishing to immerse themselves in Milanese life like true locals. For this reason, Italian-made details like colorful SMEG kettles will be incorporated, along with items from around the world, such as a Crosley turntable in each room, and communal spaces designed to encourage social moments (e.g., a basketball court). With many rooms overlooking the Garage delle Nazioni, the hotel also offers a lively ground-floor area ideal for meetings, rest, or work.

Milan: Calimala, a Surprise in the Shadow of the Madonnina
Born in Florence, where it boasts one of the best rooftops in the city, Calimala opens a second hotel in Milan, near Porta Venezia at Via Melzo 7. This will be a 90-room hotel with a gym, 2 rooftops, a bar, a restaurant, and a pool. Little is known yet, but if the style mirrors that of Florence, we can expect interiors dialoguing between historic structures and modern furnishings.

Rome: Casa Monti, an Artistic Residence Celebrating the Dolce Vita
The Leitmotiv family-managed group will debut in spring in Rome with Casa Monti. The new hotel will pay tribute to the Rione Monti, with its craft shops, wine bars, and contemporary art galleries. The five-star hotel will consist of 36 rooms, a restaurant, an aperitif bar, a terrace, and a spa with a panoramic view of the city. The design is by Laura Gonzalez, conceived as an artistic residence open to the world and the city, celebrating the sweet life, inspired by the muse of Rome and its neighborhood. Casa Monti draws from a vibrant community and celebrates eccentricity and pleasure. A color queen, Laura Gonzalez was the right person to interpret that feeling of relaxation and nonchalance that the world envies us.

Rome: Romeo, Between Zaha Hadid and the Sixteenth Century
The Romeo collection, launched in 2023, is making giant strides to become one of the benchmarks of Italian hospitality, thanks also to renowned international architects. The project for the new hotel in Rome is signed by Zaha Hadid Architects and is nestled in a distinctly Italian sixteenth-century palace not far from Piazza del Popolo, once the residence of the Serroberti-Capponi family and now ready to offer dream stays. The studio has had the opportunity to reinterpret its “no stairs-no texture” motif here in an entirely new way: the use of Italian marbles and precious woods creates a new dialogue with the city of Rome, expressed in the 74 rooms and suites, with magnificent views and original frescoes restored to their former glory. The hotel also boasts Il Ristorante, a gastronomic venue directed by Alain Ducasse, the world’s most starred chef. Romeo Roma also has a courtyard with an indoor and outdoor pool, from which you can admire the archaeological ruins. The offer is completed by site-specific installations by renowned contemporary artists, a rooftop lounge bar, and La SPA Sisley Paris.

Rome: Corinthia, Michelin-starred Cuisine under the Frescoes
Corinthia also announces a new opening in the Eternal City, scheduled for summer, in Piazza del Parlamento. The former headquarters of Banca d’Italia, built in 1904, welcomes with an imposing entrance into the two-story lobby. Ensuring hospitality excellence, from food to room service, will be Carlo Cracco. With such a name, it was imaginable that the cuisine would play a central role, and indeed, the ground floor is animated by a restaurant surrounding the garden. The interiors were created by G.A Design, and there are 60 rooms and 21 suites, a rooftop, a luxury spa. The environments have been preserved with original chandeliers and classic marbles, renewed, however, with elements of a more modernist taste. The hotel’s Signature Suites will have private balconies with views of the elegant square and the city’s majestic monuments. Guests will also have access to a spa with a vitality pool, relaxation area, sauna, steam room, and treatment rooms. The Historic Suite, the hotel’s most exclusive, will feature marbles in all its parts (starting with the sculpted bathtub) and full-wall windows.

Rome: J.K. Place Residence Club, a New Way to Stay in the City
A great mystery also surrounds this boutique hotel that will open inside a noble 17th-century Roman palace, once the seat of the architecture faculty, a short walk from Piazza di Spagna. The hotel will be accompanied by the Residence Club consisting of 15 new apartments on Via dei Prefetti, designed by the Florentine architect Michele Bonan. Each Residence will have a butler and a private concierge service, while among the common areas there will be a restaurant, a private lounge, and a state-of-the-art gym, open to both club members and guests staying at J.K. Place Roma.

Capri: Grand Hotel Quisisana, a Rich History Update
Since 1860, the Grand Hotel Quisisana has been synonymous with the splendor of Capri, its sea, and its exclusive clientele. Originally built in 1845 as a sanatorium (as the name suggests), the hotel is rich in history and features a Liberty-style theater designed by Giò Ponti in 1929. Over the years, figures like Ernest Hemingway and Jean Paul Sartre have crossed the marble lobby and admired the beauty of the park. The sun-drenched bedrooms are the quintessence of maritime leisure, with bright floors and furnishings emphasizing the view. For the 2024 season, there are many novelties, starting with the Colombaia restaurant, offering Italian-inspired cuisine and an extensive wine list. An outdoor pool, tennis courts, and new rooms will also be inaugurated. Equally important is the completion of the transition to solar water heating and the production of 100kw, the largest private solar production in Capri.

Source: Elle Decor

New York City Foreign Investment Surges to 4-Year High: 32% Buyers Worldwide

By Columbus International,22 December 2023

Amid the backdrop of the pandemic, foreign investors, who had been on the sidelines, reentered the city’s sales market in 2023, marking the highest proportion of the total buyer pool since 2019. According to a report by brokerage Avison Young, international buyers comprised 32.4 percent of the city’s investors this year. This surge surpassed the figures for both 2021 and 2022 and slightly edged out the 32.3 percent recorded in 2020. As of mid-December, the dollar volume for 2023 had tripled year-over-year, propelling New York City back to the forefront as the prime destination for foreign investment, as outlined in the Avison Young report. The tightening of financing markets in early 2023, exacerbated by the rate hikes of 2022, prompted domestic investors to scale back. This created an opening for overseas buyers, who, equipped with substantial capital, could forgo the need for loans. James Nelson, Avison Young’s head of tri-state investment sales, noted, “Once financing became more expensive and began to dry up, I think that’s when the foreign investors, being cash buyers, were able to compete.”

The primary buyers of city real estate by dollar volume in 2023 were Qatar and Japan, securing the top two positions. Qatar-based firms closed deals surpassing $1 billion, while Japanese investors accounted for just under $1 billion. Japanese buyers were attracted by depreciation benefits and superior returns, explained Avison Young broker Brandon Polakoff. With the yield on the 10-year Japanese government bond remaining below 1 percent throughout 2023, compared to the approximately 4 percent average for the U.S. 10-year treasury rate, the appeal for Japanese investors was evident. Foreign buyers predominantly gravitated towards stabilized assets, evident in recent transactions. In the fourth quarter, Japanese investors concluded deals on three fully occupied, gut-renovated properties, totaling around $35 million. Examples of these transactions included the sale of 96 Sterling Place in Park Slope to Japanese investment firm Sow Kousan for about $17 million and 422 East 81st Street on the Upper East Side to Shink for approximately $11 million, both confirmed by property records. Additionally, Peak Capital Advisors and JAM Real Estate Partners sold 355 East 50th Street for $8 million to Kenbishi Sake Brewing, Japan’s inaugural branded sake brewery.

Looking ahead, if the Federal Reserve implements its projected three rate cuts next year, foreign investors may take a back seat to domestic buyers due to more affordable financing stimulating local demand. “I don’t think foreign buyers are going to be counted out,” asserted Nelson, “but they definitely will have more competition from U.S.-based investors next year.”

Source: The Real Deal

Leonardo Maria Del Vecchio: The Gastronomic Rise of Luxottica’s Fourth Child

By Columbus International,20 December 2023

It’s all a matter of specific weight or, if you prefer, firepower. Three establishments are already open in Brera, in the heart of historic Milan, with declared plans to expand further and the goal of reaching a turnover of sixteen million euros per year. Leonardo Maria Del Vecchio, the fourth child of the former Luxottica owner, is more than just making an incursion into the restaurant world; no special lenses are needed to glimpse the features of a potential new empire. Let’s organize things a bit. Del Vecchio Jr is already the Chief Strategy Officer for the family company, holds the position of CEO of Salmoiraghi e Viganò, and, more recently, has also become part of Triple Sea Food, of which he controls 78% through his holding, Lmdv Capital. Three venues in Milan, as mentioned at the beginning of the article. Let’s briefly outline the timeline: in September 2022, Vesta, a seafood restaurant, arrives. A few months later, in April 2023, Casa Fiori Chiari opens, a few meters away from the “first episode.” The third chapter is Trattoria del Ciumbia, which opens its doors just in time for the Christmas holidays.

The goal, as mentioned earlier, is to achieve an annual turnover of sixteen million euros, making the Brera district a small capital of haute cuisine. “Another challenge was making it clear that three high-level adjacent restaurants would not compete with each other,” explained Davide Ciancio, CEO of Triple Sea Food, “but would expand the market by creating a district capable of attracting our target and establishing itself in the imagination, much like other sectors in the city, starting with fashion.” Ambitious and interesting project, there is no doubt; however, it could be just a prelude to the more comprehensive adventure of the fourth child of the Del Vecchio family in the restaurant world.

The company has already hinted at the opening of two new venues in two other Italian cities, which remain unnamed at the moment. Once this new step is completed, the goal is to shine with new openings in Italian and international tourist hubs. All that remains is to be patient and keep a close eye, in other words. Meanwhile, Leonardo Maria Del Vecchio continues to plan, especially in his father’s footsteps, who passed away shortly before the first Milanese opening: “I wanted to surprise him,” Leonardo Maria explained, “by having his favorite dish on the table: pasta with clams.”

(Source: Dissapore)

Prada Buys Building on Fifth Avenue in New York for $425 Million

By Columbus International,20 December 2023

The renowned Italian fashion house, Prada, announced the acquisition of the building housing its current store on Fifth Avenue in New York for a substantial $425 million. Since 1997, Prada had been leasing the five-story space at 724 Fifth Ave. and executed the purchase using internal resources in cash.

Prada emphasized the strategic significance of the property’s location, citing its increasing rarity and long-term potential as key factors in the decision. The 12-floor building, beyond serving as a retail space, holds the potential to offer office premises and storage facilities for the Hong Kong-listed company, according to the company’s statement.

Notably, New York’s Fifth Avenue holds the title of the world’s most expensive retail street, as indicated by a global ranking by real estate services firm Cushman & Wakefield. Despite robust growth in the Asia Pacific, Japan, and European markets, Prada faced challenges in the wider Americas region this year, with retail sales experiencing a 1.3% decline in the first nine months.

Source: The New York Post

Yves Saint Laurent Unveils Major Leather Atelier in Scandicci

By Columbus International,18 December 2023

An abandoned building formerly owned by the Agenzia delle Entrate now in the portfolio of Cdp Real Asset, becomes the new “home” of Yves Saint Laurent’s leather goods in Scandicci, in the heart of the Florentine luxury handbag district. In close proximity to the manufacturing facilities of Gucci, Prada, Montblanc, and Dior, the Saint Laurent Atelier Maroquinerie has been inaugurated, encompassing 28,000 square meters dedicated to product development, modeling, prototyping, material and technical research, cutting, production, and storage for handbags, luggage, and small leather goods. The investment of €30 million, made by Cdp to transform the disused building into a bright and functional production facility with a view of the hills, has enabled YSL to lease it for 15 years, extendable up to 27, with a purchase option. Currently, 500 people (with an average age of 37 and 53% women) work in the atelier, including 200 hired in the last two years. Another 200 employees are expected to be recruited by 2025, as explained by Francesca Bellettini, President and CEO of YSL and responsible for brand development for the entire Kering Group. The French fashion house defines the structure as a “center of excellence” for the high level of expertise concentrated here, but also a “center of competence” because it houses a company school to train artisans and technicians, becoming a strategic channel for future employment needs.

Saint Laurent was the flagship brand of the Kering Group in 2022, with a turnover of €3.3 billion (+31%), but is experiencing a slowdown in 2023 (-12% at comparable rates in the third quarter). “This center will play a vital role in the development of Saint Laurent, which generates 70% of its revenue from leather goods,” declared Bellettini while cutting the ribbon alongside the President of the Tuscany Region, Eugenio Giani, the Mayor of the Metropolitan City of Florence, Dario Nardella, the Mayor of Scandicci, Sandro Fallani, and the CEO of Cdp Real Asset, Giancarlo Scotti. “Here, creativity will be able to express itself to the fullest – added the manager – also because we are in a territory with a very long tradition in leather goods, which has allowed us to achieve these results.” Cdp expressed great satisfaction with the project, emphasizing that it embodies the mission of revitalizing disused buildings and areas. President Giani and Mayor Nardella recalled the historical, political, and industrial relations between Italy and France, while Mayor Fallani highlighted a redevelopment goal that few believed in a few years ago: giving life back to a public building, known as “Il Palazzaccio,” built 30 years ago and never used.

Source: Il Sole 24 Ore

Milan Real Estate Market: Slowdown in Residential Transactions in the Second Half of 2023

By Columbus International,29 November 2023

The residential property transaction performance index highlights a sudden slowdown in the Milan real estate market in the second half of 2023. The main drivers can be attributed to decreased demand compared to previous semesters, attributed to the increased difficulty for buyers in accessing credit. This is evident from the 3rd Real Estate Market Observatory 2023 by Nomisma regarding the real estate market in the Lombard capital.

In the first half of 2023, according to Nomisma, the residential market in Milan experienced a significant setback, with only 12,490 transactions compared to 15,600 in the first half of 2022 (-20%). This decline in transactions has partially affected the dynamics of prices for new and used properties, with a still present but significantly reduced growth compared to the previous semester. In the second half of 2023, prices for new and renovated homes experienced a slowdown (-0.6% on a semi-annual basis), despite an annual increase of +1.7%. The average discount percentage on the initial asking price (around 3-4%) remains stable, confirming a significant decrease compared to used properties. The sector of used properties shows a positive performance, with an increase in average prices of +1.3% on a semi-annual basis and +3.3% on an annual basis. The average selling times for used homes range from 3 to 4 months, maintaining an average discount of 8-9%.

These figures occur in a market context characterized by limited supply elasticity. Regarding rentals, the demand for rental homes in Milan continues to grow in the second half of 2023. Rental rates show a positive change (+2.9% on a semi-annual basis), with an annual increase of 4.7%. The average gross rental yield remains stable at 4.8%. On average, it takes about 2 months to complete a rental transaction, although properties with desirable features may remain on the market for only a few days. Nomisma’s survey suggests that approximately 50% of agency-managed demand is oriented towards purchase transactions, supported by a mortgage in 73% of cases. The demand pressure on the rental market is increasing due to the gradual increase in mortgage interest rates, on one hand, and the growing number of residences shifted to the short-term rental market on the other. In the first half of 2023, the transaction activity of retail offices in Milan experienced a significant year-on-year decline of around -33%, with only 430 properties exchanged in the market, compared to 652 in 2022 and 671 in 2021. In the second half of 2023, average prices continue to rise for the fourth consecutive semester, with positive changes both on a semi-annual basis (+1.2%) and on an annual basis (+2.9%), despite a negative result for properties located in business districts. Average discounts remain stable in attractive areas (9-11%) on a semi-annual basis but increase in the suburbs (14%). The average rental rates have been increasing since the first half of 2022, with an average annual growth rate of +1.2%.

The context remains stable for absorption times, both for sales (6 months) and rentals (4-5 months). The average gross annual rental yield remains almost stable at 5.1%. In the first half of 2023, the volume of retail store transactions in the Milanese market experienced a slight year-on-year decline (-2.6%). In the retail sector, the average price trend continues to rise on an annual basis (+1.8% semi-annually). The absorption speed decreases progressively for more central locations, with average selling times of 4-5 months in the city center and 6-7 months in the suburbs. The average discount on the asking price increases slightly (9.5%), remaining the lowest among major cities and the only one in single digits. In the rental sector, average rental rates increase slightly on a semi-annual basis (+1.3%). The market shows fast absorption times (3-4 months), slightly longer in the suburbs. Average gross annual yields remain almost stable at 6.7%.

Diptyque Paris Unveils Expansive Flagship Store on Madison Avenue, New York City

By Columbus International,27 November 2023

On December 1st, Diptyque Paris will reveal its new flagship store on Madison Avenue, in the heart of New York City, just in time to kick off the holiday season. With two floors and a spacious 2,100 square feet, this space is poised to become a beacon of real estate elegance. Highlighting the strategic importance of the United States as the brand’s leading global market in terms of sales, Julien Gommichon, President of the Americas for Diptyque Paris, emphasized the necessity of establishing a strategic presence with a local flagship store. The store showcases the entire range of Diptyque products, including candles, home and personal fragrances, home decorations, and bath and body products. While specific details about annual sales and brand growth were not disclosed, Gommichon revealed that 40% of Diptyque Paris sales come from the retail sector, expressing optimism that the new flagship store will become a robust revenue engine.

The National Candle Association reports that about 35% of candle sales occur during the holiday season, further underscoring the strategic opportunity of the store opening. Gommichon envisions the flagship store as a space for immersive experiences, with ample room to offer exclusive services and customization options such as engravings and stamps. He emphasized that enhanced experiences and services will be more prominent and accessible to customers in the flagship store. In addition to the extensive product offerings, the flagship store will provide additional services to enhance the customer experience. These include personal shopping, personalized education on fragrance layering, a fragrance refill station, and professional gift-wrapping services. VIP customers can even reserve a private dining room-style area to host exclusive parties and events.

The trend of luxury brands opening flagship stores in the United States has been a significant theme in 2023. Joining the ranks of renowned brands, Diptyque Paris positions itself with this expanded flagship store on Madison Avenue. The new store is twice the size of its original location on Madison Ave., which closed in May for renovations, presenting a more traditional storefront. The impact of Covid-19-related lockdowns on consumer behavior is evident in the renewed focus on home aesthetics and premium products. Diptyque Paris has seen an increase in demand for personal fragrances in the post-Covid period, constituting approximately 40% of the brand’s sales. Notably, the brand has championed non-gendered fragrances since its founding in 1961, a trend that has gained broader acceptance only in recent years.

As the holiday season approaches, Diptyque Paris is poised to capitalize on the anticipated increase in consumer spending. According to the National Retail Federation, holiday sales for 2023 are expected to increase by 3-4% year over year, reaching an impressive range between $957.3 billion and $966.6 billion, a yearly record. Jessie Dawes, Chief Marketing Officer of the Americas for Diptyque Paris, outlined the promotional strategy for the flagship store, including a city-wide out-of-home (OOH) campaign in New York City, paid social media ads, and an opening celebration scheduled for late November. The combination of strategic timing, a prime location, and an engaging shopping experience positions the Diptyque Paris flagship store to make a significant impact in the competitive real estate landscape.

Source: Glossy

Office Crisis: WeWork Files for Bankruptcy as the US Market Struggles with Space Reduction

By Columbus International,25 November 2023

Transforming the office landscape with an injection of flexibility is a challenge faced with courage. However, it is the burdensome rigidity of lease agreements with major property owners that has led WeWork, the American giant of shared office spaces, to file for bankruptcy under Chapter 11. Since the onset of the pandemic, the office market in the United States has failed to recover. A scenario of vacant square meters and declining rents, which WeWork’s case threatens to exacerbate. The leadership of WeWork assures that this situation is confined to the US and Canada market (the company has 777 locations in about 40 countries and does not affect Italy), but, as stated in the application filed by the company, it will result in the termination of over 40 lease contracts in New York alone.

According to the latest Jll Office Report Q3 – source: Sole 24 Ore – office leasing in the US has decreased by 35% since 2019, with rents falling by 6%. In September, compared to the same month in 2022, defaults on loans for office buildings tripled to around 6%. The net absorption of office spaces decreased by 1.7 million square meters in the third quarter, bringing the total loss of office space to over 4.7 million square meters in just one year. On a quarterly basis, the vacancy rate increased by 39 basis points to 21%, and in just one year, construction began on only 730,000 square meters of new office space, which, in perspective, will mean a lower supply of new and high-quality products compared to demand (with corresponding price pressure). “WeWork – as George Schultze, founder of Schultze Asset Management Llp, wrote in Forbes – is an extreme example, but there is now much concern in the commercial real estate market in general. Banks and insurance companies have financed loans to investors who used a minimal share of their own capital when interest rates were very low, expecting them to remain low for a long time. Now that short-term rates are above 5%, many investors are in trouble, and many lending institutions will take a hard hit when buildings are revalued under current market conditions.”

According to Moody’s, this will have a negative impact on cash flows and market office values, increasing negative sentiment and making refinancing more difficult in the next 12-18 months. According to Nareit (the American Association of Real Estate Investment Trusts), compared to 2015, the market value of offices in publicly traded real estate investment trusts has dropped from 14% to 4%. Although fund managers, as shown by Jll data, note that demand for prime offices, i.e., new high-end spaces (strategic locations, zero emissions, innovative materials and spaces, services such as green areas, restaurants, gyms), remains healthy, albeit subdued. Rents have also increased by an average of 4% since 2019. However, as emphasized by Nareit, these are indeed innovative but “traditional” offices: “Coworking will remain, but it will be a niche.” Perhaps. But opinions diverge here. “Post-pandemic hybrid work is prompting tenants to reduce spaces,” explains Jose Pellicer, Global Head of Investment Strategy at M&G Real Estate, “but the situation in the US is different from in Europe. In the United States, the return rate is 50%, in Europe, it’s 75%, driven by factors such as smaller homes and shorter commuting times.”

“The case of WeWork has raised questions about the future of flexible offices,” wrote Julie Whelan, Global Head of Occupier Thought Leadership at Cbre. However, our recent survey among companies using them indicates a growing demand for flexible lease agreements to meet increasingly relevant space planning scenarios. Therefore, we believe that WeWork’s difficulties are largely attributable to its business model, which tied it to long-term lease commitments made before the pandemic, while simultaneously facing significant costs in a context of sharply rising interest rates. In the latest Bloomberg Market Live Pulse survey, 65% of investors believe that the US office market will only begin to recover after hitting rock bottom; two out of three expect this recovery to occur in the second half of 2024.