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  "documentTitle": "Empire State Realty Trust (ESRT)",
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  "authorName": "Jonathan Litt",
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  "presentationDate": "2020-05-06 00:00:00",
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  "notes": "The slide combines qualitative expert testimony from CEOs with quantitative historical vacancy data to frame a negative outlook for commercial real estate.",
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      "text": "As firms reduce headcount and cut costs to weather the recession, office real estate will be at the top of the list to shed, and the pandemic concerns will be a convenient scapegoat.",
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      "text": "Manhattan Office Vacancy Rate 1997-2020",
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      "text": "The Empire State Building observation deck, which generated nearly $100 million in 2019 or 25% of the company's net operating income, currently has essentially no revenue and will likely see listless demand until a vaccine is found. However, even then demand may be challenged as international travel/tourism will likely be among the slowest to rebound from the recession and new competition opens. Just a few blocks away at One Vanderbilt, a new state of the art observation deck from SL Green (NYSE: SLG), will surely pull out all the stops to ensure a successful launch.",
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      "text": "vacancy rate: +910 bps",
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      "text": "Empire State Realty Trust, the owner of the iconic Empire State Building, is getting hit from all sides.",
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      "text": "of bellwether financial firms (and two of New York City's largest office users), Blackrock and Morgan Stanley, have suggested these companies will need significantly less office space in the future.",
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      "text": "And, in early May, Bank of Montreal (BMO) echoed these comments, indicating that 80% of employees may switch to blended home-office work. BMO's Chief Human Resources Officer said, \"It allows us to look for new talent in locations where maybe we haven't before and tap into talent pools across the country.\" The reduction of the need to be in New York City to tap into the local talent pool is a major potential headwind.",
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      "text": "First, in mid-April, James Gorman, CEO of Morgan Stanley, stated that he expects his 90,000-person workforce to require \"much less real estate\" going forward as \"we've proven we can operate with no footprint.\" He envisions a future with many Morgan Stanley employees working from home, at least part of the time.",
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      "text": "Then Larry Fink, CEO of Blackrock, made a similar comment about the world needing less commercial office space, stating, \"I don't think any company's going to go back to 100% of the workforce in the office.\"",
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      "text": "\"much less real estate\" — James Gorman, CEO of Morgan Stanley; \"I don't think any company's going to go back to 100% of the workforce in the office.\" — Larry Fink, CEO of Blackrock; \"It allows us to look for new talent in locations where maybe we haven't before and tap into talent pools across the country.\" — BMO Chief Human Resources Officer",
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      "text": "Source: Citi, Cushman & Wakefield",
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