—— U.S. Office Landlords Expand Into Residential; Coinbase Cuts 20% of Workforce; Microsoft in Talks for $10 Billion OpenAI Deal; UK Satellite Launch Ends in Failure; Top 5 Most Congested Cities Ranked; World Bank Slashes Global GDP Forecast; FTX Wipes Out Star-Studded Shareholder List
1. U.S. Office Landlords Expand Into Residential
In recent years, office vacancy rates have remained high and values have declined due to the pandemic and economic downturn.
According to the Wall Street Journal, with the future of office buildings still uncertain, major office developers such as Empire State Realty Trust (ESRT), Boston Properties, and SL Green Realty have begun acquiring or developing other types of real estate.
Data from CoStar shows that 153 million square feet of office space was under construction in Q3, down from 184 million in Q1 2020.
In contrast, the residential sector tells a different story—500,000 apartment units were completed in the U.S. last year, the highest since 1986. In 2019, fewer than 370,000 homes were finished.
Given the current economic conditions, demand for residential properties is higher than for offices. ESRT CEO Tony Malkin said acquiring multifamily properties yields quicker returns and requires less capital expenditure.
Boston Properties, the largest publicly traded U.S. office landlord, is developing over 2,000 residential units on the East Coast and is also exploring life sciences properties.
ESRT stated that in today’s market, multifamily acquisitions offer superior returns and lower upfront costs.
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2. Coinbase Cuts 20% of Workforce
Today, Coinbase Global CEO Brian Armstrong announced that the company will lay off another 20% of staff—approximately 950 people—as the crypto industry enters a deep winter.
In June, Coinbase laid off 18% of its workforce, impacting 1,200 people. Another 60 employees were cut in November. Now, additional projects will also be shut down.
In a blog post, Brian wrote that this crypto winter coincides with a global economic recession, forcing the company to adjust staffing during the downturn.
Coinbase said the restructuring—including layoffs—will cost between $149 million and $163 million and is expected to be completed by the end of Q2.
Over the past year, Coinbase’s share price has fallen from $250 to $40.
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3. Microsoft in Talks for $10 Billion OpenAI Deal
Sources revealed that over the past few months, Microsoft has been negotiating a $10 billion investment in artificial intelligence firm OpenAI.
Under the proposal, Microsoft and several VC firms would participate in the funding, potentially valuing OpenAI at $29 billion.
Since its launch in late November, ChatGPT’s powerful AI chatbot has generated immense buzz, attracting over 1 million users in under a week. Some believe ChatGPT could replace professional writers or even threaten Google’s core search business.
Founded by Elon Musk and Silicon Valley investor Sam Altman, OpenAI primarily monetizes by charging developers licensing fees for its technology.
Previously, Microsoft invested $1 billion in OpenAI and plans to integrate it into Bing to better compete with Google.
Founder Sam Altman acknowledged ChatGPT’s limitations but praised its accomplishments as remarkable.
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4. UK Satellite Launch Ends in Failure
This morning, Virgin Orbit’s rocket failed to reach its intended orbit after launching from the UK for the first time. The company’s shares fell over 20% following the news.
The rocket was carried by a Boeing 747 that took off from southwest England. But during the final phase of the mission, the rocket’s system failed after satellite separation, resulting in mission failure.
The failure of this historic launch undermines the UK’s aspirations to join the ranks of global space powers. Although the UK is a leader in satellite manufacturing, it ironically lacks mature launch capabilities.
Virgin Orbit, which has yet to turn a profit, is now facing growing skepticism.
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5. Top 5 Most Congested Cities Ranked
According to a new report from research firm INRIX Research, the world’s five most congested cities are located in Europe and the U.S.
The study found that 42% of major metropolitan areas in Europe are now more congested than before the pandemic, with the figure rising to 72% in the UK. In the U.S., 39% of cities also face worse traffic than pre-pandemic.
In 2022, drivers in the UK spent an average of 80 hours in traffic—compared to 51 hours in the U.S.
Report author Bob Pishue noted that while a vibrant cultural and business environment is a good thing, urban congestion must be managed to avoid harming residents’ quality of life and economic recovery.
The top five most congested cities are London, Chicago, Paris, Boston, and New York.
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6. World Bank Slashes Global GDP Forecast
Today, the World Bank announced that global GDP growth for this year is expected to reach just 1.7%—half of its June 2022 forecast and potentially the weakest pace in more than 30 years.
The bank also downgraded its 2024 forecast, citing persistent inflation and elevated interest rates as key reasons. The war in Ukraine and declining investment are also significant headwinds.
World Bank President David Malpass wrote that the global economic crisis is deepening and that both developing and advanced economies may experience GDP growth rates 6% lower than pre-pandemic levels.
The World Bank expects China’s GDP to grow faster than the U.S. this year.
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7. FTX Wipes Out Star-Studded Shareholder List
Not long ago, crypto firm FTX filed for bankruptcy, sending shockwaves through the industry.
Court documents reveal that NFL star Tom Brady and his ex-wife Gisele Bündchen held 1.1 million and 680,000 common shares of FTX, respectively.
Although the value of those shares is not yet finalized, they are likely worthless. Under U.S. bankruptcy law, equity holders are typically last in line behind creditors, customers, and suppliers.
In addition to Brady and other celebrities, major investors such as Tiger Global and Sequoia Capital were also victims of FTX’s collapse.
Just a year ago, FTX raised $400 million at a $32 billion valuation, and founder Sam Bankman-Fried briefly became the world’s richest man.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.