News & Insights

Home » News & Insights » Silicon Valley’s moves to NYC and REIT trouble in the Golden State

Silicon Valley’s moves to NYC and REIT trouble in the Golden State

Finance and Securities, NYC, Other, Real Estate Developments

In a move that had already been widely telegraphed, Facebook confirmed that it will lease 1.5 million square feet of office space in the Hudson Yards development across three different buildings, equivalent to approximately 30 floors. The company already leases just over a million square feet across two other locations in Manhattan, and spokespeople for Facebook have yet to confirm how many total employees will work across the New York offices, although an increase of the existing number of workers is all but certain. [1]

Across the East River in Queens, Long Island City continues to see rapid development and price increases for real estate despite the back and forth between the city and Amazon over the location’s future as a major site of offices for the tech giant. Observers note the neighborhood was already seeing major investment and changes prior to Amazon’s announcement, and that such investment continued more or less unabated after the mooted project was shelved. Regardless of whether or not Amazon eventually makes a move to the area, developers and zoning authorities remain locked in conflicts over the extent and character of ongoing redevelopments. [2]

Finally, The Real Deal reported last month that one of the major losers from the flurry of changes to rent laws in California as well as New York have been REITs, or real estate investment trusts. These firms, which bundle up ownership of commercial and/or residential real estate, face rent control and fee limits as a threat to the core of their business model, where the ability to generate returns could very well be hamstrung by limits to annual increases. One large firm, Equity Residential, estimates that 70 percent of its portfolio is subject to California’s new cap. How this will affect investment patterns and the shape of the broader market remains to be seen, although as we have noted further legal protections for tenants appear more likely than not given the national zeitgeist. [3]

[1] Chung, J. (November 2019) Facebook Will Lease 1.5 Million Square Feet At Hudson Yards from Gothamist Accessed November 15 2019

[2] Plitt, A. (November 2019) The state of Long Island City real estate, one year after Amazon from Curbed NY Accessed November 15 2019

[3] Kromrei, G. (October 2019) Equity Residential decries rent control’s “chilling effect” on development from The Real Deal Accessed November 15 2019

Recent Posts

Impact of Shorter COVID-19 Quarantine on Workplaces

On Monday, the CDC announced changes to its recommended isolation and quarantine time from 10 days to 5 days for asymptomatic people with COVID-19. They recommend that people leaving isolation after 5 days continue to wear a mask for the following 5 days. The CDC also...

Restaurants Sue Over Vaccine Mandate

Restaurant operators sued Mayor Bill de Blasio and New York City over Key to NYC, the new indoor vaccine mandate program, on August 17-the same day the mandate went into effect. A group of restaurants in Staten Island, through the Independent Restaurant Owners...

Financial Regulators’ New Target: Social Media Influencers and SPACs

The Financial Industry Regulatory Authority (“FINRA”) will conduct three new regulatory sweeps in an effort to combat various activities causing extreme fluctuations in the financial markets. FINRA has chosen to target special purpose acquisition companies (“SPACs”),...

Does WARN Apply to Virus Closures?

Enterprise, in Benson et al. v. Enterprise Leasing Co. of Florida LLC et al., has tried to argue that the Worker Adjustment and Retraining Notification Act (“WARN”), through its natural disaster exception, does not apply to closures caused by COVID-19. Two Florida...