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Will office buildings ever be the same? Empire State offers clues

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NEW YORK (Reuters) – The Empire State Building has been a symbol of America’s economic might for almost 90 years. Of late, it’s also become a symbol of its struggle with the coronavirus.

The once jam-packed 102 stories of the 1,454 ft (443m) Art Deco skyscraper sit mostly empty in a city in shock from the country’s worst outbreak of COVID-19. Its spire has been lit up with red-and-white flashes to honor emergency workers, a siren in Midtown Manhattan.

A week into New York’s second phase of post-lockdown re-opening, dozens of the companies with office space in one of the world’s most famous buildings are trying to figure out when, how – even whether – to come back.

The same quandary is being played out across the United States, and the world. Something so normal as working in a big office block has abruptly become almost unimaginable for many.

The June 22 reopening allowed office buildings to invite tenants back, as long as maximum occupancy stayed below 50%. But most companies based in the Empire State Building, which range from tech firms like LinkedIn Corp and luxury watch brand Bulova to nonprofits like the World Monuments Fund, have opted to extend work-from-home arrangements.

Based on a tenant poll, management expected just 15% to 20% of the building’s usual 15,000 worker population to return at the second phase of reopening.

Yet even among those who plan to maintain a presence when the time comes, few expect to ever return to a workplace like the one they knew before coronavirus, according to Reuters interviews with several people who work or run companies there.

Global Brands Group (0787.HK), which licenses the likes of Calvin Klein, signed a 15-year lease for six floors of office space in 2011 but has already told employees based in New York that they will never be required to come back to the office.

The allure of working in “unbelievable corporate headquarters” has been dulled by the pandemic, Rick Darling, chief executive of the apparel and marketing firm, told Reuters.

“I think they become less important,” he said. “If your people are dispersed, really the performance of your company becomes the prestige point.”

The company has not yet made any decisions on office space and will need showrooms for fashion launches, Darling said.

‘Go back to way it was’

Such shifting attitudes could spell trouble for Empire State Realty Trust Inc (ESRT.N), which owns and manages the building, as well as for other major commercial real-estate companies across the city and beyond.

New York City office property values have likely fallen 10% during the pandemic, said Daniel Ismail, lead analyst at real-estate research firm Green Street Advisors.

Empire State Realty shares are down nearly 53% since the end of 2019, versus a 25% fall this year in the FTSE Nareit Equity Office .FTFN47U index which tracks office real estate investment trusts (REITs).

Ismail pointed to pressuring factors for the company, including the COVID-19 shutdown of the Empire State Building’s observatory – a tourism magnet that last year generated more than a fifth of revenue for the group, which also has other office and retail spaces across the city.

Even so, CEO Anthony Malkin remains optimistic.

His family has been involved with the Empire State Building since the 1960s, and he is convinced its status as a famed piece of the New York skyline will outlast the temporary, if painful, impact of the coronavirus.

“Since COVID, we’ve only had people sign leases, we haven’t had anyone move out,” Malkin said in an interview, noting that Starbucks Corp (SBUX.O) signed a lease for a three-level store on March 15. “In a post-COVID treatment, vaccine, herd-immunity world, everything’s going to go back to the way it was.”

Empire State Realty drew down $550 million from a revolving credit facility in the first quarter to make sure it would have cash on hand if tenants fell behind on payments, but so far it has received the bulk of dues.

April rent collection dropped to 73% initially but rebounded to 83% by June 1, according to an investor presentation. The company offered deferral to a small portion of tenants which helped keep overall occupancy stable at around 96%.

‘You’re real, happening’

Some tenants say they have no intention of leaving.

For instance, Shutterstock Inc (SSTK.N), which signed an 11-year lease in 2013, is following orders from authorities about when and how to return, said Heidi Garfield, the company’s general counsel and interim chief human resources officer.

The creative content platform has 85,000 square feet, with an open-plan layout that includes a large café, a library, a terrace, an exercise studio and lounge areas. Before coronavirus, employees’ main gripes were when taps for cold-brew coffee or kombucha went down, Garfield said.

Officials from smaller non-profit tenants like the Human Rights Foundation and Human Rights Watch said the iconic building lends credibility with donors and potential partners, regardless of where staff work.

“Being in the Empire State Building was a solid component of our reputation,” said Human Rights Foundation President Thor Halvorssen. “People immediately assume that you’re solvent and you’re real and you’re happening.”

But other tenants are less confident. Unsure what the future of work might look like, they questioned whether it makes sense to spend big dollars for office space when remote operations have been working just fine.

It cost an average of $65.19 per square foot to lease space in one of Empire State Realty’s Manhattan buildings pre-COVID-19, according to the company, compared with an average of $81.64 across Manhattan as of late May, according to U.S. real estate firm CBRE Group Inc (CBRE.N).

Pricing has not changed much during the pandemic because of few new listings, said CBRE Director Nicole LaRusso, adding the reopening process might see “more revisiting on pricing.”

No mask? You can’t come in

Visitors to the Empire State Building are immediately confronted with the new reality.

Anyone entering the building must wear a mask and carry their own hand sanitizer, Malkin said.

Management closed non-essential entrances and retrofitted retail space downstairs as temperature-check and sanitization stations, tenants said. The elevator lobby has stickers on the floor that people waiting must stand on to ensure social distancing.

Similar stickers line the sidewalks outside the main entrance, in preparation for the re-opening of its observatory next month. The attraction, which allows visitors to take pictures on top of the building, raked in over $125 million in revenue for the company last year.

Some companies are reevaluating leases.

This month, for example, beauty-products company Coty Inc (COTY.N) signed over 50,000 square feet of its Empire State Building space to LinkedIn, owned by Microsoft Corp (MSFT.O).

Travel site Expedia Group Inc (EXPE.O), which occupies 9,000 square feet on the 72nd floor, said it had deferred “several real estate capital projects” to preserve liquidity.

Representatives for Coty, Expedia and LinkedIn did not respond to multiple requests for comment.

Even once the pandemic is past, the office market is likely to remain irrevocably changed, according to analyst Ismail at Green Street Advisors.

“Major companies have found an increased level of comfort with people working from home, which I think will likely accelerate in the future.”

Reporting and photo: Reuters

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CROSSROADS Maldives Introduces Weixin Pay at resorts for seamless guest experience

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CROSSROADS Maldives has introduced WeChat Pay, widely known as Weixin Pay in China, across its world-class resorts, SAii Lagoon Maldives, Curio Collection by Hilton, and Hard Rock Hotel Maldives. This payment option is made available to enhance the convenience and overall experience for guests from China, making their stay in the Maldives more enjoyable and hassle-free.

Understanding the needs of the diverse guests, CROSSROADS Maldives has integrated WeChat Pay into operations, allowing guests from China to easily and securely conduct transactions using a payment method familiar to them. The introduction of WeChat Pay is a testament to CROSSROADS Maldives’ dedication to enhancing guest satisfaction by offering exceptional experiences at every turn. What is also expected through this initiative is that the guests could benefit from better foreign exchange rates, translating to better savings on their expenditures during their stay.

The option is available for guests in-house conveniently at both resorts as well as across the Marina at CROSSROADS Maldives where a wider variety of unparalleled dining and retail experiences are available for all guests. The day visitors from China will also therefore equally benefit from this new introduction at the Maldives’ premier multi-island integrated leisure destination.

SAii Lagoon Maldives, Curio Collection by Hilton, is a vibrant tropical escape that offers unique and locally inspired experiences. The resort features spacious rooms and villas, a variety of dining options, and an array of recreational activities designed to cater to the desires of modern travellers. Guests can escape to the island’s SAiisational natural beauty, enjoy water sports, and indulge in spa treatments, all while relishing the personalised service that defines Hilton’s Curio Collection.

Hard Rock Hotel Maldives brings the iconic Hard Rock spirit to the tranquil shores of the Maldives. This family-friendly resort offers a perfect blend of relaxation and entertainment, featuring music-inspired experiences, live performances, and the brand’s signature amenities. With luxurious accommodations, diverse dining options, and a plethora of activities for all ages, Hard Rock Hotel Maldives ensures an unforgettable holiday experience for every guest.

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Pulse Hotels & Resorts unveils new residential project: The Coral Residences, Kandima

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Pulse Hotels & Resorts, one of the leading innovators in Maldives tourism, has introduced The Coral Residences, Kandima. Nestled on the northern end of the lush and green three-kilometre-long Kandima Integrated Island Resort in Dhaalu Atoll, this residential development is a first of its kind and promises to redefine luxury living in the Maldives.

Designed and crafted with meticulous attention to detail, The Coral Residences, Kandima, is a unique, integrated beachfront residential community with exceptional 5-star service, situated in the shimmering blue heart of the Maldives.

The Coral Residences comprises of 40 exquisitely designed two bedroom and three bedroom apartments. All apartments feature contemporary design and chic interiors, high-end finishes, state-of-the-art appliances, and unobstructed panoramic sea views across the Indian Ocean. Residence owners will enjoy exclusive access to a host of premium facilities, including a private beachfront pool, a gourmet restaurant and bar, dedicated fitness and recreation facilities and a 24-hour concierge service.

Buyers of The Coral Residences will be able to own their apartments under the new strata title ownership program. Owners’ apartments will be part a rental program, managed by Pulse Hotels & Resorts. Residents will have the access to the full range Kandima’s 5-star resort services, including its restaurants and bars, spa, recreation, and other amenities to complement their lifestyle. With its emphasis on comfort, convenience, and community, this development offers a truly elevated living experience.

“We are thrilled to introduce The Coral Residences, Kandima, to discerning local and international buyers,” said Sanjay Maniku, Managing Director of Pulse Hotels & Resorts. “With its unparalleled design and amenities, homeowners can take advantage of a limitless world of activities and experiences on offer at Kandima. We believe this development will set a new standard for luxury living in the Maldives, as well as bringing a new definition to the Maldives family vacation.”

The Coral Residences is realised by Pulse Hotels & Resorts, the creators behind The Nautilus Maldives, Kandima Maldives, and Nova Maldives. Known for their innovative hospitality concepts, Pulse Hotels & Resorts ensures that each property offers exceptional experiences and world-class service. The development has commenced and is expected to complete within Q3, 2025.

For more information, high-resolution images, and to schedule a private viewing, please contact Aishath Ihuma, Director of Business Development at +960 7788986 or aishath.ihuma@coralresidencesmaldives.com.

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Weixin Pay supported to boost Chinese tourists to Maldives

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On May 27, Zihuny Rasheed, Deputy Managing Director of Maldives Marketing and PR Corporation (MMPRC/Visit Maldives), and Etienne Ng, Weixin Pay’s Country Manager, Singapore and Regional Director, Southeast Asia, WeChat Pay, signed a three-year Memorandum of Understanding (MoU) during ITB China 2024, pledging to support more Maldivian merchants to accept WeixinPay to provide Chinese tourists with a convenient payment experience. Visit Maldives is the Official Destination Partner for this year’s edition of ITB China.

“China is a key source of tourists for the Maldives, and we greatly value the experience of Chinese visitors,” said DMD Zihuny Rasheed. “We plan on promoting the acceptance of Weixin Pay throughout the country, offering Chinese tourists the payment option they are familiar with and prefer. I have used Weixin Pay during my visit to China via linking an international card, and I can attest to the convenience of the mobile payment option.”

Ibrahim Faisal, Minister of Tourism of the Maldives, expressed his support, “Excited that we’re introducing Weixin Pay for Chinese visitors, which is another step in establishing Maldives as their top destination. Now, it’s easier than ever for Chinese travellers to enjoy their stay, hassle-free. We look forward to further enhancing their experience,” he wrote.

According to Etienne Ng, Weixin Pay is currently being piloted at the country’s airport duty-free store, as well as in popular restaurants like Sala Thai and City Garden. Additionally, a range of hotels and resorts are participating including, JEN Maldives Malé by Shangri-La, Adaaran Select HudhuranFushi, Adaaran Club Rannalhi, Adaaran Prestige Vadoo, Adaaran Prestige Water Villas, Velaa Private Island, Cheval Blanc Randheli Private Island, Dhawa Ihuru Maldives, Ayada Maldives, Marriott Bonvoy, Banyan Tree Vabbinfaru, Conrad Maldives Rangali Island and Angsana Velavaru in Maldives with strong support from the Bank of Maldives and local merchants. Making smooth progress, the initiative is expected to have 8,000 merchants nationwide that integrate the payment option.

“Weixin Pay is committed to providing users with safe and convenient payment services. Since the visa exemption policy was implemented, more and more Weixin Pay users have chosen to travel to the island country. Through our cooperation with Visit Maldives, we aim to provide Chinese users with the same convenient experience in the travel as they experience at home,” he said.

In February 2023, an Agreement on Mutual Exemption of Visa Requirements signed between the Maldives and China took effect as China expands its visa-free policy to benefit more countries. Consequently, the Maldives has consistently ranked among the top overseas destinations for Chinese tourists during popular travel periods such as the May Day and National Day holidays.

According to data from Visit Maldives, the country welcomed over 1.8 million tourists in 2023, a new national record. The Chinese market has been a key source market for the Maldives. As of 11th May 2024, it is the number one source market with 91,073 tourist arrivals.

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