new york

Revival of the Cubicle: As Office Workers Return, a Surprising Comeback Unfolds

By Columbus International,27 December 2023

As the calendar marches towards 2024, New York’s office sector is witnessing a glimmer of hope amid a landscape of challenges that have redefined the traditional scenario. The dynamics of demand, employment trends, and the ever-changing preferences of the workforce have compelled office owners and real estate investors to adapt to unprecedented changes.

Low Demand and High Availability: A Continuous Challenge
Office owners and real estate investors in New York are gearing up for another year of low demand and high availability. The consequences of the pandemic have left a lasting imprint on how companies operate, with many opting for remote or hybrid work models. The struggle to attract tenants to traditional office spaces persists, and navigating this challenging terrain will be a key theme for the upcoming year.

Record Office Occupancy During the Holiday Season
In an unexpected reversal, office occupancy levels are reaching new highs during the holiday season. This increase contrasts sharply with the prevailing trend of remote work and signals a potential shift in attitudes toward in-person collaboration. The festive season has become a catalyst for employees to reconnect with their work environment, sparking theories and hypotheses about the role of the office in fostering team spirit and corporate culture.

The Impact of Covid-19 on Workspace Trends
The pandemic has acted as an amplifier for a trend that was already underway: the growing importance of quiet and private spaces within work environments. While remote work provided relief from noisy and disruptive colleagues, it also introduced new distractions, such as interruptions from family members and the constant temptation to engage in household chores or spend time on social media. With the return of workers to the office, the focus on creating conducive work environments to address these challenges has never been more crucial.

The Rise of Quiet Spaces: A Billion-Dollar Market
The demand for private spaces in offices has given rise to a flourishing market. Cubicles and partitions, once overshadowed by open collaboration spaces, are now valued components of office design. According to a 2022 report from Business Research Insights, this market is expected to grow from $6.3 billion to $8.3 billion in the next five years, underscoring the significance of this transformation in workplace dynamics.

Adapting Workspaces to Hybrid Work Models
Companies are navigating the delicate balance between remote work and in-office mandates, prompting a reevaluation of office layouts. Grassi, a New York-based auditing and accounting firm, exemplifies this trend by reconfiguring its offices into hybrid spaces. The emphasis is on creating a combination of cubicles or semi-private areas alongside open collaboration spaces, reflecting the evolving needs of the workforce.

Versatile Workspaces for a Diverse Workforce
Recognizing the diverse needs of employees, many employers now offer a range of workspaces, including shared offices, conference rooms, phone booths, and libraries. This approach aims to strike the right balance between collaborative work and individual concentration, catering to the preferences and productivity requirements of a varied workforce.

As New York’s office sector looks ahead to 2024, the industry is at a crossroads, balancing the challenges of low demand with a renewed focus on creating versatile and employee-centric workspaces. The evolution of office design, driven by the lessons learned during the pandemic, will continue to shape the future of work in the bustling metropolis.

Source: The New York Times

Nobu Hospitality and Asset World Corp. Unveil Plans for Plaza Athenee Nobu Hotel and Spa New York

By Columbus International,27 December 2023

Nobu Hospitality has entered into a strategic partnership with Asset World Corp. to inaugurate the Plaza Athenee Nobu Hotel and Spa New York, an upscale 145-room hotel development situated on the Upper East Side of Manhattan in New York City. Situated between Park and Madison Avenues on 64th Street, the hotel will feature suites with both indoor and outdoor glassed terraces. Additionally, the property will offer a townhouse rental option, providing exclusive services. The suites, equipped with indoor and outdoor glassed terraces and gazebos, will be complemented by the townhouse’s distinctive offerings.

Noteworthy amenities encompass a traditional Japanese onsen bathing facility, a spa, and a wellness center. Plaza Athenee Nobu Hotel and Spa New York will boast a Nobu restaurant, offering an omakase experience—a Japanese dining style where guests entrust their menu choices to the chef. The hotel will also house a bar and lounge, along with a rooftop area designed for private events. Expected to be finalized by 2026, Asset World Corp. will oversee the comprehensive development of the project, managing both its conceptualization and design.

The collaboration has also revealed intentions for the creation of The Plaza Athenee Nobu Hotel and Spa Bangkok in Thailand, with the estimated development cost yet to be disclosed. Nobu Hospitality CEO Trevor Horwell expressed gratitude for the close collaboration with the AWC team, led by visionary CEO Khun Wallapa Traisorat. In a statement, Horwell mentioned, “The Plaza Athenee Nobu Hotel and Spa Bangkok and the Plaza Athenee Nobu Hotel and Spa New York will redefine the standards of luxury and sophistication not only in Thailand but also in the U.S. This partnership allows us to embark upon an extraordinary journey together.” This announcement comes on the heels of an exclusive agreement signed in July between AWC and Nobu Hospitality to introduce the first Nobu restaurant in Thailand, located on the top floor of The Empire—AWC’s flagship lifestyle mixed-use office complex in Bangkok’s central business district.

Source: Hotel Management

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

Macy’s Stocks Surge 17% on Potential Acquisition Offer by Arkhouse and Brigade Capital

By Columbus International,12 December 2023

Macy’s experienced a significant surge of over 17% in its stock value early on Monday, driven by a Wall Street Journal report (via CNN Business) suggesting that the longstanding 165-year-old retailer, closely associated with the holiday season, may be the target of a potential acquisition. According to the report, Arkhouse Management, a real estate-focused investment firm, and Brigade Capital Management, a global asset manager, have proposed an offer that would provide shareholders with a 32% premium above Friday’s closing stock price.

The bidders have reportedly engaged in discussions with Macy’s about the proposal. The retailer’s response to the offer remains uncertain, with no official comments from Macy’s or Arkhouse. Brigade Capital Management has yet to respond to requests for comment. Macy’s, with 722 store locations across 43 states, Washington, DC, Puerto Rico, and Guam, operates a diverse portfolio, including 500 Macy’s branded stores, 55 Bloomingdale’s branded stores, and 160 Bluemercury beauty and skincare chain locations acquired in 2015. Industry analysts, such as Neil Saunders from GlobalData, speculate that Arkhouse may see potential value in Macy’s real estate. However, Saunders warns that a strategy focused on selling off real estate and potentially spinning off the e-commerce business could harm Macy’s as a retailer in the long run unless profits are reinvested to revitalize the core retail business.

Macy’s, along with other traditional department stores, has faced ongoing challenges, grappling with competition from online giants like Amazon and major retailers like Walmart and Target. The company has responded to these challenges by closing stores to cut costs, resulting in a 74% decrease in net income in the first three quarters of the current fiscal year compared to the previous year. Despite Macy’s attempts to support its declining stock price through share repurchases, the share price has fallen significantly from its peak of $73 per share in June 2015. The proposed $5.8 billion offer, while a 32% increase from the previous closing valuation, reflects a 75% decrease from the 2015 peak. Macy’s CEO, Jeff Gennette, who has led the retailer for the past seven years, announced plans to retire in 2024. The challenging retail landscape has prompted investor groups, including private equity funds and hedge funds, to consider acquiring struggling retailers. However, such interventions have not always led to successful turnarounds, often resulting in closures, as seen with notable examples like Lord & Taylor, Toys R Us, and Sears Holdings.

Beloved Stephen Sondheim’s NYC Townhouse Finds a New Maestro at $7 Million

By Columbus International,1 December 2023

Stephen Sondheim‘s cherished New York City townhouse has gracefully transitioned to a new conductor, successfully hitting the market for a noteworthy $7 million. The proud new owner is a devoted Sondheim enthusiast residing in New York City, intending to transform the Midtown townhouse into their primary residence. The seven-bedroom house attracted considerable attention, receiving two compelling offers after being listed by Sondheim’s estate for $7 million in July. The Broadway maestro, celebrated for his timeless compositions, felt at home within the walls of this property for nearly six decades until his passing at the age of 91 in late 2021. Sondheim’s connection with the five-story Turtle Bay residence dates back to around 1960, following his lyrical contributions to iconic musicals like “West Side Story” in 1957 and “Gypsy” in 1959, as narrated in Pamela Hanlon’s book, “Manhattan’s Turtle Bay: Story of a Midtown Neighborhood.”

To ease the financial burden, Sondheim leased the top three floors until around 1973, a tactic detailed in the same book. Nestled in Turtle Bay Gardens, a charming ensemble of 1860s townhomes sharing a communal garden, Sondheim’s former residence has been a magnet for artistic residents over the years. Legendary actress Katharine Hepburn was a longtime neighbor, adding allure to the area. Among the unique features of the house is a music studio with a fireplace, where the maestro housed a baby grand piano. A solarium, accessible through a dramatic wooden arch, boasts original stained glass windows and a generous 30-foot terrace with a garden view. The primary suite occupies the fourth floor, while the fifth floor features a studio apartment designed for live-in staff. Celebrated for masterpieces like “Sweeney Todd” and “Into the Woods,” Sondheim’s illustrious career was adorned with an Oscar, a Pulitzer Prize, and numerous Grammy and Tony awards. It’s important to note that Sondheim also owned a residence in Roxbury, Conn., which entered the market with a listing price of $3.25 million in November. While luxury home sales in Manhattan experienced a 22.2% decline in the third quarter compared to the previous year, the median price exhibited a slight increase to $6 million, emphasizing the enduring appeal of distinctive properties, as demonstrated by the recently sold Sondheim townhouse.

Source: WSJ

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.

Lawsuit Alleges Conspiracy to Inflate Real Estate Commissions in Manhattan

By Columbus International,20 November 2023

On Monday, a legal action was initiated, accusing the Real Estate Board of New York (REBNY), along with over two dozen brokerages and companies, of collaborating to artificially boost commissions paid to agents involved in the sale of residential real estate in Manhattan. This proposed class action against the REBNY trade group, the Corcoran Group (HOUS.N), Douglas Elliman (DOUG.N), and others, comes in the wake of an October 31 verdict by a federal jury in Missouri, awarding home sellers $1.78 billion in a parallel case against the National Association of Realtors and multiple brokerages. The potential impact of this verdict, which a judge could triple to exceed $5.3 billion, has the potential to disrupt long-standing practices mandating sellers to pay commissions to buyers’ brokers.

The National Association of Realtors (NAR) is currently facing at least two other similar proposed class actions. In the federal court lawsuit filed on Monday in Manhattan, Monty March, the plaintiff, asserted that commissions on Manhattan residential sales persist at a stable 5% to 6%, even as home prices skyrocket, reaching an average apartment price exceeding $2 million by early 2022. March argued that sellers using REBNY’s listing service should not be obligated to pay 2.5% to 3% commissions to buyers’ brokers, especially when compared to lower commissions in “fully competitive” markets such as Brooklyn, where negotiations occur separately and average around 1%. REBNY’s General Counsel, Carl Hum, stated that the group is currently reviewing the complaint with its legal team and expressed confidence that the practices and procedures of its listing service “abide by all relevant laws.”

As of now, Corcoran and Douglas Elliman have not responded to requests for comments. March claimed to have paid inflated commissions when he recently sold property on Manhattan’s Upper East Side, with property records revealing the sale of an apartment for $5.6 million in July 2022. Commencing January 1, REBNY will mandate sellers, rather than their brokers, to directly remit any commissions to buyers’ brokers, aiming to enhance “transparency and consumer confidence in the residential marketplace.” March expressed uncertainty about whether this change would lead to lower commissions or potentially cause delays in sales as buyers’ brokers negotiate with sellers. The lawsuit seeks damages for sellers of Manhattan residential property over the past four years who paid buyer brokers’ commissions under REBNY rules.

Source: Reuters

Appartamenti quartiere Financial District | New York

Financial District Resurgence: Converting Office Spaces into Homes

By Columbus International,17 November 2023

In the ongoing discussions about repurposing New York City‘s stagnant office buildings into residential spaces, it’s the Financial District that has taken the lead in this transformative endeavor on a significant scale. This trend, as reported by The New York Times, showcases a remarkable shift in the landscape of the Financial District, challenging its traditional image as a purely business-centric area. In recent years, the Financial District has seen the conversion of prominent structures into luxury apartments. Notable examples include the transformation of a 1907 office tower at 84 William Street and an Art Deco skyscraper at 1 Wall Street, the former headquarters of the Bank of New York.

This wave of change extends beyond high-rise conversions, encompassing various modifications that began decades ago with the renovation of low-rise buildings and continues today with the construction of towering glass and steel structures. The Financial District, once criticized as a deserted expanse after the bankers’ departure, has now evolved into a thriving residential enclave at the southernmost tip of Manhattan. The demographic landscape of the area has witnessed a substantial increase, with the resident count soaring from 13,700 in 1990 to the current 66,000. The boundaries of this burgeoning community stretch from Chambers Street and the Brooklyn Bridge to the north, extending to the West Side Highway on the west. Notably, even a new Whole Foods establishment has become part of this revitalized neighborhood. The transformation of the Financial District serves as a potential roadmap and a source of optimism for other neighborhoods in Lower to Midtown Manhattan grappling with a surplus of vacant offices. As companies continue to reduce office space in the aftermath of the pandemic, real estate analysts anticipate that a significant number of buildings, particularly outdated offices with inefficient layouts, may remain unattractive to most companies, necessitating alternative uses. Both Mayor Eric Adams and Governor Kathy Hochul have endorsed residential conversions as a solution to address both the office surplus and the city’s housing shortage. However, the adoption of such conversions faces challenges, given their expense and the impracticality of transforming dark, deep interiors into light-filled residences.

The Financial District’s metamorphosis traces back to two pivotal events—the migration of banks and insurance companies from Lower Manhattan to Midtown and the impact of the September 11 attack. These setbacks led to a transformation in the district’s demographics, gradually replacing suited 9-to-5 workers with families and parents pushing strollers. The compact lots in the area facilitated the conversion process, resulting in a prevalence of slender buildings with high ceilings and large windows. Since the onset of the pandemic, the neighborhood has witnessed the addition of nearly 1,500 residences in new constructions and conversions, with thousands more expected in the coming years. Among these, the largest conversion in the country involves the creation of 1,300 apartments in an office tower vacated by JPMorgan Chase in early 2021. The article also features the perspective of a resident, Cory Levy, who highlights the Financial District’s unique charm, its historical roots, and the evolving residential character that offers a distinct advantage over other neighborhoods.

The Financial District’s makeover began in the mid-1990s, driven by tax incentives for developers converting office towers into residences. This initiative resulted in a building boom, creating nearly 13,000 units by the time the incentives expired in 2006. Despite the expiration of incentives, the conversion of offices into residences continued, albeit at a slower pace. Real estate experts, such as Joey Chilelli from Vanbarton Group, anticipate that the recent challenges in the office market will likely accelerate more conversions in the Financial District, given its status as having the highest office vacancy rate in Manhattan. Vanbarton Group is actively involved in the latest conversion project, transforming 160 Water Street into 588 apartments. The high office vacancy rate in the neighborhood, now standing at nearly 27 percent, up from 11 percent before the pandemic, underscores the potential for further transformations. The article concludes by highlighting examples of former skyscrapers, including 15 Park Row, and modern office buildings that have successfully transitioned into residential spaces. The stories of residents like Ruth Cheng, who chose to stay in the Financial District for its evolving amenities, schools, and community offerings, further emphasize the neighborhood’s growing appeal.

Valentino’s latest boutique has just landed at 654 Madison Avenue (Source: V Magazine)

By Columbus International,10 November 20239 November 2024

Valentino‘s latest boutique has just landed at 654 Madison Avenue. After introducing their innovative global retail concept in 2022, which revolves around creating distinctive spaces based on a reinterpretation of the building’s structure through various sales experiences and approaches to interior architecture, the new flagship store in Manhattan is now a pivotal destination for Valentino enthusiasts. Boasting a selling space of 1142 sqm, the new establishment is situated on the corner of Madison Avenue and 60th Street. The building spans three floors, including a basement, a ground floor, a mezzanine, and a second floor. Adorned with iconic columns and tall windows, the space is meticulously designed to provide a glimpse into the materials and architectural silhouettes that define the essence of the boutique’s interiors.

Each floor narrates a unique visual story through chromatic compositions and thoughtfully curated materials palettes, incorporating the maison’s signature red tone. Upon entering, customers are welcomed by grand double doors featuring sculptural marble handles, inspired by the work of artisans whose creations are showcased in Valentino stores worldwide. These handles, crafted in ceramic by the artist Massimiliano Pipolo, are also incorporated within the store. Visitors can explore the grand features of the building, including seven-meter-high ceilings, exposed steel columns (spanning all floors), and a rough concrete finish around the perimeter, highlighted by illuminated shelving dedicated to Valentino Garavani Accessories.

The space is intelligently divided into functional zones through bespoke elements, such as a commanding green onyx display unit at the center, and diverse materials like marble carpets and concrete on the floors that delineate specific areas and functions. Towards the rear of the store, various interpretations of the iconic Rosso Valentino are displayed, along with a dedicated area for footwear featuring floors and seating in contrasting travertine red against the luminous onyx and concrete shelving. On the second floor, the Valentino Women Ready-to-Wear collection is showcased in oversized red lacquered wardrobe structures and matching seating, complemented by chequered floors in white Botticino and black Nero Marquina marbles. La nuova boutique di Valentino è appena sbarcata al 654 di Madison Avenue

Source: V Magazine