Veteran Tishman Speyer broker Gus Field is returning to Cushman & Wakefield, Commercial Observer has learned.
Field, who spent 30 years at C&W before deccamping for Tishman Speyer in 2018, returns to the company as its executive vice chair after serving as leasing director for Tishman Speyer’s 22 million-square-foot portfolio.
“I’ve been truly blessed to be able to work with extraordinary people at Tishman Speyer, Cushman & Wakefield and so many others who I’ve come to know through the course of my career,” Field said in a statement. “I could not be more appreciative of my experiences to date, nor more excited about what lies ahead.”
At Tishman, Field oversaw one of Gotham’s biggest real estate portfolios and leased out one of its ritziest new offerings: the 2.8 million-square-foot tower at 66 Hudson Boulevard known as The Spiral. Field signed accounting firm Baker Tilly for 28,000 square feet across the 22nd floor and another 15,000 square feet for Swedish bank Skandinaviska Enskilda Banken AB in January, bringing the building to 72 percent leased.
Field also represented the landlord in its other properties, including on deals for the Government of Ireland, which took 43,108 square feet at Tishman and Irvine Company’s MetLife Building in January, and in e-commerce startup Rokt’s 33,860-square-foot expansion at Tishman’s 175 Varick Street last year.
Before he joined Tishman, Field was a stalwart C&W staffer, spending nearly three decades working with big-name C&W brokers like John Cefaly and Robert Lowe, The Real Deal reported. He represented Facebook in its 370,000-square-foot expansion at 770 Broadway in 2018 and scored 74,349 square feet for Salesforce at 685 Third Avenue in 2012.
Field has tackled more than 40 million square feet of leases in his career, and C&W was excited to bring the broker back into the fold, said Todd Schwartz, C&W’s managing principal.
“We are delighted to welcome Gus back to the Cushman & Wakefield team,” Schwartz said in a statement. “He represents the very best of our industry and exemplifies the core values of our firm.”
Tishman wished Field “all the best in his return” to C&W, Bud Perrone, a spokesperson for Tishman, said in a statement.
“We are grateful to Gus for his contributions to our New York leasing team and for his leadership on a number of major transactions during his time at Tishman Speyer,” Perrone added.
Update: This article has been updated to include a statement from Tishman Speyer.
Celia Young can be reached at cyoung@commercialobserver.com.
Two tony Manhattan shopping destinations entered a public health emergency and financial catastrophe. One came out swinging, the other emerged punch drunk.
Union Square and SoHo have indeed ended up on divergent paths in terms of the recovery of their retail from the pandemic. SoHo, after a rough 2020 characterized by broken storefronts due to rioting, seems to be back if not better than ever, attracting dozens of new tenants and thousands of shoppers daily. Union Square, on the other hand, has slipped a bit from its former perch as a Manhattan retail mecca.
Retail brokers argue that Union Square suffers from rents that can be as high as those in SoHo — but for much larger spaces. Combined with the fact that Union Square has never been considered a destination for major fashion brands, the square’s lofty asking rents and sudden mass departure of tenants has been a challenge.
“When you have a large space and a high per square foot number, it becomes multiple millions of dollars,” said Richard Skulnik, a retail broker at Ripco. “I think that’s where some of the vacancy lies.”
Fourteen blocks south, SoHo has benefited from luxury and mid-range brands that remained through the peak of the pandemic and redesigned their stores, including standbys such as Coach, Louis Vuitton, Dior and Tiffany & Co., as well as fast-fashion retailers Forever 21 and Uniqlo. It also helps that SoHo is a major tourist destination.
New tenants began to trickle back into the neighborhood south of Houston Street a year into the pandemic, with Aritzia leasing the former Dean & Deluca space at 524 Broadway in mid-2020 and opening in February 2021. Valentino followed suit, leasing its first SoHo store at 135 Spring Street the same month Aritzia opened. Petco also took advantage of lower rents and opened a store called Reddy, which it billed as a “premium lifestyle brand for dogs.”
Then 2022 brought a flurry of new retail deals: athleisure brand Vuori leased 106 Spring Street for its first store in March, followed by deals with Armani Exchange, Eataly, Timberland, Athleta, Balenciaga, Arc’teryx and Glossier. Armani even doubled down with a second, yet-to-be-publicized store at 134 Spring Street for its slightly more upscale offering, Emporio Armani.
Low rents in the less fashionable parts of SoHo also attracted unique tenants like the House of Cannabis, a weed museum set to open this year at 427 Broadway, just north of Canal Street. In February, Australian fashion brand Cotton On took 20,000 square feet at 512 Broadway, in one of the largest retail leases signed in the neighborhood this year.
Meanwhile, Union Square has been struck by some notable vacancies, including the departure of Raymour & Flanigan on 14th Street near Third Avenue; Walgreens vacating a two-floor storefront at the corner of 14th Street and Fourth Avenue; and Food Emporium’s exit across the street. The supermarket shuttered suddenly in 2021 after two decades in its 33,000-square-foot storefront at 10 Union Square East, ending its lease early to make way for a new tenant that had leased the space in February 2020: Target. The big-box retailer started construction late last year and expects to open in August 2023.
A number of other restaurants and shops closed before the pandemic or in 2020, punching more holes in what had once been a lively retail landscape. Fast-fashion retailer Forever 21 shuttered its large store on 14th Street in 2020 after filing for bankruptcy. Sephora decided to take over the storefront and vacate its 21,000-square-foot, two-floor spot at 200 Park Avenue on the north side of the square. Sephora’s old space remains empty.
Another Union Square standby, the restaurant and bar Coffee Shop, closed in 2018 and its space remained vacant until it was leased by Chase bank, which opened in 2021 with an attached Joe Coffee Company. American Eagle also closed on the same block in 2020, and was replaced the following year by a children’s clothing store called Rookie USA.
The east side of the square also seems to be struggling. A two-floor TGI Friday’s at East 16th Street and Union Square East closed in 2018, and the space has yet to be filled with a tenant. Across the street, Children’s Place, another kid’s clothing store, closed during the pandemic and hasn’t been replaced, either.
Other looming vacancies on the square include Petco, which is leaving its longtime store at 860 Broadway on the corner of East 17th Street for the redeveloped Tammany Hall on Union Square East. And, in January, Regal’s parent company, Cineworld, said it would close its popular multiplex at the corner of Broadway and East 13th Street. The London-based theater conglomerate filed for Chapter 11 bankruptcy last year, announcing that it would shutter 39 theaters, including the Regal Union Square.
The 2,000-seat theater opened in 1998 and was reportedly Manhattan’s biggest multiplex at the time. Cineworld even spent millions renovating the theater in early 2020, adding a Lavazza espresso bar and new screening equipment. However, sources familiar with Regal’s lease say that Cineworld is threatening to walk away from the theater as a bargaining tactic, in hopes of negotiating a cheaper rent on a new long-term lease for the space.
Of course, the neighborhood’s not deserted. Union Square Partnership, the area’s business improvement district, points out that the neighborhood added 40 new retailers last year. In the fourth quarter of 2022, about a dozen new businesses opened, including an Urbanspace food hall at Zero Irving (aka 124 East 14th Street), Warby Parker at 73 Fifth Avenue, P.F. Chang’s at 113 University Place, Sweet Chick at 32 East 16th Street, and Medrite Urgent Care at 123 Third Avenue.
And it’s worth noting that one retailer is decamping from (almost) SoHo to (almost) Union Square. Crate & Barrel is moving its New York City flagship from 611 Broadway, at the north side of Houston Street, to 881 Broadway, at the corner of West 19th Street.
Ripco’s Skulnik said that many of the mid-range retailers that would lease space near Union Square have been struggling with supply chain issues, inflation and rising retail rents. And, of course, there’s what some people would call the “normcore” aspect of Union Square — its appeal for convenience retailers like Whole Foods and Walgreens, mainstream national chains like American Eagle, DSW and Barnes & Noble, and furniture sellers like Raymour & Flanigan.
“The luxury retailers you have in SoHo are not going to lease space on Union Square,” Skulnik said. “That’s where I believe some of the struggle has been in leasing spaces in Union Square. It checks all of the boxes for daytime population, tourists, college students and residents, so it has plenty of foot traffic. I don’t think Union Square is going to suffer.”
He said he felt that “off-price retailers, furniture, and dry goods retailers” that don’t need the critical mass of apparel brands nearby on Fifth Avenue might do well in Union Square.
Indeed, the stretch of Fifth Avenue to the west and north of the square, between 14th and 23rd streets, has thrived since the pandemic, with new stores from Aritzia, Allbirds, Under Armour, Outdoor Voices, Hoka, Pandora Jewelry, Theory and Arc’teryx. Most of the pre-pandemic chains stuck around, including Zara, H&M, Banana Republic, Gap, J. Crew, Club Monaco, Bonobos, Madewell and Lululemon.
As for Union Square, “it’s not where you’re going to put your first store,” said Matt Chmielecki of CBRE. “It’s not on the top of most tenants’ lists of where they want to do stores. It’s not a very dense retail market, but it is a dense retail market to the west and the north.”
Chmielecki added that other retail corridors have more specific draws. “If you’re a big-box tenant, you’re probably looking at Sixth Avenue first. If you’re a luxury tenant, you’re probably looking at Madison Avenue first. If you’re new to the market, you’re probably looking at SoHo.”
Trying to pin down exact retail rents tends to be more of an art than a science, too, with brokerages offering varying numbers and individual brokers guesstimating with their own anecdotal experiences.
For example, the average asking rent along Broadway from 14th to 23rd streets was $424 a square foot in the fourth quarter of 2022, according to CBRE’s latest retail report. And average asking rent on Fifth Avenue from 14th to 23rd streets was even lower at $297 per square foot. SoHo had a much broader range of rents, with Prince Street between Broadway and West Broadway averaging $640 a square foot, and, at the lower end, Broadway between Broome and Houston streets averaging $322 a square foot.
“I think SoHo, out of all the markets in Manhattan, benefited the most coming out of COVID,” said Jason Greenstone, a broker at Cushman & Wakefield. “Retailers are having a flight to quality retail locations, to markets that will have the most amount of co-tenancy and foot traffic for their stores. The direct availability is 15.3 percent, which is the lowest it’s been since 2015.”
Ultimately, a tenant that leases in Union Square needs to be able to pay high rents for large spaces. That means they need to generate enough revenue on a per-square-foot basis to justify the lease. Greenstone suggested that entertainment concepts — like bowling or mini-golf with food and alcohol — might be more interested in Union Square. He also felt that “elevated and specialized fitness concepts, gyms, veterinary [businesses], and medical retail” would also do well to look on the square.
“As those fashion tenants continue to move out, you lose the continuity of the shopper,” he said. “It’s not surprising to see those tenants focusing on areas where their competitors already exist.”
Patrick Smith, a veteran retail broker at JLL, felt that rents on Union Square had “escalated disproportionately” but argued that there wasn’t very much vacancy. He blamed lenders for the empty storefronts across the city, because they don’t like to accept tenants at lower rents, especially if the owner bought and financed the property during the last retail rent peak in 2017. Citywide, he estimated that retail rents are still down by about 30 percent from their late 2010s pinnacle.
“A lot of these landlords can’t replace their tenants at the previous rent,” said Smith. “A lot of the chronic vacancy is because the mortgagee won’t approve the tenant, or because the lender set up a circumstance that was too challenging to do it.
“If you bought or financed a property at that time [from 2015 to 2017], it’s hard to replicate those leases and those rents,” he explained. “Until these lenders restructure these mortgages, nothing really happens.”
And, while office landlords such as Blackstone and RXR have attracted attention for handing back the keys to their less-profitable buildings, Smith argued that retail landlords are struggling with similar circumstances.
“There are a lot of properties on Fifth Avenue where the rent was $10 million a year, and now it’s $5 million a year,” he noted. “It means the value has been impaired. I’ve heard it’s happening with retail. Lenders are debating whether to give back the keys or accept the keys, because they don’t want the keys. We’ll see more foreclosures and more lenders being involved in New York City than we have in a long time.”
Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com.
Law firm Garwin Gerstein & Fisher locked down a deal to remain in the same Financial District office building, the tenant brokers announced Monday.
The antitrust and business law firm signed a 10-year lease to move its offices to slightly smaller, 7,662-square-foot digs within 88 Pine Street, according to tenant broker Cushman & Wakefield. C&W declined to comment on the asking rents.
Garwin Gerstein & Fisher, which moved to the 32-story tower in 2013, will ditch its 8,992 square feet on the 10th floor for new, 28th-floor offices. The firm was drawn to the space because of its views of the Manhattan skyline, said C&W’s Aron Schreier who represented the firm in the deal with colleagues Max Mond and Jennifer Konefsky.
Garwin Gerstein & Fisher “is pleased to continue its commitment to the Financial District and 88 Pine Street for the long term,” said Schreier. “[It] will benefit from new space within the building that is more reflective of the needs of its partners and staff.”
Other tenants at the 664,990-square-foot building between Wall Street and Maiden Lane include Gilbane Building Company and software firm Dalet.
CBRE’s Gerry Miovski, Masha Dudelzak, Dorothy Chuang and Jonathan Cope represented landlord Orient Overseas Associates. A representative for CBRE did not immediately respond to a request for comment.
A representative for Garwin Gerstein & Fisher did not immediately respond to a request for comment.
Celia Young can be reached at cyoung@commercialobserver.com.
It’s in SoMa, the South of Market Street neighborhood that divides San Francisco diagonally into its more residential and stately north end and its more commercial and grittier south end. Six stories, ground up, with wide windows offering a view beyond the mere streets surrounding it, into the future.
In a national office market depressed over the possibility that hybrid and remote work might make good, old-fashioned urban offices obsolete, the development at 300 Kansas Street may be a little shining beacon signaling safety.
San Francisco in particular could use a ray of hope. Office vacancy there stood at 24.1 percent by the end of 2022, according to Cushman & Wakefield, the highest it’s ever been since the brokerage began tracking it in 1996. A mere 43.5 percent of the Bay Area’s workers have returned to the office on a typical workday, according to security firm Kastle Systems, which tracks swipe-ins. That’s among the lowest of the 10 markets Kastle covers. The only metro areas lower were Philadelphia and nearby San Jose — like San Francisco, a tech-driven market. The national average was 50.1 percent.
In that light, 300 Kansas may be a successful model for commercial real estate in cities post-pandemic: buildings designed to host research and development of the industrial kind. The model certainly appears to be catching on. Last year there were 4.8 million square feet of industrial R&D deliveries in urban areas — a new high, according to statistics compiled by Newmark. That was also more than double 2021’s 2.1 million square feet.
With a market beset by office customers who have learned — some the hard way — that their employees can do their jobs remotely, a premium has been placed on uses that can’t be duplicated someplace other than the office. These are the jobs that, by definition, can be done only at a location designed for the kind of experimentation you would not want to subject your carpet to.
In the case of 300 Kansas, it will even have a 45,000-square-foot research and development area where a tenant can drive cars.
San Francisco is a hotbed for futuristic autonomous vehicles, also known as self-driving cars, a technology that promises to revolutionize the very experience of urban living. Already some investors are buying up parking garages in the hope they can be converted to apartments once driverless vehicles catch on and folks no longer have to consider where to stash their cars when they go downtown.
“We continue to be focused on growth in cities where talent wants to be,” said Ethan McCall, a vice president with Spear Street Capital, which is 300 Kansas’ lead developer. “We are following the evolution of cars as computers on wheels.”
He said Spear Street was attracted to San Francisco’s SoMa neighborhood because it was where tech companies put manufacturing operations in the past. Spear Street declined to disclose the cost of the building. It did say Bank of America is financing its construction.
The perfection of autonomous vehicles depends on the perfection of artificial intelligence, or AI, in which every last movement of fellow vehicles, pedestrians and even animals is anticipated to give the machine a brain that can think as good as and perhaps better than a human’s, and put it in charge. There’s other technology. An image posted by Uber, one of the companies working on autonomous vehicle technology, shows a car with a roof-mounted “lidar” unit. Lidar, or “light detection and ranging,” takes constant 360-degree laser pictures to give a car a complete sense of its surroundings.
All this tech still needs a bit of research and development. Recent stories in The New York Times discuss accidents these vehicles have had, or stalls that tie up whole neighborhoods, as experimental vehicles are set loose on San Francisco’s street grid.
The new building at 300 Kansas topped off in February. It still has no committed tenants, but a spokeswoman for Newmark, the brokerage representing Spear Street, said the topping-off should spur interest. The building is expected to be complete by the fall. And researchers there will be able to grab a drink or a meal, take in the city’s cultural spots and nightclubs, and enjoy a rooftop garden with views of the East Bay hills and Mount Diablo.
“I know the building, certainly,” said Robert Sammons, San Francisco-based senior director of research for Cushman & Wakefield, a rival of Newmark. “If you’re looking at creative, or PDR [production, distribution, repair], or advanced manufacturing, it’s one of the largest and newest projects in the city of San Francisco right now. [It’s] a bit of an outlier so far, as far as flex and R&D use goes, though I think it’s going to be a more important part of the market as the entire office sector readjusts to the new reality, if you will.”
There are a number of similar but smaller operations in the San Francisco areas — one a renovation of an old building — designed to serve the same market, Sammons said. One is occupied by software company Adobe. The building also has robotics labs, he said. Industrial R&D shops tend to be connected largely by Caltrain with colleges and universities such as Stanford and the University of California-Berkeley and UC-San Francisco, as well as Silicon Valley to the south of the city.
Sammons compared research and development, which before was confined to more spacious suburban and rural areas, as comparable to life sciences, a major industry in the Bay Area and in San Diego County, Greater Boston and a handful of other markets like New York and D.C. The appeal is about promoting a use that cannot easily be done at home or in a remote location close to home.
“If you’re in the R&D sphere, if you are creative, you certainly need to be on-site,” he said. “You can’t do life science lab work in your apartment.”
R&D spaces are popping up in urban areas throughout the country, and should get bigger in the months and years ahead, said Larry Gigerich, vice chairman of the Site Selectors’ Guild and founder and executive managing director of Ginovus, an Indiana-based consultancy that specializes in helping industrial companies find places to operate. The desire for uses that can’t be replicated remotely or at home is providing extra impetus, he said.
There’s also the fact that leasing rents and sales prices for office and other commercial properties have dropped due to pandemic-
spurred vacancies as well as, in some cases, oversupply from new construction.
“You start with talent,” Gigerich said. “The quality and availability of talent is a critical site-selection factor. One of the best things that urban areas can do to position themselves is talk about (their) talent. Younger, well-
educated talent, especially before they have families, are domiciled in those areas.”
The approximately $275 million February acquisition by Hyundai, the Korean car company, of 15 Laight Street in Manhattan’s Hudson Square is an example of a city benefiting from a desire by industrial companies to tap into that talent to perfect its vehicles, Gigerich said. Hyundai will also add offices and a showroom, according to Bloomberg, which broke the story.
“That’s a really good example of the fact that these companies are looking at the great talent that’s happening in these urban areas,” he said. “These companies had not done it before because of the price point on the real estate side. I think now too there’s a real awareness that has grown not only with U.S domestic companies, but international companies, of the talent that can be tapped into.”
There should definitely be opportunities to replicate the 300 Kansas experience throughout the country. A February report from Cushman & Wakefield titled “Obsolescence Equals Opportunity” predicted there will be more than 330 million square feet of vacant office space by the end of this decade that can be directly linked to hybrid work. With about half a billion square feet expected to come online by then, there should be some 5.6 billion square feet of offices. With hybrid and remote increasingly the norm, however, there will be a need for only 4.6 billion square feet of office space.
Bob Hess, practice leader and senior principal for Newmark’s global consulting and strategy solutions group, said an idea for a new process can happen anywhere. But taking the idea and developing it probably requires people working together, most likely in an office.
“In a life science environment, you have to be in a lab together,” he said. “There are COOs and heads of scale and strategy — (they) want people in the office, so there’s that culture and energy around that idea to make it happen.”
To Hess, corporations are less interested in whether a location is urban, suburban or rural than whether it has the environment to effectively test a product. He mentioned International Falls, Minn., the coldest place in the 48 contiguous states, where car batteries are tested to make sure they will fire up a car under the most extreme conditions. There is one place about an hour west of International Falls where Bosch, the German multinational engineering and technology company, tests “everything from batteries to braking systems,” said Gigerich.
“Innovation happens anywhere,” Hess said. “Everyone wants to do R&D. It’s not just about an urban environment. It can happen in the suburbs, in different states, countries. It takes a village to take these innovation ideas and get them to the next level, scalability, and to make money. In a downturn, a soft-landing recession, innovation and R&D always picks up.”
160 Water Office-to-Residential Conversion to Provide 600 Units at Market Rate – Commercial Observer
Vanbarton Group is inching closer to converting 160 Water Street in the Financial District into a residential tower, and Mayor Eric Adams is paying close attention.
While the $272.5 million construction loan to create 588 new units of market-rate housing is still two years from completion, according to representatives of the developer, Adams is looking to the project as an example in his push to remove legal hurdles standing in the way of office-to-residential conversions.
There are, however, no affordable units in the building apart from the 20 percent required by the Mandatory Inclusionary Housing (MIH) law, with rents starting at $3,000 per month for a one-bedroom.
Nevertheless, Adams views 160 Water Street’s conversion as proof that his quest to create 500,000 units of housing over the next 10 years — with office-to-residential conversion built in — is a valid framework to boost mixed-income building.
160 Water Street “makes it clear what we can do with more of our vacant office buildings. We’re talking about millions of square feet of office space,” Adams said Monday morning. “What we have in the city is a housing crisis and the goal is to build low income, middle income and market [rate] and to shore up NYCHA, so it’s not a one size fits all. … This project here is market rate.”
Until there is a replacement for the now-expired 421a program, Adams said, there may not be many options for the city to incentivize the building of new affordable housing.
The firm is side-stepping away from the office market — as many other landlords also are — with a sluggish return to office changing portfolio preferences nationwide.
Studies show that there is no real end in sight when it comes to turbulence in the office market. A Cushman & Wakefield report released in February claimed that the U.S. is likely to end the decade with 1.1 billion square feet of vacant office space and more than 25 percent of the country’s total 5.56 billion square feet of office — about 1.4 billion — entirely obsolete, CO recently reported.
Vanbarton secured the aforementioned construction loan from Brookfield Real Estate Financial Partners after acquiring it in 2014 for a total of $165 million, Commercial Observer reported in August 2022 when the firm got the funding.
By September 2021, Vanbarton was looking for buyers for the property with an asking price of $200 million with an additional $200 million expected to be needed for a conversion, The Real Deal reported at the time.
Mark Hallum can be reached at mhallum@commercialobserver.com.
There’s not a whole lot of happy news out there at the moment, but Greystone just closed a transaction worth celebrating.
The lender has provided $257.2 million in Freddie Mac financing for Building and Land Technology’s The Beacon, a six-building multifamily complex in Jersey City, Commercial Observer can first report.
Further, the deal marks one of the largest Freddie Mac single-asset financings to date (boom).
Josh Alascio, Alex Hernandez, Alex Lapidus and Mitch Rothstein from Cushman & Wakefield’s Debt and Structured Finance team negotiated the 10-year, fixed-rate financing along with Brian Whitmer, Niko Nicolaou and David Bernhaut from the brokerage’s capital markets team.
Greystone’s Judah Rosenberg led the transaction — which he said included a “highly complex” structure — on behalf of the lender.
“This collaboration is a perfect example of how two companies with complementary industry expertise can work together to meet clients’ individual needs with unique structures in a rapidly changing market,” Rosenberg told CO. “The loan was index-locked shortly after executing the application to take advantage of the dip in Treasuries, which were 50 basis points lower than today.”
The Art Deco-inspired development, at 20 Beacon Way, sits near the intersection of Baldwin Avenue and Montgomery Street in Jersey City and features panoramic views of the Manhattan skyline. It comprises 1,155 units in total, and spans 14 acres.
Amenities include children’s playrooms, sky lounges, three fitness centers, a yoga studio, a bocce court and a private park. The development also includes a 510-space parking garage.
“The property is ideally located at the intersection of three of Jersey City’s most populated neighborhoods and features unparalleled views of the New Jersey Gold Coast and Manhattan,” Alascio said in prepared remarks. “The recently redeveloped complex features best-in-class amenities and a thoughtful community design offering tenants a convenient live, work, play environment.”
Real Estate New Jersey reported in November that the C&W team was in the market sourcing financing for the transaction, following BLT’s completion of lease-up at the buildings. BLT undertook a significant repositioning of the former hospital site after acquiring it from developer George Filopoulos in 2011. The buildings were once part of the Jersey City Medical Center, and constructed early in the 20th Century.
Cathy Cunningham can be reached at ccunningham@commercialobserver.com
Western Alliance Bank has set the stage for the latest industrial development in Southern California’s Inland Empire with an $80.3 million loan, Commercial Observer has learned.
The funds helped Patrinely Group acquire nearly 38 acres of land in Menifee, Calif., from Jupiter Holdings for $60.8 million, according to data provided by Vizzda. The developers have proposed to build multiple buildings with 668,000 square feet of warehouse space at 33630 Zeiders Road, just south of the Scott Road interchange on Interstate 215, known as the Escondido Freeway.
The development would be the second phase of the Commerce Pointe Project. The adjacent first phase includes 157,147 square feet of industrial space on 10 acres.
Neither Patrinely Group nor Western Alliance immediately returned requests for comment.
Cushman & Wakefield’s national market outlook released Monday noted consumer spending on goods along with e-commerce sales started tapering back toward pre-pandemic levels last year, and that higher interest rates are weighing on demand.
“A slowdown in (industrial) demand can make it tempting to believe that rents will decline and that there will be some respite for occupiers who have been forced to pencil in 40 percent increases in real estate costs,” Rebecca Rockey, head of economic analysis and forecasting for C&W, said in a statement. “Although we expect rent growth will decelerate meaningfully in the near term, it is unlikely to decline. Vacancy is at 3.3 percent nationwide, and the construction pipeline, which is 40 percent spoken for, has a swift construction cycle, meaning construction will pull back quickly and put a ceiling on how high vacancy can go, despite softer demand.”
Additionally, the Inland Empire has been the fastest-growing industrial market in the nation, with property rents increasing an average of 28 percent upon lease renewal, according to CommercialEdge. Approximately $5 billion in warehouse sales closed in the Inland Empire in 2022.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
Women in commercial real estate, especially in New York, have made great strides, but in one niche of the industry they are in danger of falling further behind.
Investment sales brokerage in the New York market — the brokers who arrange the transfer of ownership of some of the world’s most expensive buildings, development sites and complexes such as shopping centers — remains male-dominated. With one very notable exception.
According to data from GreenStreet’s Real Estate Alert (REA), the top investment sales team in New York, with a 35 percent market share, is led by Darcy Stacom, chair and head of New York capital markets for CBRE, the world’s largest commercial property brokerage. REA’s ranking survey showed that Stacom’s team processed five deals with an aggregate value of $2.95 billion. (Some of CBRE’s competitors have disputed this, and the numbers can fluctuate depending on the time period.)
Men appeared to lead all the rest of the top 10 investment sales teams in New York rankings provided to Commercial Observer on Jan. 30.
No. 2 was Cushman & Wakefield’s team formerly led by Doug Harmon and Adam Spies (now with Newmark as of February), whose five deals aggregated at $1.81 billion, or 22 percent of the market.
The time it takes to build relationships in investment sales and her numbers themselves suggest that Stacom — whose prominence in New York investment sales extends back to the 1990s — might prove hard to duplicate any time soon, for women or for men. Meanwhile, the industry at large remains male-dominated, making it also unlikely women of Stacom’s success will emerge soon. (Stacom declined to be interviewed for this article.)
“It has changed,” said Barry Hersh, clinical professor at New York University’s Schack Institute of Real Estate. “It’s not as much of a patriarchy, an old boys network as it used to be. But I absolutely agree, it’s not changed nearly enough. It’s moving slowly but it is moving.”
In a September article in the “Journal of Real Estate Research,” researchers Eren Cifci, Alan Tidwell, Sandra Mortal and Vishal Gupta, all at one time professors at the University of Alabama, wrote that some 65 percent of U.S. agents in the $16 trillion industry are men “and occupy most top positions in CRE firms, with women generally in supportive and service roles.”
“There has been progress, but very little,” said Barbi Reuter, immediate past president of Commercial Real Estate Women (CREW), a nationwide network involved in the industry, and chair of Cushman & Wakefield PICOR, an employee-owned brokerage in Tucson, Ariz., that’s been part of Cushman’s global network since 2008. “That may apply to various aspects of equity — from pay equity, to advancement opportunities, to satisfaction in their role in the workplace.”
It was both the Alabama study and research done by CREW that made members think “we needed to do something more intentional … to make meaningful progress,” Reuter said. The organization launched what she called “the CEO pledge” to make firms large and small commit themselves to sponsorship and mentorship to help women climb the corporate ladder.
In New York, some aspects of real estate have shown lots of progress, and some are still waiting. Examples of the former include residential brokerage teams with female superstars, including “Shark Tank” panelist Barbara Corcoran, who founded the Corcoran Group, one of the largest brokerages; Dolly Lenz of Dolly Lenz Real Estate; Diane Ramirez of Berkshire Hathaway HomeServices; and Pamela Liebman, the current president and CEO of Corcoran. Commercial real estate leasing brokerage has also seen an emergence of woman all-stars such as Mary Ann Tighe, who is CEO of CBRE’s New York tri-state region; Cynthia Wasserberger, vice chairman of CBRE rival JLL’s New York leasing; and Tara Stacom, executive vice chairman at Cushman & Wakefield (and Darcy Stacom’s sister).
In other areas, progress has been sluggish.
Besides investment sales, there is the ownership of buildings themselves, which has been led by one male after another, such as Stephen Ross of Related Companies; Steven Roth, CEO of Vornado Realty; Owen Thomas, CEO of Boston Properties; Rob Speyer, CEO of Tishman Speyer Properties; and on and on.
One of the women who has developed a name for herself in investment sales in New York is Helen Hwang, who is senior executive managing director at Meridian Capital, a mortgage brokerage highly active in investment sales. Hwang is the head of Meridian’s institutional investment sales brokerage team.
Hwang has executed more than 100 transactions with a cumulative value of nearly $30 billion, according to Meridian. Her sales assignments have included Manhattan’s MetLife Building; 1 Court Square, the tallest office building in Queens; 101 Murray Street, a luxury condo site in Tribeca; and the ground lease under 75 Rockefeller Center. Meridian ranked sixth among firms doing investment sales brokerage in 2021, according to REA’s numbers, with $358 million of sales. Hwang declined to respond to questions emailed to her.
Though CBRE and Darcy Stacom also declined to comment, CBRE did issue a statement regarding Stacom’s efforts at mentoring the next generation of female real estate professionals. As “one of the first woman members of the Real Estate Board of New York’s board of governors,” she is currently co-chair of its diversity committee. There, she leads “a movement to change the composition of talent in the real estate field and create new opportunities,” according to the statement.
Stacom also co-chairs Schack’s annual women in real estate conference, and is “the undisputed favorite mentor for CBRE’s interns — a pied piper of sorts — providing inspiration, support, hands-on learning opportunities and guidance,” according to the statement.
Investment sales brokers are the behind-the-scenes workers who make large building and site sales happen. That often means supplying potential buyers the history of a property’s revenue streams and what they can expect in the years following a purchase, often in a book that provides bidders with that information. It’s also knowing what a location is like, how close it is to mass transit, what restaurants and other retail are in the area, and what other similar buildings recently sold for, and understanding the zoning and what a building can be used for, or what the site can be used for if the decision is to take the building down.
It’s understanding what potential buyers are looking for, and what their appetite for risk is, what capitalization rate they are looking for, which means what a building can provide a buyer in terms of income in the years following a purchase, and how that rate interacts with interest rates. It’s knowing the capital markets, what kinds of loans are available, and what they could cost a potential bidder.
“I have tremendous respect for Darcy,” said Robert Knakal, head of JLL’s New York private capital group and a leading investment sales broker himself. “She is one of the top five brokers in the country, without a doubt.”
While the very top of commercial real estate is male-dominated, a number of women have emerged as potential powerhouses. These include MaryAnne Gilmartin, who honed her skills at Forest City Ratner and was a mover behind the Atlantic Yards project in Brooklyn, now known as Pacific Park. That project included the Barclays Center, home of the NBA’s Brooklyn Nets. Gilmartin is now heading up her own firm, MAG Partners, which recently acquired a 99-year ground lease at 335 Eighth Avenue in Manhattan’s Chelsea neighborhood, where she intends to build housing.
While she doesn’t rule out buying commercial real estate in the future, “I can tell you that my first love in the business is to build as a developer,” Gilmartin said.
MAG Partners describes itself on its website as “a woman-owned, urban real estate company with decades of experience developing impactful, iconic, large-scale projects.” Other projects listed on its website include 241 West 28th Street, a 480-unit multifamily project under construction, a “boutique office development” at the Hudson Square site at 122 Varick Street, and participation, along with Goldman Sachs Asset Management, MacFarlane Partners and others, in a 177-acre master-planned development in South Baltimore, Md.
There’s also Leslie Himmel, the Himmel of Himmel & Meringoff Properties, founder and managing partner along with Stephen Meringoff, who has the same title. Their partnership, which dates back to 1985, holds interests in such assets as 400 Eighth Avenue, 729 Seventh Avenue and 401 Park Avenue South.
Other women of prominence in the business include Wendy Silverstein, a former Vornado Realty Trust executive who served a stint as CEO of NYREIT, overseeing its liquidation, as well as a stretch as an executive for the coworking firm WeWork; and Andrea Olshan, CEO of Seritage Growth Properties, a real estate investment trust that was formed to sell properties that were once Sears stores, though it has become a retail manager and investment firm in it its own right. These days, Silverstein is working for Olshan, helping her liquidate Seritage assets to maximize shareholder value.
In the commercial real estate financing world, there’s Greta Guggenheim, CEO of TPG Real Estate Finance, who was the former president of Ladder Capital, another big name in real estate finance. Also there is Lisa Pendergast, who is executive director of the Commercial Real Estate Finance Council and a former executive with investment bank Jefferies LLC.
“It is changing for women who want that,” said Silverstein. “I think there are some really, really impressive young women who are, I don’t want to say ‘up and coming’ because they’re already doing super well. I don’t know if you want to call them moguls or what have you, but certainly you have women in positions of prominence at a very young age in a way that we really didn’t see as much in my generation.”
It’s also worth noting that Blackstone’s global head of real estate is Kathleen McCarthy (along with Kenneth Caplan), and the CEO of Blackstone Mortgage Trust is Katie Keenan.
“Mentoring” is a word you hear quite a bit around women who are advocating for advancement for women in CRE. One of them is Lauren Crowley Corrinet, a CBRE vice president and a chairwoman-to-be (next January) of CBRE’s Women’s Network in the Americas, a group of more than 6,000 CBRE staff members whose aim is to raise women’s profiles both within and beyond the organization.
“It’s not about putting women in roles just because they are women, but achieving parity based upon merit,” Corrinet said. “This is really a case where we are trying to train and raise the profile of the women at CBRE, so that they are at the top of their game. And management knows them and wants them to be in those leadership roles.”
One thing is for certain, said Hersh and others. Women are going to keep coming. Women are well represented in NYU’s Schack classes, he said.
Another academic, Patrice Derrington, director of the real estate development program at the Columbia Graduate School of Architecture, Planning and Preservation, put it this way: “It takes time.”
Hybrid working will push US office vacancies 55 per cent above their pre-pandemic levels to a record 1.1 billion square feet by 2030, according to a stark industry forecast that attempts to quantify the damage to the commercial property sector wrought by changing work patterns.
The report, by commercial property adviser Cushman & Wakefield, found that 330 million square feet of office space – roughly equivalent to all the office inventory in the Washington metropolitan area – would be made redundant by hybrid or remote working by the end of the decade. That would come on top of another 740 million square feet of space that it classified as “normal or natural” vacancy.
Cushman concluded that about a quarter of US office space was already undesirable and another 60 per cent was at risk of obsolescence and might require “significant investment” either to upgrade or repurpose it for other uses – a transformation that New York City is now beginning to embrace.
While such trends are most acute in North America, they are also evident in Europe and Asia, the company noted.
“Obsolescence is kind of the word of the day right now,” said Andrew McDonald, Cushman’s president, calling the report an acknowledgment of “an inflection point, perhaps”.
[ Just 10% occupancy in offices on a Monday or Friday, new research shows ]
The forecast is noteworthy both for the magnitude of the findings and the fact that it was conducted by one of the commercial property sector’s leading players.
Like most in the industry, Cushman had, until recently, tended towards a more sanguine view of the long-term impacts of hybrid working.
But Cushman has now accepted that the industry is in the midst of lasting structural changes that are likely to intensify. Thus far, only a third of office leases set to expire between 2020 and 2030 have done so, meaning that landlords could find growing numbers of tenants trimming space or leaving buildings altogether in the coming years.
While hiring has been robust as the US recovers from the worst of the pandemic and unemployment is once again at historic lows, Kevin Thorpe, Cushman’s chief economist, noted that a long-standing correlation between job growth and companies’ demand for office space had been “fractured”, meaning the post-Covid recovery failed to fill empty offices. Tenants were now seeking less space per worker, though how much less was not clear.
I think you can assume that Friday is dead forever … Monday is touch and go
— Steven Roth, chief executive of Vornado Realty Trust
“The trend is downward, though the magnitude of the downward shift is still in flux,” Thorpe said.
In a sign of the changing market, Cushman has revived the distressed asset team it created after the 2008 financial crisis to advise clients on troubled buildings and investments.
However, McDonald said there was “no evidence of widespread distress” yet and that most of the damage Cushman was seeing was concentrated in specific office buildings.
The company’s findings echo a growing body of commentary from property developers, with many noting how rising interest rates were compounding the challenges of increasing vacancies.
[ Are hybrid workers really as productive as office-based colleagues? ]
On an earnings call last week, Steven Roth, chief executive of Vornado Realty Trust, acknowledged that hybrid working would not be a passing phenomenon, telling analysts: “I think you can assume that Friday is dead forever … Monday is touch and go.”
Roth also acknowledged that in the current environment it would be “almost impossible” to finance the company’s ambitious – and contentious – plan to build a series of office towers around New York’s Penn Station.
Scott Rechler, chief executive of RXR, another leading developer, said earlier this month that the company would have to relinquish some of its office buildings to lenders after determining that they were no longer competitive and could not be easily repurposed.
Like other developers, RXR has increasingly focused its resources on a handful of trophy properties with the most modern amenities and best locations. These are still in high demand among tenants and have become a class unto themselves. In its report, Cushman predicted that only 15 per cent of US office space would fall into this new and highly selective category by 2030.
Copyright The Financial Times Limited 2023
A promise is a promise.
In 2020, real estate companies made significant commitments to promoting diversity, equity and inclusion (DEI) in the wake of nationwide protests, sparked when a Minneapolis police officer murdered George Floyd. They hired DEI officers, formed task forces and surveyed their staffers. They pledged to change the industry, their suppliers and the profile of their own teams.
Three years later, their initiatives remain in place for the most part, and several have grown. But by the numbers, progress in diversifying the industry has been slow, negligible and, in some cases, still impossible to measure.
While women make up about half of the nation’s workforce, the share of women in commercial real estate was already stuck between 35 and 37 percent from 2005 to 2020, according to a study conducted every five years by the network group Commercial Real Estate Women (CREW). And after 2020’s bold statements, the share of women at some of the largest brokerage firms has changed fairly little.
At CBRE, women represented 33.5 percent of the brokerage’s global workforce in 2021, about the same as the 33.2 percent of staffers that were female in 2020, according to CBRE’s corporate responsibility reports. Within CBRE’s U.S. workforce, women represented 32 percent of CBRE’s employees in 2020 and 2021.
At Cushman and Wakefield, the share of women in the company’s global staff rose from 39 percent in 2020 to 40 percent in 2021, according to two C&W reports.
Other brokerages posted similar metrics. The percentage of women in JLL’s global workforce remained at 35 percent from 2019 to 2021, while at Savills, it rose from 45.5 percent in 2020 to 46.2 percent in 2021, according to annual reports from both companies. Colliers posted a single percentage point decline; the percentage of women working for Colliers worldwide dropped from 40 percent in 2020 to 39 percent in 2021, according to Colliers’ global impact reports. (Colliers CEO Gil Borok said Colliers’ staff fluctuates every year).
Men, particularly white men, continued to dominate executive level positions (though improvements in the brokerages’ C-suites were more marked.) The share of women serving in manager positions or higher levels at Colliers rose from 32 percent in 2020 to 34.2 percent in 2021 worldwide. About 21 percent of top global management at JLL were women in 2021 compared to just 18 percent in 2020. And 22 percent of C&W’s executives were female in 2021, compared to 19 percent in 2020.
JLL hopes to grow the number of women in its top two management levels to 40 percent by 2025, according to a spokesperson for the firm. Colliers has a similar goal of 40 percent of its workforce and management being women by 2025, and also to grow the number of minority staffers, though Borok declined to disclose that number.
But brokerages, as a whole, have a way to go before their staffing reflects the broader U.S. workforce, where roughly 46.8 percent of employed people identified as women, 19.3 percent identified as Black or Asian and 18.5 percent of people identified as Hispanic in 2022, according to the U.S. Bureau of Labor Statistics (BLS), though those who identify as Hispanic in BLS data may be of any race.
The panels and the new diversity departments did prompt a few companies to begin tracking more data, with the hopes of marking future improvements.
C&W reported a diversity breakdown of its U.S. workforce for the first time in 2021 to hold the firm “accountable” as it works towards its goals, according to C&W’s 2021 environmental, social and governance (ESG) report. Out of all U.S. staffers, 52.4 percent were white, while 30 percent of C&W’s board of directors were racially or ethnically diverse in 2021. CBRE’s U.S. workforce remained 74.4 percent white between 2020 and 2021. At JLL, the percentage of white U.S. staffers dropped from 67.5 percent in 2020 — the first year JLL tracked that information — to 66 percent in 2021, according to JLL’s global sustainability report.
In a 2021 forum that Commercial Observer hosted, Chad Tredway, who was then the head of real estate banking at JPMorgan Chase, put it this way: “What gets measured, gets done.” JLL used the mantra for their gender pay gap report for its UK offices. But not every firm collected the racial or ethnic breakdown of their staffers, or had enough data to report.
Avison Young sent out its first global survey of its employees in October 2021 to gather a baseline of responses on the firm’s “diversity dimensions,” according to the company’s 2021 ESG report. Savills’ 2021 annual report includes a breakdown of the gender of its employees globally, but the firm doesn’t track the racial demographics of its North American office, according to a Savills spokesperson. Colliers lacked enough data for “attributes other than gender” because not enough of its employees disclosed that information, according to Colliers’ 2021 global impact report.
While more data is better than none, the pace of progress in both reporting and diversifying commercial real estate’s ranks has been slow. But the real estate industry is not known for its speed, said Wendy Mann, chief executive officer of CREW.
“We’re not done by any measures right now,” Mann said. “But, for an industry that has been slow to change, I think that there has been such a great commitment.”
Numerical breakdowns by race and gender also fail to tell the full story, because hiring brokers from underrepresented communities requires a strong talent pipeline commercial real estate just doesn’t have, Borok said.
“The general population would like this industry to be some significant percentage of color today, yesterday, tomorrow. I’ll go on record saying that is not going to happen,” Borok said. “There’s a long history of why this industry has been white male dominated. All of the firms, even the smaller firms, are making significant strides to try and diversify their populations on every metric. But the number of qualified people to do that doesn’t exist in a way that can get us to a meaningful percentage in the near term.”
Most brokerages have established programs to tackle the pipeline problem, and a growing number of firms have taken aim at a major barrier to entry for brokers without the connections, or the cash, to get started: commission-based compensation.
Savills established its Junior Broker Development program in 2020, and will train and pay 15 young brokers $65,000 this year, said Ann Duncan Inman, chief strategy officer and chief diversity officer for Savills. Most early-career professionals rely on their own money (or their parents’ cash), or borrow their pay from an older broker in what’s called a “draw.”
Savills’ 2023 class is 78 percent diverse and has the opportunity to move into multiple career paths at Savills after the program ends, not just brokerage, Duncan Iman said.
“Diversity is not just gender, and race and ethnicity — it’s expertise too,” Duncan Iman said. “Part of what we do with the program is give them rotations around various functions within the organization, and some of them find their calling in different places.”
Avison Young started its own compensation program last year, allowing managing directors to bring in a new broker and pay their salary for up to a three-year period, though a spokesperson for the firm said Avison Young couldn’t provide the current number of participants.
CBRE paid out a salary to 100 participants of one of its mentorship programs in 2022 and JLL started a broker diversity fund last year to pay young brokers wages for two years, instead of a draw. JLL also offers a networking and training program, dubbed “JLLU,” to all its junior and associate-level brokers that has trained 70 people since it was established in 2022.
And Colliers committed to hiring two or three brokers each year from Project REAP, a.k.a the Real Estate Associate Program, which helps middle-career minority professionals transition into commercial real estate through a training program, said Borok. Those that work for Colliers get paid a draw that is forgivable if they don’t score the commission to cover it, Borok added.
Project REAP also helps Colliers access a pipeline of minority brokers that can be difficult to find, Borok said. Colliers, CBRE, C&W, JLL, Newmark, Savills and some of the city’s biggest landlords have partnered with Project Destined, an educational program that trains high school and college students in real estate. Project Destined trains more than 2,500 students per year, and those graduates have scored internships and jobs at Brookfield Properties, Mastercard, Goldman Sachs and JLL, among others.
C&W also took to 11 historically Black colleges and universities in 2020 to host a commercial real estate bootcamp for students, and the firm looks to those schools to recruit full-time hires, Nadine Augusta, chief DEI at C&W, told CO in September. C&W’s 2021 report does not mention the program, but a spokesperson for C&W said the firm partnered with HBCUs via a career development nonprofit last year.
And for applicants that make it to the interview room, Avison Young requires its hiring teams to include diverse interviewers, and mandates that every talent pool has diverse applicants at the corporate level, said Joan Skelton, global director of diversity and inclusion at the firm. C&W also standardized its interview approach in 2021, distributing guidelines to its entire staff and recruiters to ensure that the interview approach is the same for all hires, Augusta said.
Last but not least, the Real Estate Board of New York (REBNY) offers a handful of programs aimed at expanding the ranks of diverse real estate professionals. REBNY offers a paid internship program for City University of New York undergraduates, serving 150 students in its first two years after it was established in 2020. It also selected 24 diverse, early career professionals with leadership training program Coro New York Leadership Center for a six-month training program, per REBNY.
“As a trade association, we do know from our members that they are eager to see the changes, where the workforce will reflect the city in which we live, work and conduct business,” said Yvonne Riley-Tepie, REBNY’s senior vice president of social impact. “When they start thinking about hiring, they’re going to be looking at these interns as a pool of applicants for these jobs.”
But what happens when those professionals want promotions, not internships? So far, the C-Suite has remained overwhelmingly white and male.
Out of all of CBRE’s senior executive level managers, 67.7 percent were white men in 2021, though that’s an improvement from 70.6 percent in 2020. Women represented three of nine board members at Savills in 2021. Only 27 percent of executives at C&W were racially or ethnically diverse in 2021.
Most firms touted their employee resource groups (ERG) as ways to both create community and help staffers move up the corporate ladder.
“We’re creating a sense of belonging, a sense of community and a safe place for our associates and employees to basically have a voice,” said Juan Bueno, U.S. president and principal for Avison Young and a member of its Hispanic ERG Conexión. “Specifically to Conexión, we talk about career advancement and mentorship. And each ERG would have their own goals.”
Most brokerages have ERGs for women, Black, LGBTQ+, and occasionally other minority groups, but memberships range widely. Colliers has 1,095 professionals in all of its resource groups, Borok said, while Avison Young had more than 550 members in its Women’s Network group alone, according to a spokesperson for the firm.
A handful of brokerages also offered leadership programs for those heading ERGs, like at Avison Young, or for emerging leaders, like at Savills. And career advancement programs can be crucial for helping professionals advance, Riley-Tepie said.
“The ripple effect of everything we’re doing here is a win-win,” Riley-Tepie said. “I heard directly from one of our fellows from last year about going back to her firm and bringing the information that she learned to her business resource group, and how then she can help to impact the work of the diversity group within her firm. That trickles out to other members.”
Most executives expected, or at least hoped, that commercial real estate’s commitment to diversity, equity and inclusion would continue beyond 2023 — even amid an economic downturn that may encourage companies to cut back. But investing in diverse hires is a good business practice, aside from it being the right thing to do, Bueno said.
“To us, it’s a business strategy to be diverse,” Bueno said. “Time will tell if in tough times, people decide to cut back on some of these initiatives or not. I will tell you that we remain committed to this because it’s driving our culture and it is giving us dividends.”
Still, brokerages will need to keep their momentum if they expect to see significant change in the face of the commercial real estate industry, Mann said. She offered one key piece of advice that a consultant told her when working with CREW in 2019:
“She said to me, ‘Wendy, the reason that DEI initiatives fail is because white people get tired. So I’m asking you Wendy, don’t get tired,’” Mann said.
“I took that to heart because she’s right.” Mann added. “We can start doing all these things and there’s a possibility that we start feeling like we’re doing everything [and] we don’t see change overnight. … But you have to keep moving forward and you have to keep that momentum. And we have to remember [that] things take time.”
So, commercial real estate executives: Don’t get tired. It’s a steep climb, but the path is there.