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What does the widespread consumption of a juggernaut drug have to do with commercial real estate? More than meets the eye, and the industry should start preparing for a potential upheaval in the not-too-distant future, a growing number of real estate professionals say. Diabetes drugs being prescribed for weight loss, like Ozempic and Mounjaro, are already altering consumer purchasing habits. In the short term, the retail sector is in line to adjust first. But widespread adoption of the drugs, known as GLP-1s, could have far-reaching and surprising implications for asset classes from housing to healthcare and beyond. Nearly 24 million people, or roughly 7% of the population, are slated to be taking appetite suppressants by 2035. That has prompted longtime industry insiders like Roy Oppenheim to brace for what they believe could be the biggest disruption to real estate since the pandemic, on par with emerging and revolutionary technologies like artificial intelligence. A heightened focus on health and wellness brought on by the widespread use of semaglutide and tirzepatide, the active ingredients in the Type 2 diabetes drugs often prescribed for weight management, could alter both the tenant mix and configuration of retail developments, according to Anton Pil, global head of alternatives for J.P. Morgan & Co. And developers, landlords and brokers should pay close attention to who their target audience is and how their preferences might shift as a result, he said at a Jan. 11 state of retail event held by Texas-based firm Weitzman. “Over the next five to 10 years, the spending patterns of that cohort will change dramatically … alcohol sales will probably be struggling, fast food sales are going to have to morph,” Pil said. “If 10% of this country goes on these drugs, sales of a lot of major companies are going to decline and they’re going to decline pretty dramatically.” - Bisnow | Olivia Lueckemeyer URL: https://lnkd.in/e53eqtF4 #realestate #commercialrealestate #retail #ozempic

Another luxury brand is paying nearly $1B to acquire retail space on Fifth Avenue. Kering, the parent company of Gucci, Balenciaga and Brioni, is paying $963M to acquire the 115K SF retail condominium at 717 Fifth Ave., it announced Monday. The multilevel space sits at the base of a 26-story office tower and was sold by Jeff Sutton’s Wharton Properties. Sutton was also the owner of 720 and 724 Fifth Ave. across the street, which Italian fashion house Prada paid more than $820M combined to acquire last month. The sales show that demand from iconic fashion brands for space on the globe’s most expensive retail strip has roared back since the early days of the pandemic when some questioned whether Fifth Avenue would ever regain its cachet. The space at 715-717 Fifth Avenue has been leased to Armani and Dolce & Gabbana. It is unclear what Kering’s plans are with the existing tenants, who aren’t among the Paris-based company’s roster of fashion, leather and jewelry brands. “With this transaction, Kering acquires exceptional retail locations on one of the world’s most iconic avenues,” the company said in a press release. “This investment represents a further step in Kering’s selective real estate strategy, aimed at securing key highly desirable locations for its Houses.” The deal is a huge turnaround for Sutton at the property, in which SL Green owned an 11% stake. The venture had faced a foreclosure suit from New York Life after defaulting on a $300M loan, The Real Deal reported. Eastdil Secured advised Sutton in the deal with Kering. - Bisnow | Ethan Rothstein URL: https://lnkd.in/e7Nr5i9i #realestate #commercialrealestate #luxury #retail

Shoppers rejoice, Big Apple retail not only survived the pandemic blues, it thrived unlike any other sector of the city’s commercial market. Owners that could lease for less money and shorter terms did so, and those generous terms triggered a feeding frenzy for well-located spaces. “We’ve seen a fairly healthy amount of recovery,” said Gene Spiegelman of Ripco. “Rents are down 50%.” Vacant restaurants were some of the fast movers, as were luxury fashion fronts. Dolce & Gabbana leased the unique former Hermès store at 695 Madison Ave. Prada paid billionaire retail sultan Jeff Sutton $835 million to buy a building at 724 Fifth Ave., as well as the adjacent structure at 720 Fifth, where Abercrombie & Fitch once ruled. Sutton had quietly been planning a slender new tower there, next to the Aman Hotel in the Crown Building. It’s unclear if that will still materialize. Sutton also sold the space now occupied by Versace at 747 Madison Ave. at East 65th Street to the Dyson family for $135 million. Other fashion brands on the prowl include Zara, Mango, Lululemon, Arc’teryx and Vans. “A global luxury brand is going to create a long-term flagship environment that they will invest in heavily and operate themselves,” said Cassie Durand of CBRE. “Madison Avenue is in a good position and we are seeing good absorption from 57th to 64th streets, and even 65th to 72nd is seeing quite a lot of activity.” Her client, Milan-based Del Core, will open in February at 789 Madison Ave. by East 67th Street. - NY Post | Lois Weiss URL: https://lnkd.in/gBmXQFXP #realestate #commercialrealestate #luxury #retail

There’s plenty of gloomy news out there at the moment, but an extra large lease signing rounded out 2023 on a positive note, and broke a leasing record in the process. Bank of America has signed a 15-year lease to take 550,000 square feet at BGO’s Newport Tower in Jersey City, the companies told Commercial Observer The transaction, which spans 21 floors of the 36-story building at 525 Washington Boulevard, represents the only new lease over 500,000 square feet signed in New Jersey in the last 10 years. The bank has a tentative move-in date of the first quarter of 2026 after inking the lease on Dec. 12. The deal comprises the building’s top 12 floors — amounting to 280,000 square feet — plus nine mid- and lower-level floors, for a total of roughly 550,000 square feet. BGO officials declined to provide the asking rent. With the deal now sealed, Alberto Garofalo, the market president of New Jersey for Bank of America, told CO he was excited for Bank of America’s employees, for Jersey City and for the broader community. “In a simplistic form, through this lease, we have an opportunity to bring all of our Jersey City employees together under one roof,” Garofalo said. “Further, the amenities of 525 Washington Avenue really align with our goals, and with our future. We’re really excited about what this transaction means, both for Jersey City and for our Jersey City employees.” - Commercial Observer | Cathy Cunningham URL: https://lnkd.in/getm92Qu #realestate #commercialrealestate #office #remotework #returntooffice

Louis Vuitton is eyeing a return to Palm Beach’s Worth Avenue, the island town’s high street retail corridor, after a brief absence. The Palm Beach Development Review Committee approved the fashion brand’s request to open at 222 Worth Avenue. The two-story boutique space, which was previously occupied by the now-bankrupt fashion brand Escada, will total 5,010 square feet. The first floor will house a typical retail boutique, while the second will be dedicated to VIP customers. New York-based East Gold Holdings has owned the 7,592-square-foot property, constructed in 1956, since 1998, when it purchased the building for $6.4 million. The LVMH-owned Louis Vuitton has had a presence on Worth Avenue for about four decades, first opening at 251 Worth Avenue. In 2000, it relocated one block north to The Esplanade shopping building at 150 Worth Avenue, but shuttered the store last year. Worth Avenue has gone through somewhat of a shakeup in recent years. Last year, billionaire Ken Griffin, founder and CEO of hedge fund Citadel, bought a three-story mixed-use building at 125 Worth Avenue for $83 million. In May, Ta-boo, a restaurant that had operated on the strip for more than 80 years, closed. World-famous chef Thomas Keller, the mastermind behind The French Laundry and the Surf Club, is taking over the space. - Commercial Observer | Julia Echikson URL: https://lnkd.in/eDpGkJ52 #realestate #commercialrealestate #retail #fashion #luxury

Food delivery app DoorDash has moved to a direct deal and doubled the size of its office at 200 Fifth Avenue, Commercial Observer has learned. DoorDash signed an 11-and-a-half-year lease for 115,382 square feet on the eighth and ninth floors of the 14-story office building, a spokesperson for landlord Boston Properties (BXP) said. The spokesperson did not disclose the asking rent, but the average asking rent in Midtown South was $81.35 per square foot in the fourth quarter of 2023, according to a Colliers report. DoorDash was founded in 2013 and holds the largest market share of meal delivery services in the U.S., according to Bloomberg Second Measure. The San Francisco-based company tripled its New York footprint in March 2023 when it subleased 57,691 square feet on the eighth floor of the Fifth Avenue building from review app Yelp, moving out of its old digs two blocks away on the fourth floor 125 West 25th Street. The new direct deal doubles DoorDash’s office footprint. “Since opening, we’ve heard great feedback from employees and consistently seen very high utilization of the space,” DoorDash real estate director Ari Sacharow said in a statement. “We are excited to expand to the ninth floor and provide even more opportunities for in-person meetings, on-sites, and collaborative experiences.” Yelp, for its part, is getting out of the New York office market entirely. The 20-year-old company closed its Fifth Avenue space and its much larger 192,000-square-foot outpost at 11 Madison Avenue in 2022 after CEO Jeremy Stoppelman announced his decision to embrace fully remote work. Over the following two years, Yelp shuttered underutilized offices in Chicago, Washington, D.C., Phoenix, and Hamburg, Germany. - Commercial Observer | Abbie Nehring URL: https://lnkd.in/gS6VnYj2 #realestate #commercialrealestate #office #workfromhome #returntooffice

The largest delivery company in the country will require its corporate employees to return to the office this spring, eliminating remote work. In an internal memo, UPS announced it would be requiring employees to return to the office five days a week starting March 4, the Atlanta Business Chronicle reported. "By adopting this approach, we recognize the ongoing commitment of our operators and other UPSers who have and continue to work in-person in our facilities five days and sometimes more per week as they deliver on our purpose by providing industry-leading service to our customers," the memo stated, according to the publication. The company plans to bring workers back to corporate offices across the country, including its headquarters in Sandy Springs, Georgia. The company previously rolled out a hybrid work model last year that affected 3,600 workers at the campus, the Atlanta Business Chronicle reported. UPS is the second-largest public company in Georgia. Last year saw a bump in return-to-office mandates, with 2 million workers under some type of in-person requirement as of August, Bisnow previously reported. Big companies like Google, Starbucks and Boeing have announced some type of RTO requirement. However, the mandates haven't appeared to have a significant impact on overall office occupancy yet. Office usage didn't experience a major spike in the post-Labor Day period as some had hoped for but has seen slow increases, according to Kastle Systems' keycard swipe data. Office usage in the 10 markets Kastle tracks ticked up in October to a three-year high of 50.5% of pre-pandemic levels and then rose above 51% before dropping off around the holidays. Kastle’s data also shows that five-day office schedules have become somewhat rare, as occupancy on Fridays was down more than 20 percentage points from Thursdays. - Bisnow | Taylor Driscoll URL: https://lnkd.in/gJnpU7hF #realestate #commercialrealestate #office #workfromhome #returntooffice

Whole Foods has gone on a shopping trip of its own, buying its Downtown Miami store for $21 million, property records show. The ground-floor commercial condo of the Met 3 rental tower at 299 SE Third Street, two blocks north of Brickell, spans 97,674 square feet. The sale includes the basement. Amazon (AMZN)-owned Whole Foods began operating the 41,000-square-foot store in 2014, when the 32-story building opened. The grocer currently operates five locations in the Miami area, with another under construction at Crescent Heights’ Nema development in Edgewater. Washington-based Edens had purchased the Downtown Miami condo for $19.6 million in 2019, according to records. The tower is one of four that are part of the Metropolitan Miami mixed-use development. Representatives for Whole Foods and Edens did not immediately respond to requests for comment. The deal marks the second time in about a month that a retailer has purchased its store in Miami. In December, Alo Yoga, the athleisure brand popular among young celebrities and influencers, bought its store in the Design District for $22 million. - Commercial Observer | Julia Echikson URL: https://lnkd.in/ezcTx7be #realestate #commercialrealestate #retail #miami

ULike the fictitious Miranda Priestly, Prada gave its December deal with Jeff Sutton two nods (maybe even a smile). Prada not only bought Wharton Properties’ 724 Fifth Avenue for $425 million, but the fashion brand also purchased 720 Fifth Avenue for about $397.3 million in a deal that took place around the same time, according to property records made public this week. Crain’s New York Business first reported the transaction. The total price for 720 Fifth Avenue, plus an annex next door on East 56th Street, brought the total for the building to $410 million, according to a source with knowledge of the deal. The sale of both buildings were wrapped into a single deal, according to a source with knowledge of the deal. The total for both buildings was $835 million, and it’s unclear what Prada plans to do with 720 Fifth. Will Silverman and Gary Phillips of Eastdil Secured represented Wharton in the deal to offload both properties, but declined to comment. Sutton also declined to comment while Prada did not respond to a request for comment. Wharton previously owned the 15-story 720 Fifth and the neighboring 12-story office and retail 724 Fifth with SL Green Realty. The pair bought 720 Fifth for $153 million in 2006 then dropped $223 million for 724 Fifth in 2012, as Commercial Observer previously reported. In 2018, Sutton became the sole owner in a deal that paid $85.5 million for SL Green’s 50 percent stake in the venture. Prada has been at 724 Fifth Avenue since 1997 when it leased 22,000 square feet for its four-story flagship location. - Commercial Observer | Mark Hallum URL: https://lnkd.in/e79_5tun #realestate #commercialrealestate #propertyinvestment #fashion

Boeing plans to require its employees to return to the office on a pre-pandemic schedule of five days a week, the Seattle Times reports. No timetable for the shift away from hybrid work schedules has been announced, but reportedly managers are already discussing the matter with workers and the change may come as soon as after the holidays. Word came down recently from Stan Deal, executive vice president of the Boeing Co. and CEO of Boeing Commercial Airplanes, who told managers to require full-time on-site attendance, according to the Times. “Over the past two years, we have transitioned more employees to work in the office and are asking all Boeing Commercial Airplane employees to return to our pre-pandemic policy,” a spokesperson told Bisnow by email Monday. “As we continue to hire new employees and continue our airplane development work, it’s beneficial to have teams in the office more often to support our customer commitments and collaborate in person, including sharing best practices and responding promptly to emergent needs. Often there’s no substitute for face-to-face collaboration and communication.” Boeing employs more than 156,000 people worldwide, with the largest concentration in Washington. More than 60,000 Boeing workers are in Washington, mostly in greater Seattle, where the company maintains its main manufacturing hub. - Bisnow | Dees Stribling URL: https://lnkd.in/dFA9ee5r #realestate #commercialrealestate #workfromhome #returntooffice