1 00:00:02,759 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,640 --> 00:00:14,600 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:14,640 --> 00:00:17,880 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,960 --> 00:00:21,080 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,400 --> 00:00:23,120 Speaker 1: or watch us live on YouTube. 6 00:00:23,880 --> 00:00:26,560 Speaker 2: Let's bring and Drew Redding, Bloomberg Intelligence US home building 7 00:00:26,520 --> 00:00:28,520 Speaker 2: analysts to give us a recap of what we need 8 00:00:28,560 --> 00:00:31,360 Speaker 2: to know about Lowe's results. Drew, Good to speak with 9 00:00:31,400 --> 00:00:34,800 Speaker 2: you is what does lows look like and when it 10 00:00:34,840 --> 00:00:38,040 Speaker 2: comes to its results compared with its big arrival, Home Depot. 11 00:00:39,960 --> 00:00:43,240 Speaker 3: Yes, I think Low's results could be best characterized as 12 00:00:43,479 --> 00:00:47,040 Speaker 3: better than feared, particularly in light of what we heard 13 00:00:47,080 --> 00:00:50,800 Speaker 3: from Home Depot yesterday. They did fall short of consensus 14 00:00:50,920 --> 00:00:53,960 Speaker 3: estimates on same store sales, but I think the buy 15 00:00:54,040 --> 00:00:57,080 Speaker 3: side was probably looking for something flat to lower, so 16 00:00:57,160 --> 00:01:00,360 Speaker 3: a little bit better than they were looking for. Now 17 00:01:00,480 --> 00:01:03,200 Speaker 3: that being said, they did trim their four year outlook. 18 00:01:03,960 --> 00:01:05,720 Speaker 3: Now they're looking for four year comp sales to be 19 00:01:05,800 --> 00:01:08,080 Speaker 3: flat from flat to up one percent, So that would 20 00:01:08,080 --> 00:01:11,440 Speaker 3: imply that four Q is relatively flat. But you know, 21 00:01:11,480 --> 00:01:13,440 Speaker 3: similar to what we heard from Home Depot, they had 22 00:01:13,480 --> 00:01:17,640 Speaker 3: about one hundred basis point impact from hurricane activity that 23 00:01:17,760 --> 00:01:20,319 Speaker 3: was not replicated this year. So again, if you were 24 00:01:20,319 --> 00:01:22,640 Speaker 3: to back that out, it looks like the underlying trends 25 00:01:22,640 --> 00:01:25,000 Speaker 3: in the business are pretty stable. 26 00:01:25,560 --> 00:01:25,760 Speaker 4: You know. 27 00:01:25,800 --> 00:01:28,800 Speaker 3: That being said, they're still grappling with the same consumer 28 00:01:28,880 --> 00:01:31,840 Speaker 3: uncertainty and you know, the same weak housing market that 29 00:01:31,880 --> 00:01:34,840 Speaker 3: their competitors, so you know, still challenges out there in 30 00:01:34,880 --> 00:01:35,279 Speaker 3: the market. 31 00:01:35,880 --> 00:01:39,240 Speaker 5: Drew, I think I understand it correctly that Lows has 32 00:01:39,560 --> 00:01:42,600 Speaker 5: a lower percentage of sales to professional contractors than does 33 00:01:42,760 --> 00:01:45,720 Speaker 5: Home Depot. If so, are they trying to narrow that gap? 34 00:01:45,800 --> 00:01:47,680 Speaker 5: Are they targeting that segment a little more? 35 00:01:48,680 --> 00:01:52,080 Speaker 3: Yeah, great question. So Loew's is about thirty percent professional 36 00:01:52,080 --> 00:01:56,560 Speaker 3: contractors seventy percent DIY. Home Depot is about fifty to fifty, 37 00:01:56,600 --> 00:01:59,440 Speaker 3: maybe even a little bit higher. On the pro front. 38 00:01:59,480 --> 00:02:03,160 Speaker 3: What's interesting to your point on investment is the pro space, 39 00:02:03,280 --> 00:02:08,240 Speaker 3: especially in building products distribution, has really become a battleground 40 00:02:08,240 --> 00:02:12,000 Speaker 3: among home improvement retailers. You had Home Depot recently do 41 00:02:12,080 --> 00:02:16,880 Speaker 3: acquisitions for srs and gms, and then you have Lows 42 00:02:16,880 --> 00:02:21,960 Speaker 3: who recently acquired foundation building materials. So it's certainly an 43 00:02:22,000 --> 00:02:24,600 Speaker 3: area where they're making a concerted effort to grow now. 44 00:02:24,800 --> 00:02:28,919 Speaker 3: LOWS has historically focused on the small and medium sized 45 00:02:29,000 --> 00:02:32,160 Speaker 3: pro and what this acquisition does is it gives them 46 00:02:32,200 --> 00:02:37,240 Speaker 3: exposure to larger pros who do more complex projects, so 47 00:02:37,240 --> 00:02:40,399 Speaker 3: they're able to you know, be the supplier of choice, 48 00:02:41,280 --> 00:02:44,160 Speaker 3: you know, across more building product categories and at a 49 00:02:44,240 --> 00:02:45,440 Speaker 3: larger scale. 50 00:02:45,240 --> 00:02:48,120 Speaker 2: So basically directly competing with Home DEEPO in many ways. 51 00:02:48,960 --> 00:02:50,919 Speaker 2: Is this going to become duopoly or are There's still 52 00:02:50,960 --> 00:02:55,600 Speaker 2: a lot of other places that professional contractors can go to. 53 00:02:57,720 --> 00:03:01,640 Speaker 3: Yeah, so the building products distributions space is still very 54 00:03:01,880 --> 00:03:05,760 Speaker 3: highly fragmented. You know, I wouldn't be surprised to see 55 00:03:05,800 --> 00:03:09,600 Speaker 3: further consolidation within the industry, you know, across different categories. 56 00:03:10,160 --> 00:03:12,920 Speaker 3: Home Depot and LOWS are certainly, you know, two of 57 00:03:12,919 --> 00:03:15,480 Speaker 3: the behemoths in the industry who have you know, the 58 00:03:15,560 --> 00:03:19,760 Speaker 3: scale and financial flexibility to further consolidate the industry. But 59 00:03:19,800 --> 00:03:23,120 Speaker 3: there's some other players as well, like QXO. So it 60 00:03:23,240 --> 00:03:25,920 Speaker 3: is a frag mented industry, but I would expect, you know, 61 00:03:25,960 --> 00:03:29,080 Speaker 3: in the coming years, it's something that continues to get consolidated. 62 00:03:29,600 --> 00:03:32,040 Speaker 5: Drew, I'm probably like a lot of investors out there, 63 00:03:32,040 --> 00:03:33,799 Speaker 5: I can't keep track of where all the tariffs are 64 00:03:33,800 --> 00:03:35,960 Speaker 5: these days, all the different products. But I'm just guessing 65 00:03:36,000 --> 00:03:39,120 Speaker 5: if I'm a Low's or home depot, my plywood from 66 00:03:39,200 --> 00:03:42,840 Speaker 5: Canada that's probably being tariff. A power tool from somewhere 67 00:03:42,840 --> 00:03:45,320 Speaker 5: in Asia that's probably subject to tariffs. How are these 68 00:03:45,320 --> 00:03:48,600 Speaker 5: companies dealing with it? What have they been telling you guys? 69 00:03:49,680 --> 00:03:53,280 Speaker 3: Yeah, good question. So Lows gets about sixty sixty percent 70 00:03:53,320 --> 00:03:57,400 Speaker 3: of its products from the US, so their exposure internationally 71 00:03:57,480 --> 00:04:00,000 Speaker 3: is maybe not as high as you would expect. China's 72 00:04:00,000 --> 00:04:03,920 Speaker 3: probably around fifteen to twenty percent. You know, there hasn't 73 00:04:03,920 --> 00:04:05,960 Speaker 3: been a whole lot of talk. I think we have 74 00:04:06,040 --> 00:04:08,600 Speaker 3: seen their average ticket increase this quarter was up about 75 00:04:08,640 --> 00:04:11,680 Speaker 3: three percent, and part of that is in response to 76 00:04:11,800 --> 00:04:15,640 Speaker 3: tariff related price increases. Loose told us that they were 77 00:04:15,680 --> 00:04:18,520 Speaker 3: only modest increases, and you know, they'll take a portfolio 78 00:04:18,520 --> 00:04:20,920 Speaker 3: approach to how they increase prices. They'll look at their 79 00:04:21,560 --> 00:04:24,200 Speaker 3: product lineup and see where they have more elasticity. But 80 00:04:24,640 --> 00:04:27,160 Speaker 3: I think the impact of costs will start to come 81 00:04:27,160 --> 00:04:29,600 Speaker 3: in a little greater as we look into Q four 82 00:04:29,600 --> 00:04:31,920 Speaker 3: in early twenty twenty six. And you know, some of 83 00:04:31,920 --> 00:04:34,680 Speaker 3: the areas that we're looking at you mentioned Plywood so 84 00:04:34,960 --> 00:04:38,960 Speaker 3: lumber tariffs from Canada. We also had the implementation of 85 00:04:39,279 --> 00:04:42,160 Speaker 3: tariffs on cabinetry both the kitchen and bath, which to 86 00:04:42,240 --> 00:04:45,040 Speaker 3: go up to fifty percent in January. So I do 87 00:04:45,080 --> 00:04:46,800 Speaker 3: think that the impact gets a little greater as we 88 00:04:46,839 --> 00:04:49,520 Speaker 3: look at the next year, so I would expect further 89 00:04:49,600 --> 00:04:51,760 Speaker 3: price increases from both retailers. 90 00:04:52,880 --> 00:04:55,919 Speaker 5: Stay with us more from Bloomberg Intelligence coming up after this. 91 00:05:00,000 --> 00:05:03,840 Speaker 1: And to the Bloomberg Intelligence podcast. Catch us live weekdays 92 00:05:03,839 --> 00:05:06,719 Speaker 1: at ten am Eastern on Apple, Cocklay and Android Auto 93 00:05:06,839 --> 00:05:09,920 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 94 00:05:09,960 --> 00:05:12,599 Speaker 1: get your podcasts, or watch us live on. 95 00:05:12,480 --> 00:05:17,240 Speaker 5: YouTube TJ Max. Before to some earnings here, Mary Ross 96 00:05:17,240 --> 00:05:21,280 Speaker 5: Gilbert covers the stock for Bloomberg Intelligence as a retail analyst. 97 00:05:21,279 --> 00:05:23,599 Speaker 5: She's based out there in La Mary, I know you 98 00:05:23,600 --> 00:05:27,640 Speaker 5: guys like the TJ Max. I mean, Alex is a fan. Alex, 99 00:05:27,720 --> 00:05:30,120 Speaker 5: Alex Steel's a fan. Scarla who's a fan? Lisa Mateo's 100 00:05:30,120 --> 00:05:32,080 Speaker 5: a fan. I have the card, You've got the car. 101 00:05:32,160 --> 00:05:32,840 Speaker 2: I have the credit card? 102 00:05:32,880 --> 00:05:33,200 Speaker 3: All right? 103 00:05:33,279 --> 00:05:33,640 Speaker 5: Very good? 104 00:05:33,800 --> 00:05:34,520 Speaker 4: Mary? Are you a fan? 105 00:05:34,839 --> 00:05:37,120 Speaker 5: Our investors a fan? 106 00:05:37,760 --> 00:05:38,039 Speaker 4: Paul? 107 00:05:38,320 --> 00:05:41,120 Speaker 6: You are absolutely right. I'm a fan too, and they 108 00:05:41,160 --> 00:05:44,520 Speaker 6: it's because they carry such a variety of brands and 109 00:05:44,560 --> 00:05:47,359 Speaker 6: it appeals to all income groups. So if you have 110 00:05:47,400 --> 00:05:51,920 Speaker 6: a luxury consumer, you can get Balanciaga, you can get 111 00:05:52,000 --> 00:05:55,680 Speaker 6: Chloe Low, So they carry all of the brands. And 112 00:05:55,720 --> 00:05:59,560 Speaker 6: then if you're more oppressed and you're really a valued consumer, 113 00:05:59,600 --> 00:06:04,200 Speaker 6: they have Steve Madden, they have Theory, so they really 114 00:06:04,320 --> 00:06:09,040 Speaker 6: they have Puma, they have Nike, Adidas, so they have 115 00:06:09,320 --> 00:06:13,400 Speaker 6: all the brands that consumers want, and that's why they're Marmas, 116 00:06:13,800 --> 00:06:17,159 Speaker 6: which is tj Max and Marshall's division, reported a comp 117 00:06:17,240 --> 00:06:20,919 Speaker 6: sales increase of six percent, and that's why. You know, 118 00:06:20,920 --> 00:06:22,800 Speaker 6: if you look at the overall results, they were up 119 00:06:22,839 --> 00:06:25,120 Speaker 6: five percent, so a lot of strength there within the 120 00:06:25,120 --> 00:06:30,120 Speaker 6: Marmas home goods and of course Canada. Canada was up 121 00:06:30,160 --> 00:06:34,400 Speaker 6: eight percent, So we're seeing consumers flock to get the 122 00:06:35,240 --> 00:06:39,920 Speaker 6: brands that they want and they've had some amazing buying opportunities, 123 00:06:39,960 --> 00:06:41,200 Speaker 6: so their margins were higher. 124 00:06:41,800 --> 00:06:45,880 Speaker 2: So the way that TJX stocks at stores is that 125 00:06:46,680 --> 00:06:50,040 Speaker 2: they get inventory that hasn't sold at full price stores. 126 00:06:50,080 --> 00:06:53,520 Speaker 2: But if all these merchants, all these retailers are managing 127 00:06:53,520 --> 00:06:56,359 Speaker 2: their inventories better and don't have a lot of excess inventory. 128 00:06:56,640 --> 00:06:59,440 Speaker 2: Where does tj X get its inventory? I mean it 129 00:06:59,480 --> 00:07:01,599 Speaker 2: has to have a another option, right. 130 00:07:02,520 --> 00:07:05,200 Speaker 6: Yeah, Scarlett, you raise a good question. But the fact 131 00:07:05,279 --> 00:07:08,320 Speaker 6: is is that some of the retailers, but also the 132 00:07:08,360 --> 00:07:12,400 Speaker 6: brands themselves. So if you think of for example, PVH, 133 00:07:12,480 --> 00:07:16,360 Speaker 6: which has the Tommy Hill Figure and Calvin Klein brands, 134 00:07:16,760 --> 00:07:19,720 Speaker 6: we see those brands pretty prevalent throughout off price, So 135 00:07:19,760 --> 00:07:23,200 Speaker 6: that's been a good channel for them to sort of 136 00:07:23,200 --> 00:07:25,760 Speaker 6: release some of that excess inventory. And when they work 137 00:07:25,800 --> 00:07:29,080 Speaker 6: with some of their wholesale partners, including the department stores, 138 00:07:29,600 --> 00:07:33,000 Speaker 6: So where you have product that's not selling off price, 139 00:07:33,200 --> 00:07:37,240 Speaker 6: is just a natural fit to be able to release 140 00:07:37,280 --> 00:07:40,280 Speaker 6: that inventory. So you want to keep your inventory fresh 141 00:07:40,400 --> 00:07:43,120 Speaker 6: in the stores, especially when you're a full price operator, 142 00:07:43,680 --> 00:07:46,880 Speaker 6: and there hasn't been any slow down in terms of 143 00:07:46,920 --> 00:07:50,880 Speaker 6: that excess inventory. And that's why even on the luxury side, 144 00:07:50,920 --> 00:07:55,120 Speaker 6: where typically you wouldn't think you'd find markdowns, it's been 145 00:07:55,160 --> 00:07:59,480 Speaker 6: pretty prevalent, especially with overall weakness in luxury. 146 00:08:00,400 --> 00:08:03,080 Speaker 5: So what does the folks at cheek kJ max what 147 00:08:03,080 --> 00:08:05,000 Speaker 5: are they saying about the consumer these days? 148 00:08:06,480 --> 00:08:09,240 Speaker 6: Well, the consumer, I mean they're really seeing strength. So 149 00:08:09,400 --> 00:08:12,320 Speaker 6: It's interesting because when you sort of read the take 150 00:08:12,400 --> 00:08:15,760 Speaker 6: on Target with their results today and they sort of cited, 151 00:08:16,080 --> 00:08:19,520 Speaker 6: you know, the consumer is very cautious. But that caution, 152 00:08:19,760 --> 00:08:22,520 Speaker 6: I think what's really going on is that they've got 153 00:08:22,560 --> 00:08:25,600 Speaker 6: the brands that consumers want. So those that are executing 154 00:08:26,240 --> 00:08:28,680 Speaker 6: are the ones that are getting the sales, because even 155 00:08:28,840 --> 00:08:33,480 Speaker 6: some retailers that are more full price oriented are generating sales, 156 00:08:33,880 --> 00:08:35,920 Speaker 6: or they may be promotional, like we're going to get 157 00:08:35,920 --> 00:08:38,120 Speaker 6: Gap when they go to report tomorrow, and we think 158 00:08:38,120 --> 00:08:40,720 Speaker 6: we're going to see strong results there out of Old 159 00:08:40,840 --> 00:08:43,360 Speaker 6: Navy and out of Gap, and those are their two 160 00:08:43,440 --> 00:08:46,280 Speaker 6: largest brands. So we think that they're just executing really 161 00:08:46,280 --> 00:08:50,040 Speaker 6: well and providing great fresh merchandise. But they're also promotional 162 00:08:50,080 --> 00:08:53,240 Speaker 6: and they provide value to the consumer. So the consumer 163 00:08:53,320 --> 00:08:55,960 Speaker 6: is flocking to value, there's no doubt about it. But 164 00:08:56,040 --> 00:08:58,800 Speaker 6: we do see some you know, operators, You've got Ralph 165 00:08:58,880 --> 00:09:02,160 Speaker 6: Lauren on the luxury side, they continue to outperform and 166 00:09:02,200 --> 00:09:07,200 Speaker 6: their sales are always topping expectations too, and consumers there 167 00:09:07,320 --> 00:09:09,960 Speaker 6: are willing to pay full price, so there are a 168 00:09:10,000 --> 00:09:13,839 Speaker 6: lot less promotional every year, they seem to be less 169 00:09:13,840 --> 00:09:17,400 Speaker 6: promotional for that reason. They're able to sell at full price. 170 00:09:17,840 --> 00:09:21,360 Speaker 2: So clearly TJX has a strategy that works well given 171 00:09:21,400 --> 00:09:23,800 Speaker 2: the current environment, and even when the economy is doing well, 172 00:09:24,040 --> 00:09:26,000 Speaker 2: I would argue it has a strategy that works well. 173 00:09:26,360 --> 00:09:29,400 Speaker 2: At at what point do investors want more from the 174 00:09:29,440 --> 00:09:33,199 Speaker 2: company than just executing on the strategy. Will they want 175 00:09:33,400 --> 00:09:36,000 Speaker 2: I don't know, am an agent? Do they want consolidation? 176 00:09:36,160 --> 00:09:38,280 Speaker 2: Do they want innovation from TJX? 177 00:09:39,559 --> 00:09:42,760 Speaker 6: Yeah, Well, so that's the reason why TGX is focused, 178 00:09:43,000 --> 00:09:46,280 Speaker 6: you know, internationally. So they're going to be entering Spain 179 00:09:46,440 --> 00:09:49,520 Speaker 6: in twenty twenty six, so coming next year, and of 180 00:09:49,559 --> 00:09:54,040 Speaker 6: course they've had some they have two joint venture investments, 181 00:09:54,160 --> 00:09:56,880 Speaker 6: one in Mexico and then one in the Middle East, 182 00:09:56,920 --> 00:09:59,760 Speaker 6: and they're both off price retailers that they've invested in. 183 00:10:00,120 --> 00:10:04,000 Speaker 6: So they're basically taking their talent and providing them a 184 00:10:04,120 --> 00:10:07,640 Speaker 6: platform to leverage their talent in these joint ventures and 185 00:10:07,640 --> 00:10:10,720 Speaker 6: to grow that way. So they're always looking for ways. 186 00:10:10,760 --> 00:10:14,400 Speaker 6: Because Scarlett, you bring up a good point. TJX trades 187 00:10:14,440 --> 00:10:17,400 Speaker 6: at a pretty high premium in the off price space, 188 00:10:17,480 --> 00:10:20,760 Speaker 6: and generally it's a pretty big premium that is due 189 00:10:20,760 --> 00:10:25,720 Speaker 6: to their very consistent execution. But You're right, consumers keep wondering, well, 190 00:10:25,760 --> 00:10:28,880 Speaker 6: how can they keep growing on top of all this growth? 191 00:10:29,240 --> 00:10:32,560 Speaker 6: And yet they keep doing it. But as they talk about, look, 192 00:10:33,040 --> 00:10:35,920 Speaker 6: they have drops several times a week. There's not a 193 00:10:35,920 --> 00:10:39,240 Speaker 6: lot of retailers that offer fresh merchandise several times a week, 194 00:10:39,720 --> 00:10:43,320 Speaker 6: and they curate the merchandise by location, so they're very 195 00:10:43,360 --> 00:10:46,240 Speaker 6: cognizant of the demographics for each location. 196 00:10:47,080 --> 00:10:49,520 Speaker 5: Stay with us. More from Bloomberg Intelligence coming. 197 00:10:49,360 --> 00:10:50,240 Speaker 3: Up after this. 198 00:10:54,120 --> 00:10:57,839 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 199 00:10:57,920 --> 00:11:00,600 Speaker 1: weekdays at ten am. He's den on Apple, Cocklay and 200 00:11:00,600 --> 00:11:03,880 Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand 201 00:11:03,920 --> 00:11:07,480 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 202 00:11:07,840 --> 00:11:09,960 Speaker 5: Let's talk a little bit of commercial real estate here. 203 00:11:10,520 --> 00:11:13,200 Speaker 5: We can talk about big market small markets. We do 204 00:11:13,240 --> 00:11:16,280 Speaker 5: that with Liz Hard, president of Leasing for North America. 205 00:11:16,600 --> 00:11:18,440 Speaker 5: The name of the firm is new Mark, joining us 206 00:11:18,480 --> 00:11:21,760 Speaker 5: live here in our Bloomberg Interactive Broker Studio. We appreciate that. Liz, 207 00:11:21,920 --> 00:11:26,280 Speaker 5: you step back. Let's start with retail. Talk us about 208 00:11:26,280 --> 00:11:29,360 Speaker 5: the retail marketplace. Where are we in terms of filling 209 00:11:29,400 --> 00:11:29,840 Speaker 5: that up? 210 00:11:30,200 --> 00:11:33,960 Speaker 4: Absolutely so, overall, retail's performing really well. This year. Lowest 211 00:11:34,000 --> 00:11:36,040 Speaker 4: availability we've seen is five percent, and we're at five 212 00:11:36,080 --> 00:11:38,320 Speaker 4: point three right now. So across the market is doing 213 00:11:38,320 --> 00:11:40,880 Speaker 4: pretty well, but like most of the market, it's a 214 00:11:40,960 --> 00:11:45,680 Speaker 4: quite bifurcated story. So in normal's performing very well, power 215 00:11:45,679 --> 00:11:48,000 Speaker 4: centers performing very well. But if you look at what 216 00:11:48,000 --> 00:11:51,719 Speaker 4: the availability is, the availability that we're tracking half of 217 00:11:51,760 --> 00:11:53,760 Speaker 4: it's been on the market for over twenty four months, 218 00:11:53,800 --> 00:11:56,320 Speaker 4: So it's that bifurcated story that steth's not moving, it's 219 00:11:56,480 --> 00:11:57,440 Speaker 4: really not moving. 220 00:11:58,240 --> 00:12:01,320 Speaker 2: What does it look like in city center versus the suburbs. 221 00:12:01,360 --> 00:12:02,920 Speaker 2: I think about a couple of places I've been to, 222 00:12:03,000 --> 00:12:06,319 Speaker 2: like Seattle, which there are parts of downtown Seattle which 223 00:12:06,360 --> 00:12:09,440 Speaker 2: look vacant, but then you go to the suburbs like Bellevue, 224 00:12:09,480 --> 00:12:11,680 Speaker 2: and I mean, traffic is out of control and it 225 00:12:11,720 --> 00:12:15,200 Speaker 2: looks like everyone has gravitated over there for certain cities 226 00:12:15,720 --> 00:12:18,320 Speaker 2: that have really been hit hard by the work from 227 00:12:18,320 --> 00:12:20,080 Speaker 2: home phenomenon, what does that look like? 228 00:12:20,280 --> 00:12:22,640 Speaker 4: So we're seeing that trend start to stabilize. It definitely 229 00:12:22,760 --> 00:12:25,440 Speaker 4: was a COVID trend that was very, very pronounced, and 230 00:12:25,480 --> 00:12:27,520 Speaker 4: in the last twelve months it started to smooth out. 231 00:12:27,800 --> 00:12:30,280 Speaker 4: So it is starting to show that it's starting to blend. 232 00:12:30,520 --> 00:12:33,160 Speaker 4: But in the market that you just showed, Seattle is 233 00:12:33,240 --> 00:12:36,040 Speaker 4: a very occupier friendly market. So that's one in which 234 00:12:36,040 --> 00:12:38,800 Speaker 4: the retailers are really calling the shots. And that's true 235 00:12:38,800 --> 00:12:40,880 Speaker 4: in a lot of those West Coast markets right now. 236 00:12:41,080 --> 00:12:43,480 Speaker 4: You're not seeing that as much in other markets, particularly 237 00:12:43,520 --> 00:12:45,640 Speaker 4: in the Sun Belt, where it's really the landlords who 238 00:12:45,640 --> 00:12:48,800 Speaker 4: are calling the shots. So it is a suburban urban trend, 239 00:12:48,800 --> 00:12:51,360 Speaker 4: but it's also a geographic trend across the United States. 240 00:12:52,000 --> 00:12:54,160 Speaker 5: Here in New York City, we just had one of 241 00:12:54,200 --> 00:12:57,240 Speaker 5: the maybe the coolest office building open up, the JP 242 00:12:57,320 --> 00:12:59,719 Speaker 5: Morgan oh My Park Avenue one. 243 00:13:00,080 --> 00:13:03,040 Speaker 2: Watch right, we can't go in there yet though we can't, Well, 244 00:13:03,120 --> 00:13:03,400 Speaker 2: we can. 245 00:13:03,320 --> 00:13:04,920 Speaker 4: Ask Jamie Diamond. You think he'll let us in if 246 00:13:04,920 --> 00:13:05,840 Speaker 4: we ask him on the radio. 247 00:13:06,000 --> 00:13:09,640 Speaker 5: He allows us to remote broadcast there. But again across 248 00:13:09,679 --> 00:13:12,520 Speaker 5: and then across the street from penn Station on. I 249 00:13:12,520 --> 00:13:14,800 Speaker 5: guess it's Sixth Avenue, you know the empty lot there 250 00:13:14,800 --> 00:13:17,440 Speaker 5: where that old Pennsylvania Hotel used to be. So it 251 00:13:17,679 --> 00:13:19,800 Speaker 5: seems like the city's definitely getting better. 252 00:13:19,840 --> 00:13:20,440 Speaker 4: It's back. 253 00:13:21,280 --> 00:13:23,280 Speaker 5: How does New York City look just from an office perspective? 254 00:13:23,320 --> 00:13:27,439 Speaker 4: Absolutely so. In the Trophy category, you're below five percent availability, 255 00:13:27,520 --> 00:13:31,160 Speaker 4: so low single digits, very very high performing. Again, you 256 00:13:31,200 --> 00:13:33,200 Speaker 4: do have that kind of tail of two cities going 257 00:13:33,200 --> 00:13:35,199 Speaker 4: on where the lower end of the market isn't performing 258 00:13:35,240 --> 00:13:39,360 Speaker 4: as strongly, but we're seeing very high absorption in the 259 00:13:39,400 --> 00:13:42,880 Speaker 4: top category, very strong demand being led again, you know, 260 00:13:42,960 --> 00:13:45,840 Speaker 4: financial services sector, tech sector which is coming back, and 261 00:13:45,880 --> 00:13:47,800 Speaker 4: you're having a little bit of an AI boom here 262 00:13:47,840 --> 00:13:50,400 Speaker 4: in New York City. A lot of companies coming out 263 00:13:50,400 --> 00:13:52,120 Speaker 4: for the West Coast that want to get into New 264 00:13:52,200 --> 00:13:55,040 Speaker 4: York City's tech talent, which is bigger than it's ever been. 265 00:13:55,080 --> 00:13:56,959 Speaker 4: It's great to see that happening here in New York City. 266 00:13:57,120 --> 00:13:59,680 Speaker 2: That is super interesting. Talk a little bit more about that. 267 00:13:59,760 --> 00:14:02,040 Speaker 2: What kind of space are they looking for? How quickly 268 00:14:02,120 --> 00:14:04,440 Speaker 2: are they growing? And you know, where do they want 269 00:14:04,440 --> 00:14:06,800 Speaker 2: to be situated. Do they want to be in midtown 270 00:14:06,840 --> 00:14:09,400 Speaker 2: your banks? Do they want to be downtown where it's 271 00:14:09,480 --> 00:14:13,280 Speaker 2: always been more of yes? That And what's the New 272 00:14:13,320 --> 00:14:17,560 Speaker 2: York name for our tech spirits Silicon Alley? No, yeah, 273 00:14:17,600 --> 00:14:18,760 Speaker 2: maybe Silicon Alley. 274 00:14:19,520 --> 00:14:21,640 Speaker 4: I'd say Midtown South and then south of that. They 275 00:14:21,640 --> 00:14:23,640 Speaker 4: do like to be more downtown for the most part, 276 00:14:24,000 --> 00:14:26,760 Speaker 4: not Midtown. Then really although AI is a little bit 277 00:14:26,760 --> 00:14:29,120 Speaker 4: of everywhere because it's also you know, very much where 278 00:14:29,160 --> 00:14:31,160 Speaker 4: we are right now, right because it's even in this building. 279 00:14:31,200 --> 00:14:33,480 Speaker 4: You guys have an AI division, and the talent here 280 00:14:33,720 --> 00:14:35,160 Speaker 4: is going to be in your building as well, So 281 00:14:35,200 --> 00:14:37,880 Speaker 4: it really is everywhere. But in terms of how quickly 282 00:14:37,920 --> 00:14:40,120 Speaker 4: it's growing, I'll talk about San Francisco first, then we'll 283 00:14:40,160 --> 00:14:44,080 Speaker 4: mimic how it's here as well. It's pretty incredible. It's 284 00:14:44,080 --> 00:14:45,800 Speaker 4: growing as quickly as I've ever seen it in my 285 00:14:45,880 --> 00:14:49,600 Speaker 4: twenty year career. There's several companies in San Francisco that 286 00:14:49,960 --> 00:14:52,360 Speaker 4: started less than five years ago that are already looking 287 00:14:52,400 --> 00:14:54,440 Speaker 4: for over one hundred thousand square feet. I think there's 288 00:14:54,480 --> 00:14:57,000 Speaker 4: seven as of the last count, but the numbers changing 289 00:14:57,000 --> 00:14:59,360 Speaker 4: so quickly it's hard to keep track of. And what 290 00:14:59,400 --> 00:15:01,560 Speaker 4: you're really seeing is a commitment to the office space. 291 00:15:01,680 --> 00:15:04,400 Speaker 4: So how interesting is this? Right, they're able to build 292 00:15:04,440 --> 00:15:08,120 Speaker 4: new companies. They certainly have access to technology, you know that, 293 00:15:08,360 --> 00:15:10,280 Speaker 4: and they're a tech first company. But why are they 294 00:15:10,360 --> 00:15:12,920 Speaker 4: choosing to be in the office. Well, they're solving big 295 00:15:12,960 --> 00:15:14,520 Speaker 4: problems and when they're doing it, they want to be 296 00:15:14,520 --> 00:15:16,640 Speaker 4: doing it face to face, and they're choosing to do 297 00:15:16,680 --> 00:15:20,560 Speaker 4: it mostly in higher end buildings, creative buildings. They love 298 00:15:20,640 --> 00:15:23,880 Speaker 4: high ceilings, they love to have natural light. And one 299 00:15:23,920 --> 00:15:25,800 Speaker 4: thing that's really interesting is a lot of them are 300 00:15:25,840 --> 00:15:28,840 Speaker 4: thinking about productivity hacks. So how do they get snacks 301 00:15:28,840 --> 00:15:31,800 Speaker 4: that are elevating their productivity? How do they make sure 302 00:15:31,840 --> 00:15:34,400 Speaker 4: that they even have the level of oxygen? Isn't that 303 00:15:34,440 --> 00:15:37,640 Speaker 4: interesting to make sure that they're maximizing their productivity. So 304 00:15:38,000 --> 00:15:40,440 Speaker 4: a lot of an analytical approach to real estate. That's 305 00:15:40,520 --> 00:15:43,440 Speaker 4: probably much more than we've seen in that past generation. 306 00:15:44,080 --> 00:15:47,200 Speaker 5: How about industrial space, It seems like for a while 307 00:15:47,240 --> 00:15:52,120 Speaker 5: there we're building these Amazon distribution centers everywhere you could, 308 00:15:52,160 --> 00:15:54,360 Speaker 5: I mean half of the state New Jerseys at Amazon 309 00:15:54,400 --> 00:15:57,000 Speaker 5: distribution center. I think talk to just about industrial. 310 00:15:57,240 --> 00:15:59,720 Speaker 4: Yeah, absolutely so. Well, Amazon doesn't seem to be slowing down. 311 00:16:00,160 --> 00:16:03,240 Speaker 4: Trend does continue, But what I would say in general 312 00:16:03,320 --> 00:16:06,480 Speaker 4: is that we are still seeing, you know, some absorption 313 00:16:06,560 --> 00:16:09,320 Speaker 4: that's happening. We built quite a bit of industrial so 314 00:16:09,800 --> 00:16:11,560 Speaker 4: it does feel like from the data there's a little 315 00:16:11,600 --> 00:16:13,800 Speaker 4: bit of a pullback in the data of an increase 316 00:16:13,840 --> 00:16:16,040 Speaker 4: in availability, but it's just because the market's catching up 317 00:16:16,040 --> 00:16:18,480 Speaker 4: to what was built, and we'll see that for the 318 00:16:18,480 --> 00:16:20,560 Speaker 4: next couple of quarters. But we are very long on 319 00:16:20,640 --> 00:16:23,360 Speaker 4: industrial being a very solid market in the US, especially 320 00:16:23,400 --> 00:16:26,720 Speaker 4: with the reindustrialization that's happening and kind of the reformation 321 00:16:26,760 --> 00:16:30,240 Speaker 4: of supply chains based on what's happening with tariffs. But 322 00:16:30,280 --> 00:16:33,760 Speaker 4: what's also interesting is Small Bay Industrial. Wow, what a 323 00:16:33,840 --> 00:16:36,960 Speaker 4: hot part of the market. I mean, very very low vacancy. 324 00:16:37,440 --> 00:16:40,160 Speaker 4: A lot going on there too, so the market's feeling 325 00:16:40,320 --> 00:16:42,720 Speaker 4: pretty hot. And then from a user perspective, you know, 326 00:16:42,760 --> 00:16:46,920 Speaker 4: three pls are really shit. They're the three pls. Oh gosh, 327 00:16:47,120 --> 00:16:50,320 Speaker 4: make you explain these I'm like, it's it's what you do, 328 00:16:50,360 --> 00:16:52,320 Speaker 4: and you're redoing the supply chain logistic. So it's kind 329 00:16:52,320 --> 00:16:53,680 Speaker 4: of like a I don't want to call it the 330 00:16:53,680 --> 00:16:55,400 Speaker 4: we work of supply chain, that might be too simple, 331 00:16:55,640 --> 00:16:58,440 Speaker 4: simple simplifying it, that kind of thing. They basically have 332 00:16:58,560 --> 00:17:00,920 Speaker 4: them take it on and then they reposition it for you. 333 00:17:01,280 --> 00:17:04,200 Speaker 4: But three pls that's really the dominant player in the market. 334 00:17:04,920 --> 00:17:07,160 Speaker 2: Which city is kind of hitting on all cylinders here 335 00:17:07,200 --> 00:17:09,399 Speaker 2: when it comes to industrial, when it comes to office, 336 00:17:09,440 --> 00:17:10,320 Speaker 2: when it comes to retail. 337 00:17:10,560 --> 00:17:17,480 Speaker 4: Ooh, all three would I think probably if you're going 338 00:17:17,520 --> 00:17:20,040 Speaker 4: to say all three, it would have to be somewhere 339 00:17:20,040 --> 00:17:23,320 Speaker 4: in the south southeast quadrants, so I'm sun Belt sun 340 00:17:23,400 --> 00:17:25,720 Speaker 4: Belt sun Belt in southeast quadrant is where I would 341 00:17:25,720 --> 00:17:26,960 Speaker 4: say it is probably heading on all three at the 342 00:17:26,960 --> 00:17:27,440 Speaker 4: same time. 343 00:17:27,680 --> 00:17:29,240 Speaker 5: Thirty seconds left. I finally want to go out and 344 00:17:29,280 --> 00:17:31,480 Speaker 5: build something up, build a building, office tower or something. 345 00:17:31,600 --> 00:17:32,879 Speaker 5: Can I get the capital to do it? Can I 346 00:17:32,880 --> 00:17:34,480 Speaker 5: get the banks to lend me money to do it? 347 00:17:34,560 --> 00:17:36,399 Speaker 4: Well, it certainly depends on what you're building, but if 348 00:17:36,440 --> 00:17:38,800 Speaker 4: you're building for trophy in a place with good demand, 349 00:17:38,800 --> 00:17:39,400 Speaker 4: you can now. 350 00:17:40,320 --> 00:17:45,040 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 351 00:17:45,200 --> 00:17:48,680 Speaker 1: and anywhere else you get your podcasts. 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