Property and Business
May 6, 2021
Each year I fly to New York, San Francisco, Omaha and a new USA city so that I can see first hand what is happening in the world of business and real estate in the largest economy. In 2020, like everyone I was grounded by the pandemic and I am not sure when I will be free to go again. The good news is that I’ve got the right people in key places and I can continue my learnings of some of the most significant global cities. I’m keen to compare this knowledge to our cities in Australia so that I can identify common trends and convey these to our clients.
When it comes to workplace trends the IT industry in the USA has seized on space as a way of attracting and retaining staff and building culture. In Australia, that goal is common however cost savings are also important and hence we see less space per person in Australian cities. This might help explain why the vacancy factor in New York (Manhattan) is 17.3% and much higher than Sydney’s 8.6%. Note, both numbers are significant increases on the pre COVID-19 vacancy factor. Although I can’t help feeling sorry for northern hemisphere countries where 90% of the world’s population lives. It really means that countries in the southern hemisphere are less affected by the pandemic and able to enjoy the benefits of isolation. Island countries like Australia, Taiwan, Singapore and New Zealand have a significant advantage as they share no borders.
For 2020, 2021 and probably 2022 the pandemic has cruelled travel however I thought I would report vicariously through the lens of my network, which comprises lots of professional eyes. I’ve called this series of stories, “Through Networked Eyes”.
San Francisco is about US business and is dominated by technology companies which are driving the US economy whilst New York is about global capital and real estate. Omaha is where Warren Buffett lives and where Berkshire Hathaway is headquartered. The Annual Meeting is held in early May which I have attended in the past three years. On Tuesday I reported on that meeting on Linkedin as USA 2021 #1 Business – Berkshire Hathaway Annual Meeting review. That’s where Charlie Munger and Warren Buffett espouse their views on investing to a hoard of investor spectators. I then investigate a new city each year like I’ve done with Boston, Washington and Chicago to learn more about business generally within USA. All are exciting markets and I am fortunate to have my loyal colleagues, Joey Vlasto in New York and Mark Sullivan in San Francisco, both at Newmark Knight Frank to guide me. In addition I have my own established network of friends and colleagues. It’s the best experience for learning each year. I’m lucky to have a network of Newmark Knight Frank real estate people and very fortunate to have made longstanding friendships with my colleagues.
Finally wealth, tracking wealth and the habits of the wealthy are important. This might seem crass but wealth changes markets. It is the combination of investment confidence, government policy and development which combine to create progress in the built environment. Wealth is also about creating prime property and I find this fascinating. Having an idea or even a vision about change is wonderful but it doesn’t become real without financial support and changes to existing policy.
When I tour Hudson Yards on NY’s westside I can turn my mind to Sydney’s Barangaroo or Melbourne’s Docklands and I can appreciate the challenge of the change and the value of the outcomes. I can also see the small but important differences but I really appreciate the impact of the final product, especially if it sets a new standard. How often have I advised local investors to upscale their investment in a secondary business market by way of design, amenity or environmental sustainability rather than produce a new version of a secondary product. It is usually only the wealthy investors/developers that will listen to this message. Most will follow the past which is why we have so many safe, convenient and satisfactory outcomes and rarely much which is unique.