REAL ESTATE

Madison Avenue Goes on Sale

Soon, you might be able to buy an entire Dolce & Gabbana store for less than one of its patterned dresses.

That’s a slight exaggeration, but here’s the point: Commercial real estate, particularly of the high-end variety, is getting crushed during the pandemic. Rents along NYC’s ritzy Madison Avenue are down 17% in Q3, according to brokerage Cushman & Wakefield. 

What’s going on: Covid-19 brutalized urban retail corridors. First, cities emptied out when companies started working from home. At the same time, people started shopping online by the cartload (which puts more demand on warehouses, not actual store locations). Finally, the tourists so many of these luxury retailers depend on were forced to take staycations.  

• An extreme example: Swiss retailer Akris just bought three properties along Madison Ave. at about 80% below peak sales prices in 2014 ($1,340/square foot average vs. $7,589), writes the WSJ.

Now for an M. Night Shyamalan twist

They might appear in the dumps, but commercial rents are still too high right now, and that’s crippling NYC and other cities’ abilities to rebound economically, argues Columbia University law professor Tim Wu in a NYT op-ed. 

Wu writes that rents don’t reflect current market conditions. Landlords are incentivized to keep rents artificially high for a few reasons, including... 

1. Some landlords can afford to be patient and hold out for when demand returns.
2. Other landlords simply can’t lower rents based on agreements with lenders.
3. Lower rents can lead to depressed property values, the last thing a landlord wants.

Inflated rents are bad for the economy because when businesses can’t afford to set up shop, high vacancy rates can suck the vitality out of a neighborhood. In Times Square in Q3, 29% of space was available. 

Looking ahead...Wu proposes a few fixes, such as establishing minimum-rent terms and tweaking zoning laws, and says cities can use this crisis as an opportunity to come back better than ever.

PAYMENTS

The "Stripe of Africa" Is Being Acquired By...

You’ll never guess: Stripe. 

Yesterday, payments processor Stripe announced it’s acquiring Nigerian fintech Paystack for a rumored $200+ million—a record-setting deal for both Stripe and Nigeria. 

Similar to its new parent, Paystack offers software that facilitates digital transactions for 60,000+ business customers. TechCrunch previously dubbed it “the Stripe of Africa,” and Stripe led an $8 million round in Paystack in 2018.  

• The similarities continue: Paystack was a 2016 grad of Silicon Valley’s esteemed Y Combinator accelerator, as was Stripe in 2010.

Stripe’s been looking abroad for a while 

In April, the company raised $600 million at a $36 billion valuation to help fund international expansion. In the last 18 months, it’s moved into 17 new countries. 

The Paystack acquisition shows Stripe is betting on emerging African markets, where e-commerce is growing faster than the global average. And among them, Nigeria is the strongest magnet for tech: Last year, Nigerian fintechs received a quarter of all VC funding that went to African startups.

EDUCATION

Empty Dorms Are the New Norm

A National Student Clearinghouse report surveyed institutions representing 9.2 million students just to come to the same conclusion one could arrive at by scrolling through TikTok—way fewer high-school grads enrolled in college this year. 

The Clearinghouse report found that overall undergraduate populations shrank by 4%, with over two-thirds of the decline coming from first-time college students. 

Breaking it down: The biggest drop-off comes from community college enrollment, where freshman numbers are down 22.7%. 

• That decline is surprising when you consider community college enrollment often jumps during a recession, as adults go back to school to acquire new skills and families look to save on tuition.

One type of college weathering the storm? Private, for-profit, four-year institutions. Enrollment is actually up 3.7% compared to the previous fall. 

Bottom line: With hopes of a V-shaped recovery fading, and family finances still under pressure, the ripple effects from the pandemic are rippling. “I fear that many of those students will never get back,” said Doug Shapiro, executive director of the National Student Clearinghouse.

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For the love of logistics, listen to Lou.

Stop spending your time chasing receipts and approvals, correcting coding, waiting weeks to close the books, and emailing Reginald in Compliance that “the 1,000-gallon tropical fish tank isn’t expensable.”

Start using Divvy.

SPORTS

Sports Viewership Checkup

This chart from Sports Media Watch says it all. 

MARIJUANA

Green Is Pulling For Blue

While every industry is preparing for any and all outcomes in the upcoming election, U.S. weed companies are banking on a Biden/Harris W. 

A joint effort: Sen. Kamala Harris, Biden’s VP pick, said during last week’s debate that the Biden administration would push for decriminalization at the federal level if they win in November.

• And if the Senate also flips from red to blue, it will likely be more impactful for marijuana policy than whoever is sitting in the Oval Office. 

Republican Majority Leader Mitch McConnell has repeatedly struck down legislation that would allow financial institutions more freedom to work with cannabis companies. If the Senate adopts a more chill stance on weed, it would pave the way for U.S.-based companies to list their shares on major stock exchanges.

Bottom line: August cannabis sales were up 26% in California and 34% in Nevada compared to last year, according to BDS Analytics. A Biden victory could propel those numbers even...higher. 

QUIZ

Emily Quizzer

The feeling of getting a 5/5 on the Brew's Weekly News Quiz has been compared to successfully untangling a necklace.

It's that satisfying. Ace the quiz. 

WHAT ELSE IS BREWING

• About 2,000 Robinhood accounts were compromised in a recent hacking spree, Bloomberg reports.
• Ray McGuire, a vice chairman at Citigroup, is leaving the company to run for mayor of NYC.
• Big Hit Entertainment shares soared in its Seoul IPO. Big Hit is the agency behind K-pop legends BTS.
• YouTube cracked down on QAnon conspiracy theory accounts, joining Facebook and Twitter.
• Snapchat debuted its new TikTok rival, Sounds.

SPONSORED BY HPE

The race to Exascale computing is the space race of our century. What is Exascale? It’s a supercomputer performing a billion billion calculations per second. Imagine how researchers might use that kind of power to tackle everything from vaccine discovery to the climate crisis. HPE spoke with Rick Stevens, leader of Argonne National Lab’s Exascale Computing Initiative, about how these new supercomputers will change the world. Read the Q&A.

BREW'S BETS

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• Visuals: Check out ’80s interior design on Twitter and follow our very own Francis Scialabba on Instagram. 
• Jingles: One couple is turning jingles into jams for Empire Today, O’Reilly Auto Parts, and Education Connection on TikTok.

Spooky szn: The Haunting of Bly Manor is getting rave reviews. It’s “uniquely calibrated to mirror the horrors of life in lockdown,” “scarier” than Hill House (its predecessor), and—hard pivot—a “whirlwind romance.” (It’s based on a gothic romance by Henry James.) Watch it on Netflix.

GAMES

Friday Puzzle

What letter comes next in this series: W, L, C, N, I, T?

FRIDAY PUZZLE ANSWER

S. What Letter Comes Next In This Series.