WEBVTT - Musk’s SpaceX to Buy EchoStar Spectrum for $17 Billion 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:17.880 Eastern on Apple, Coarclay, and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.000 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:24.000 or watch us live on YouTube. 0:00:24.600 --> 0:00:28.440 And we're deal making for Elon Musk. His SpaceX has 0:00:28.480 --> 0:00:31.720 reached a deal worth about seventeen billion dollars with EchoStar 0:00:32.360 --> 0:00:35.080 for spectrum licenses that it's going to use to beef 0:00:35.200 --> 0:00:38.120 up its Starlink satellite network. We want to talk more 0:00:38.159 --> 0:00:40.640 about this deal and what it means for both companies 0:00:40.800 --> 0:00:43.800 and the stock of EchoStar, which is doing quite nicely today. 0:00:43.840 --> 0:00:46.560 I want to bring in John Butler, Bloomberg Intelligence senior 0:00:46.600 --> 0:00:50.720 at Telecom Analyst. He's joining us from our Bloomberg Princeton office. John, 0:00:50.760 --> 0:00:53.840 good to see you. Let's just talk with talk about 0:00:53.880 --> 0:00:57.080 what this deal is going to allow SpaceX to do 0:00:57.480 --> 0:00:59.200 that it can't currently do. 0:01:01.280 --> 0:01:05.240 So the key to this deal alexis is a spectrum 0:01:05.280 --> 0:01:10.920 called AWS four. So if you look at Starlink and 0:01:11.000 --> 0:01:14.880 its sprivals in the satellite space, they all hold spectrum, 0:01:14.959 --> 0:01:19.080 but they're not allowed to offer wireless spectrum, I'm sorry, 0:01:19.120 --> 0:01:25.760 wireless services over that spectrum. AWS four spectrum, according to 0:01:25.800 --> 0:01:31.160 the FCC, can be used flexibly. It's called flexible use spectrum, 0:01:31.200 --> 0:01:35.760 meaning the satellite providers can offer anything from mobile services 0:01:36.319 --> 0:01:41.920 to satellite data, downlink services, video, whatever. It's open use 0:01:41.959 --> 0:01:43.959 spectrum if you want to think of it that way. 0:01:44.680 --> 0:01:48.880 And so Starlink getting its hands on this key spectrum 0:01:48.920 --> 0:01:51.840 will allow them at some point in the future to 0:01:51.960 --> 0:01:55.680 potentially enter the wireless market as a competitor to AT 0:01:55.800 --> 0:01:58.200 and T, Verizon and T Mobile. 0:01:58.960 --> 0:02:01.760 So Echostars shareholders seem to like this deal. The stock 0:02:01.840 --> 0:02:05.560 is up about fourteen percent right now. What are they 0:02:05.560 --> 0:02:08.560 going to do with the proceeds? What will Echo Star 0:02:08.639 --> 0:02:10.040 do with the proceeds of the sale? 0:02:10.960 --> 0:02:13.640 So for Echostarre, it's a very good deal as well. 0:02:13.680 --> 0:02:17.440 They have really struggled to get their wireless service off 0:02:17.480 --> 0:02:20.840 the ground. They've been building this five G wireless network 0:02:21.280 --> 0:02:25.400 and have a relatively weak prepaid brand called Boost and 0:02:25.440 --> 0:02:29.880 they've really struggled there. So this brings in much needed 0:02:29.960 --> 0:02:33.920 funds for them to pay down debt. They've been a 0:02:33.919 --> 0:02:38.520 bit stretched on that front, over leveraged, and you know, 0:02:38.760 --> 0:02:41.400 this deal together with a deal a couple of weeks 0:02:41.440 --> 0:02:43.280 ago with AT and T is going to bring in 0:02:43.360 --> 0:02:47.200 billions of dollars to reduce debt. That's number one, and 0:02:47.280 --> 0:02:50.040 number two, it brings in fresh capital for them to 0:02:50.200 --> 0:02:53.840 invest in the business. And I have a feeling they're 0:02:53.880 --> 0:02:56.640 probably going to take a step back and reevaluate the 0:02:56.720 --> 0:03:00.560 strategy here based on the fresh funding and side what 0:03:00.800 --> 0:03:03.640 the best avenues of growth may be going forward. 0:03:05.080 --> 0:03:07.960 And I'm wondering if this is going to satisfy the 0:03:08.080 --> 0:03:10.359 FCC this deal, because I know that they were sort 0:03:10.360 --> 0:03:13.440 of on Echo Star's case, if you will. They wanted 0:03:13.480 --> 0:03:16.520 them to sell some of their airwaves as the company 0:03:16.520 --> 0:03:18.800 looks to roll out its five G technology. I know 0:03:18.840 --> 0:03:22.560 they sold some spectrum licenses to AT and T recently. 0:03:22.600 --> 0:03:24.040 So do you think this is going to sort of 0:03:24.400 --> 0:03:26.080 take the FCC off their backs? 0:03:27.800 --> 0:03:33.040 I do. I mean, I think Starlink was working with 0:03:33.160 --> 0:03:37.800 the FCC. They had written a letter about Echostars under 0:03:37.920 --> 0:03:42.400 use of this spectrum. Starlike obviously really wants to get 0:03:42.400 --> 0:03:45.040 their hands on it. And I think the FCC really 0:03:45.080 --> 0:03:47.720 took their side on this one. I think they understood 0:03:47.720 --> 0:03:52.480 that EchoStar, being the only owner of this flexible use. 0:03:52.520 --> 0:03:55.880 Spectrum had not really put it to use to date, 0:03:56.080 --> 0:03:59.400 so in their view it was being underutilized, and being 0:03:59.440 --> 0:04:04.880 such a glasset felt that, you know, a sale might 0:04:04.960 --> 0:04:08.440 make sense, and so they really Echo Star really got 0:04:08.440 --> 0:04:11.680 into it with the FCC trying to protect those licenses. 0:04:12.440 --> 0:04:14.400 But in the end here, I think, if you want 0:04:14.440 --> 0:04:16.719 to think of it this way, the FCC won the 0:04:16.800 --> 0:04:20.640 day and net I think it's a good deal for 0:04:20.760 --> 0:04:24.279 both echo Star and Starlink and the FCC. 0:04:25.160 --> 0:04:28.280 Now I knew SpaceX or Starlink had a deal with 0:04:28.320 --> 0:04:31.880 T Mobile, right, how is this spectrum acquisition with EchoStar different, 0:04:31.920 --> 0:04:32.400 if at all? 0:04:34.640 --> 0:04:39.039 So, I think ultimately Starlink could go from being a 0:04:39.080 --> 0:04:44.400 partner with T Mobile to being a competitor of Team Mobiles. 0:04:45.040 --> 0:04:48.000 As I said a moment ago, this Spectrum opens the 0:04:48.040 --> 0:04:52.080 door for them to get into wireless directly without having 0:04:52.120 --> 0:04:55.839 to partner with a terrestrial carrier. The current deal with 0:04:55.960 --> 0:05:00.080 T Mobile basically has Starlink. I think the best way 0:05:00.120 --> 0:05:03.400 to think about it is they're almost like a tower company. 0:05:03.560 --> 0:05:07.680 They're providing the space based cell sites, if you will, 0:05:07.800 --> 0:05:11.360 to carry T Mobile traffic and they get paid a 0:05:11.400 --> 0:05:15.320 fee for that. But they're not earning the level of 0:05:15.440 --> 0:05:19.120 profits that you could as as a direct carrier. So 0:05:19.279 --> 0:05:23.200 down the road, Starlink, understanding this, wants to enter the 0:05:23.960 --> 0:05:27.000 cellular business directly. They have a lot to do before 0:05:27.080 --> 0:05:31.960 that happens, but I think it longer term puts the 0:05:32.080 --> 0:05:35.280 deal with T Mobile in jeopardy. 0:05:35.120 --> 0:05:37.520 And in the remaining seconds we have is seventeen billion 0:05:37.560 --> 0:05:40.719 dollars a fair price for the spectrum licenses? Do you think? 0:05:42.040 --> 0:05:45.039 You know? Spectrums a very i liquid market, so it's 0:05:45.160 --> 0:05:49.440 tough to gauge valuations. But in my mind, I look 0:05:49.560 --> 0:05:54.279 at it as a fare price given the potential again 0:05:54.440 --> 0:05:57.880 for Starlink to enter this huge market down the road, 0:05:58.760 --> 0:06:01.360 and they're very well capped bpitalized as you know, so 0:06:01.400 --> 0:06:04.479 I think those two factors together probably make it a 0:06:04.520 --> 0:06:05.000 good deal. 0:06:05.440 --> 0:06:08.560 Stay with us more from Bloomberg Intelligence coming up after this. 0:06:12.320 --> 0:06:16.000 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:16.080 --> 0:06:19.200 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:19.200 --> 0:06:22.520 Auto with the Bloomberg Business app. Listen on demand wherever 0:06:22.560 --> 0:06:26.120 you get your podcasts, or watch us live on YouTube. 0:06:26.839 --> 0:06:29.360 I've got a big bank merger to talk about here 0:06:29.520 --> 0:06:34.880 this Monday, PNC agreeing to buy Colorado's first bank for 0:06:34.960 --> 0:06:38.320 about four billion dollars. This is a big push by 0:06:38.360 --> 0:06:40.520 PNC to really go coast to coast and here to 0:06:40.520 --> 0:06:42.920 break it down for US as Herman Shan Bloomberg Intelligence 0:06:42.960 --> 0:06:46.200 as senior analyst for US regional banks joining us live 0:06:46.200 --> 0:06:48.200 here in a New York studios. Herman, good to see you. 0:06:48.400 --> 0:06:49.120 Thanks for having me. 0:06:49.240 --> 0:06:51.360 First off, I'm just wondering our regulator is going to 0:06:51.400 --> 0:06:53.440 be okay with this because the combined company is going 0:06:53.480 --> 0:06:57.000 to hold fifteen percent of deposits in what is it, Colorado. 0:06:56.720 --> 0:06:59.640 Yeah, in the Denver market. So that's what's real push 0:06:59.640 --> 0:07:04.160 for this deal in particular. But the regulartory landscape has 0:07:04.200 --> 0:07:08.560 been really great for banking and getting bank deals done. 0:07:08.600 --> 0:07:11.000 That's why you've seen some more bank deals over the 0:07:11.000 --> 0:07:14.560 past couple of months. You saw Huntington, which is based 0:07:14.600 --> 0:07:17.800 in Ohio, go into Texas for Vera tex And you've 0:07:17.840 --> 0:07:21.160 see in emerging vehicles in the Southeast with so Novas 0:07:21.200 --> 0:07:23.520 and Pinnacle, And this is sort of like the third 0:07:23.760 --> 0:07:25.480 large regional bank deal over. 0:07:25.280 --> 0:07:26.080 The past couple of months. 0:07:26.120 --> 0:07:28.800 So it just sort of signals that the bank, the 0:07:28.800 --> 0:07:31.400 Trump administration is really open for bank of an am. 0:07:31.920 --> 0:07:35.320 And this is not PNC's first attempt at really expanding 0:07:35.320 --> 0:07:38.239 its Colorado presence. It had previously sought to open sixteen 0:07:38.280 --> 0:07:41.800 locations in Colorado. Why is Colorado such a hot market 0:07:41.800 --> 0:07:42.280 for P ANDC? 0:07:42.440 --> 0:07:42.600 Right? 0:07:42.840 --> 0:07:45.840 I would take a step back and sort of highlight 0:07:45.920 --> 0:07:50.520 that the P and C, which is mostly in the Northeast, 0:07:50.560 --> 0:07:55.640 mid Atlantic a Midwest, that they've expanded across the sun 0:07:55.680 --> 0:07:58.440 Belt states in Colorado with the twenty twenty one deal 0:07:58.480 --> 0:08:01.920 for BBVA US and they sort of double down on 0:08:01.960 --> 0:08:05.920 those markets with this expansion plan to grow organically by 0:08:05.920 --> 0:08:08.320 opening up new branches, and this deal today that they 0:08:08.360 --> 0:08:11.760 announced really sort of supports that growth and accelerates it 0:08:12.160 --> 0:08:13.760 in Colorado and in Arizona. 0:08:14.600 --> 0:08:17.240 So, Herman, you obviously you're a specialist here in US 0:08:17.320 --> 0:08:19.440 regional banks. This is your sweet spot. So I'm just 0:08:19.520 --> 0:08:22.480 wondering as you look out onto the landscape now, who 0:08:22.600 --> 0:08:25.520 might be the next takeover candidate? Who might we be 0:08:25.600 --> 0:08:27.360 talking about in the not too distant future. 0:08:27.480 --> 0:08:30.280 Yeah, So you've seen some of these deals where these 0:08:30.840 --> 0:08:37.839 slower growth Midwest banks grow into areas like Texas, Florida, Colorado. 0:08:38.040 --> 0:08:41.960 So the banks are sort of smaller in size and 0:08:42.160 --> 0:08:45.880 we're talking about the first banks about twenty billion in assets, 0:08:45.920 --> 0:08:49.120 So banks of Slummer of that size in these higher 0:08:49.160 --> 0:08:54.040 growth markets are really attractive to some of these larger institutions. 0:08:55.000 --> 0:08:58.520 So with this purchase, PNC's total assets approaches six hundred 0:08:58.559 --> 0:09:01.520 billion dollars. It will bring closer to the number one 0:09:01.559 --> 0:09:03.240 regional bank, which is US Bank Corp. 0:09:03.679 --> 0:09:05.280 Is US Bankrup still a regional bank? 0:09:05.640 --> 0:09:10.120 Yeah, I would say there are three super regional banks, 0:09:10.120 --> 0:09:13.040 and I will put P and C, US Bank Corp 0:09:13.120 --> 0:09:16.640 and Truest where they're sort of below that seven to 0:09:16.679 --> 0:09:20.240 fifty mark, but larger than your typical regional bank. And 0:09:20.280 --> 0:09:23.280 they P and C now is a coast to coast lender, 0:09:23.400 --> 0:09:27.640 so and have operations all from the northeast all the 0:09:27.679 --> 0:09:31.400 way down to Florida, Texas, California, So you can't really 0:09:31.440 --> 0:09:33.679 call them a regional bank at this point. 0:09:34.040 --> 0:09:36.640 I would view them as more super regional. 0:09:37.400 --> 0:09:39.000 And I want to tie it back to the FED 0:09:39.080 --> 0:09:42.080 next week in interest rates, because don't all roads really 0:09:42.160 --> 0:09:44.760 lead there? At this point, I want to talk about 0:09:44.840 --> 0:09:46.640 what again, if this is going to be an environment 0:09:46.640 --> 0:09:49.760 of lower interest rates for the foreseeable future, what is 0:09:49.800 --> 0:09:51.720 this going to mean for the banks, but especially these 0:09:51.720 --> 0:09:54.360 smaller regional banks, because I'm thinking it may even squeeze 0:09:54.400 --> 0:09:55.520 their profitability more. 0:09:55.720 --> 0:09:55.960 Yeah. 0:09:56.040 --> 0:09:59.960 Yeah, it's interesting because we had a few federick cut 0:10:00.440 --> 0:10:02.480 at the end of last year, and the regional banks 0:10:02.520 --> 0:10:04.880 that I cover were able to navigate that pretty well. 0:10:04.920 --> 0:10:07.160 They're able to keep their net interest margins, which is 0:10:07.200 --> 0:10:11.640 a key metric for profitability, fairly stable. And that's one 0:10:11.640 --> 0:10:13.600 of the reasons why they've been able to do that 0:10:13.679 --> 0:10:16.920 is they've been able to lower their deposit costs, which 0:10:17.160 --> 0:10:20.400 was one of the things that really is a key 0:10:20.480 --> 0:10:25.000 metric for banks to really show top line growth. On 0:10:25.120 --> 0:10:27.720 top of that, lower interest rates could help. 0:10:29.400 --> 0:10:29.960 Loan growth. 0:10:30.280 --> 0:10:37.120 You've seen some companies like Rockets Mortgage be very abuiliant 0:10:37.200 --> 0:10:40.160 for lower interest rates, and so that could help improve 0:10:40.280 --> 0:10:43.040 some of the demand for lending, and that's something that 0:10:43.040 --> 0:10:44.960 we're seeing so far over. 0:10:44.760 --> 0:10:45.720 The first half of the year. 0:10:46.000 --> 0:10:47.719 So they'll make it up in volume. What they lose 0:10:47.720 --> 0:10:49.320 in profitability, they plan to make up. 0:10:49.520 --> 0:10:52.440 They can make it in volume. You'll see some dents 0:10:52.480 --> 0:10:55.960 in like the rates that they charge for loans, but 0:10:56.000 --> 0:10:58.520 they'll also make it up in volume and lowering their 0:10:58.520 --> 0:10:59.319 funding costs. 0:11:00.000 --> 0:11:02.040 When you look at the landscape overall of M and 0:11:02.080 --> 0:11:03.880 A in the banking sector. It feels like we've been 0:11:03.920 --> 0:11:06.040 waiting for something to happen for a long time, and 0:11:06.120 --> 0:11:08.280 maybe this is kind of the domino, the first domino 0:11:08.360 --> 0:11:11.640 that falls. Yeah, well, the big banks and I'm here, 0:11:11.640 --> 0:11:13.679 I'm talking about the JP Morgans, the Bank of America's 0:11:13.679 --> 0:11:14.240 well as Fargo's. 0:11:14.360 --> 0:11:16.400 Will they play any role in this consolidation. 0:11:16.960 --> 0:11:23.040 They're already too big, so there's that they are prohibited 0:11:23.280 --> 0:11:26.840 from from doing such deals because they just have dominant 0:11:26.840 --> 0:11:29.600 market share in their markets. One thing that we did 0:11:29.640 --> 0:11:32.680 see during the height of the regional banking crisis a 0:11:32.720 --> 0:11:35.679 couple of years back is that JP Morgan bought First 0:11:35.679 --> 0:11:40.040 Republic in an FDIC failed bank acquisition. So if we 0:11:40.800 --> 0:11:44.560 in the sense that if there we do get to 0:11:44.800 --> 0:11:47.920 a place like that, that's when the big banks can play, 0:11:48.000 --> 0:11:51.360 but in a straight M and A type scenario. 0:11:51.040 --> 0:11:52.720 To clean up messes. They can clean can't. 0:11:52.600 --> 0:11:56.280 Clean up messes, but they can't outwardly buy a bank 0:11:56.400 --> 0:11:58.040 at this point, they're just way too big. 0:11:58.880 --> 0:12:01.800 And just what about the consumer out there only shopping 0:12:01.800 --> 0:12:03.080 for the best deal. You know, it used to be 0:12:03.120 --> 0:12:05.120 that these smaller regional banks would be the place to 0:12:05.160 --> 0:12:07.640 go for the better CD rates, right or a more 0:12:08.520 --> 0:12:11.080 friendly mortgage terms. Is that still the case in the 0:12:11.080 --> 0:12:12.320 thirty seconds we've got Yeah? 0:12:12.400 --> 0:12:12.679 Sure. 0:12:12.720 --> 0:12:16.000 So that's what really great about these markets that P 0:12:16.080 --> 0:12:18.440 and C is going to where they can have really 0:12:18.480 --> 0:12:22.720 dominant market share in Denver and Arizona and just having 0:12:22.760 --> 0:12:28.199 that marketing and having the branches really helps with deposit 0:12:28.320 --> 0:12:30.640 taking and helping your consumer out. 0:12:30.840 --> 0:12:34.000 Stay with us more from Bloomberg Intelligence coming up after this. 0:12:37.880 --> 0:12:41.600 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:41.679 --> 0:12:44.720 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:44.760 --> 0:12:48.079 Auto with the Bloomberg Business app. Listen on demand wherever 0:12:48.120 --> 0:12:51.240 you get your podcasts, or watch us live on YouTube. 0:12:51.880 --> 0:12:54.720 I want to talk a little commercial real estate. Now, 0:12:54.760 --> 0:12:56.960 call me crazy, but I actually get excited, Scarlett about 0:12:57.000 --> 0:13:01.560 commercial real estate, right, John, because I think it tells 0:13:01.640 --> 0:13:03.800 us a lot about the broader economy. Let me look 0:13:03.800 --> 0:13:04.440 at how it's doing. 0:13:04.720 --> 0:13:08.760 Yeah, it's long term investments and so they don't move things, 0:13:08.800 --> 0:13:11.560 aren't reacting to day to day movements and expectations on 0:13:11.640 --> 0:13:14.560 interest rates. But once rates are moving down, then you 0:13:14.600 --> 0:13:19.439 can expect slow gradual movement. But see change in how 0:13:19.440 --> 0:13:20.240 people perceive it. 0:13:20.520 --> 0:13:22.199 So where are we now? Right after years of high 0:13:22.240 --> 0:13:25.720 inflation limited growth, is the commercial real estate industry coming 0:13:25.760 --> 0:13:27.760 back to life? We wanted to bring in a pro. 0:13:27.880 --> 0:13:30.160 She's here in on New York studio, Lisa, the managing 0:13:30.240 --> 0:13:33.080 partner and head of real estate at Eisner Amper. Lisa, 0:13:33.080 --> 0:13:35.160 thanks so much for being with us. Just in my 0:13:35.240 --> 0:13:39.440 little cosmic world here in Midtown east of Manhattan. I'm 0:13:39.520 --> 0:13:43.240 seeing storefronts that had gone empty for so long now 0:13:43.440 --> 0:13:46.880 having tenants. I'm going to call it a mini upswing. 0:13:47.000 --> 0:13:48.600 Am I right in saying that. 0:13:48.800 --> 0:13:50.520 Well, thank you for having me, And yes, I get 0:13:50.520 --> 0:13:52.520 excited too while we talk about commercial real estate. 0:13:52.600 --> 0:13:53.520 So we're in the right group. 0:13:53.960 --> 0:13:57.480 So office in New York has definitely taken a new 0:13:57.559 --> 0:13:59.280 surgeons again. And so I think I made a prediction 0:13:59.280 --> 0:14:00.960 at the beginning of this year that's saying by the 0:14:01.040 --> 0:14:03.319 end of twenty twenty six that we were going to 0:14:03.400 --> 0:14:05.600 be pretty much at capacity for New York City, and 0:14:05.720 --> 0:14:09.360 vacancy for office is definitely moving down. And so rents 0:14:09.360 --> 0:14:12.199 in New York City are about little under seventy five 0:14:12.240 --> 0:14:15.240 dollars a square foot and the level of volume is 0:14:15.360 --> 0:14:18.280 really close to twenty nineteen, which is really amazing when 0:14:18.280 --> 0:14:21.280 you're seeing that so so pree pandemic pre pandemic levels 0:14:21.360 --> 0:14:23.520 is the amount of volume that we've seen in office 0:14:23.600 --> 0:14:25.880 leasing in New York City, and you can be excited 0:14:25.880 --> 0:14:26.680 about other cities. 0:14:26.840 --> 0:14:27.920 San Francisco as well. 0:14:27.920 --> 0:14:30.960 We talked about earlier in the year with AI dollars 0:14:31.040 --> 0:14:33.920 being spent. So when you look at fifty five billion 0:14:33.920 --> 0:14:36.240 dollars of AI that was gone has been spent in 0:14:36.240 --> 0:14:39.240 San Francisco rents, there are about seventy two dollars a foot. 0:14:39.280 --> 0:14:41.680 So for Class I know, that's really exciting. So for 0:14:41.760 --> 0:14:45.120 Class A buildings in San Francisco area, that's where the 0:14:45.120 --> 0:14:45.720 money's going. 0:14:45.760 --> 0:14:47.640 Now, whether we have a bubble or a boom or 0:14:47.680 --> 0:14:48.200 what's going. 0:14:48.080 --> 0:14:50.680 On with AI, it remains to be seen, but people 0:14:50.800 --> 0:14:53.480 are Initial reports are that people are excited and they 0:14:53.560 --> 0:14:56.760 do see productivity with AI dollars being spent. 0:14:56.840 --> 0:14:59.360 So you know the excitement. I'm excited. 0:14:59.520 --> 0:15:00.640 It's it's there, it's real. 0:15:00.880 --> 0:15:03.760 We can feel it from you, Lisa, So it makes 0:15:03.760 --> 0:15:06.200 sen sense. San Francisco, it's an AI story. What's the 0:15:06.280 --> 0:15:09.120 story here in New York Because the call for folks 0:15:09.120 --> 0:15:12.280 to return to work the city being busy once again 0:15:12.360 --> 0:15:14.720 has been in process for a couple of years. 0:15:14.760 --> 0:15:17.080 Now, is there anything that kind of flipped a switch? 0:15:17.640 --> 0:15:20.640 So it's again, what's here in the market in demand? 0:15:20.720 --> 0:15:22.760 And so there wasn't a lot of office being put 0:15:22.800 --> 0:15:25.840 back into the market, and so now people are absorbing 0:15:25.920 --> 0:15:28.360 those office units are there. We always know New York 0:15:28.400 --> 0:15:31.120 is still a hub for financial, for entertainment, for all that, 0:15:31.160 --> 0:15:32.480 it's still a capital of the world. 0:15:32.720 --> 0:15:33.680 So people want to be here. 0:15:33.680 --> 0:15:35.360 They want to live here, they want to work here, 0:15:35.480 --> 0:15:37.480 and they want to be in that environment. So just 0:15:37.600 --> 0:15:41.160 creating that excitement around New York again is really going 0:15:41.200 --> 0:15:44.240 to help with the vacancies and bring back the retail 0:15:44.440 --> 0:15:47.200 and the retail experience to life, which what you noticed 0:15:47.200 --> 0:15:48.640 earlier on Yeah. 0:15:48.520 --> 0:15:50.560 I mean, there's a big high rise going up not 0:15:50.600 --> 0:15:52.480 too far from where I live, and I'm just wondering 0:15:52.480 --> 0:15:54.560 who the anchor stores on the bottom will be, because 0:15:54.600 --> 0:15:57.720 sometimes those buildings go up and those anchor stores remain 0:15:58.120 --> 0:15:59.880 empty for a long time. 0:16:00.040 --> 0:16:02.480 So most of those projects have the anchor tenants pretty 0:16:02.520 --> 0:16:04.920 much in place when they're penciling or they're doing they're 0:16:04.920 --> 0:16:07.120 mapping out the deals and so making sure that it 0:16:07.160 --> 0:16:10.840 really does create that energy and that vibe that for 0:16:10.880 --> 0:16:14.400 the multifamily. And again, when you look at multifamily, you 0:16:14.480 --> 0:16:16.840 really have to make sure that you're able to sustain 0:16:16.880 --> 0:16:19.120 the construction costs and the zoning and so a lot 0:16:19.120 --> 0:16:21.160 of goes into those projects to make sure that those 0:16:21.400 --> 0:16:24.160 will really work, and everybody wants it to work. That's 0:16:24.160 --> 0:16:26.320 why we have the City of Yes mandates now and 0:16:26.360 --> 0:16:29.280 things are going through. So really, the excitement I think 0:16:29.360 --> 0:16:31.560 is there, and I think it's just as you had 0:16:31.560 --> 0:16:33.800 said before. It's the long term planning. It's not going 0:16:33.840 --> 0:16:36.840 to change overnight. It's really knowing that where we're going 0:16:36.880 --> 0:16:39.280 to be in the next five to ten years with 0:16:39.360 --> 0:16:40.359 some of these properties. 0:16:40.600 --> 0:16:42.280 But the rules of the road have changed, right. 0:16:42.280 --> 0:16:45.360 You had the One Big Beautiful Bill, which you know, 0:16:45.600 --> 0:16:48.600 the President is a former property developer and in many 0:16:48.640 --> 0:16:50.640 ways still is a property developer, So I mean, he 0:16:51.040 --> 0:16:52.840 knows what the industry wants and likes. 0:16:53.400 --> 0:16:55.640 What did you see in your industry from that bill? 0:16:56.320 --> 0:16:59.000 So the real estate industry fed fairly well with One 0:16:59.000 --> 0:17:02.160 Big Beautiful Bill. There's of incentives for both affordable housing 0:17:02.240 --> 0:17:05.119 for low income housing credits that were awarded by the 0:17:05.119 --> 0:17:07.760 federal government. What the states do are now a different 0:17:08.000 --> 0:17:11.240 story of how they award those experience. 0:17:10.760 --> 0:17:11.919 Points for affordable housing. 0:17:12.200 --> 0:17:15.280 Same thing with qualified Opportunity zones, where there's in the 0:17:15.320 --> 0:17:18.119 One Big Beautiful Bill there are incentives to go for 0:17:18.200 --> 0:17:21.520 some of these economic zones and create new spaces in there, 0:17:22.480 --> 0:17:26.320 things with bonus appreciation. So the incentives are there in 0:17:26.320 --> 0:17:29.280 One Big Beautiful Bill. It's whether or not the states 0:17:29.280 --> 0:17:30.639 and the federal governments are going to be able to 0:17:30.680 --> 0:17:33.919 work together to make sure that developers can still build 0:17:34.160 --> 0:17:36.840 in those areas that really really do need economic development 0:17:36.920 --> 0:17:37.359 and growth. 0:17:37.600 --> 0:17:39.919 You talked about Class A buildings a moment ago. I 0:17:39.960 --> 0:17:43.840 know Boston has been having some real struggles there and 0:17:44.080 --> 0:17:47.000 what happens to the non Class A buildings. So all 0:17:47.040 --> 0:17:49.399 the other buildings that would need to be retrofitted or 0:17:49.440 --> 0:17:52.640 that people they just don't seem that desirable anymore given 0:17:52.680 --> 0:17:54.560 these new buildings coming up with amenities. 0:17:54.960 --> 0:17:57.320 So I was in Boston maybe a month ago, and 0:17:57.359 --> 0:18:01.440 that Seaport district looks great and vibing and. 0:18:01.240 --> 0:18:01.960 Doing really things. 0:18:02.040 --> 0:18:03.520 So the A market, as you said. 0:18:03.400 --> 0:18:04.720 Before, is going to fare very well. 0:18:05.000 --> 0:18:07.320 The bee and the obsolete buildings are really going to 0:18:07.359 --> 0:18:08.960 be the ones that struggle, and that's what's going to 0:18:09.000 --> 0:18:12.240 remain the scene is does the capital markets, which there's 0:18:12.280 --> 0:18:14.040 a lot of money out there, where are they going 0:18:14.080 --> 0:18:17.440 to put those investments to put back into the marketplace. 0:18:17.640 --> 0:18:19.520 Is it going to continue in the Class A or 0:18:19.600 --> 0:18:22.080 is somebody going to come and try to revamp those 0:18:22.119 --> 0:18:24.760 Class bs and the obsolete buildings or what are we 0:18:24.800 --> 0:18:28.280 going to do with them as those properties? And that's 0:18:28.320 --> 0:18:30.800 a great question and it'll remain to be seen as 0:18:30.840 --> 0:18:33.560 in the next seven to ten years of areas. But 0:18:33.640 --> 0:18:36.639 that seaport district is really exciting in Boston. 0:18:36.680 --> 0:18:38.560 I was there just dropping off my son to college 0:18:38.600 --> 0:18:40.080 a couple of weeks ago, and we went for some 0:18:40.119 --> 0:18:42.520 seafood down by the seaport and it was bustling and 0:18:42.600 --> 0:18:43.760 it was hard to get a reservation. 0:18:44.000 --> 0:18:46.160 Yeah, I mean that feels like every city these days. 0:18:46.240 --> 0:18:49.000 I'm telling you, Lisa, how much of your day or 0:18:49.000 --> 0:18:52.119 how many of your conversations focus around data centers, because 0:18:52.119 --> 0:18:54.120 that is an area you're smiling alright aside. 0:18:53.920 --> 0:18:56.119 Can tell us Polley, would you say more than half? 0:18:56.440 --> 0:18:58.159 I wouldn't say more than half, but it's definitely an 0:18:58.200 --> 0:19:01.240 area of interest of where people are dedicating to time 0:19:01.280 --> 0:19:03.520 to see where it makes sense if they should be 0:19:03.600 --> 0:19:05.800 investing in data centers building data centers. 0:19:06.000 --> 0:19:07.000 It's interesting we talk. 0:19:06.880 --> 0:19:09.439 With real estate about square feet everything square foot, but 0:19:09.520 --> 0:19:11.840 on data centers it's on energy consumption and how much 0:19:11.920 --> 0:19:14.040 energy usage it is in those centers. 0:19:14.160 --> 0:19:16.399 So it's a little bit different of a mine shift 0:19:16.400 --> 0:19:16.919 and change. 0:19:17.280 --> 0:19:20.480 And the places that or the regions that can house 0:19:20.520 --> 0:19:23.240 these centers are much different than when we're talking the 0:19:23.280 --> 0:19:27.840 downtown Boston and so really it's an entirely different niche 0:19:28.080 --> 0:19:31.760 within industrial figuring out to make sure that if where 0:19:31.960 --> 0:19:35.200 dollars get allocated and the excitement around those data centergy 0:19:35.240 --> 0:19:36.560 and energy, I have to make sure I say it 0:19:36.720 --> 0:19:37.440 energy consumption. 0:19:38.760 --> 0:19:41.560 In the thirty seconds, we have left the most affordable 0:19:41.960 --> 0:19:45.439 commercial real estate market right now. Oh that's a tough one. 0:19:45.880 --> 0:19:46.560 That is a tough one. 0:19:46.640 --> 0:19:48.960 I think when people are looking everyone still likes the 0:19:49.000 --> 0:19:50.440 sun belts and the mountain regions. 0:19:50.440 --> 0:19:52.520 Sure is still because. 0:19:52.320 --> 0:19:54.080 Again, when we talk about affordable, it has to be 0:19:54.080 --> 0:19:56.280