Michael Shvo’s bicoastal office play

TRD’s “Deconstruct” podcast looks at the ramifications for the rental market

SHVO's Michael Shvo
SHVO's Michael Shvo

As signs of distress hit office buildings from New York to Los Angeles, some investors are ignoring the noise.

Luxury developer Michael Shvo told The Real Deal’s “Deconstruct” podcast he has faith that flight to quality, a theory used to characterize tenant demand for better spaces in the wake of the pandemic, will continue to carry Class A office spaces. 

Despite the doomsday headlines about San Francisco’s faltering office market, Shvo points to his Transamerica Pyramid as evidence of that strength.

“Transamerica is probably, from everything that I’ve done, is the single building that has proven the flight-to-quality theory, in much more aggressive numbers than anything else we are renting today,” Shvo said.

The developer also touted his office interest in New York, noting the recently renovated Coca-Cola Building at 711 Fifth Avenue. 

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“I’m quite bullish on New York office, but it’s on the New York office that I care about,” Shvo said.

Coincidentally, the trophy property is located steps from 697-703 Fifth Avenue, the office tower with a $450 million loan on which Vornado Realty Trust defaulted earlier this month. 

“If you only focus on super prime real estate and build quality and develop quality, you’ll do better in a good market, and you’ll survive when everybody else dies,” Shvo said.  

Catch the full episode of “Deconstruct” on Apple Podcasts, Spotify, Audible or wherever you get your podcast fix.

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