Commercial Real Estate takes massive hit due to Remote Working

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So I’m doing my homework this morning and I see a column and I’m like, holy shnikes. I talked about this yesterday on the program. But the interesting thing is, I finally have seen a real estate investor, a massive group out there that is not lying. They’re actually telling the truth for the first time in a long time. You know how I love to make fun of real estate companies and real estate agents from time to time because they’re hard to find actually good ones. But…

This was actually in the Wall Street Journal talking about Vernado, or Vornado, however you want to pronounce it. Again, they’re a major commercial real estate, and a myriad of different things that they’re involved with. And what they’re doing in New York City in and around Penn Station. Now, Penn Station talked about this, okay? Hub, major station.

expanding it, also people from Westchester get in, but primarily it is Amtrak, New Jersey, Long Island coming in. Okay. And the guy came out and said, and again, I’m going to say this is, this is their head of their company, Steven Roth, their chairman, New York’s chairman. Um, he told their investors that Friday office work is dead forever. And Monday is touch and go. This is.

Fernando, Fernando. He believes workers will continue to commute a few days a week, so long as it is an easy journey. He calls the train rides of Penn Station a one seat commute because office employees won’t need to take the subway to their offices. Holy crap, yeah, we told you that yesterday here on the program and he’s right, he’s right. Again, they’re trying to build up in and around Penn Station at this point in time.

They’ve got, I think, rebuilt one pen and they did all sorts of renovations to it. And they’re actually charging, I think it’s $100 a square foot compared to the new office tower that has been put up near Grand Central Station there on Vanderbilt. I think that’s over $300 a square foot. But let’s take a look. Let’s take a look at Vornado’s share price since 2020. Whoa, hey, it’s a double diamond.

That’s a double diamond stock right now. It’s down near 80%. They just wrote down their Midtown Manhattan portfolio by 500 million and it’s suspended its dividend payments. They have been buying over the past couple of decades in and around Penn Station. More than 40% of their 20 million square foot office portfolio is in the neighborhood around Penn Station.

west side and they’re planning to build more. They also have plans for a hotel and apartment building near Penn Station. Again, this is a big bet, but it’s the only thing that they can do at this point in time. Again, they’re renovating Penn Station. However, you’re going to need massive, massive overhauls in the overall community. It’s a blighted area. It really is. It is a bad area.

The hotel, it’s an old hotel across the Pennsylvania hotel. They were just talking about that. That’s where they’re housing migrants at this point in time. I never forget this. Never forget this. I’m doing a radio row, radio row at the Republican National Convention, which was at Madison Square Garden, you know, right there at Penn Station, if you’re not familiar with New York. And this was 2004.

And they had a meeting there, you know, basically setting up what the setup was, how it was going to work, all the logistics for the RNC. And I go into that hotel and I was like, what a thrill. I mean, it was brutal, but that entire neighborhood is crap. I mean, it’s cheap. You know, they have these electronic stores all over Manhattan.

which are basically reselling stuff that people have stolen. It’s not a good area. A lot needs to be done in around that area if you’re gonna convince people to come back. Again, yes, $325 square foot that Vanderbilt, they’re one Vanderbilt compared to 100 bucks a square foot that they’re gonna be charging there. But yeah, good luck guys.

I mean, again, you know, it’s almost kind of like a, you know, a desperation shot at the end of a ballgame. What else are they going to do? Stocks down 80%. They’re taking the profits from one of their apartment towers. They’re not doing this with debt. They’re using the money that they’ve made. Um, but let’s, you know, Hudson yards, Hudson yards to another brand new complex right there. I know what’s going on.

there. I can. I find out very easily. I speak to the people that actually do the wiring and provide the internet services about Facebook was supposed to take massive, massive amount of space there in Hudson yards. Nobody’s going in. Nope. Empty. Empty over there. And they keep BSing everybody about telling everybody how spank and awesome it is. And you know, again, it’s the nature of real estate, the bullshitting.

that goes on in that business. I’m like, wait a second. I’m here at Christmas time. They got a little mall there and shopping is supposed to be great, but there’s nobody here. Yeah. Again, urban doom loop rolls on. Watchdog on wallstreet.com.