Brief : New York’s Financial District is suffering as a glut of office space builds with the pandemic keeping workers home. JPMorgan Chase & Co. is the latest high-profile tenant to look for an exit from the neighborhood, a historic part of lower Manhattan that is home to the New York Stock Exchange and Federal Reserve. S&P Global and Fitch Ratings Inc. are also marketing big blocks of offices, driving an 80% surge in the amount of sublease space available. That’s more than double the rate in Midtown, according to data from CoStar Group Inc. “The sublet spaces currently on offer at deeply discounted rates is a veritable flood of biblical proportions, with more likely to come online soon,” said Ruth Colp-Haber, chief executive officer of brokerage Wharton Property Advisors. Manhattan’s office market has taken a big hit in the past year, with the pandemic emptying out skyscrapers and pushing cost-conscious companies to reconsider how much space they need after months of remote working. In Midtown, where there’s been a 36% increase in sublease space, roughly 18% of office space is currently available, either because it’s empty or a company is trying to unload it. There’s a similar amount space for rent in lower Manhattan. The area had been clawing its way back after being battered by the 9/11 terrorist attacks and the global financial crisis. In 2011, when the magazine publisher Conde Nast announced a move to the rebuilt World Trade Center from Times Square, it was a pivotal moment in the bid to draw companies downtown.
Brief: Most companies in the U.K. will ask employees to return to the office after the pandemic because working from home hurts productivity, a Bank of England policy maker said. Jonathan Haskel, a member of the central bank’s monetary policy committee, said information and communications technology is the only industry that indicating that staff can get more done from home. He analyzed data from an Office for National Statistics survey. “A net balance of firms across the vast majority of industries does not intend to use home working as a permanent feature,” Haskel said in a webinar on Friday. “It’s likely that the majority of industries will return to the workplace when the pandemic restrictions are lifted, lessening the impact of structural change from this quarter.” The remarks help explain why more people are traveling to work during the U.K.’s third national lockdown. Almost half of people reported leaving home for jobs at least once this week, reducing the portion of home working over the past few weeks. The number of people in offices now is similar to what it was in June when pandemic rules were looser. Prime Minister Boris Johnson plans to slowly loosen restrictions through the middle of the year, starting with reopening schools on March 8. He’s urged people to stick to the rules until the rules are loosened.
Brief: While both the European Union and China are committed to moving ahead with "vaccine passports," a government-mandated system for citizens to prove they’ve been inoculated against COVID-19 could be complicated to carry out in the U.S. because of privacy, equality, and practical concerns. This week, European Commission president Ursula von der Leyen said the EU would propose a “digital green pass” for EU citizens. China’s government said it intended to develop a certification program for citizens to show proof of vaccination or negative test results. And in February, Israel initiated its “Green Badge” system to exclude non-vaccinated individuals from certain activities. While some experts say there's a chance the U.S. government could pull off a successful and legal certification scheme, data privacy and anti-discrimination hurdles, as well as technical ones, could make a federal vaccine passport system tough to impose on Americans.
Brief: U.S. insurers are strengthening language in policies that cover business losses to protect them from future claims related to the coronavirus pandemic or other widespread illnesses that disrupt operations, industry sources say. New policies and renewals now define terms like “communicable disease” or “microorganism” – something existing policies often lacked, and which led to a flood of lawsuits that insurers have so far largely won. An exclusion drafted by the Lloyd’s Market Association, for example, says insurers will not cover any claim “directly or indirectly arising out of, attributable to, or occurring concurrently or in any sequence with a Communicable Disease.” Another, used by Farmers Mutual Hail Insurance Company of Iowa, excludes losses from even the “fear or threat” whether “actual or perceived” of a communicable disease or “any action in controlling, preventing, suppressing” it.
Brief: BentallGreenOak has raised 869 million euros ($1 billion) for its latest European real estate debt fund as the private equity firm muscles in on property lending amid a retreat by banks. The fund, which started raising cash before the onset of the pandemic, exceeded its initial target of 800 million euros, according to a statement Thursday. It issues loans secured against offices, warehouses and homes in Germany, the Netherlands, the Nordics and Ireland. “Post-Covid we have faced a lot less bank competition on the lending side,” said Jim Blakemore, a London-based managing partner and global head of debt. “This is a good market to be a lender in today.” The outbreak prompted banks to make hefty provisions for soured loans as widespread lockdowns threatened borrowers’ rent collections and their ability to repay loans. That’s diminished their appetite for new real estate lending, particularly to malls, stores and hotels that have seen their income wiped out. Non-bank lenders have spied an opportunity to step in and back investors seeking to reinvent those impaired properties. GreenOak Europe Secured Lending Fund II has so far lent 382 million euros, the statement said. The eight loans agreed to date have been for properties in the Netherlands and Ireland.
Brief: Energy hedge fund Deep Basin Capital LP is returning capital to investors after retail traders drove market volatility to extreme levels, overwhelming the fund’s positions, according a letter to investors reviewed by Bloomberg News. “I do not believe that risk markets are functioning properly and am deeply concerned about the immediate investment climate,” Matthew J. Smith, managing partner of the Stamford, Connecticut-based fund, wrote in the letter. “Further, the market structure has changed and become more dangerous in ways that at this point are difficult to quantify and understand, and I cannot fully study these changes while taking risk with partner capital,” he wrote. Hedge funds have struggled to make money for much of the last decade as equity markets surged, and there have been more hedge funds closures than launches since 2014, according to Hedge Fund Research. During the first three quarters of 2020, 619 funds shut compared with 364 that opened. Stock rallies driven by retail investors caused pain for short sellers this year, with funds like Melvin Capital Management and Maplelane Capital losing billions during January’s GameStop Corp. short squeeze. Melvin made up for some of its losses after gaining 22% in February. A spokesperson for Deep Basin declined to comment. An influx of retail traders weighed on the fund’s stock picks, with retail flows in stocks and options exceeding 50% of the daily volumes in Deep Basin’s positions.