Look no further than one of the biggest commercial real estate developers in New York City to see how the retail and office industries are being impacted by the coronavirus pandemic.
“Retail is obviously struggling,” Related Companies Chief Executive Jeff Blau told CNBC’s “Squawk Box” Thursday.
The owner of the Hudson Yards mall as well as The Shops at Columbus Circle in the Time Warner Center building in New York City said Related is collecting just over 50% of retail rents for its malls in Manhattan.
“We expect that will pick up post [re]opening,” he said.
The city has not yet set a date for when malls will be able to open for business again. But Blau said he is hopeful Related will be given the green light to reopen Hudson Yards and The Shops at Columbus Circle as early as next week. Other malls in the city include Westfield World Trade Center and Brookfield Place. Gov. Andrew Cuomo has allowed malls in other parts of New York state to welcome shoppers again, with added precautions.
Hudson Yards, which opened roughly one year ago, is already losing Neiman Marcus as its one department store anchor tenant, and has yet to name what will move in that space. Some restaurants at the mall are also shutting permanently.
Related is also a major office landlord. Blau earlier this week penned an op-ed in the Wall Street Journal calling for New York City offices to reopen.
“This is about bringing New York back to life,” he told CNBC Thursday. “The city doesn’t recover by itself.”
In a post-Covid-19 world, Blau said he envisions office buildings being “less dense,” with people spread out over more buildings. Working-from-home should only be an option for portions of time, he said, not all the time.
“Innovation only happens when people are together,” he said. “I don’t think the demand of office space is going away.”