A History Lesson

Many have drawn parallels between today’s banking crisis and the 2007-2008 one that felled Lehman Brothers and Bear Stearns. But the real parallel is from 20 years earlier, when interest rates rose as savings and loans collapsed. Also, what’s an older, famous office tower like the Empire State Building or the Flatiron to do amid the vaunted flight to quality? Here’s what.

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— Tom Acitelli, Co-Deputy Editor

Forget Comparisons to 2008. Today’s Banking Crisis Looks Like the S&L Crash

Stop if you heard this one before: Amid bank failures and depositor concerns, with headlines warning the threat of financial contagion and businesses bracing for a recession, the most powerful central bank in the world decides to … raise interest rates? If the kicker seems strange — and so unlike how the regulators responded to the 2008 Global Financial Crisis (GFC), when the Federal Reserve cut its benchmark rate from 4.2 percent in December 2007 to 0.16 percent by December 2008 — it’s because many commercial real estate professionals expected a different decision from Federal Reserve Chairman Jerome Powell on March 22. Rather than chart a familiar course, and one taken by his predecessors at the Eccles Building during the unprecedented period of quantitative easing in the 10 years following summer 2007, Powell chose to bring the effective rate to nearly 5 percent. And he signaled more rate hikes are on the horizon to fight the high prices brought on by inflation. The central bank’s decision to increase interest rates by a quarter point on March 22 — the seventh straight rate increase in the last 12 months — came at a particularly precarious moment for the economy: Not only have two U.S. regional banks recently failed, but $936 billion in CRE and multifamily debt is due to mature in 2023 and 2024, with more than half of the debt provided by commercial banks.

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New York's Classic Skyscrapers Reinvent Themselves to Better Compete

For the Flatiron Building, the stakes could not be higher. For 121 years and counting, the Flatiron has been a signature of New York City: its distinctive triangular shape; its ornamentation; its spot at the convergence of Broadway and Fifth Avenue across from the southernmost end of Madison Square; its history as one of the city’s first skyscrapers; its distinction as one of legendary architect Daniel Burnham’s most important statements; its etymological inspiration for the surrounding neighborhood, the Flatiron District. It is also pretty much empty. The Flatiron is just one of many classic, even iconic, New York towers that find themselves competing like perhaps never before. They’re battling against not only a newer class of skyscraper that has been raking in record rental rates with sumptuous tenant lounges, sophisticated air filtration systems, lush outdoor terraces, bespoke food and beverage services, and other amenities, but also against the notion that coming to the office is no longer compulsory.

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