Image Credits: Hiroko Masuike/The New York Times.
It’s hard to miss the schadenfreude in Shahien Nasiripour’s Bloomberg article on the struggling financial performance of Trump Tower, but the numbers don’t lie. They’re having troubling selling retail and office space, and people are ditching their luxury condos at an inflation-adjusted loss in a market where that’s exceedingly rare. The piece is replete with snide comments from real estate analysts and brokers, former residents, and even the woman who managed the building’s construction.
“If I were looking for office space, that would be a building I’d want to avoid,” said Edward Son, until recently a market analyst for CoStar Group Inc…
…Michael Sklar sold his parents’ 57th floor unit for $1.83 million in October after they spent $400,000 to remodel the property. His family purchased it for $1.4 million in 2004, which comes out to $1.84 million after adjusting for inflation.
“No one wants in that building,” Sklar said, “the name on the building became a problem.”
…“The luxury market is softening,” said Matthew D. Hughes, a Manhattan-based broker at Brown Harris Stevens. “But it’s rare that someone owns an apartment here for 10 years and takes a loss.”
…”It’s totally a tourist trap,” said Barbara Res, a former Trump Organization executive who oversaw the building’s construction….“I don’t think I would want an office in Trump Tower,” Res said. “Why would you go there? It’s a wonder he doesn’t have 50% vacancy.”
It’s not a shock that Trump’s brand is doing poorly in Manhattan. It doesn’t help that the place has been turned into a fortress for security reasons. Yet, once again, Trump has figured out how to weather the storm.
Net income slightly rose last year, boosted by the tenancy of his 2020 campaign committee, which has spent more than $890,000 over the last two years to rent space in Trump Tower, according to Federal Election Commission records.
The building’s net income is still about 26% lower than what bankers expected when they evaluated Trump’s fitness for a $100 million loan in 2012. Even so, Trump Tower regularly produces an annual profit for its namesake. Last year, the building generated $10 million in net cash flow, after taking into account its annual $4.3 million interest payment on the loan, according to Trump Organization disclosures.
Trump is paying himself $445,000 a year for office space which is nearly five percent of his total annual profit on the building. This appears to be a business model for the president. Derek Kravitz recently wrote a piece for ProPublica that detailed the egregious and potentially illegal self-dealing going on at Mar-a-Lago. There are two court cases charging that the sales practices of Trump’s Washington, DC hotel violate the Emoluments Clause to the Constitution. The case brought by Congress is moving ahead after a federal judge found Trump’s arguments against it “unpersuasive and inconsistent.”
The Washington Post counts twenty current investigations of the president. Some are related to the Mueller Report or general oversight of the administration, but the majority of them are related to Trump’s businesses, taxes, and finances. In truth, it’s impossible to separate the corruption of this administration from the corruption of the Trump Organization. That’s the problem.
Sometimes it seems that most of the country doesn’t care, but at least in Manhattan people are shunning the Trump brand.