Business
Luxury Rental Buildings Take ‘Working From Home’ to the Next Level
When Christopher Dossman and his spouse, Yao Li, had been in search of an condo in New York final yr, they compiled the standard checklist of preferences: washer/dryer, proximity to a grocery retailer, subway entry. However a high precedence for them was a work-from-home area.
In April, the couple moved into the Willoughby, a 34-story tower in Downtown Brooklyn, paying $4,300 a month for a one-bedroom. The constructing is unfinished, however they selected it as a result of it offered a vital amenity: a co-working area on the twenty second ground that features semiprivate banquettes and a convention room with a view of Fort Greene Park.
“On daily basis I’m up there,” mentioned Mr. Dossman, an entrepreneur who has based a number of tech start-ups. “There are some days I don’t depart the constructing in any respect.”
As company America adapts to worker requests for flex schedules, Mr. Dossman is a part of a rising variety of employees who wish to work remotely, however not essentially from their front room couches or kitchen tables.
The pandemic pressured an exodus of employees from workplaces in 2020. Whilst workplaces reopen, 59 p.c of workers are nonetheless working remotely, based on a survey launched earlier this yr by the Pew Analysis Heart. Amongst these distant employees, 78 p.c say they wish to proceed to take action after the pandemic, up from 64 p.c two years earlier.
Builders throughout the nation are doing what they’ll to make distant work extra handy to lure potential tenants, setting off an facilities struggle as luxurious rental buildings and condos dangle must-have conveniences like non-public workplaces, convention rooms, job lighting, wall-mounted screens, podcasting cubicles and high-speed web.
“It’s one thing you need to do in the present day; it’s an amenity, like a pool,” mentioned Ric Campo, the chief government and chairman of Camden Property Belief, which included a piece area referred to as the Hub within the frequent space at Camden Harbor View, a residential growth in Lengthy Seaside, Calif.
At most buildings, the price of the work areas is included within the lease, however some landlords cost a payment to order a room for a big assembly or an prolonged interval. Co-working corporations like Industrious and WeWork are starting to take discover, hoping to not get edged out of what might turn into a profitable market.
Builders have been including area to flats for years as architects design bedrooms and alcoves that may accommodate desks and different work tools, a development that has solely accelerated within the pandemic. The dimensions of the typical new condo has elevated 9.6 p.c because the begin of the pandemic in contrast with these delivered within the 10 years earlier than the pandemic, mentioned Matt Vance, a senior economist for the true property companies agency CBRE. The rise is the same as an additional 90 sq. toes, or the dimensions of a bed room or work area.
He added that the demand for work areas has prolonged to frequent areas, too. “Over the past decade, now we have had cybercafes with cubicles and low machines, shared areas in condo buildings,” he mentioned.
However as Individuals settle right into a hybrid work mannequin, they’re looking for extra skilled areas the place they’ll maintain a non-public Zoom name or collect purchasers for a presentation with out heading into the workplace.
“Folks have excessive expectations,” mentioned John G. Weigel, a senior growth government at DivcoWest, an actual property companies agency. “We’re incentivized to ensure that is as strong as it may be.”
DivcoWest’s portfolio consists of Park 151, a 20-story multifamily complicated in Cambridge, Mass., set to open this fall with 468 flats and a typical space that can embody 5 devoted work-from-home areas and convention rooms.
“It’s a good portion of our amenity bundle, and it has gotten bigger,” Mr. Weigel mentioned. “Now that the viability of working from dwelling has been confirmed, we are going to see extra of this.”
Different builders are switching gears halfway via building. At Brooklyn Crossing in Prospect Heights, Thomas Brodsky, a associate on the family-run growth agency Brodsky Group, scrapped plans for an open lounge and added semiprivate cubicles and “telephones cubicles” as a substitute to the constructing’s co-working area, scheduled to open in August.
And the developer Macklowe Properties beefed up the expertise at One Wall Avenue, a condominium in downtown Manhattan, including microphones and cameras for digital conferences and cubicles for podcasting to its co-working area, now branded One Works by One Wall Avenue, mentioned Richard Dubrow, the agency’s director of promoting.
The elevated curiosity in work-from-home areas comes as firms grapple with their shrinking workplace footprint. Metropolitan areas with the next share of workers working from dwelling had increased workplace emptiness charges from the top of 2019 to the top of 2021, in accordance a report launched in Might by Moody’s Analytics.
Actual property watchers say the idea has legs and, if managed correctly, could possibly be profitable in the long term.
“There’s such sturdy demand from multifamily residences for this area that we predict it’s going to be a sticky development,” Mr. Vance of CBRE mentioned.
The mannequin could possibly be expanded in increased density areas to incorporate the encircling group, mentioned Thomas LaSalvia, a senior economist at Moody’s Analytics. “It doesn’t must be the residents of that condo constructing utilizing that area; it could possibly be neighbors,” he mentioned.
That bigger imaginative and prescient has drawn curiosity from Industrious, a office supplier that has 150 areas in 65 cities worldwide. “There are beginning to be builders that wish to create a posh that companies the tenants and the skin world,” mentioned Jamie Hodari, the chief government and a co-founder of the corporate.
He pointed to Monrovia, Calif., the place AvalonBay Communities, an actual property funding belief that owns a stake in 296 condo communities, is renting non-public work areas on the bottom ground of its condo complicated to residents and most people below a model referred to as Second House Work Suites.
Mr. Hodari added that various massive condo homeowners had reached out to his agency a few partnership. “We’re fairly near an announcement with considered one of them,” he mentioned.
Tenants have quite a lot of causes to search for a “third area,” a communal space distinct from dwelling and the workplace. Their dwelling workplace could also be too small or have too many distractions or not look skilled sufficient for an vital digital name with purchasers.
And a few, like Mr. Dossman, might have a partner who additionally desires to make money working from home.
“Most of my work is speaking to different folks,” he mentioned. “It wouldn’t work if we had calls on the similar time.”
The additional advantage of a work-from-home area has pressured some tenants to re-evaluate how a lot room they want in their very own flats.
Amina AlTai, a profession and enterprise coach, was drawn to One South First, a luxurious constructing in Brooklyn’s Williamsburg neighborhood, due to its work-from-home area, which incorporates two non-public convention rooms and a bigger boardroom. She reluctantly took a studio condo within the constructing as a result of nothing else was out there, however when a one-bedroom opened up, she realized she didn’t want it.
“That amenity area is superb,” she mentioned. “I exploit it not less than twice a month.”
For Ms. AlTai, the area allowed her to renew in-person conferences, a vital a part of her enterprise that was lower off within the pandemic. She had tried typical co-working areas, however mentioned the standard was inconsistent. At One South First, she pays $100 for a four-hour rental of a non-public room the place she will place her consumer in a chair searching over Domino Park and the East River.
“Generally there are some experiences that can’t be translated via the display,” she mentioned.
These areas can assist tenants lower different month-to-month prices, too, together with transportation and eating out. “If I’m not commuting, I’m saving $100 a month,” Mr. LaSalvia of Moody’s mentioned.
However one of the vital neglected advantages is one thing an condo alone can’t present, one which many employees are looking for after two years of distant work: a social expertise. “It creates a extra communal vibe,” Mr. Vance mentioned.
On the Willoughby, Mr. Dossman and Ms. Li have gotten to know their neighbors via social occasions like happy-hour mixers and wine-tastings within the work-from-home area. The expertise impressed him and a pal to arrange a gathering with different start-up founders in New York, saying it will value $250 an hour to host an occasion within the constructing.
“We checked out a pair completely different locations for occasions, and it’s approach cheaper than a bar,” he mentioned. “It is a good place to be and it’s getting higher.”
The federal government sued Southwest Airlines on Wednesday, accusing the airline of harming passengers who flew on two routes that were plagued by consistent delays in 2022.
In a lawsuit, the Transportation Department said it was seeking more than $2.1 million in civil penalties over the flights between airports in Chicago and Oakland, Calif., as well as Baltimore and Cleveland, that were chronically delayed over five months that year.
“Airlines have a legal obligation to ensure that their flight schedules provide travelers with realistic departure and arrival times,” the transportation secretary, Pete Buttigieg, said in a statement. “Today’s action sends a message to all airlines that the department is prepared to go to court in order to enforce passenger protections.”
Carriers are barred from operating unrealistic flight schedules, which the Transportation Department considers an unfair, deceptive and anticompetitive practice. A “chronically delayed” flight is defined as one that operates at least 10 times a month and is late by at least 30 minutes more than half the time.
In a statement, Southwest said it was “disappointed” that the department chose to sue over the flights that took place more than two years ago. The airline said it had operated 20 million flights since the Transportation Department enacted its policy against chronically delayed flights more than a decade ago, with no other violations.
“Any claim that these two flights represent an unrealistic schedule is simply not credible when compared with our performance over the past 15 years,” Southwest said.
Last year, Southwest canceled fewer than 1 percent of its flights, but more than 22 percent arrived at least 15 minutes later than scheduled, according to Cirium, an aviation data provider. Delta Air Lines, United Airlines, Alaska Airlines and American Airlines all had fewer such delays.
The lawsuit was filed in the United States District Court for the Northern District of California. In it, the government said that a Southwest flight from Chicago to Oakland arrived late 19 out of 25 trips in April 2022, with delays averaging more than an hour. The consistent delays continued through August of that year, averaging an hour or more. On another flight, between Baltimore and Cleveland, average delay times reached as high as 96 minutes per month during the same period. In a statement, the department said that Southwest, rather than poor weather or air traffic control, was responsible for more than 90 percent of the delays.
“Holding out these chronically delayed flights disregarded consumers’ need to have reliable information about the real arrival time of a flight and harmed thousands of passengers traveling on these Southwest flights by causing disruptions to travel plans or other plans,” the department said in the lawsuit.
The government said Southwest had violated federal rules 58 times in August 2022 after four months of consistent delays. Each violation faces a civil penalty of up to $37,377, or more than $2.1 million in total, according to the lawsuit.
The Transportation Department on Wednesday also said that it had penalized Frontier Airlines for chronically delayed flights, fining the airline $650,000. Half that amount was paid to the Treasury and the rest is slated to be forgiven if the airline has no more chronically delayed flights over the next three years.
This month, the department ordered JetBlue Airways to pay a $2 million fine for failing to address similarly delayed flights over a span of more than a year ending in November 2023, with half the money going to passengers affected by the delays.
California government’s plan to phase out heavy-duty diesel trucks and diesel locomotives has been derailed.
The ambitious plan aimed at reducing local pollution and global greenhouse gases required special waivers from the federal government. The Biden administration hadn’t granted the waivers as of this week, and rather than face almost certain denial by the incoming Trump administration, the state withdrew its waiver request.
That means the far-reaching regulations issued by the California Air Resources Board in 2022 to ban new diesel truck sales by 2036 and force fleet owners to take them off the road by 2042 won’t be enforced. Known as the Advanced Clean Fleets rule, the idea was to replace those trucks with electric and hydrogen-powered versions, which dramatically reduce emissions but are currently two to three times more expensive.
“While we are disappointed that U.S. EPA was unable to act on all the requests in time, the withdrawal is an important step given the uncertainty presented by the incoming administration that previously attacked California’s programs to protect public health and the climate and has said will continue to oppose those programs,” CARB Chair Liane Randolph said in a prepared statement.
Environmentalists reacted with deep disappointment.
“To meet basic standards for healthy air, California has to shift to zero-emissions trucks and trains in the coming years. Diesel is one of the most dangerous kinds of air pollution for human health,” Paul Cort, director of Earthjustice’s Right to Zero campaign, said in a prepared statement. “We’ll be working tirelessly in the coming years — and calling on Gov. [Gavin] Newsom, state legislators, and our air quality regulators to join us — to clean up our freight system and fix the mess [U.S.] EPA’s inaction has created.”
The trucking industry is pleased at the result, but hopes to continue working with California on environmental issues.
“This rule was flawed, and was not reflective of reality,” said Matt Schrap, chief executive at the Harbor Trucking Assn. “Ideally this is an opportunity to take a step back and look at a program that would be more sustainable.”
Trucking representatives had filed a lawsuit to block the rules, arguing they would cause irreparable harm to the industry and the wider economy. Train operators said no zero-emission locomotives exist on the commercial market.
Schrap said “the most important thing is the EPA could have issued the waiver and they didn’t.”
The EPA said it acknowledges California’s withdrawal of the waiver requests “and as a result is taking no further action on CARB’s prior requests and considers these matters closed.”
President-elect Donald Trump is a champion of the fossil fuel industry, making it unlikely that his administration would have approved the California waivers. The state could, however, pursue waivers at some point in the future.
Under the federal Clean Air Act, California is allowed to set its own air standards, and other states are allowed to follow California’s lead. But federal government waivers are required. Most of California’s waivers have been granted, including approval in December of a California ban on new sales of gas-powered cars and light trucks by 2035.
Bezos, Zuckerberg and Coke at the inauguration
Corporate America had already raced to donate big sums to Donald Trump’s record-breaking inaugural fund. Now some of its leaders appear eager to jockey for prominent positions at the inauguration next week.
It’s a new reminder that for some of the nation’s biggest businesses, forging close ties to a president-elect who is promising hard-hitting policies like tariffs is a priority this time around.
Jeff Bezos and Mark Zuckerberg are expected to be on the inauguration dais, according to NBC News, alongside Elon Musk and several cabinet picks.
The presence of Musk isn’t a surprise, given the Tesla chief’s significant support of and huge influence over Trump. But the other tech moguls have only more recently been seen as supporters of the administration. (Indeed, Bezos frequently sparred with Trump during his first presidential term.)
It’s the latest effort by Bezos and Zuckerberg to burnish their Trump credentials. At the DealBook Summit in December, Bezos — whose Amazon has faced scrutiny under the Biden administration and whose Blue Origin is hoping to win government rocket contracts — said that he was “very hopeful” about Trump’s efforts to reduce regulation.
And Zuckerberg recently announced significant changes to Meta’s content moderation policy, including relaxing restrictions on speech seen as protecting groups including L.G.B.T.Q. people that won praise from Trump and other conservatives. On the inauguration front, Zuckerberg is also co-hosting a reception alongside the longtime Trump backers Miriam Adelson, Tilman Fertitta and Todd Ricketts.
Both tech moguls have visited Mar-a-Lago since the election, with Zuckerberg having done so more than once.
Coca-Cola took a different tack. The drinks giant’s C.E.O., James Quincey, gave Trump what an aide called the “first ever Presidential Commemorative Inaugural Diet Coke bottle.”
More broadly, business leaders want a piece of the inauguration action. The Times previously reported that the Trump inaugural fund had surpassed $170 million, a record, and that even major donors have been wait-listed for events.
Others are throwing unofficial events around Washington, including an “Inaugural Crypto Ball” that will feature Snoop Dogg, with tickets starting at $5,000, The Wall Street Journal reports.
It’s a reminder that C.E.O.s are reading the room, and preparing their companies for a president who has proposed creating an “External Revenue Service” to oversee what he has promised will be wide-ranging tariffs.
David Urban, a longtime Trump adviser who’s hosting a pre-inauguration event, told The Journal, “This is the world order, and if we’re going to succeed, we need to get with the world order.”
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In other Trump news: The president-elect is expected to appear via videoconference at the World Economic Forum in Davos, Switzerland, which starts on Inauguration Day, according to Semafor.
HERE’S WHAT’S HAPPENING
Investors brace for the latest inflation data. The Consumer Price Index report, due out at 8:30 a.m. Eastern, is expected to show that inflation ticked up last month, most likely because of climbing food and fuel costs. Global bond markets have been rattled as slow progress on slowing inflation has prompted the Fed to slash its forecast for interest rate cuts.
More Trump cabinet picks will appear before the Senate on Wednesday. Senator Marco Rubio of Florida, the choice for secretary of state, is expected to field questions about his views on the Middle East, Ukraine and China, but is expected to be confirmed. Russell Vought, the pick to run the Office of Management and Budget, will most likely be asked about his advocacy for drastically shrinking the federal government, a key Trump objective. And Sean Duffy, the Fox Business host chosen to lead the Transportation Department, will probably face questions on how he would oversee matters including aviation safety and autonomous vehicles, the latter of which is a priority for Elon Musk.
Meta plans to lay off another 5 percent of its employees. Mark Zuckerberg, the tech giant’s C.E.O., told staff members to prepare for “extensive performance-based cuts” as the company braces for “an intense year.” The social media giant faces intense competition in the race to commercialize artificial intelligence.
A new bill would give TikTok a reprieve from a ban in the United States. Senator Ed Markey, Democrat of Massachusetts, said he planned to introduce the Extend the TikTok Deadline Act, which would give the video platform 270 additional days to be divested from its Chinese parent, ByteDance before being blacklisted. It’s the latest effort to buy TikTok time, as the app faces a Jan. 19 deadline set by a law; President-elect Donald Trump has opposed the potential ban as well.
A question of succession
JPMorgan Chase and BlackRock, the giant money manager, just reported earnings. (In short: Both handily beat analyst expectations.)
But the Wall Street giants are likely to face questioning on a particular issue on Wednesday: Which top lieutenants are in line to replace their larger-than-life C.E.O.s, Jamie Dimon and Larry Fink.
Who’s out:
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Daniel Pinto, who had long been Dimon’s right-hand man, said he would officially drop his responsibilities as JPMorgan’s C.O.O. in June and retire at the end of 2026. Jenn Piepszak, the co-C.E.O. of the company’s core commercial and investment bank, has become C.O.O.
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And Mark Wiedman, the head of BlackRock’s global client business and a top contender to succeed Fink, is planning to leave, according to news reports.
What Wall Street is gossiping about JPMorgan: Even in taking the C.O.O. role, JPMorgan said that Piepszak wasn’t interested in succeeding Dimon “at this time.” DealBook hears that while she genuinely appears not to want to pursue the top job, the phrasing covers her in case she changes her mind.
For now, that means the most likely candidates for the top spot are Marianne Lake, the company’s head of consumer and community banking; Troy Rohrbaugh, the other co-head of the commercial and investment bank; and Doug Petno, a co-head of global banking.
The buzz around BlackRock: Wiedman reportedly didn’t want to keep waiting to succeed Fink and is expected to seek a C.E.O. position elsewhere. (So sudden was his departure that he’s forfeiting about $8 million worth of stock options and, according to The Wall Street Journal, he doesn’t have another job lined up yet.)
Fink said on CNBC on Wednesday that Wiedman’s departure had been in the works for some time, with the executive having expressed a desire to leave about six months ago.
Other candidates to take over for Fink include Martin Small, BlackRock’s C.F.O.; Rob Goldstein, the firm’s C.O.O.; and Rachel Lord, the head of international.
But Dimon and Fink aren’t going anywhere just yet. Dimon, 68, said only last year that he might not be in the role in five years. And Fink, 72, said in July that he was working on succession planning: “When I do believe the next generation is ready, I’m out.”
The S.E.C. gets in a final shot at Musk
Another battle between Elon Musk and the S.E.C. erupted on Tuesday, with the agency suing the tech mogul over his 2022 purchase of Twitter.
It’s unclear what happens to the lawsuit once President-elect Donald Trump, who counts Musk as a close ally, takes office. But the agency’s reputation as an independent watchdog may be at stake.
A recap: The S.E.C. accused Musk of violating securities laws in his $44 billion acquisition of the social media company.
The agency said that Musk had failed to disclose his Twitter ownership stake for a pivotal 11-day stretch before revealing his intentions to purchase the company. That breach allowed him to buy up at least $150 million worth of Twitter shares at a lower price — to the detriment of existing shareholders, the agency argues.
The S.E.C. isn’t just seeking to fine Musk. It wants him to pay back the windfall. “That’s unusual,” Ann Lipton, a professor at Tulane Law School, told DealBook.
Alex Spiro, Musk’s lawyer, called the latest action a “sham” and accused the agency of waging a “multiyear campaign of harassment” against him.
The showdown sets up a tough question for the S.E.C. Will Paul Atkins, the president-elect’s widely respected pick to lead the agency, drop the case? Such a move could call the bedrock principle of S.E.C. independence into question.
Jay Clayton, who led the agency during Trump’s first term, earned the respect of the business community for running it in a largely drama-free manner. It was under Clayton that the S.E.C. sued Musk over his statements about taking Tesla private.
Musk, who is set to become Trump’s cost-cutting czar and is expected to have office space in the White House complex, has called for the “comprehensive overhaul” of agencies like the S.E.C. The billionaire said he would also like to see “punitive action against those individuals who have abused their regulatory power for personal and political gain.”
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In related news: The Consumer Financial Protection Bureau sued Capital One, accusing it of cheating its depositors out of $2 billion in interest payments.
THE SPEED READ
Deals
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DAZN, the streaming network backed by the billionaire businessman Len Blavatnik, is closing in on funding from Saudi Arabia’s sovereign wealth fund as the kingdom continues to expand its sports footprint. (NYT)
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The Justice Department sued KKR, accusing the investment giant of withholding information during government reviews for several of its deals. KKR filed a countersuit. (Bloomberg)
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OpenAI added Adebayo Ogunlesi, the billionaire co-founder of the infrastructure investment firm Global Infrastructure Partners, to its board. (FT)
Politics and policy
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We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.
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