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close video Office space is a very bifurcated marketplace: Bruce Mosler

Bruce Mosler, Global Brokerage Chairman at Cushman and Wakefield, joined Varney & Co. to discuss the impact remote work has had on the evaluation of office buildings.

The business districts in a number of America’s major cities like New York and San Francisco are facing an "urban doom loop" as the workforce shifts away from office work in the wake of the COVID-19 pandemic – a trend that has economists raising alarm about the fiscal impacts.

The growing popularity of remote work has decreased the number of workers heading to the office on a daily basis and made it easier than ever for workers to live in suburban and rural areas without needing to commute. That workforce migration poses challenges for businesses reliant on sales and traffic from bustling downtowns, and risks triggering a fiscal doom loop in which cities see tax revenue dwindle and respond by raising taxes or reducing services, further exacerbating conditions for the remaining residents and businesses.

TEXAS DEVELOPER SAYS AUSTIN'S HISTORIC SIXTH STREET IN ‘DEATH SPIRAL’

A National Bureau of Economic Research working paper entitled "Work From Home and the Office Real Estate Apocalypse" warns that major U.S. cities could be on the brink of slipping into such a downward fiscal spiral. 

The economists who wrote the paper – Arpti Gupta of New York University’s Stern School of Business, and Columbia Business School’s Vrinda Mittal and Stijn Van Niuwerburgh – noted that office occupancy in major U.S. office markets plummeted from 95% in February 2020 to 10% at the end of March 2020 due to the pandemic. As the economy has reopened, occupancy hasn’t fully recovered and had only reached 47% of its pre-pandemic level in mid-September 2022.

AT&T, WESTFIELD MALL, NORDSTROM LEAD SAN FRANCISCO DOWNTOWN EXODUS

The value of New York City’s office space declined by over $500 billion due to the pandemic. (Photo by Gary Hershorn/Getty Images / Getty Images)

The slow bounce back of workers heading into the office has caused businesses to reassess their office leases, opting for shorter leases in 2020 and 2021 as the pandemic continued to cause economic dislocation.  

Although the economists noted the trend is reversing back to companies signing longer leases for office space in 2022 as prior long-term leases and shorter, pandemic-era leases are renewed ahead of their expiration, the pandemic precipitated a 45% decline in New York City office values in 2020 and 39% over the long run due to shorter lease terms and cheaper rents being offered to retain or attract tenants.

AMERICA’S DOWNTOWN AREAS SLOWLY SPRINGING BACK TO LIFE, RESEARCH ON CELL PHONE ACTIVITY REVEALS

New York City’s vacancy rate for office buildings is over 22% this year about double its long-term average. ((Photo by Gary Hershorn/Getty Images) / Getty Images)

The economists found that the total decline in New York City’s commercial office value might be $518.7 billion in the short run and $453.6 billion in the long run. 

Vacancies remain an ongoing problem in cities like New York, where the city’s budget analysts are projecting that the office vacancy rate – which hit a record of 22.7% this year after averaging about 11% for decades – will remain above 20% through 2026.

SAN FRANCISCO ‘DOOM LOOP’ THREATENS TO GUT DOWNTOWN ECONOMY AS EMPLOYEES WORK FROM HOME

San Francisco’s office buildings reportedly had a vacancy rate around 30% this year. (REUTERS/Carlos Barria / Reuters Photos)

San Francisco is facing a similar plight, as commercial real estate services firm CBRE found that the city’s offices have a vacancy rate of nearly 30%, an amount more than seven times its pre-pandemic level.

At one San Francisco high-rise office building located at 350 California Street, the vacancy rate is about 75% and as a result, its value has fallen from about $300 million in 2019 to about $60 million to $67.5 million today – a decline of about 80% in value.

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‘Incredible third period’ rescues Jets in Game 1

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'Incredible third period' rescues Jets in Game 1

WINNIPEG, Manitoba — Kyle Connor‘s one-timer with 1:36 remaining in the third period snapped a 3-3 tie, and the No. 1 seed Winnipeg Jets survived a Game 1 scare — and some shaky goaltending from Connor Hellebuyck — to post a 5-3 victory over the St. Louis Blues in the opener of the Stanley Cup playoffs.

Connor also contributed a pair of assists and captain Adam Lowry capped the victory with an empty-netter with 53 seconds left, much to the delight of the “whiteout” full house of 15,225 fans at the Canada Life Centre.

“There were some emotional swings. Obviously, we didn’t get off to the start we wanted,” Lowry said during his postgame bench interview, aired on the arena’s jumbotron. “But what an incredible third period, what an incredible atmosphere. And we’re real happy with the result.”

Game 2 in the best-of-seven series is Monday in Winnipeg, and the home team knows it will need a more complete effort in their own zone if it is to gain a 2-0 series lead. Hellebuyck made 14 saves en route to the win, but in allowing three goals in the first two periods, he finished with a concerning .824 save percentage.

But Mark Scheifele had a goal and two assists and Jaret Anderson-Dolan also scored for the Jets, who won the Presidents’ Trophy for the NHL’s best regular-season record (56-22-4). With his three points, Scheifele became the Jets’ all-time leader in playoff points with 41.

“It’s obviously really cool,” Scheifele said of the record. “To do it in front of the fans tonight was pretty special. That was a fun game to be a part of.”

Jordan Kyrou gave the Blues a 3-2 lead with a power-play goal early in the second period, but Winnipeg’s top-line winger Alex Iafallo tied it at 9:18 of the third.

Robert Thomas also scored on the power play for St. Louis. Oskar Sundqvist added one at even strength and Justin Faulk had two assists.

Jordan Binnington stopped 21 shots for St. Louis, which grabbed the Western Conference’s final wild-card spot with a final-game victory.

St. Louis outshot the Jets 9-7 in the opening period, and dished out 32 hits to Winnipeg’s 14, as the teams hit the locker room tied at 2-2.

The Blues came out of the first intermission and used the power play for Kyrou’s goal at 1:13 and a 3-2 lead. It extended his season-ending point streak to four goals and two assists in four games.

“Overall, I thought it was a really good hockey game, but we are going to grow and we are going to get better,” Blues coach Jim Montgomery said. “That’s what we’re going to have to do. … We’ve got a lot of young guys playing in their first game in the Stanley Cup playoffs. That’s why I know we will get better.”

Winnipeg couldn’t capitalize on its early third-period man advantage but came close when Binnington denied Connor on a one-timer.

After Lowry’s goal, players paired up for some fighting with 19 seconds left after a regular-season series that Winnipeg won 3-1.

“That’s playoff hockey,” Hellebuyck said. “You have to play ’till the last minute, the last second. You know, it was a lot of fun, the guys were buzzing out there. I didn’t get a whole lot of action in the third. But it was really fun to watch and be a part of it.”

The Associated Press contributed to this report.

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Yanks’ Williams blows 4-run lead; ERA up to 9.00

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Yanks' Williams blows 4-run lead; ERA up to 9.00

TAMPA, Fla. — Three-and-a-half weeks into his New York Yankees career, Devin Williams doesn’t resemble the All-Star closer who dominated hitters with the Milwaukee Brewers.

Brandon Lowe tied the score with a two-run single in a four-run ninth inning off Williams, Jonathan Aranda hit a two-run homer in the 10th against Yoendrys Gomez, and the Tampa Bay Rays beat the Yankees 10-8 on Saturday to stop New York’s five-game winning streak.

“Yeah, four-run lead, you’d like to get in and get out,” Williams said. “Made some good pitches; made some bad ones. Not enough good ones today.”

Williams has a 9.00 ERA and has allowed runs in four of nine appearances. While he has four saves in four chances, Williams has walked seven in eight innings, and opponents have a .333 average against him.

“We got a long way to go,” Yankees manager Aaron Boone said of Williams. “It’s a little bump here early, and he’s got all the equipment to get through it.”

Luke Weaver, who struck out two in a perfect eighth, could become an increasingly enticing option to replace Williams as closer. After thriving when he took over the closer role from Clay Holmes late last season, Weaver has not allowed a run in 11 innings over nine games this year and has given up just two hits while striking out 13 and walking five.

Acquired in December from Milwaukee for left-hander Nestor Cortes and infield prospect Caleb Durbin, Williams can become a free agent after the season.

Williams converted 14 of 15 save chances with a 1.25 ERA for the Brewers last year, striking out 38 and walking 11 in 21⅔ innings. Diagnosed during 2024 spring training with two stress fractures in his back, he didn’t make his season debut until July 28.

Given an 8-4 lead, Williams allowed Jose Caballero‘s one-out single on a chopper as third baseman Oswaldo Cabrera made a high throw, for an error, then walked No. 9 batter Ben Rortvedt. Chandler Simpson hit an opposite-field RBI double to left for his first big league hit, Yandy Diaz hit a run-scoring infield single and Lowe singled to left.

“A lot of soft contact,” Boone said.

Williams allowed the hits to Caballero, Diaz and Lowe on his changeup, known as an airbender.

“Just the changeup to Lowe. I’d like to have that one back,” Williams said. “Tough luck on that double down the line, but aside from that, I thought I threw the ball pretty well.”

Williams generated just one swing-and-miss among his seven changeups.

“Maybe using it too much,” he said. “We’ll work on that.”

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The British economy has lost out – and sucking up to Trump will only get Starmer so far

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The British economy has lost out - and questionable meat and cheese ban is a reminder of why

Unwary travellers returning from the EU risk having their sandwiches and local delicacies, such as cheese, confiscated as they enter the UK.

The luggage in which they are carrying their goodies may also be seized and destroyed – and if Border Force catch them trying to smuggle meat or dairy products without a declaration, they could face criminal charges.

The new jeopardy has come about because last weekend, the government quietly “extended” its “ban on personal meat imports to protect farmers from foot and mouth”.

This may or may not be bureaucratic over-reaction.

It’s certainly just another of the barriers EU and UK authorities are busily throwing up between each other and their citizens – at a time when political leaders keep saying the two sides should be drawing together in the face of Donald Trump’s attacks on European trade and security.

Starmer and Macron meeting at Chequers last month. Pic: Reuters
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Keir Starmer’s been embarking on a reset with European leaders. Pic: Reuters

The ban on bringing back “cattle, sheep, goat, and pig meat, as well as dairy products, from EU countries into Great Britain for personal use” is meant “to protect the health of British livestock, the security of farmers, and the UK’s food security.”

There are bitter memories of previous outbreaks of foot and mouth disease in this country, in 1967 and 2001.

In 2001, there were more than 2,000 confirmed cases of infection resulting in six million sheep and cattle being destroyed. Footpaths were closed across the nation and the general election had to be delayed.

In the EU this year, there have been five cases confirmed in Slovakia and four in Hungary. There was a single outbreak in Germany in January, though Defra, the UK agriculture department, says that’s “no longer significant”.

The UK imposed bans on personal meat and dairy imports from those countries, and Austria, earlier this year.

Authorities carry disinfectant liquid near a farm during an outbreak of foot-and-mouth disease in Dunakiliti, Hungary. Pic: Reuters
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Authorities carry disinfectant near a farm in Dunakiliti, Hungary. Pic: Reuters

Better safe than sorry?

None of the cases of infection are in the three most popular countries for UK visitors – Spain, France, and Italy – now joining the ban. Places from which travellers are most likely to bring back a bit of cheese, salami, or chorizo.

Could the government be putting on a show to farmers that it’s on their side at the price of the public’s inconvenience, when its own measures on inheritance tax and failure to match lost EU subsidies are really doing the farming community harm?

Many will say it’s better to be safe than sorry, but the question remains whether the ban is proportionate or even well targeted on likely sources of infection.

Read more: The products you can’t bring into Britain from the EU

Gourmet artisan chorizo sausages on display on a market stall. File pic: iStock
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No more gourmet chorizo brought back from Spain for you. File pic: iStock

A ‘Brexit benefit’? Don’t be fooled

The EU has already introduced emergency measures to contain the disease where it has been found. Several thousand cattle in Hungary and Slovenia have been vaccinated or destroyed.

The UK’s ability to impose the ban is not “a benefit of Brexit”. Member nations including the UK were perfectly able to ban the movement of animals and animal products during the “mad cow disease” outbreak in the 1990s, much to the annoyance of the British government of the day.

Since leaving the EU, England, Scotland and Wales are no longer under EU veterinary regulation.

Northern Ireland still is because of its open border with the Republic. The latest ban does not cover people coming into Northern Ireland, Jersey, Guernsey, or the Isle of Man.

Rather than introducing further red tape of its own, the British government is supposed to be seeking closer “alignment” with the EU on animal and vegetable trade – SPS or “sanitary and phytosanitary” measures, in the jargon.

Various types of cheese. Pic: iStock
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A ban on cheese? That’s anything but cracking. Pic: iStock

UK can’t shake ties to EU

The reasons for this are obvious and potentially make or break for food producers in this country.

The EU is the recipient of 67% of UK agri-food exports, even though this has declined by more than 5% since Brexit.

The introduction of full, cumbersome, SPS checks has been delayed five times but are due to come in this October. The government estimates the cost to the industry will be £330m, food producers say it will be more like £2bn.

With Brexit, the UK became a “third country” to the EU, just like the US or China or any other nation. The UK’s ties to the European bloc, however, are much greater.

Half of the UK’s imports come from the EU and 41% of its exports go there. The US is the UK’s single largest national trading partner, but still only accounts for around 17% of trade, in or out.

The difference in the statistics for travellers are even starker – 77% of trips abroad from the UK, for business, leisure or personal reasons, are to EU countries. That is 66.7 million visits a year, compared to 4.5 million or 5% to the US.

And that was in 2023, before Donald Trump and JD Vance’s hostile words and actions put foreign visitors off.

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Trump: ‘Europe is free-loading’

More bureaucratic botheration

Meanwhile, the UK and the EU are making travel between them more bothersome for their citizens and businesses.

This October, the EU’s much-delayed EES or Entry Exit System is due to come into force. Every foreigner will be required to provide biometric information – including fingerprints and scans – every time they enter or leave the Schengen area.

From October next year, visitors from countries including the UK will have to be authorised in advance by ETIAS, the European Travel and Authorisation System. Applications will cost seven euros and will be valid for three years.

Since the beginning of this month, European visitors to the UK have been subject to similar reciprocal measures. They must apply for an ETA, an Electronic Travel Authorisation. This lasts for two years or until a passport expires and costs £16.

The days of freedom of movement for people, goods, and services between the UK and its neighbours are long gone.

The British economy has lost out and British citizens and businesses suffer from greater bureaucratic botheration.

Nor has immigration into the UK gone down since leaving the EU. The numbers have actually gone up, with people from Commonwealth countries, including India, Pakistan and Nigeria, more than compensating for EU citizens who used to come and go.

Focaccia sandwiches with prosciutto. Pic: iStock
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Editor’s note: Hands off my focaccia sandwiches with prosciutto! Pic: iStock

Will European reset pay off?

The government is talking loudly about the possible benefits of a trade “deal” with Trump’s America.

Meanwhile, minister Nick Thomas Symonds and the civil servant Mike Ellam are engaged in low-profile negotiations with Europe – which could be of far greater economic and social significance.

The public will have to wait to see what progress is being made at least until the first-ever EU-UK summit, due to take place on 19 May this year.

Hard-pressed British food producers and travellers – not to mention young people shut out of educational opportunities in Europe – can only hope that Sir Keir Starmer considers their interests as positively as he does sucking up to the Trump administration.

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