The New York Office Renaissance: Edward L. Shugrue III on Real Estate's Diverging Future
Edward L. Shugrue III, Managing Director at RiverPark Funds, believes that a resurgence in top-tier leasing activity and high-profile property sales suggests that a more nuanced and perhaps opportunistic landscape is taking shape. He offers expert insights, drawing from decades of experience navigating commercial real estate.
Shugrue is a seasoned voice in the field, with over 30 years of experience in the commercial real estate investing, lending, and restructuring sectors. As the Portfolio Manager of a fund comprised of floating rate commercial mortgage-backed securities (CMBS), a $1.8 trillion market, his view into market behavior is granular and strategic. His tenure includes leading roles in the restructuring of distressed assets, pioneering commercial mezzanine finance platforms, and overseeing investment strategies.
Known for his analytical rigor and operational expertise, Shugrue has also extended his impact to academic settings, where he has contributed case studies and lectured at leading universities. His foundation in public and private market investment allows him to assess cycles and capital flows with clarity.
That clarity is critical, especially in today's commercial real estate environment. The office market, particularly in dense urban centers like New York City, is undergoing a bifurcation. Shugrue has witnessed how the decline in office occupancy during the pandemic led many to believe the sector was in secular decline. He argues that such generalizations fail to capture the real story. "New York is far from dead," Shugrue says. "It's simply a tale of two cities, the top-tier assets that are thriving, and the others that are struggling."
Recent news backs this up. The Manhattan commercial office market received a welcome boost with the announced sale of 590 Madison Avenue to Scott Rechler's New York-based RXR. After fierce bidding from an array of well-heeled institutional investors including Tishman Speyer (the owner of Rockefeller Center), one of Manhattan's largest office landlords, SL Green Realty (NYSE: SLG), and global private equity giant Blackstone (NYSE: BX), RXR emerged on top with a price of nearly $1.1 billion. The interest and activity in the property is consistent with increased leasing activity in Manhattan (nearly 12 million square feet of signed leases in the first quarter of 2025) since reaching pandemic lows.
Formally known as the IBM Building, this one million square foot gleaming office tower sits prominently at 57th and Madison Avenue, sharing the same block as Tiffany & Co's flagship on Fifth Avenue. It boasts a roster of leading finance and investment firms, including Apollo Global Management (NYSE: APO), which recently signed a 100,000 square foot lease. Asking rents at the property are $190 per square foot.
The pending sale is noteworthy for multiple reasons. First, it's the largest sale in Manhattan since Google's acquisition of 550 Washington Street in 2022 for nearly $2 billion. Second, with only $5 billion of Manhattan office sales in 2024, this sale will be a significant contributor to 2025 sales levels. Third, the price translates to over $1,000 per square foot, which, while common pre-pandemic, hasn't been seen here for quite some time.
This transaction is on the heels of two large and noteworthy office transactions in 2024. First was the sale of an 11% stake in one of Manhattan's newest skyscrapers, One Vanderbilt, to the Mori Building Company of Japan at an implied valuation of $4.7 billion. Second was Tishman Speyer's $3.5 billion refinancing of their historic Rockefeller Center.
Additionally, the Paramount Group, Inc. (NYSE: PGRE) recently announced that it is seeking strategic alternatives to maximize shareholder value for its $8 billion portfolio of Class A office buildings in New York and San Francisco. With 11 Class A towers within New York City, many of which are in midtown on Sixth Avenue, interest is expected to be keen.
However, Shugrue notes that while the outlook and tone have been strong, the demand is sharply skewed. Class A properties, those offering premium amenities, prime locations, and modern infrastructure, are experiencing strong interest and competitive bidding. Meanwhile, Class B and C assets, those situated away from central business corridors, are languishing in foreclosure or trading at distressed values.
This divergence has become a defining characteristic of the market. "Some assets attract global capital and command prices exceeding $1,000 per square foot. Others, although they're just mere blocks away, are nearly abandoned." The industry expert states that this isn't only a matter of location but of a broader realignment in tenant expectations and investment strategy.
Shugrue has observed that the appetite remains strong for Class-A towers offering the right mix of quality, location, and technology. However, buildings that fail to meet these changing standards are being repositioned for alternative uses, most notably residential conversions. These projects signify a shift in how underperforming office assets can be reintegrated into urban spaces.
As the 590 Madison Avenue sale and recent robust New York City leasing activity demonstrate, big transactions are back in the Big Apple. However, unlike the pre-pandemic world, the tide is no longer lifting all boats equally. Edward Shugrue's insights are a reminder that discernment is the differentiator in a fractured market. The next wave of opportunity won't emerge from sweeping generalizations about the office market but from a disciplined understanding of where capital, tenants, and cities are headed.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
DW
an hour ago
- DW
Dior, Gucci and other luxury brands in crisis as sales slide – DW – 08/19/2025
The personal luxury fashion market is losing its luster. Recent sales figures show that the industry, which proved resilient after pandemic lockdowns, is slowing down. Is luxury finally going out of style? When athletes started to return their 2024 Paris Olympic medals after they began to corrode, it was an omen of things to come. The medals were designed by French jeweler Chaumet, which LVMH, a luxury goods giant, owns. Though the French mint produced the medals, LVMH suffered bad publicity after it made a spectacle of its corporate sponsorship of the games. Paris-based LVMH is not corroding, but it is not doing great either. In late 2022, the company's market value soared high enough to make Bernard Arnault, its founder and chairman, who controls about half of the company's shares, the wealthiest man in the world. Since then, its stock price has seen a notable drop. The conglomerate, which owns 75 brands like Louis Vuitton, Dior and jewelers Bulgari and Tiffany & Co., is suffering from slowing sales after a post-COVID boom. Half-year results released on July 24 show revenue down 4% compared with the same six-month period in 2024. Profits from recurring operations were down 15% and came to €9 billion ($10.5 billion). Sectors like wine, spirits, fashion and leather goods saw revenue and operating profits decline in the first half of the year. While its watches, jewelry, perfumes and cosmetics businesses remained stable. LVMH said the company "showed good resilience and maintained its powerful innovative momentum despite a disrupted geopolitical and economic environment." Demand in Europe was "solid" and "remained stable" in the US. LVMH is not the only one suffering. Kering, which is also based in Paris and owns Gucci, Bottega Veneta and Yves Saint Laurent, reported a significant decline in sales in the first half of the year. "Luxury is in a death spiral," predicted Katharine K. Zarrella in a December 2024 guest essay in the . "After a decade of nearly unfettered growth, the sector is bombing across the globe. Analysts point to less-affluent buyers reining in their spending and slowing demand in China." Zarrella, a longtime fashion editor, saw bad omens all around, like rising prices and poor quality. Beyond that, more brands are selling overstock at discount outlets. The more ubiquitous luxury becomes, the less desirable it is. "Once-revered establishments that prided themselves on craftsmanship, service and cultivating a discerning and loyal customer base have become mass-marketing machines that are about as elegant and exclusive as the Times Square M&M's store," she concluded. Uncertainty over tariffs is another headache for the industry. Currently, the Trump administration has put a 15% tariff on European Union goods and a 39% tariff on Swiss goods. This could have real consequences for the important US market. Many luxury goods are made in France or Italy, and many watches come from Switzerland. Generally, people spend more freely on personal luxury goods when they are optimistic about the future. But these tariffs could go up, go down or disappear. No one knows how trade talks will proceed, and many are likely to just wait and see. While some brands are doing fine in China, others are way down, says Imke Wouters, a partner at consultancy Oliver Wyman and a retail expert with 15 years of experience in China. Looking ahead, Wouters thinks the industry will see more moderate growth than in the recent past. "It's not like the high days when all luxury brands were doing well," she told DW. There will be winners and losers. US tariffs on European luxury goods won't impact Chinese buyers, but geopolitical uncertainty is keeping them closer to home. In the past, the Chinese bought around 40% of their luxury goods at home. As they rediscover mainland China, Wouters thinks around 75% is bought within the country. However, as the Chinese economy struggles, many aspirational shoppers have fallen away, and those left may be less eager to spend on luxury goods. To stay successful with the remaining Chinese shoppers, luxury companies have to double down on their core customers and the customer experience, says Wouters. They have to offer something unique and make sure price hikes reflect better quality. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video With many buyers holding back, the luxury goods industry could be facing its most significant setback since the 2008-2009 financial crisis, not counting the COVID shock, according to a new report by consultancy Bain & Company. Last year, luxury sales were down 1% globally, and this year, they have declined further. Bain analysts foresee a moderate decline of 2-5% for the industry by year's end, but they believe its prospects will be brighter in the future. "Rising global incomes, generational wealth transfers, and a projected 20% increase in the number of high-net-worth individuals will further expand the pool of potential luxury buyers," Claudia D'Arpizio and Federica Levato wrote in a press statement. But a bigger pool of shoppers is not enough, warned the pair. "Brands will need to rethink how they engage younger consumers, avoid over-reliance on top spenders, and build emotional connections that go beyond transactional loyalty."
Int'l Business Times
an hour ago
- Int'l Business Times
PlayStation Prices Rise As US Tariffs Bite
Sony on Wednesday said it is bumping up the price of PlayStation 5 video game consoles by $50 in the United States due to a "challenging economic environment." Tariffs imposed by President Donald Trump hike the cost of goods brought into the US, leaving companies like Japan's Sony to decide whether to pass that on to consumers. "Similar to many global businesses, we continue to navigate a challenging economic environment," Sony Interactive Entertainment vice president of global marketing Isabelle Tomatis said in a post. After initially being threatened with a 25 percent hike, Japan negotiated a 15 percent tariff with the Trump administration. "As a result, we've made the difficult decision to increase the recommended retail price for PlayStation 5 consoles in the US." The new price for PS5 will be $550, with a "Digital Edition" priced at $500 and a Pro version for $750, according to Tomatis. In May, Sony warned it was considering tweaking prices in the US, estimating that tariffs could wind up costing the company about $680 million in the fiscal year. American companies are feeling the crunch, too. New York-based cosmetics giant Estee Lauder recently estimated the impact of the new tariffs at around $100 million for the 2026 financial year and plans to adjust its prices to offset the additional cost. US snack giant PepsiCo could increase prices of its soft drinks about 10 percent to mitigate effects of US tariffs, particularly those on imported aluminum used to make soda cans, according to trade magazine Beverage Digest. Meanwhile, California-based energy drink maker Monster Beverages is considering raising prices due to a "complex and dynamic customs landscape," according to chief executive Hilton Schlosberg. The Commerce Department this week said the US broadened its steel and aluminum tariffs, impacting hundreds more products that contain both metals such as child seats, tableware and heavy equipment. Since returning to the presidency, Trump has imposed tariffs on almost all US trading partners. Though the impact of Trump's tariffs on consumer prices has been limited so far, economists warn that their full effects are yet to be seen. Some businesses have coped by bringing forward purchases of products they expected will encounter tariffs. Others have passed on additional costs to their consumers, or absorbed a part of the fresh tariff burden.
Int'l Business Times
6 hours ago
- Int'l Business Times
Dwayne Moore's Journey to Building Moore National Facility Service as a Powerhouse
Some entrepreneurs follow a clear path from education to business ownership. Others are forged through adversity, shaped by detours and hard-won lessons. Dwayne Moore belongs to the latter. Today, he is the founder and CEO of Moore National Facility Service, a full-service facility service company with branches in New York, New Jersey, and Los Angeles. But his journey to this position was anything but linear. Moore grew up surrounded by entrepreneurs. His father juggled multiple businesses, instilling in him a work ethic from a young age, starting with a paper route at ten. That drive initially found an outlet not in business, but in athletics. Moore pursued a career in professional baseball, playing in the minor leagues and pouring all his energy into sports. But a career-ending injury abruptly changed his trajectory, leaving him grappling with loss, identity, and the pressures of navigating the 'real world.' "I didn't bounce back instantly," Moore recalls. "I felt lost. I still had the work ethic, but I was putting it into jobs for other people, in corporate roles, always the hardest worker on the team, but never reaping the full rewards." Even when he ventured into entrepreneurship with a business partner, Moore faced similar frustrations: he worked relentlessly while the benefits were shared among others. That realization ultimately crystallized his resolve. "I realized if I'm going to be the hardest worker in the room, it's going to be for myself," he says. That decision led to the creation of Moore National Facility Services in 2019, a company that would grow organically, step by step, in response to client needs rather than market fads. From its inception, Moore National has been guided by purpose and careful listening. The company started with local janitorial services, but clients' requests soon expanded their offerings into handyman work, plumbing, electrical services, and, most recently, call center operations. Each new service stemmed from the practical needs of clients, a philosophy that has set the company apart in an industry often dominated by cookie-cutter solutions. Central to Moore's approach is the treatment of his team. Having endured toxic work environments himself, he committed early on to building a company culture rooted in respect, fairness, and opportunity. "If you treat your workers badly, it shows," Moore explains. "They are the face of your business. Happy, well-supported employees translate into happy clients, and that's the foundation of long-term success." Today, Moore National boasts a remarkably low turnover rate, offering competitive wages, medical benefits, 401(k) plans, and a family-oriented workplace culture. The company's resilience was tested during the COVID-19 pandemic. Just as the crisis began, Moore's team was preparing for a national trade show with a shipment of reusable shopping bags. When his supplier pivoted to producing disposable face masks, Moore seized the opportunity to sustain his team and serve the community. "I refused to gouge prices," he shares. "We sold masks affordably, and I even donated packages. It allowed us to keep the team on board." Yet masks alone were insufficient. Moore knew he had to diversify services to ensure employees could thrive and clients remained supported. His team began monitoring multiple retail locations for compliance and maintenance during store closures, providing inspections, sanitation, and sanitization services at scale. "There's a triangle you have to maintain where all elements, business relationships, and the team thrive," Moore notes. "When all three are in balance, you see true success." Leadership at Moore National is hands-on and humble. Moore surrounds himself with experts, admits mistakes openly, and fosters a culture of continuous improvement. Employees are empowered to contribute ideas, execute projects, and grow professionally, reinforcing a company culture built on collaboration, accountability, and trust. The company's client-driven model has driven steady national growth. Moore National now manages multi-location accounts with assigned project managers, hotlists for urgent issues, and standardized processes to ensure consistency and quality. This has allowed the company to scale carefully and maintain strong client relationships. Moore also emphasizes adaptability and learning from challenges. Having worked in multiple industries before founding his company, he draws lessons from past mistakes and encourages his team to do the same. "Even in difficult situations, there's always something to learn," he says. "Complacency is the enemy. You have to stay agile, stay engaged, and lead by example." Looking forward, Moore plans to continue strategic diversification. The company has expanded into Canada and is now managing call center operations for clients, dispatching work orders on a 24-hour basis, further demonstrating its ability to meet evolving client needs while providing employees with career growth opportunities.
