Helmut Jahn, a German-born architect who designed buildings around the world but was most influential in his adopted hometown, Chicago, where he conceived of an extravagant downtown home to state government and the United Airlines terminal at O’Hare International Airport, died on Saturday in a traffic accident near the horse farm where he lived, in St. Charles, Ill. He was 81.
His wife, Deborah (Lampe) Jahn, confirmed the death. He had been riding his bicycle in suburban Campton Hills when he was struck by two cars that were heading in opposite directions. A news release from the local police department said that Mr. Jahn failed to brake at a stop sign.
A modernist who began a long flirtation with postmodernism in the 1970s, Mr. Jahn (pronounced “yahn”) designed the Xerox Center, an elegant 45-story office tower with a glass and aluminum curtain wall, a rounded corner and a two-story streetfront that undulates inward that opened in 1980 in Chicago’s Loop.
Philip Johnson called Mr. Jahn “a genuine genius” and “a comet flashing in the sky,” although he added, “I don’t know about him yet.”
At the time, construction of Mr. Jahn’s futuristic design of the State of Illinois Center — a government and retail complex — was nearly complete in the middle of the Loop. The facade is a mix of reflective bluish-turquoise glass; inside, the circular atrium has a mix of salmon-colored and blue metal panels. Multicolored granite lines the base.
In his 1985 review in The New York Times, the architecture critic Paul Goldberger said that the complex’s “squat form, which swoops around one corner in a 16-story-high curve, is one part Pompidou Center, one part Piranesi and one part kitsch 1950s revival. He added, “It is not surprising that it has left even this relatively sophisticated city breathless.”
Reaction to Mr. Jahn’s buildings in Chicago ranged from “dazzling” to the critical observation that it was “unrelated to anything else in the whole of Western civilization.”
Eero Saarinen’s early-1960s designs for Dulles International Airport in Washington and the T.W.A. Flight Center at Kennedy International Airport in New York.
Helmut Jahn was born on Jan. 4, 1940, in Nuremberg, Germany, and grew up in a nearby suburb. His father, Wilhelm, was a special-education teacher. His mother, Lena (Werth) Jahn, was a homemaker.
As a boy, Helmut loved drawing and painting, but he aspired to be an airline pilot. “But he wasn’t very good at languages, which disqualified him to be a pilot for Lufthansa,” his wife said, “so he chose architecture because it involved a lot of drawing.”
After graduating from the Technische Hochschule in Munich, he earned a master’s degree from the Illinois Institute of Technology College of Architecture. After he graduated in 1967, he was hired by Gene Summers, formerly the right-hand man to the modernist giant Ludwig Mies van der Rohe, at the venerable Chicago architectural firm C.F. Murphy Associates.
But five years later the roof collapsed in a rainstorm.
The failure was found to have been caused by the fracture of high strength bolts that helped suspend the roof.
In 1981, Murphy Associates became Murphy/Jahn; Mr. Jahn became the firm’s president a year later and acquired it in 1983. It was renamed Jahn in 2012.
After designing the State of Illinois Center (which would be renamed the James R. Thompson Center, for the Illinois Republican governor who backed it), Mr. Jahn worked with Donald J. Trump to design a 150-floor tower that would have been the centerpiece of a megacomplex on the West Side of Manhattan called Television City.
That plan never came to fruition, and the site later became a pared-down development called Riverside South.
Mr. Jahn’s other projects in Manhattan included the 70-story CitySpire in Midtown, behind City Center, and 425 Lexington Avenue, which the architecture critic Carter Horsley dismissed in The City Review in 1987 for its “Roto-Rooterized top,” which he said looked like a “squished foil to the irrepressible upward thrust of the Chrysler Building just across 43rd Street.”
Joe and Rika Mansueto Library at the University of Chicago (2011), with an elliptical, 40-foot-high dome that covers a 180-seat reading room and an underground automated storage and retrieval system.
Writing in The Chicago Tribune, the critic Blair Kamin called the library a “convention-busting marvel” that “students seem to love because it lets natural air pour inside, liberating them from the university’s dimly lit reading rooms.”
Mr. Jahn was working on designs until the end of his life.
“He was so possessed with getting his work done,” Mrs. Jahn said by phone. “He was just a one-man show. He had so many ideas in his head.”
In addition to his wife, whom he met when she was the interior designer for McCormick Place, Mr. Jahn is survived by his son, Evan, a partner in the firm; two granddaughters; and a brother, Otmar.
Earlier this month, Gov. J.B. Pritzker’s administration accelerated the process, sending developers a request for proposals to sell the building, whose upkeep has been deemed too costly.
Last year, Mr. Jahn offered a proposal to save the building by adapting it to create new offices, a hotel and apartments, and building an office tower on the southwest corner of West Randolph and North LaSalle Streets. He also proposed removing the building’s front doors and turning the enormous atrium into a covered outdoor space.
“A demolition and replacement would not only take a long time but seeks high density without considering public benefits,” he wrote in his proposal. We need not more bigger buildings, but buildings which improve the public space.”
It has been only five weeks since New York State legalized the use of recreational marijuana. The board that will oversee the rollout has yet to be appointed, let alone rules set for how licenses will be issued to cannabis businesses. The sale of legal pot in the state is still a year away. And, of course, marijuana remains illegal on the federal level.
But already the rush is on to get a piece of what could be a $4.2 billion industry in the Empire State.
Brokers are talking to landlords about leasing storefronts to dispensaries. Representatives of out-of-state cannabis businesses are flying in to scope out properties. And suppliers of medical marijuana are expanding in the hope that they will be able to branch into recreational sales.
Agricultural land upstate is now marketed as being “in the green zone” for hemp farming or the construction of grow houses for cultivating marijuana.
may soon change.
heated discussions among local officials, some of whom “can’t fathom the idea of the devil’s lettuce businesses within their borders,” said Neil M. Willner, co-chair of the cannabis practice at Royer Cooper Cohen Braunfeld, a New York City law firm.
But the pandemic may have softened the stance of some officials, given the jobs and tax revenue that cannabis businesses can generate after the protracted health crisis has decimated both. The state estimates that the new industry could bring it $350 million in annual revenue and create 30,000 to 60,000 jobs.
Meanwhile, funding is pouring into the industry in anticipation of possible federal legalization, some lenders will now do business with cannabis companies, and real estate investment trusts have sprung up to serve marijuana interests.
an increase in purchasing over leasing in the past year.
“Going forward, when banking becomes more normalized for us — when we have the opportunity to get real estate debt in the way traditional industries do — we would have a preference for owning real estate,” said Barrington Rutherford, senior vice president of real estate and community integration at Cresco Labs, a cannabis company with operations in several states.
law firms, consultants, insurance agents and accountants specializes in helping clients jump through regulatory hoops. A listing service that is the industry’s answer to Zillow offers a wide range of real estate, from $65,000 lots in an industrial park in Lexington, Okla., to a $109 million, 45,000-square-foot grow house in San Bernardino, Calif.
The brick-and-mortar side of cannabis real estate has also evolved.
As cultivation of marijuana has become more sophisticated, grow houses have expanded — they can be 150,000 square feet or more, with high ceilings, heavy-duty ventilation, lighting and security. Processing typically occurs in separate buildings with high-tech machinery.
dispensaries are increasingly stylish, offering a rarefied retail experience. Accomplished architecture and design firms have gotten into the act. There are even companies that specialize in kitting out dispensaries and other cannabis real estate.
And as marijuana gains broader public acceptance — and some celebrity glamour, with Jay-Z’s Monogram and Seth Rogen’s Houseplant — stores are opening in prominent locations near traditional retailers.
“We’re next to Starbucks in downtown Chicago,” Mr. Rutherford said. “In Philadelphia, the store we’re opening is a half block from Shake Shack and down the block from Macy’s.”
“We are building a portfolio of sites that would be enviable by any retail organization,” he added.
The New York State law also provides for licenses for “consumption sites,” and this is expected to give rise to clublike lounges and cannabis cafes. The prospect of such convivial settings has led to predictions that New York City may become the next Amsterdam.
These new storefront uses would appear to be a godsend for New York’s retail real estate market, where availability has increased and rents have fallen.
“A few years ago, when the market was stronger, it was harder to find landlords willing to play ball,” said Benjamin S. Birnbaum, a broker at the real estate services firm Newmark. “What’s changed, because of the pandemic, is that every landlord is willing to talk about it.”
in a recent CNBC interview.
Regardless of size, opening a dispensary can be complicated and expensive, in part because states have required that would-be retailers have control of a site, through a lease or option to lease, before they can apply for a license. But the number of licenses in some states is limited, with no guarantee a business will get one.
In Oregon, some applicants had to wait so long — one or two years, said Andrew DeWeese, a lawyer with Green Light Law Group in Portland — they eventually gave up and essentially sold their place in line.
“It’s a Catch-22,” said Kristin Jordan, a cannabis lawyer in New York City. “You want to secure real estate, but you don’t want to jump the gun.”
Still, the prospect of operating in New York, a state with more than 19 million residents and a major tourist destination, is so enticing that cannabis companies are getting their ducks in row.
Companies that have medical dispensaries, which have been operating since 2016, are in an enviable position because it is believed they will have an advantage in securing additional licenses.
Cresco Labs has four medical dispensaries in New York, including one in the Williamsburg neighborhood of Brooklyn. It is unclear whether the state will allow recreational marijuana to be sold at those locations, but Mr. Rutherford is hedging his bets, adding parking and in some cases expanding by leasing a storefront next door to an existing space.
“We are making sure those stores are ready for the future adult use market,” he said.
“Not being able to have a flexible deal was making the business unsustainable,” Mr. Perillo said.
The landlord of his best store, Premier Equities, declined to comment on its dealings with Dr Smood. But property records show that Premier had amassed a big debt on the building that housed the store, which may have factored into its decision.
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In 2014, Premier Equities paid $11.25 million for the building, financing the purchase with a $9 million mortgage. In 2017, Premier borrowed another $5 million against the building, the records show. Premier also declined to comment on the debt.
Some property owners have deeper pockets than others, and in big office buildings where retail income makes up a small fraction of overall rent, landlords are not hurting as badly because corporations, law firms and other tenants are still paying rent. These landlords can offer rent deals for longer to keep their properties looking lively.
Mark Strausman, a noted chef, went ahead last fall with plans for a new restaurant, Mark’s Off Madison. He could do so in part because his landlord, Rudin Management, is not charging him rent, except for the first month’s payment.
Nonetheless, the restaurant is losing money. But, Mr. Strausman said, “I don’t believe that after all of this, people want to stay home and cook.”
William C. Rudin, Rudin’s chief executive, said he wanted the restaurant to stay open in part so that employees in the offices above might feel better about returning. Mr. Rudin said he believed in Mr. Strausman’s vision but had not decided how long to keep waiving the rent. “Luckily, this is a small percentage of our portfolio, so it hasn’t impacted us, but for small owners, these are very difficult decisions to make,” Mr. Rudin said.
Before, businesses had little interest in spending on such services, according to Rebecca Humphrey, an executive vice president at Savills and head of the Workplace Practice Group. “A client would say ‘I don’t want to pay for that, I just want this deal done,’” she said. “The pandemic has shifted that.”
Her Savills colleague, Mr. Lipson, said he saw possible changes for even some of the staunchest traditionalists, like white-shoe law firms in Washington. “Senior partners went home last March thinking ‘my paper, I can’t do without my paper, and I can’t do without my assistant right outside my office,’” he said. “Then they billed the same amount of hours the next week and thought, ‘huh, that went better than I thought?’”
With companies anticipating changes, and reactions to them, one new role the real estate firms may be playing is that of the scapegoat.
For businesses with employees reluctant to return to the office, the consultants’ stamp of approval can provide credibility — and a reason to make office workers come back.
“We’re very helpful to play the bad guy,” Ms. Humphrey said, noting a fair amount of business had related to auditing office plans and helping companies communicate changes or bring people back. “It helps in messaging to say ‘we brought the outside guys in’.”
What Is an Office For?
Sixteen floors up in a quiet Midtown Manhattan high-rise, Joseph J. Sitt leapt to his feet and pointed to a television headline that heartened him: Remote work would soon end for New York City government employees. He had been agitating for a signal like this. “If he’s not going to have workers back in the office,” he said, “who is?”
Mr. Sitt, chief executive of Thor Equities, reopened his own workplace last July, unveiling what he called a “Covid conference room,” with chairs spaced a shade more generously. (“I guess I should call it the socially distanced conference room,” he corrected himself.) He was counting on a “violent reopening.”
STOREY COUNTY, Nev. — You can’t ride the wild mustangs at the Tahoe-Reno Industrial Center in Nevada, but you’re nearly guaranteed to see bands of them loping over sagebrush in a scene that feels straight out of the 1800s.
At least until the dust clears and Tesla’s 5.3-million-square-foot “Gigafactory” comes into focus.
Welcome to the Silver State, where Elon Musk, a cryptocurrency tycoon and a brothel owner are using a symbol of Americana as a social media recruiting tool.
The water cooler used to be the spot in the office to talk shop. Then came on-site cafes, fitness and yoga studios, rooftop gardens, fire pits and rock-climbing walls. “The overarching trend of the last five years has been the hotelification of the office,” said Lenny Beaudoin, an executive managing director at CBRE.
For employers, the newest amenities to wow workers are ideological, with environmental commitments topping the list, said Jason H. Somers, the president of Crest Real Estate, a Southern California real estate consultancy.
progress by corporate giants, but most efforts remain so opaque that it’s tough to spot greenwashing, the use of sustainability efforts to appear more attractive.
Embracing high environmental standards can be challenging and expensive. Some companies pay others to reduce emissions. Others plant trees, which can take years to grow and rely heavily on water and care.
Tesla used a $1.3 billion state tax break to build its $5 billion factory, tapping into a local work force still reeling from the Great Recession and ushering in a wave of Silicon Valley heavies. Switch, a technology infrastructure company, set up three data centers, then Google gobbled up 1,200 acres. Blockchains bought 67,000 acres for $170 million in 2018, becoming the park’s biggest tenant.
hoped to transform the expanse into an experimental city run by his encrypted digital systems. He pledged to build 15,000 homes, turning it into a huge innovation zone, with his company overseeing everything from schools to courts, law and water.
“I want this to become the greatest social experiment in the history of the world,” he said. “It’s going to be a cross between Disneyland and the chocolate factory from Willy Wonka.”
He’ll have to rethink the scope: In March, the county voted against the secession plan.
Mr. Berns says he plans to develop around 25,000 of his 67,000 acres, but for now, it will remain an outpost for wild horses.
Nevada is home to more than half of the country’s 95,000 wild horses and burros, descendants of animals brought to the continent by Spanish conquistadors in the 1500s. Managed by the federal Bureau of Land Management to the tune of about $100 million annually, wild horses live on protected and private land crisscrossed by freeways.
Wild Horse Connection, an advocacy group. “Horses in traffic, on the wrong side of fencing, vehicular, train accidents, sick or ill horses.”
Rescues triple once mares start foaling, said Ms. Vance, whose annual budget is about $100,000, including small donations from the office park and tenants. She says further expansion depletes open spaces and decreases grazing areas.
“Horses have migration patterns, and when a development comes in, it cuts that off and there’s more interactions with people,” she said.
One solution is humane horse fertility so the animals, which can spend up to 16 hours a day eating, don’t overpopulate and overgraze.
American Wild Horse Campaign, has worked with the office park since 2012, spending more than $200,000 on fertility control, water and feeding in the last three years.
“Development displaces wildlife,” she said. Water stations help, she said, as does an underground crossing built by Switch.
But the horses will not offset the park’s overall carbon footprint, said Simon Fischweicher, the North American head of corporations and supply chains at CDP. Tenants like Tesla, whose lithium-ion batteries are costly to mine and nearly impossible to recycle, require a lot of energy.
Switch is installing its own solar panels, and there are two green fuel plants on site, but distribution and data centers use large amounts of water for heating and cooling, and “supply chain emissions are on average 11.4 times higher than operational emissions,” Mr. Fischweicher said.
Others question the need to use the horses as a lure. Mr. Thompson says most of the roughly 25,000 workers at the office park are blue-collar Nevadans living within an hour commute. They’re here for jobs, not because of horses.
Growth for the industrial park means luring workers from out of state, expanding limited housing nearby and developing more land — all of which jeopardize the wildlife incentive.
“Quality of food, retail choices and housing are going to shape those decisions more than having wild horses nearby,” Mr. Beaudoin of CBRE said. “I would never bet against someone like Elon Musk, but there are other factors to attract workers.”
The Biden administration has unveiled its corporate tax overhaul, intended to raise $2.5 trillion over 15 years to pay for an infrastructure program. “Debate is welcome. Compromise is inevitable. Changes are certain,” President Biden said, but he stressed that “inaction is not an option.”
“America’s corporate tax system has long been broken,” the Treasury secretary Janet Yellen wrote in a Wall Street Journal op-ed coinciding with the plan’s release. In addition to raising the headline corporate tax rate, the administration’s proposal takes aim at companies that shift profits abroad, especially to low-tax havens like Bermuda or Ireland. Some of the changes could be enacted by regulation, but things like raising the corporate tax rate will need the approval of Congress.
What’s in the plan? Here are the main provisions:
Raise the corporate tax rate to 28 percent. The increase from 21 percent would put the U.S. more in line with other big countries and, the administration says, lift corporate tax receipts that have fallen to their lowest levels as a share of the economy since World War II.
global minimum tax rate by midyear, but previous efforts have faltered when it came to nailing down the details.
Punish companies that headquarter in low-tax countries. A provision in the plan would target “inversions,” where American companies merge with a foreign entity in order to move headquarters to a low-tax country.
Replace fossil-fuel tax subsidies with clean-energy incentives. Previous attempts to eliminate subsidies on oil and gas met with stiff industry and congressional opposition.
Beef up the I.R.S. The agency’s enforcement budget has fallen by 25 percent over the past decade, and the proposal would bolster the budget for experts in complex corporate litigation.
What effect would it have? A Wharton School budget model concluded that the corporate tax rate increase would “not meaningfully affect the normal return on investment,” but when combined with the proposed minimum tax on book income, business investment would fall somewhat. All told, by 2050 the tax provisions would reduce government debt by more than 11 percent from the current baseline, but also reduce G.D.P. by 0.5 percent over that period.
“I’m actually OK at 28 percent.”
“I think there could be bipartisan interest in about half of what the president proposed on the spending side, but of course the corporate tax increases would be a non-starter,” Rohit Kumar, the head of PwC’s Washington tax policy group and a former aide to Senator Mitch McConnell, told DealBook. He’s not convinced there’s even enough support among Democrats for tax increases.
For more on this, see our sister newsletter, The Morning: “Corporate Taxes Are Wealth Taxes”
HERE’S WHAT’S HAPPENING
The counting of votes in the Amazon union drive begins soon. The union seeking to represent workers at a warehouse in Alabama said that 3,215 ballots were cast, representing 55 percent of eligible workers. The hand count of the ballots will begin either later today or tomorrow.
Britain curbs the use of AstraZeneca’s vaccine for people under 30. The decision came as regulators increasingly suspect a link between the shot and rare blood clots. While Britain has enough vaccines from other makers to avoid a slowdown in its inoculation efforts, the concerns may dent vaccination efforts in developing countries.
Senator Mitch McConnell walks back his comments on companies and politics, sort of. The minority leader conceded that his criticism of companies for speaking out against voting restrictions was not spoken “artfully.” (Democrats noted that Republicans have benefited from corporate donations.) “They are certainly entitled to be involved in politics,” Mr. McConnell said.
Tencent’s biggest shareholder sells a slice of its holdings for $14.7 billion. Prosus, the Europe-based tech investor, sold 2 percent of its stake in the Chinese tech giant in the biggest-ever block trade (breaking its own record). Prosus still owns a 29 percent stake in the company.
hadn’t told top executives or his board of the arrangement. He is accused of having the gun-rights group file for Chapter 11 to stymie an investigation by New York State’s attorney general.
Acres of empty desks
Many parts of the economy have held up during the pandemic — but corporate real estate isn’t one of them. Landlords and cities are worried that remote working will irreversibly sap demand for office space, The Times’s Peter Eavis and Matthew Haag report.
The numbers are grim for landlords. The national office vacancy rate in city centers has hit 16.4 percent, according to Cushman & Wakefield, a decade-long high. In Manhattan alone, over 17 percent of all office space is available, the most in over 30 years. And rents on existing space could also face pressure from new buildings coming online, representing 124 million square feet.
Some are staying hopeful. Landlords like Boston Properties and SL Green haven’t suffered big financial losses from the pandemic, thanks to many tenants being locked into long leases. They’re also betting many companies want their workers to meet in person to better collaborate and train younger employees.
The final damage won’t be known for some time. Companies are still trying to figure out their real estate needs, based on their work policies: While Amazon expects a return to an “office-centric culture,” JPMorgan Chase’s Jamie Dimon said that the bank may need only 60 seats for every 100 employees after the pandemic.
“We are just going to be bleeding lower for the next three to four years to find out what the new level of tenant demand is,” Jonathan Litt, the chief investment officer of Land & Buildings, told The Times.
“Even though I’m sort of a pro-crypto, pro-Bitcoin maximalist person, I do wonder whether at this point Bitcoin should also be thought in part of as a Chinese financial weapon against the U.S.”
— Peter Thiel, the tech investor, on how cryptocurrency threatens the U.S. dollar. “China wants to do things to weaken it, so China’s long Bitcoin,” he added.
Florida and Texas banned them. Airlines, universities, event venues and other businesses are also testing various methods of vaccine verification. The starkly different approaches reflect a wider national and global debate on proof of health in the pandemic era.
“There are a lot of ways it could be done badly,” Jay Stanley of the American Civil Liberties Union told DealBook, but he suggested a “narrow path” to a certification system that could work. The ideal system would be paper-based with a digital supplement, Mr. Stanley argues, so that people who lack access to technology aren’t disadvantaged. Encrypted data would be stored on a decentralized network, protected with a public key for vaccine providers and private keys for users to ensure privacy. Fairness also demands a standardized approach, rather than the current variety of systems, which could result in “a mess for civil liberties, equity and privacy,” he said.
The Biden administration has said it won’t mandate vaccine passports, a point it reiterated this week, but it is working on standards the private sector can adopt. New York partnered with IBM on the state’s opt-in Excelsior Pass, which allows access to restricted activities and venues.
The certificates can raise a slew of social and legal issues, depending on who is asking for proof of vaccination and why, according to the Stanford law professor David Studdert. Government mandates trigger more concerns than opt-in programs, he noted, and companies will have different considerations if they seek certification from customers or workers. Given all the variations, he said, “within reason” the market should decide what works, and officials should avoid both mandates and bans: “Different communities and employers have a different tolerance for risk.”
More on vaccine passports:
THE SPEED READ
A top S.E.C. official warned of “significant and yet undiscovered issues” with SPACs, the latest words of caution from the regulator about blank-check funds. (WSJ)
Twitter is said to have held talks to buy Clubhouse for $4 billion, though negotiations aren’t currently active. (Bloomberg)
Shares in Deliveroo rose after retail investors were allowed to start trading in the food delivery service. (CNBC)
Politics and policy
China is offering tax breaks and other perks to financiers in Hong Kong to keep them from leaving the territory. (NYT)
A federal official warned last June that Emergent BioSolutions, the company behind the Johnson & Johnson vaccine mix-up, lacked trained staff and had problems with quality control. (NYT)
Uber and Lyft are “throwing money” at drivers to bring them back to work. (FT)
Within weeks, Apple will roll out new privacy notifications for apps, which companies like Facebook have argued would harm their businesses. (Reuters)
“No publicly traded company is a family. I fell for the fantasy that it could be.” (NYT Op-Ed)
Best of the rest
How the pandemic pummeled the world’s most famous shopping streets. (Quartz)
Former employees of Marcus, the consumer lender that is key to Goldman Sachs’s future, reportedly say they were burned out by an ambitious product launch schedule. (Insider)
All about muons, the subatomic particles that seem to disobey the known laws of physics. (NYT)
We’d like your feedback! Please email thoughts and suggestions to email@example.com.
Roughly 17.3 percent of all office space in Manhattan is available for lease, the highest proportion in at least three decades. Asking rents on the island have dropped to just over $74 a square foot, from nearly $82 at the beginning of 2020, according to a recent report by the real estate services company Newmark. Elsewhere, asking rents have largely stayed flat from a year ago, including in Boston and Houston, but have climbed slightly in Chicago.
The Japanese clothing brand Uniqlo, whose United States headquarters are in Manhattan’s SoHo neighborhood, recently relocated to another office building nearby, an open layout with tables designed for its work force of 130 people who will come into the office only a few days a week. Many of its office workers will keep working remotely after the pandemic, while some employees, like those in the marketing department, will hold meetings occasionally in SoHo.
“As a leader, it has been challenging because meeting people face-to-face is so important,” said Daisuke Tsukagoshi, the chief executive of Uniqlo USA. “However, since we are a Japanese company with global reach, the need for remote collaboration among many centers has always been part of our culture.”
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The stock prices of the big landlords, which are often structured as real estate investment trusts that pass almost all of their profit to investors, trade well below their previous highs, even as the wider stock market and some companies in other industries like airlines and hotels that were hit hard by the pandemic have hit new highs. Shares of Boston Properties, one of the largest office landlords, are down 29 percent from the prepandemic high. SL Green, a major New York landlord, is 26 percent lower.
Fitch Ratings estimated that office landlords’ profits would fall 15 percent if companies allowed workers to be at home just one and a half days a week on average. Three days at home could slash income by 30 percent.
Senior executives at property companies claim not to be worried. They argue that working from home will quickly fade once most of the country is vaccinated. Their reasons to think this? They say many corporate executives have told them that it is hard to effectively get workers to collaborate or train young professionals when they are not together.
As vaccination rates increase and businesses start to reopen, cities across the country are cautiously moving forward with economic recovery plans to coax workers back into offices and revive real estate markets pummeled by the pandemic.
Some midsize cities — like Austin, Texas; Boise, Idaho; and Portland, Ore. — may be poised to rebound faster than others because they have developed strong relationships with their local economic development groups. These partnerships have established comeback plans that incorporate a number of common goals, like access to affordable loans, relief for small businesses and a focus on downtown areas.
The partnerships are also encouraging investments in infrastructure as lures for new business activity. Last Wednesday, President Biden announced a $2 trillion infrastructure plan to modernize the nation’s bridges, roads, public transportation, railways, ports and airports.
“Recovery plans create an agenda for rebuilding the metropolitan area,” said Richard Florida, professor at the University of Toronto, who helped prepare a plan for northwest Arkansas.
Google, Microsoft, Target and Twitter about remote work, and some cities could see less office construction activity.
These challenges are not limited to midsize cities. Larger metropolitan areas like Los Angeles and New York are certainly in distress, but they have shown the capacity in the past to rebound from calamity. In San Francisco, municipal authorities said that there was no way to predict postpandemic construction activity but that expectations were high.
“This isn’t the first recession here,” said Ted Egan, San Francisco’s chief economist. “We’re expecting people to come back to the office.”
But the cities that have a strong alliance with business development agencies are expected to recuperate faster.
For instance, the Downtown Austin Alliance, a business development group, is convening focus groups and workshops, and conducting interviews and surveys to stir fresh interest in its downtown office market. Before the pandemic, 11 buildings encompassing roughly 3.5 million square feet were under construction, nearly half of all downtown office space.
Boise established a 16-member Economic Recovery Task Force made up of city officials, academics and executives of professional organizations. In September, it issued recommendations to “enhance economic resilience and agility.”
And the Greater Portland Economic Development District formed a partnership with the Metro Regional Government to prepare a plan to recover from the economic shock of the pandemic, which wiped out 140,000 jobs and shuttered 30 percent of the region’s small businesses. Among their recommendations is todirect funds and technical assistance to small businesses through local Community Development Financial Institutions, part of an affordable-lending program from the Treasury Department.
Some cities are already seeing success. A year ago, Boston abruptly suspended construction for nine weeks in an effort to halt the spread of the coronavirus. During the moratorium, the Boston Planning and Development Agency prepared a recovery plan that focused on reviewing permit decisions for major projects remotely. With its 250-member staff working from home, and in some cases outfitted with new software and digital equipment, the planning agency held 220 virtual public meetings and digitally reviewed architectural plans and land-use proposals.
“We identified a methodology to conduct our reviews and resume public participation,” said Brian P. Golden, the agency’s director. “Honestly, it worked better than we could reasonably have expected.”
The city approved 55 significant development projects last year encompassing 15.8 million square feet and valued at $8.5 billion, the most in Boston’s history. The largest was $5 billion Suffolk Downs, a 10-million-square-foot, mixed-use development with 10,000 housing units rising on a shuttered horse-racing track.
Tucson is also intent on resuming construction. Along with identifying sites for industrial development, the Sun Corridor recovery plan calls for resuscitating the city’s downtown.
The pandemic closed 85 downtown restaurants, eliminated 10,000 travel and tourism jobs and cut revenue in the sector by $1 billion. The antidote is to persuade city and county leaders to make loans and grants available to small businesses tied to the tourism industry, the focus of commercial space in central Tucson.
Mayor Regina Romero said the city was investing $5 million — $2 million more than last year — in the city’s tourism marketing group. Tucson also distributed $9 million from the federal relief legislation passed in March 2020 in grants ranging from $10,000 to $20,000 to small businesses, many of them in tourism.
“We’re working together as a region,” Ms. Romero said. “That’s one of the most important steps that we can take for the recovery.”
Since the pandemic sent workers home last year, a slew of modifications have been made to office buildings to protect against the spread of the coronavirus. Now, as companies prepare to bring workers back, experts say even more changes are on the way.
Expect expanded gathering spaces and fewer personal workstations, for instance, changes that are being fueled by the success of working from home. Companies like Google, Microsoft and Walmart have already announced proposals for hybrid work models that will allow employees to continue to work remotely at least a few days a week.
These new arrangements mean companies may need less office space, and some have already cut back on their real estate needs, according to a survey from the consulting firm PwC. Target said this month that it was giving up office space in downtown Minneapolis, and in September, the sporting goods retailer REI sold its newly built headquarters in Bellevue, Wash.
“We really are at an inflection point,” said Meena Krenek, an interior design director at Perkins+Will, an architecture firm that is revamping offices, including its own, for new modes of working.
a return to the office in the summer and fall. Desks were dragged six feet apart and Plexiglas barriers installed between them. One-way arrows were stenciled on corridor floors, chairs were removed from conference rooms, and an elaborate choreography was developed to determine how and when teams would return to avoid overcrowding.
Then many workers simply stayed home. As the pandemic dragged on and people got the hang of Zoom, many discovered it was possible to be productive while parked on living room sofas or in backyard lawn chairs.
Now, as company heads are again planning for a return to the office, not only safety measures but also the new work arrangements are driving discussions about the postpandemic workplace. More than 80 percent of companies are embracing a hybrid model whereby employees will be in the office three days a week, according to a new survey by KayoCloud, a real estate technology platform.
Workplaces are being reimagined for activities benefiting from face-to-face interaction, including collaboration on projects and employee training, as a way to promote a company’s culture and identity.
holographic representations of employees who are off site but could still take a seat at the table.
For now, some companies are having in-person attendees continue to use their laptops so that remote workers can see everyone on their Zoom screens, an effort to “help maintain a sense of equivalency that we’ve come to expect,” said Peter Knutson, chief strategy officer of A+I, a design firm.
Devices combining 360-degree cameras, microphones and speakers are being placed on a table or tripod to improve sound and visibility. In the future, these technologies are likely to be built into gathering places and the number of screens increased, transforming the conference room into a “Zoom room,” Ms. Krenek said.
Likewise, some phone booths — the closet-size pods deployed in open-plan offices to give workers a place to make private calls — may give way to videoconferencing booths, which some manufacturers have introduced with built-in screens.
Screens are destined to pop up elsewhere. One near the coffee bar or at a cafe table could allow those on the premises to meet virtually for a latte or lunch with colleagues working remotely.
And digital whiteboards are likely to become more popular, so workers at home can see what’s being written in real time.
foot pedals to activate elevators. Buttons on walls outside restrooms can be pressed with an elbow, averting the need to touch door handles. Some companies are adding foot-operated door openers.
The coronavirus has focused attention on air quality in what may be a lasting way. Outdoor spaces — roofs, terraces and courtyards — were popular before the pandemic and have become more so as fresh air has gone from being a nicety to being a necessity.
Landlords have in some cases adjusted HVAC systems to increase the amount of outdoor air being pumped in. They are also upgrading filters to trap smaller airborne particles.
Some measures are being enshrined in leases, said Geoffrey F. Fay, a real estate lawyer with Pullman & Comley. But landlords are doing such things proactively, he added, as they try to make offices as enticing as possible at a time when tenants may be wondering if they even need to rent space anymore.
“Landlords realize we are on the precipice of change,” he said. “They want to make employees feel comfortable to the extent they’re coming back to the office.”
Spotify’s headquarters in the United States fills 16 floors of 4 World Trade Center, a towering office building in Lower Manhattan that was the first to rise on the site of the 2001 terror attacks. Its offices will probably never be full again: Spotify has told employees they can work anywhere, even in another state.
A few floors down, MediaMath, an advertising tech company, is planning to abandon its space, a decision fueled by its new remote-work arrangements during the pandemic.
In Midtown Manhattan, Salesforce, whose name adorns a 630-foot building overlooking Bryant Park, expects workers to be in the office just one to three days a week. A nearby law firm, Lowenstein Sandler, is weighing whether to renew its lease on its Avenue of the Americas office, where 140 lawyers used to work five days a week.
“I could find few people, including myself, who think we are going to go back to the way it was,” said Joseph J. Palermo, the firm’s chief operating officer.
sparked an extraordinary exodus of workers from office buildings, what had seemed like a short-term inconvenience is now clearly becoming a permanent and tectonic shift in how and where people work. Employers and employees have both embraced the advantages of remote work, including lower office costs and greater flexibility for employees, especially those with families.
Beyond New York, some of the country’s largest cities have yet to see a substantial return of employees, even where there have been less stringent government-imposed lockdowns, and some companies have announced that they are not going to have all workers come back all the time.
In recent weeks, major corporations, including Ford in Michigan and Target in Minnesota, have said they are giving up significant office space because of their changing workplace practices, while Salesforce, whose headquarters occupies the tallest building in San Francisco, said only a small fraction of its employees will be in the office full time.
But no city in the United States, and perhaps the world, must reckon with this transformation more than New York, and in particular Manhattan, an island whose economy has been sustained, from the corner hot dog vendor to Broadway theaters, by more than 1.6 million commuters every day.
to return in early May, in part as a signal to other employers that filling New York’s buildings is a key to its recovery.
“This is an important step for the city, and it’s another important step on the way to the full recovery of New York City,” Mr. de Blasio said.
Still, about 90 percent of Manhattan office workers are working remotely, a rate that has remained unchanged for months, according to a recent survey of major employers by the Partnership for New York City, an influential business group, which estimated that less than half of office workers would return by September.
Across Midtown and Lower Manhattan, the country’s two largest central business districts, there has never been more office space — 16.4 percent — for lease, much higher than in past crises, including after the Sept. 11 terror attacks in 2001 and the Great Recession in 2008.
As more companies push back dates for returning to offices and make at least some remote work a permanent policy, the consequences for New York could be far-reaching, not just for the city’s restaurants, coffee shops and other small businesses, but for municipal finances, which depend heavily on commercial real estate.
Sarah Patellos, who is on Spotify’s music team, has been working from a dining room table in Truckee, Calif., a mountain town near Lake Tahoe where she has spent most of the past year after flying there for a weekend trip in March 2020 and getting stuck because of government-imposed lockdowns.
on CNBC. “As for everyone working from home all the time, there is also zero chance of that.’’
from the $1.9 trillion federal stimulus package: $5.95 billion in direct aid and another $4 billion for schools, a City Hall spokeswoman said.
While that addresses immediate needs, the city still faces an estimated $5 billion budget deficit next year and similar deficits in the following years, and a changing work culture could hobble New York’s recovery.
The amount of office space in Manhattan on the market has risen in recent months to 101 million square feet, roughly 37 percent higher than a year ago and more than all the combined downtown office space in Los Angeles, Atlanta and Dallas. “This trend has shown little signs of slowing down,” said Victor Rodriguez, director of analytics at CoStar, a real estate company.
At least one industry, however, is charging in the opposite direction. Led by some of the world’s largest companies, the technology sector has expanded its footprint in New York during the pandemic. Facebook has added 1 million square feet of Manhattan office space, and Apple added two floors in a Midtown Manhattan building.
And the surge in available commercial real estate has actually been a boon for some new businesses that have been able to find spaces at rents that are lower than they were before the pandemic.
“I’ve seen the obituary for New York City many times,” said Brian S. Waterman, the executive vice chairman of Newmark, a commercial real estate services firm. “The office reboarding will start to occur in May, June and July, and you are going to have a much fuller occupancy once we hit September.”
rally behind an idea that seemed unthinkable before the pandemic: converting distressed office buildings in Manhattan into low-income housing.
The record vacancy rate has been driven by companies across almost all industries, from media to fashion, that have discovered the advantages of remote work.
Beside the cost savings of operating a scaled-down office or no office at all, modern technology and communications have allowed workers to stay connected, collaborate from afar and be more productive without lengthy commutes. Parents are also clamoring for more flexibility to care for their children.
“We believe that we’re on top of the next change, which is the Distributed Age, where people can be more valuable in how they work, which doesn’t really matter where you spend your time,” said Alexander Westerdahl, the vice president of human resources at Spotify, the Stockholm-based streaming music giant that has 6,500 employees worldwide.
For now, Spotify does not plan to reduce its New York footprint, but as of February, the company told its United States employees — 2,100 of whom had worked at the Manhattan office — that they could work from pretty much anywhere.
“The change is mainly driven by globalization and digitalization, and our tools are much, much better at allowing for people to work from anywhere,” Mr. Westerdahl said.
Remote work, of course, is not without significant downsides.
The blurry lines that already existed between work and personal life have been all but obliterated during the pandemic. Without the time spent commuting in the morning and at night, people are logging on to work earlier in the day and staying connected later into the night.
And despite modern technology and video conferencing capabilities, companies are struggling to foster workplace cultures and make employees, especially new hires, feel welcome and part of a team.
Those concerns have weighed heavily on executives at Kelley Drye, a law firm founded in 1836 in New York, which is moving from Park Avenue near Grand Central Terminal to 3 World Trade Center in Lower Manhattan.
“Zoom and Teams are great,” said Andrea L. Calvaruso, a lawyer who is the chair of the firm’s trademark and copyright group, but she added that “there’s no substitute for sitting down in a beautiful new collaborative and working together without distractions.”
But Ms. Patellos, despite being unprepared after being stuck in California — she had to buy a keyboard and monitor — soon found herself connecting with colleagues all over the world just as she had in her New York office.
“I fell into a rhythm,” said Ms. Patellos, who is still deciding where to eventually move. “I maintained a bit of East Coast hours, starting my days a little earlier and ending a bit earlier. Before I knew it, it became the norm and a routine.”