Office Space Cost Will Have To Come Down: IWG Global

bring in somebody who knows a lot about it. He is founder of International Workplace Group otherwise known as i w G Global Marketings and joins us. Now, Mark, just give us the lay of the land. First of all, Well, the lay of the land is not even The pandemic has hit the metropolis city centers around the world. We operate in a hundred twenty countries and that's been the

major impact. So in provincial locations countryside, we're up and we're badly affected in down to down so people are working close to where they live and they're working from home. Our homework business has grown tenfold over the pandemic and we're slightly hedged with that. So Mark, I guess one of the questions that people are asking here is the future of the city center itself? And this is a I guess a global question. It's not just London in

New York. What is your view as we look towards the other side of this pandemic about how the city center as a work center will evolve. It changes forever. It's rapid evolution. Um, you know, the the cities will never be the same again. We will take some time for the change to take place because people have to get out of leases that they are already in. But pretty much of all CEOs and leadership teams aren't now

positively in a mode of hybrid workings. Hybrid working means the company saves lots of money, they can hire better talent, and they allow people to work either from home or close to home, and they come into a sort of headquarters when they need to or if they haven't got they live in the city itself. So, you know, hybrid working has such strong economic and environmental advantages. It's going to happen, and it's what people want. They've whatever people say.

For most the pandemic has gone on for too long, but they have been quite productive working on zoom teams and the like. You know, companies. It has worked. It's an experiment that worked, and it will continue and it will become the norm. So talk to us about occupancy rates. Can you give us a sort of a percentage across your portfolio and and also where you might be thinking of getting out of commercial real estate the way it is now changing it into something like storage or what

have you. Well, look for us. We we've we've got three and a half thousand buildings. We're in all sorts of markets. So look, we are expanding in the countryside. We have been for a while actually because this change was occurring prethe The pandemic is just accelerated with it um and so we were expanding in the countryside. We are adding more even in the cities. Because it's not what companies are looking for a flexibility. They're looking for products.

They don't you know, what companies don't want or want less of is a five or ten year least. They want flexibility, they want products. So this for a company like ours, where we provide a fully operational office ready to use for a couple of people or for a thousand people, you know that that is what's being being

looked for. So we're working more with property owners who at the other end of this, if they're long in the market, they are looking for different ways to get revenue and providing a finished product is a great way to do that. So we are seeing some growth. We are adding capacity in some cities. We would expect that to continue. So it's more in the countryside, the cities, the provinces where people live, and in the cities themselves. Apart from adding inventory, we're having to adjust prices of

out our input prices. I with our partners, we're having to lower our costs in order to be more competitive because it's going to be a much more competitive marketplace because there's going to be less demand more supply. So marketing some of these big city centers and I just think the last time I was in London, there's cranes everywhere. What are some of these commercial real estate owners going to do with all this office space? Well, it's um,

it's going to get repurposed. I mean, look, the real estate market is a market that's very fickle and I've I've started our business thirty one years ago and I've seen it go up and down, and it's it is markets like London that have more oscillation. The bigger the city, the more the move. But you know, in the future, you know, cities are going to have to reinvent themselves

and become a more reasonably priced place to live. And you know, the cost of office place will have to come down over time, so it has to be economical for both for companies to be there. London, as an example, became extremely expensive per person to house someone and the cost of living I you know, people finding an apartment close to where they live and not having to commute for two hours a day to get there. It's that combination.

So there will be a repricing and I'm sure many cities will reinvent themselves with lower prices and a tramp favor back in. Hey, Mark, thank you so much for joining. It's just a fascinating discussion. We really appreciate your insight. Mark Dixon, founder and CEO of i w g A Global, just giving us the view, the forecast, if you will, of real estate and urban centers, a major evolution taking place.

Let's pivot to the consumer package goods business that's certainly seen some changes here as a result of the pandemic. We can do that with Jordan Gaspar Jordan's is managing partner and president of A f Ventures, joining us on the phone from Wellington, Florida. A Adventures is a women owned VC firm focusing on better for you consumer brands and categories including food and beverage, beauty and personnel care, health and wellness, and whole bunch of others. Jordan, thanks

so much for joining us here. Talk to us about the consumer package goods business. It seems, obviously as a result of the pandemic be people are buying a lot more in the supermarket, going out less to eat. What are you seeing as some of these trends and how permanent might they be? Hi, thank you so much for

having me so UM. As you said, I imagining partner of Adventures, and we are a fund that exclusively invest in consumer products across the verticals of food and beverage, personal care, pet, beauty, health and wellness UM and so of our over thirty five companies UM, thirty two of them are food and beverage companies. And so it's been an an interesting year for us UM, particularly as all of our products are distributed UM at most of the

major retailers as well as online. UM. You know two thousand and twenty will mark the year of changing consumption patterns. You know, we saw um an increased emphasis of the consumer on self care products, UM, the rise of personalization, and just this general idea of food as health UM. You know, coming in formats like inguestible beauty. Beyond that, we saw the food itself, you know, continue to evolve as people we're focusing on you know, healthy living directed

products like plant based alternatives. UM. But now with this new concept of the grab and stay option, you know, with so many people no longer going to eat out, people need to find solutions that were easily adopted in their homes. UM. And so we'll see a lot of changes in two thousand and twenty one in terms of format, packaging and continents and self and and really playing into sort of a rise and sustainability in the space in general.

Way to hear about some of that, but the first you have to give me an idea of what ingustible

beauty is. Yes, so inguestible beauty, I mean, you know, they're sort of a blurring of the line between personal care, beauty and food that have been occurring, and it had started in predated COVID, but you know, we've invested in the company called a New Code, which is a line of products geared towards UM you know, you know, supporting skin, gut, mood, health, UM and covers you know, different needs states of sleep, immunity, focus and stress and comes in powder formats and capsules

and tinctures and so the idea is that UM not just going to be topicals that you put on your skin, but it's also going to be you know, things that you put inside your body. And so if you think about you know, some of the really big focus coming out of this year and exits in the space you know, v MS has been has had a really huge year in terms of people really thinking about how to take care of themselves from within. So how are brands dealing UM Jordan's kind of much more of the of shopping,

including consumer products moving to e commerce. How are they adopting to that. It's a new world for food and beverage, right, you know, we knew that we had Amazon and you know, detail in the form of Fresh directs UM. You know that we're already players in the market UM, but during COVID, click and collect UM and the ability for consumers to be purchasing from Walmart and Target more easily. UM has has really risen and and that will be a more

permanent shift. You know, people will go back eventually UM into producing shelves and brick and mortar, but there will be large spread adoption of some of these new UM sort of sort omni distribution outlets. You know. Beyond that,

you know, digital marketing itself is going to change. You know, for the first time, we're seeing fresh and frozen food companies UM that are authentic young brands, developing DTWOC strategies, and so you know, we're going to see what comes out of this is just the true omni channel brands UM and that brands will be built expecting to be sold in brick and mortar as well as directly to

their consumers. Jordan's how many times have you been approached by SPACs in the last few months for your various portfolio companies. It is it is a stack moment in the summer, so UM. I think that there is an enormous amount of stack activity in the market. UM And and we do think that you know, SPACs will certainly find some UM great partners in food and beverage in particular but across consumer So go on how many times are there are there portfolio companies that you might be

looking to go public with that way? UM, I think that the public markets have really opened up for food and beverage. And I think that we do see that with the success of companies like Beyond and Tattooed Chef. There is no question, UM, there is now the strategy for you know, liquidity, for these companies to not just be private but also too you know in terms of private act and sponsors, but to be increasingly in the

public markets. UM. And So There'll be a lot of different outcomes, but there is it will be a big year in food and beverage. So Jordan's our new products coming to market during this pandemic or our consumer products company saying our R and D our new product launches, We're gonna wait till after It depends on who you're talking to. UM. So I think that from the Bantas point of our portfolio, new products are certainly coming to market.

There was you know a little bit of a brief pause on innovation where pipelines were halted very temporarily early on during COVID. For the UM the portfolio companies to get their bearings and see, you know how things were on full in retail, but that innovation was in process, and so there's innovation that's now in process to come onto shelf and did through the back half of the year as well as in will in two thousand twenty one because suppliers that were able to deliver and to

meet the expectations of their buyers were certainly allocated self space. UM. Beyond that, there are new preferences that have been built and so innovation lines are being developed off of changing consumer preferences. So you know, we think innovation continues to thrive. UM. It will just be you know, sort of quality manufacturers who have the ability to to really um properly stock the shelves and to deliver in a way that people can trust that the products are going to meet expectations

of both the retail partners and the consumer. Jordan's thank you so much for joining us today. Will certainly given touch of you throughout the year. No doubt there will be activity among your companies. Jordan Gaspar is moniting partner and president of a f Adventure is a very interesting consumer and packaged goods and beauty company h venture fund. Let's put it that way. This morning, a preceived another job's claims a number frustratingly higher, much higher than expected,

almost a million claims uh last month. Really putting pressure on present like Biden too uh put through and propose a much a significant fiscal stimulus plan to break it down. We welcome Carl Ricka Donna, Chief US economist for Bloomberg Economics. Carl, let's start with that jobless claim number. What's your takeaway? Well, there's good news and there's bad news, Paul. The bad news is that nearly a million people filed for unemployment

insurance last week. But the good news is that a million people will be receiving unemployment checks to support their income during this difficult period for the economy and one of the critical uh, you know, issues for the economy of building a bridge loan until we can reopen. The economy and a lot of households, whether we look at the income trends or food stamp applications or other types of signs of financial stress, are really in a difficult

period right now. So we do need to paper over some of the pain, patch up some of the pain with the aid in terms of food stamps, unemployment checks, and rebate checks from the government until we can get to a post lockdown economy. In this week's data, we see nearly more than two hundred thousand people more than economists we're looking for claiming this week to January nine, which is an interesting sort of little detail in itself.

Each one of these people not a detail, of course, They're all human beings, and I'm curious as to why economists might have got it so wrong. Are there more people out there unemployed and underemployed that we're just not seeing? Well, I think a big factor here. There's been a little bit of a mystery since early November, when lockdown measures start to intensify. We really didn't see the fallout in

the unemployment filings data. So we we expected way back by before Thanksgiving even to start to see the steady move higher and jobless claims over the last really last eight weeks or so. Uh, and it only happened to a very limited degree, which seemed inconsistent with restaurants being shut down, indoor dining bands, and all of the other restrictions that are going into place. So while I hate to be vindicated, Uh in looking for that that we

do see that showing up in today's data. So you know, at this time of year, there's very big seasonal factors as people are laid off as cold weather sets in, if they had outdoor employment, for instance, or holiday related hiring, all of those things. Uh, they tend to distort the data. And this is certainly an atypical period we're in. So using typical seasonal factors is hard to apply to the current environment, but it's really the best we can do

as as statisticians. Uh. The other factor is, uh the recent passage of the stimulus bill. Uh, those sweetened unemployment checks and also stimulus checks. That does incentivize some people who may be figured it wasn't worth filing for unemployment to actually uh take the effort to do it now that there will be a more enticing reward, uh if their applications accepted. Carl, We're expected to hear from President le Biden later today talking about perhaps fiscal stimulus plan.

What do you really need to see in his plan? Well, there's the the pie in the sky version, and there's the reality of a split Senate with the Vice President Kamala Harris casting the deciding vote, and so pie in the sky stimulus, which could be green energy and infrastructure investment, and of course aid uh for uh uh you know the current economic downturn. Uh. That would be great if we could see that, and that was certainly force GDP

to a higher number. But I think the reality of the situation is that we're going to see much more limited stimulus. Already, Joe Mansion of West Virginia has expressed some concerns about astronomical price tag, so I think the reality will be we can talk about a two trillion dollar plan, we're more likely to see six eight hundred billion. Carl. Speaking of major speeches, today, we hear from Jerry J. Powell. Is he likely to say anything that will surprise the market?

I don't think so. J. Powell is giving speaking on an academic lecture at the Princeton University Benheim Center for Finance, so I'm an alumni of that. So that's exciting in that regard. But as an election, you know, as they an opportunity to really steer the markets, this doesn't seem like the right platform to be doing that. So at best I think we might get some insight into how he is thinking about the inflation and growth landscape, but this is not the opportunity to really create a new

policy signal. Carl Rick Donna, thank you as always. Carl is chief you as economist for Bloomberg Economics, and we always appreciate his insights. Once again, that initial jobs claims data coming out and just you know, sending chills down our spines. Sixty five thousand people filing claims to the week of January nine, and of course the week earlier

was revised, but only by five thousand. It's it's not like we're not seeing what's in the data, or it's not like yet the data or opaque or anything like that. We also got continuing claims obviously five point two seven one million, which is more than we were anticipating as well.

And it's on Wall Street time for Bloomberg Opinion Today we're joined by at Lisa Martinouzi, Bloomberg Opinion columnists covering finance, and she has a fascinating column out today talking about and analyzing the relationship between President Trump, his busin this is and Deutsche Bank. At Leasta, thanks so much for joining us here. It seems like we're seeing a lot of corporations trying to back away and distance themselves from the president and his companies. That's not going to be

so easy for Deutsche Bank to do, is it. Yes, Now, that's right, I think. Um. You know, what you have to consider is that this is an ongoing and very long standing lending relationship, one that has been going on for decades um to begin with, but also one that

will linger. Because so we understand that Deutsche Bank has now committed not to be doing any new business with Donald Trump nor his companies or his entities, they are still sitting on loans that Donald Trump owes um ow s Deutsche Bank, and it's going to be a little bit tricky to extricate themselves from that relationship for a number of reasons. First and foremost, um, you know, may not be easy to find any anyone willing to take

on that debt off them. But even if they did, this long standing relationship, we know it's going to be on come under the microscope. We know is going to be scrutinized. There are several investigations ongoing at various levels that could well see douortship banks being dragged out. Not so much because it's been necessarily accute of any wrongdoing, but certainly their business practices will come under the radar.

There's a bit of a theory out there, and I don't know how serious it is or if it's just something that was floated that you know, people of a democratic leaning bent, let's say, who might run credit jobs or whatever it might pick this stuff up for a very cheap and try to get something from Donald Trump. Yes, no,

that that you know could could well happen. But in terms of where doorship banks relationship goes and where doorship banks, um, you know, it's history hitherto in its relation with Donald Trump that will remain potentially under scrutiny. And you know when it comes to their business practices. Um. You know, this is a bank that is you know, tried and recently is very hard to um you know, rebuild. It's

the two improve controls, improved governance. After decades of exponential growth that basically saw it, you know, taking on greater and wat to risk and that's resulted in um, you know, allegations and and you know find for many, many billions of dollars, and you know, this is just going to reignite that interest in the businesses of Deutsche Bank and how it goes about winning winning clients and winning business.

At least, it's gonna be fascinating to see how the president and his business uh fund themselves going forward, because up until this point, there was no other money center UH institution lending money to the Trump corporation that came down to. Deutsche Bank was the only one. And it wasn't even the corporate and investment bank at Deutsche Bank. It was the private bank. And now the private banker

for President Trump has left Deutsche Bank. So it it really raises the questions how the Trump organization will capitalize its business going forward. What do we know about that? I think that's you know, extremely early to speculate on that. Um, you know, your wife they do you know, dutche Bankers appeared to be the principal London, but you know, there may be more that we learn about these finances going forward. UM. I think it's you know, a little bit too early

to speculate. I mean, clearly, UM, he will be a you know he is and will remain a polarizing figure. Um. And and that will affect you know, his dealings and the dealings of those who have been you know, enabling him over the years. And of course we also had Signature, which is a much smaller, a boutique kind of bank, who might take over from them? Will anybody step up to the place? As I said, I think I think it's a little bit early to you know, to speculate

on all this. Um. I think what we do know is that you know, obviously, um, you know a lot of businesses, a lot of institutions have been distancing themselves and vowing not to do business with Trump and his organizations. UM. From from including the City of New York, the p G, A and A and its golf tournaments, and that is you know, undas peopill have repercussions on on his entourage

at least. How concerned is Deutsche Bank do you believe about its reputation and maybe maybe the business risk it faces from some of its customers saying we don't want to do business with you. Are they concerned about or how concerned are they about this going forward? I think you know, this could be you know, a moment in which you know, perhaps there's there's more support in in in in in what in how Deutsch about me? Try

to um? You know, sever that relationship, UM, certainly more support than it might have had, you know, you know before last week. UM, I think what what is certainly um the cases that you know, they are trying to maintain the market share in the US. It's not growth the market share in the US. It's still a very important business for anyone, for for an investment bank such

as Deutsche Bank. Um, and it is one in which you know that will draw headlines um which whichever where you cut it, and you know that's not often not

often good for an about bank. You obviously, you know, look at all aspects of Deutsche Bank's reputation here and point out in your column that institutional Shareholder Services rate Deutsche Bank D minus, which is the lowest score, and I S S is extraordinarily well respected and also sort of you know, bound by when it comes to institutional investing. So how long does it take for you know, a major major institution like Deutsche Bank to sort of rehabilitate

its reputation. That's a good question. I think, you know, the focus on on E s G is only increasing as we speak, and investors are paying more attention to it, and um, you know it'll there is a long, long list of situations that Deutsche Bank has been involved in UM that have led to the school UM. And it will certainly take time. I mean, this isn't something that

you fix UM in a year or so. This is you know, this have to They'll have to demonstrate that their controls and governance has improved UM and then you know that that you know the type of for me, it takes you know, years, not months. At Lisa, how important is the US market to Deutsche Bank. They obviously have their challenges in their home market of Germany, but they've really tried for decades to become a major player

here in the US with mixed results. I think you know they're totally clear, are clearly are but there you know, they have a scale down strategy now for the investment banks, they're not offering a broader a sweet of products or some of the competitors. They're much more focused, especially in the US. But you know, the America's still a count for about a third of their investment banking revenue and there are pockets of business where you know, being big

on Wall Street is absolutely essential. As you take UM I, p O s and spacks last year, you know, I p O underwriting revenue was was the biggest among old regions Deutsche Bank covers, So there are pockets of business we absolutely have to be in the US and have to be big. Very briefly, Eliza, how are the banks in London contending with Briggs and these days? Well, we've had you know, the most significant shift we've had so

far has been the one in show trading. You've seen European shares now being almost exclusively traded on the continent, so away from London. That is a big shift for London. But we know we're going to be learning more as the week's progressed, as we see more activity going to the market. Yeah. Absolutely, and Elsa is all over it always. Eliza Martin Utti is a Boomberg opinion columnist covering finance,

and her latest is Deutsche Banks Trump links will prove sticky. Obviously, Deutsche said that it wants to pull back and won't do any further business with Donald Trump, but of course it does already have business in the work. Thanks for listening to the Boomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever a podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn. And I'm Paul Sweeney. I'm on Twitter at

pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio