Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Week Insight from the reporters and editors that bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio chairs A.

Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Week Insight from the reporters and editors that bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio chairs A.

Apple right now are down about one point six percent. They were hired by as much as four percent earlier in the session, more than four percent earlier in the session. This after the company reported earnings yesterday. Not a lot of great news in the numbers that came out, some real weakness in China and the iPhone. We're going to talk about all that in just a minute. First, though, we got to talk to Mark German about this Bloomberg News exclusive that he reported just in the last couple of hours. Mark German is chief Technology correspondent. He joins us from Los Angeles. Mark, you came out just in the last hour with this story about some big news Apple canceling this sort of meta glasses competitor. What are the details here?

Apple right now are down about one point six percent. They were hired by as much as four percent earlier in the session, more than four percent earlier in the session. This after the company reported earnings yesterday. Not a lot of great news in the numbers that came out, some real weakness in China and the iPhone. We're going to talk about all that in just a minute. First, though, we got to talk to Mark German about this Bloomberg News exclusive that he reported just in the last couple of hours. Mark German is chief Technology correspondent. He joins us from Los Angeles. Mark, you came out just in the last hour with this story about some big news Apple canceling this sort of meta glasses competitor. What are the details here?

Thanks for having me. I mean, as we know, the Holy Grail and the mixed reality industry are augmented reality glasses, and so Apple's been working on this for some time. Obviously the vision pro it's a technical and engineering marble, but a commercial failure. Even the people who paid four thousand dollars for it really aren't using it. So looking for the next big thing in the MR space, and that is AR glasses. So the original vision was a lightweight pair of glasses that you connect to the phone, use the phone's chip, use the phone's operating system to power some of it, the battery. That had too many technical hurdles to overcome, so they pivoted to making MAC glasses. So AAR glasses that you can connect to your Mac obviously beef your battery, more processing power, additional engines for graphics in AI. But now they've pulled the plug on that. Apple is abandoning Project N one zero seven. That's what they call it internally, that's their augmented reality MAC glasses. And now back to the drawing board. They need to figure out future for this platform. They've spent tens of billions of dollars investing in augmented and virtual reality, the whole XR pipeline. Right now, I would say this is not great they're lost, and it's it's it's not good. It's not good, especially when you realize how behind they are on AI too.

Thanks for having me. I mean, as we know, the Holy Grail and the mixed reality industry are augmented reality glasses, and so Apple's been working on this for some time. Obviously the vision pro it's a technical and engineering marble, but a commercial failure. Even the people who paid four thousand dollars for it really aren't using it. So looking for the next big thing in the MR space, and that is AR glasses. So the original vision was a lightweight pair of glasses that you connect to the phone, use the phone's chip, use the phone's operating system to power some of it, the battery. That had too many technical hurdles to overcome, so they pivoted to making MAC glasses. So AAR glasses that you can connect to your Mac obviously beef your battery, more processing power, additional engines for graphics in AI. But now they've pulled the plug on that. Apple is abandoning Project N one zero seven. That's what they call it internally, that's their augmented reality MAC glasses. And now back to the drawing board. They need to figure out future for this platform. They've spent tens of billions of dollars investing in augmented and virtual reality, the whole XR pipeline. Right now, I would say this is not great they're lost, and it's it's it's not good. It's not good, especially when you realize how behind they are on AI too.

Well, this is it's funny because we're talking about this with Caroly. I had yesterday like this could be you know where I was saying, this could be an option for them because Meta glasses have been somewhat successful. I mean, they're not selling off the shelves and they're you know, it's still early technology. And Carolin made the point, well, you know, Apple's not necessarily first car and Carol made this point too, Apples not necessarily first to stuff, but oftentimes they're their best to stuff. So I assume that yes, they would come out with some sort of wearable piece of eyewear that would really change the game. Does that mean they're they're just done with this?

Well, this is it's funny because we're talking about this with Caroly. I had yesterday like this could be you know where I was saying, this could be an option for them because Meta glasses have been somewhat successful. I mean, they're not selling off the shelves and they're you know, it's still early technology. And Carolin made the point, well, you know, Apple's not necessarily first car and Carol made this point too, Apples not necessarily first to stuff, but oftentimes they're their best to stuff. So I assume that yes, they would come out with some sort of wearable piece of eyewear that would really change the game. Does that mean they're they're just done with this?

We're talking about two different things here, right, So we're talking about augmented reality glasses versus smart glasses. Right, So the Meta raye ND glasses, those don't have displays, those don't have augmented reality. Right. Meta is not going to have AR glasses on the market until twenty seven on the earliest, So we're still two three years out from that. Actually happening now. I do think there is a world where Apple could come out with some fashionable glasses that have cameras and speakers and batteries not built in in order to compete with the Meta ray bound glasses. That being said, Meta will be adding a small little display into their glasses next year. It's not an AAR display, but it's going to be something similar to what you saw from Google Glass a decade ago. Those are going to be quite expensive. But certainly this is not a good moment for Apple. This is I would say, this is terrible. I quite frankly wouldn't be surprised if they all but abandon their mixed reality efforts, but also want to be surprised if they pull things together and they try to get a model out in the future. I would say three to five years from now is the time horizon on an Apple standalone augmented reality glasses. So these glasses that we're talking about today are something a little bit in between what Meta has on the market today and the eventual vision. Right, So standalone glasses the glasses themselves, they have the displays, they have the OS, they have the battery read the heap of the engine. You don't need a connected to the phone. It's a phone replacement. Apples is a bit of a mix. It has the lenses, it has some onboard processing power, some of the guts and the glasses, but you're going over a cable and using mostly what's inside of the computer.

We're talking about two different things here, right, So we're talking about augmented reality glasses versus smart glasses. Right, So the Meta raye ND glasses, those don't have displays, those don't have augmented reality. Right. Meta is not going to have AR glasses on the market until twenty seven on the earliest, So we're still two three years out from that. Actually happening now. I do think there is a world where Apple could come out with some fashionable glasses that have cameras and speakers and batteries not built in in order to compete with the Meta ray bound glasses. That being said, Meta will be adding a small little display into their glasses next year. It's not an AAR display, but it's going to be something similar to what you saw from Google Glass a decade ago. Those are going to be quite expensive. But certainly this is not a good moment for Apple. This is I would say, this is terrible. I quite frankly wouldn't be surprised if they all but abandon their mixed reality efforts, but also want to be surprised if they pull things together and they try to get a model out in the future. I would say three to five years from now is the time horizon on an Apple standalone augmented reality glasses. So these glasses that we're talking about today are something a little bit in between what Meta has on the market today and the eventual vision. Right, So standalone glasses the glasses themselves, they have the displays, they have the OS, they have the battery read the heap of the engine. You don't need a connected to the phone. It's a phone replacement. Apples is a bit of a mix. It has the lenses, it has some onboard processing power, some of the guts and the glasses, but you're going over a cable and using mostly what's inside of the computer.

Right.

Right.

Meta has no displays. It's phone SYNCD what they're launching in twenty twenty seven. This is their Orion prototype they showed in October of twenty twenty four, just a few months ago, that wirelessly pairs with a puck that you keep in your pocket and a wrist device and between those three mechanisms that's the whole operation of the device. But what we really want are fully standalone glasses and quite a ways out from that, all right, what's going.

Meta has no displays. It's phone SYNCD what they're launching in twenty twenty seven. This is their Orion prototype they showed in October of twenty twenty four, just a few months ago, that wirelessly pairs with a puck that you keep in your pocket and a wrist device and between those three mechanisms that's the whole operation of the device. But what we really want are fully standalone glasses and quite a ways out from that, all right, what's going.

On at Apple?

On at Apple?

Like, are they just like is this just a you know, they're having a tough kind of design moment or what's going on that they are It sounds like kind of completely walking away from it.

Like, are they just like is this just a you know, they're having a tough kind of design moment or what's going on that they are It sounds like kind of completely walking away from it.

This is a company that couldn't figure out a self driving car. This is a company that hasn't been able to figure out AI. This is a company that is not able to figure out ar VR. For the time being. The good news for them is they're still selling a lot of iPhones and that's going to allow them to keep having money to throw at R and D budgets and try to figure something out. And I think they eventually will, but it's a scary time right now.

This is a company that couldn't figure out a self driving car. This is a company that hasn't been able to figure out AI. This is a company that is not able to figure out ar VR. For the time being. The good news for them is they're still selling a lot of iPhones and that's going to allow them to keep having money to throw at R and D budgets and try to figure something out. And I think they eventually will, but it's a scary time right now.

I can hear of you.

I can hear of you.

Okay, Well, there's a lot of interest for a major new product, and there's just not It just isn't something. It's about re skinning the existing widgets. They're going to have thinner iPhones, foldable iPhones, all sorts of stuff, smart home appliances, foldable iPads. But in terms of a revolution, we're far from it.

Okay, Well, there's a lot of interest for a major new product, and there's just not It just isn't something. It's about re skinning the existing widgets. They're going to have thinner iPhones, foldable iPhones, all sorts of stuff, smart home appliances, foldable iPads. But in terms of a revolution, we're far from it.

But I mean, you know what's going on inside? Are they just waiting mark for other people to kind of figure some things out before they kind of jump on board, or do they not have the right people engineers, design folks like, like, what is it that's missing? Maybe in the mojo of Apple of today.

But I mean, you know what's going on inside? Are they just waiting mark for other people to kind of figure some things out before they kind of jump on board, or do they not have the right people engineers, design folks like, like, what is it that's missing? Maybe in the mojo of Apple of today.

They've lost a lot of their visionaries, right, they lost a lot of their top engineering talent over the last several years. It's really about you know, vision and willing to take bold risks to accomplish the next big thing. They didn't want to take the bold risk getting a car out. Fine, they took the bold risk getting the vision pro out, but that took a little too long and it was a bit of a failure at least till now. I mean, I think with the proper marketing and the proper price points, they'll be okay. But at some point they're going to have to figure some stuff out and make some hard decisions.

They've lost a lot of their visionaries, right, they lost a lot of their top engineering talent over the last several years. It's really about you know, vision and willing to take bold risks to accomplish the next big thing. They didn't want to take the bold risk getting a car out. Fine, they took the bold risk getting the vision pro out, but that took a little too long and it was a bit of a failure at least till now. I mean, I think with the proper marketing and the proper price points, they'll be okay. But at some point they're going to have to figure some stuff out and make some hard decisions.

You said, Apple is still selling a lot of iPhones. We know that, but they're not selling as many as analysts thought they would sell, especially, Okay, so.

You said, Apple is still selling a lot of iPhones. We know that, but they're not selling as many as analysts thought they would sell, especially, Okay, so.

I will let's just be honest here, right, Like the analysts come up with these numbers, they come up with these forecasts, right, and then Apple announces a certain number, right, and that either beats the number from the forecasts or doesn't.

I will let's just be honest here, right, Like the analysts come up with these numbers, they come up with these forecasts, right, and then Apple announces a certain number, right, and that either beats the number from the forecasts or doesn't.

Right.

Right.

But it's not like you're comparing Apple numbers to Apple numbers. You're comparing Apple numbers to numbers that a bunch of analysts came up with themselves, right. And so the question is where are they getting this data from?

But it's not like you're comparing Apple numbers to Apple numbers. You're comparing Apple numbers to numbers that a bunch of analysts came up with themselves, right. And so the question is where are they getting this data from?

Right?

Right?

Why do we think that's how many they would have sold? Is it how many they should have sold? How many they thought they were going to sell? Right? So I do think there are some fundamental questions about the whole comparison between analyst estimates and what really were sold. I personally think the better metric is how many they sold versus how many they sold in the year prior. Are they showing growth? What percentage of growth would we have liked to see? Right? In terms of China, I think that's more of a clear cut example of their performance. Right, they dipped three billion dollars year. Every year, they're down seven billion dollars compared to two or three years ago in the holiday season. Right, So that's a bit more cut and dry. The China things extremely concerning. I think the iPhone to me was actually pretty good.

Why do we think that's how many they would have sold? Is it how many they should have sold? How many they thought they were going to sell? Right? So I do think there are some fundamental questions about the whole comparison between analyst estimates and what really were sold. I personally think the better metric is how many they sold versus how many they sold in the year prior. Are they showing growth? What percentage of growth would we have liked to see? Right? In terms of China, I think that's more of a clear cut example of their performance. Right, they dipped three billion dollars year. Every year, they're down seven billion dollars compared to two or three years ago in the holiday season. Right, So that's a bit more cut and dry. The China things extremely concerning. I think the iPhone to me was actually pretty good.

I mean they're still selling one hundred and twenty four billion dollars worth of stuff. Like I always think about this mark when the numbers cross and we all kind of just throw them out there. I mean, they still sell a ton of stuff. That's just a quarterly number.

I mean they're still selling one hundred and twenty four billion dollars worth of stuff. Like I always think about this mark when the numbers cross and we all kind of just throw them out there. I mean, they still sell a ton of stuff. That's just a quarterly number.

Yeah, that's a lot. That's a four percent year of year growth. That's good, right. I Mean we were at a time period about a year and a half ago we talked a lot of bit about this about how they were declining on an annual basis quarter after quarter, right, that was not a great time for them. But now we're back in growth mode and that's why the stock is up today. It reflects that they have growth in the holiday perier. They're going to grow again in the March quarter. So I think there are positive signs on an overall basis. In terms of the products, I think the Mac and the iPad were sneaky good hits recently. And you know we've talked about John Turnis, the head of Mac iPad engineering, right being in line to be the future CEO. I mean, I think that we're just keep pushing in that direction by having the main stays in the Apple product pipeline doing as well as they're doing, right. I think the questions about Apple are the periphreeze.

Yeah, that's a lot. That's a four percent year of year growth. That's good, right. I Mean we were at a time period about a year and a half ago we talked a lot of bit about this about how they were declining on an annual basis quarter after quarter, right, that was not a great time for them. But now we're back in growth mode and that's why the stock is up today. It reflects that they have growth in the holiday perier. They're going to grow again in the March quarter. So I think there are positive signs on an overall basis. In terms of the products, I think the Mac and the iPad were sneaky good hits recently. And you know we've talked about John Turnis, the head of Mac iPad engineering, right being in line to be the future CEO. I mean, I think that we're just keep pushing in that direction by having the main stays in the Apple product pipeline doing as well as they're doing, right. I think the questions about Apple are the periphreeze.

Yeah, how about that services revenue? Though that came in above estimates.

Yeah, how about that services revenue? Though that came in above estimates.

It was great. Yeah, app store, cloud services, advertising business at Apple is growing quite steadily, so that's helping on the margins for them too. Obviously there's some fear around the app store outside of the US the regulatory environments, but it even seems like that's tapering down to right. So services I think quite the positive. Can you imagine if Apple didn't get into the services business and did the full potion to services about five years ago, where they would be right now. I mean, that whole initiative has really I'm not going to say saved the company, because it's hard to save a company that's making one hundred and twenty billion a year, but it's done wonders for them.

It was great. Yeah, app store, cloud services, advertising business at Apple is growing quite steadily, so that's helping on the margins for them too. Obviously there's some fear around the app store outside of the US the regulatory environments, but it even seems like that's tapering down to right. So services I think quite the positive. Can you imagine if Apple didn't get into the services business and did the full potion to services about five years ago, where they would be right now. I mean, that whole initiative has really I'm not going to say saved the company, because it's hard to save a company that's making one hundred and twenty billion a year, but it's done wonders for them.

Well, Tim and I talk about you know, we look at our monthly statements or you know how much I pay out to Apple on the services side, not even on the hardware side. It's pretty remarkable. Hey, there's a couple of other headlines that have come out over the past week or so. Apple and Spacelink to support Starlink network of iPhones, some different things coming out.

Well, Tim and I talk about you know, we look at our monthly statements or you know how much I pay out to Apple on the services side, not even on the hardware side. It's pretty remarkable. Hey, there's a couple of other headlines that have come out over the past week or so. Apple and Spacelink to support Starlink network of iPhones, some different things coming out.

What do we need to know about that?

What do we need to know about that?

So this is an interesting one. So T Mobile in the US is now rolling out a beta version of their Starlink partnership with SpaceX. And even though Apple already has its own global network for satellite infrastructure through Global Star, if you're a T Mobile customer in the US, you're gonna have a great experience using Starlink on your iPhone when this rolls out officially in the coming months, and so I'm very bullish on satellite networking, very bullish on the future of satellite connectivity for devices. I think this is going to be a great thing for iPhone customers, but also are Android customers. Why this was newsworthy is because all the disclosures to date is that this would be a Android specific technology. But getting it on the Apple ecosystem I think is great and so as an as an Apple customer, I'm excited to take it first.

So this is an interesting one. So T Mobile in the US is now rolling out a beta version of their Starlink partnership with SpaceX. And even though Apple already has its own global network for satellite infrastructure through Global Star, if you're a T Mobile customer in the US, you're gonna have a great experience using Starlink on your iPhone when this rolls out officially in the coming months, and so I'm very bullish on satellite networking, very bullish on the future of satellite connectivity for devices. I think this is going to be a great thing for iPhone customers, but also are Android customers. Why this was newsworthy is because all the disclosures to date is that this would be a Android specific technology. But getting it on the Apple ecosystem I think is great and so as an as an Apple customer, I'm excited to take it first.

Man, I'm a starlink customer. It's pretty amazing. It's pretty amazing. Anyway, go ahead, Hey.

Man, I'm a starlink customer. It's pretty amazing. It's pretty amazing. Anyway, go ahead, Hey.

Mark, just about forty five seconds left. We haven't gotten your take on the deep seek news earlier this week. How do you see that relating to Apple?

Mark, just about forty five seconds left. We haven't gotten your take on the deep seek news earlier this week. How do you see that relating to Apple?

Okay, so twofold. On one hand, it validates Apple's model for artificial intelligence, right, But on the other hand, Apple's model for artificial intelligence this is not very good. And you have this random small company that nobody ever heard of until last weekend eating Apple's lunch, right, So it validates it, but also shows how far behind they are at the same time, So I don't think it's a great thing for Apple. I'm telling you Apple needs to figure something out on their AI stuff. I just don't understand how a company this resource rich, with the right people in place, have been able to just completely miss the boat on the biggest new technology since the Internet.

Okay, so twofold. On one hand, it validates Apple's model for artificial intelligence, right, But on the other hand, Apple's model for artificial intelligence this is not very good. And you have this random small company that nobody ever heard of until last weekend eating Apple's lunch, right, So it validates it, but also shows how far behind they are at the same time, So I don't think it's a great thing for Apple. I'm telling you Apple needs to figure something out on their AI stuff. I just don't understand how a company this resource rich, with the right people in place, have been able to just completely miss the boat on the biggest new technology since the Internet.

Well unbelievable.

Well unbelievable.

Like I said, the tone in your voice, I haven't heard that for a while. When it comes to Apple specifically, he is Mark German.

Like I said, the tone in your voice, I haven't heard that for a while. When it comes to Apple specifically, he is Mark German.

He's amazing.

He's amazing.

Bloomberg News Chief Technology correspond be sure too to check out his weekly newsletter. You can find it at Bloomberg dot com and of course I always on the Bloomberg terminal.

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You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Applecarplay and Android Auto with the Bloomberg Business app, or just live on YouTube.

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President Donald Trump intends to move ahead with plans on Saturday.

President Donald Trump intends to move ahead with plans on Saturday.

Tomorrow to impose twenty five.

Tomorrow to impose twenty five.

Percent tariffs on Mexico and Canada and a ten percent levee on China. This was coming from the White House earlier, the White House Press Secretary commenting on it.

Percent tariffs on Mexico and Canada and a ten percent levee on China. This was coming from the White House earlier, the White House Press Secretary commenting on it.

I saw that.

I saw that.

Report and it is false. I was just with the President in the Oval Office, and I can confirm that Tomorrow the February first deadline that President Trump put into place, that a statement several weeks ago continues, the President will be implementing tomorrow a twenty five percent tariffs on Mexico, twenty five percent tariffs on Canada, and a ten percent tariff on China.

Report and it is false. I was just with the President in the Oval Office, and I can confirm that Tomorrow the February first deadline that President Trump put into place, that a statement several weeks ago continues, the President will be implementing tomorrow a twenty five percent tariffs on Mexico, twenty five percent tariffs on Canada, and a ten percent tariff on China.

All right, That, of course is the White House Press Secretary Caroline Levitt earlier today when she said, I saw that report and it was false. There were earlier reports today that these tariffs would not be imposed until March first, so she was clarifying that no, yes, indeed, it's going to start tomorrow, So certainly something that we're following. We also let some US economic news this morning on inflation. The FED, of course watches very closely. So let's get into it. Let's tie it all together in terms of what it means for the US economy and really the global economy. With us right now is Molly Smith, Bloomberg News Global Economy Reporter. She's right here with Tim and me in studio and out there in our DC bureau where so much news is coming lately, Bloomberg News Global Economy Reporter and a current Hey, Molly, I do want to start with you.

All right, That, of course is the White House Press Secretary Caroline Levitt earlier today when she said, I saw that report and it was false. There were earlier reports today that these tariffs would not be imposed until March first, so she was clarifying that no, yes, indeed, it's going to start tomorrow, So certainly something that we're following. We also let some US economic news this morning on inflation. The FED, of course watches very closely. So let's get into it. Let's tie it all together in terms of what it means for the US economy and really the global economy. With us right now is Molly Smith, Bloomberg News Global Economy Reporter. She's right here with Tim and me in studio and out there in our DC bureau where so much news is coming lately, Bloomberg News Global Economy Reporter and a current Hey, Molly, I do want to start with you.

We did get inflation data, we got.

We did get inflation data, we got.

To read on consumers in terms of spending incomes, and yet this is all against the backdrop, like I don't know, do we not even care about any of that anymore? Because tariffs are now front and center.

To read on consumers in terms of spending incomes, and yet this is all against the backdrop, like I don't know, do we not even care about any of that anymore? Because tariffs are now front and center.

It really is.

It really is.

I mean, I honestly even was forgetting that we already had pc this morning.

I mean, I honestly even was forgetting that we already had pc this morning.

So much has happened since then.

So much has happened since then.

Good point.

Good point.

So and of course this data for PCE is back in December, so I mean tomorrow, February first, like man like, December is really old news right now. And we also kind of had a good sense of how this data was going to come in because we got the GDP data yesterday, which is quarterly and wraps a lot of this stuff into it. So not too many surprise is coming out of the December data, but just wrapping up what we had a sense of that inflation is well, maybe coming down depending on how you look at it, but in a lot of ways still moving sideways, and consumer spending tough to bet against the consumer, even if it looks like there are signs that disposable incomes are slowing in the savings rate is dipping, so reasonable to think that, you know, consumer spending would start to slow, especially if tariffs are enacted, if that is meaningfully going to increase consumer prices. But it's just really hard to bet against the American consumer. That's tales all the time.

So and of course this data for PCE is back in December, so I mean tomorrow, February first, like man like, December is really old news right now. And we also kind of had a good sense of how this data was going to come in because we got the GDP data yesterday, which is quarterly and wraps a lot of this stuff into it. So not too many surprise is coming out of the December data, but just wrapping up what we had a sense of that inflation is well, maybe coming down depending on how you look at it, but in a lot of ways still moving sideways, and consumer spending tough to bet against the consumer, even if it looks like there are signs that disposable incomes are slowing in the savings rate is dipping, so reasonable to think that, you know, consumer spending would start to slow, especially if tariffs are enacted, if that is meaningfully going to increase consumer prices. But it's just really hard to bet against the American consumer. That's tales all the time.

And a good that we have you here with Molly Smith, and you look at the global economy, you look at the US economy. Tarriffs twenty five percent on Mexico, Canada, ten percent on China. I mean, these are the US's largest trading partners. There's a lot that goes back and forth. Your initial read on if this sticks, if it sticks around for a while, what it could mean.

And a good that we have you here with Molly Smith, and you look at the global economy, you look at the US economy. Tarriffs twenty five percent on Mexico, Canada, ten percent on China. I mean, these are the US's largest trading partners. There's a lot that goes back and forth. Your initial read on if this sticks, if it sticks around for a while, what it could mean.

Well, certainly a big headline, add a depressed briefing int White High. Even though the President has warned about these tariffs, imposing them tomorrow for everyone, I think is probably at the shock end of the scale for most economists. But still we have to wait and see to your point, just what exactly our details in this The Press Secretary did say will be twenty five percent on Canada and Mexico and the ten percent on China. But we need to know are we talking about all of the goods, the merchandise goods across the borders and come in from those countries. We need to know will there be any exemptions for some sectors? How long will these tariffs be in place for I mean, will there be mitigating circumstances where Canada and Mexico and China complete their case. So there's lots of you know, devil in the detail on this, but taking it at face value, it would be quite a shock because you're talking about, you know, everything from food, avocado's my colleagues are all about today, lumber crossing the border from Canada, cars and car parts go back and forth on both borders, and then of course when it comes to the US and China. I mean, obviously, China's the world's biggest trading nation. They're the factory of the world, so you know, the whole gambit of can asumer goods will be coming in from that side of things. Now, you can argue to talk about how much of an inbact ten percent would have, but I think the bigger focus for now, the bigger folcus I think right now is on that twenty five per cent level. Chann and sorry, Canada and Mexico.

Well, certainly a big headline, add a depressed briefing int White High. Even though the President has warned about these tariffs, imposing them tomorrow for everyone, I think is probably at the shock end of the scale for most economists. But still we have to wait and see to your point, just what exactly our details in this The Press Secretary did say will be twenty five percent on Canada and Mexico and the ten percent on China. But we need to know are we talking about all of the goods, the merchandise goods across the borders and come in from those countries. We need to know will there be any exemptions for some sectors? How long will these tariffs be in place for I mean, will there be mitigating circumstances where Canada and Mexico and China complete their case. So there's lots of you know, devil in the detail on this, but taking it at face value, it would be quite a shock because you're talking about, you know, everything from food, avocado's my colleagues are all about today, lumber crossing the border from Canada, cars and car parts go back and forth on both borders, and then of course when it comes to the US and China. I mean, obviously, China's the world's biggest trading nation. They're the factory of the world, so you know, the whole gambit of can asumer goods will be coming in from that side of things. Now, you can argue to talk about how much of an inbact ten percent would have, but I think the bigger focus for now, the bigger folcus I think right now is on that twenty five per cent level. Chann and sorry, Canada and Mexico.

Well to that end, And I'm wondering who you think absorbs the majority of these tariffs, especially those from Mexico and from Canada. Does it, in your view, happen that it's the consumer or is it the company where it eats their bottom line who absorbs more Here.

Well to that end, And I'm wondering who you think absorbs the majority of these tariffs, especially those from Mexico and from Canada. Does it, in your view, happen that it's the consumer or is it the company where it eats their bottom line who absorbs more Here.

So there are a few parts in this chain. Number one, the question becomes, will the exporter or the producer selling their product cut their prices to factor in the tariff. That's one side of it. The other side of it is will the buyer the importer absorb the tariff rather than pass it on? You know, if they have good margins, kind of take the tariff on board I rather than pass on to consumers. But to your point, this is where economists say the rubber hits the road. In truth, you know, these companies don't have those margins. Nobody's going to take a cut in their selling price. So these prices will eventually be passed along to consumer, pass on to main street. Now, the Treasury Secretary Scott Besson made the point recently his hearing that there are mitigatting circumstances. He made the point that it's strong dollar can offset the impact of tariffs, and they say consumer patterns will change anyway. They won't buy tariff goods or there are ways around us. But you know, writ large, there's a question mark for sure over the impact prices for consumers from tariffs.

So there are a few parts in this chain. Number one, the question becomes, will the exporter or the producer selling their product cut their prices to factor in the tariff. That's one side of it. The other side of it is will the buyer the importer absorb the tariff rather than pass it on? You know, if they have good margins, kind of take the tariff on board I rather than pass on to consumers. But to your point, this is where economists say the rubber hits the road. In truth, you know, these companies don't have those margins. Nobody's going to take a cut in their selling price. So these prices will eventually be passed along to consumer, pass on to main street. Now, the Treasury Secretary Scott Besson made the point recently his hearing that there are mitigatting circumstances. He made the point that it's strong dollar can offset the impact of tariffs, and they say consumer patterns will change anyway. They won't buy tariff goods or there are ways around us. But you know, writ large, there's a question mark for sure over the impact prices for consumers from tariffs.

I do want to point out the tariffs would mark the first wave of trade levies in Trump's new term, and their impact will ripple well beyond Canada and Mexico as other nations brace for the possibility that they may be targeted next, and as US businesses await possible retaliatory measures. And this is the one thing that it maybe stops business from kind of moving ahead on something as they try to figure out the impact of it. Molly, I want to bring you back in here, because how much can the US economy absorb if there is a bit of a tariff war trade war here? And is it more of an impact on growth or is it more of an impact on inflation.

I do want to point out the tariffs would mark the first wave of trade levies in Trump's new term, and their impact will ripple well beyond Canada and Mexico as other nations brace for the possibility that they may be targeted next, and as US businesses await possible retaliatory measures. And this is the one thing that it maybe stops business from kind of moving ahead on something as they try to figure out the impact of it. Molly, I want to bring you back in here, because how much can the US economy absorb if there is a bit of a tariff war trade war here? And is it more of an impact on growth or is it more of an impact on inflation.

Well, that's what we had a story out this We those just examining that exact question. And the conversation this time around really has been about inflation. But that's because inflation is you know, of course, has dominated the conversation for the last couple of years here versus in twenty nineteen, the first full year after Trump's first room taffs were enacted. You know, the inflation quote problem then was that we couldn't get up to two percent inflation, that it had been running so low for so many years coming out of the financial crisis. So it's a very different conversation now versus back then. What was really the concern that was starting to unfold was looking at how growth is starting to slow down in response to tariffs, how business investment is stalling, industrial production is contracting, those factory jobs are actually not coming back here, and how these are then going to be headwinds to growth. Of course, that all got very soon overshadowed by the pandemic and we didn't really get to see the full effects of it play out, but it's a good lesson for this time around, and that's what our story was looking at. As we just recently got new transcripts from the FED. These are verbatim closed door accounts that come out with a five year lag from those meetings that were in twenty nineteen, and we saw that it was really more the growth concerns rather than inflation that dominated the conversation back then.

Well, that's what we had a story out this We those just examining that exact question. And the conversation this time around really has been about inflation. But that's because inflation is you know, of course, has dominated the conversation for the last couple of years here versus in twenty nineteen, the first full year after Trump's first room taffs were enacted. You know, the inflation quote problem then was that we couldn't get up to two percent inflation, that it had been running so low for so many years coming out of the financial crisis. So it's a very different conversation now versus back then. What was really the concern that was starting to unfold was looking at how growth is starting to slow down in response to tariffs, how business investment is stalling, industrial production is contracting, those factory jobs are actually not coming back here, and how these are then going to be headwinds to growth. Of course, that all got very soon overshadowed by the pandemic and we didn't really get to see the full effects of it play out, but it's a good lesson for this time around, and that's what our story was looking at. As we just recently got new transcripts from the FED. These are verbatim closed door accounts that come out with a five year lag from those meetings that were in twenty nineteen, and we saw that it was really more the growth concerns rather than inflation that dominated the conversation back then.

Well, speaking of the FED, there were a lot of questions Molly to Fed chair J. Powell earlier this week about Trump's proposed policies, and you know, just to paraphrase a little bit, he basically said, well, we haven't seen the policies enacted yet, so we can't really comment on them. We don't have a roadmap for them necessarily. Now he's now at the FED, they have their work cut out for him because they know that these tariffs are starting tomorrow. How does it change the conversation that they're having.

Well, speaking of the FED, there were a lot of questions Molly to Fed chair J. Powell earlier this week about Trump's proposed policies, and you know, just to paraphrase a little bit, he basically said, well, we haven't seen the policies enacted yet, so we can't really comment on them. We don't have a roadmap for them necessarily. Now he's now at the FED, they have their work cut out for him because they know that these tariffs are starting tomorrow. How does it change the conversation that they're having.

Well, I think the flat that honestly Powell has gotten, you know from economists who have commented on this since the FED meeting on Wednesday, is that the Fed you know, communication up until Wednesday was we are data dependent. We're going away to see how economic data evolves and that's going to guide our policy and how we think about the economy. But the message that a lot of people heard on Wednesday was we're going to wait to see what Donald Trump and his administration doesn't that that's going to guid or understanding of the economy. Those are two very different things, and that's I mean, it's still just again was saying devil in the details, like there's just still so much unknown with that, and of course, how much the data of that is going to pick up as well.

Well, I think the flat that honestly Powell has gotten, you know from economists who have commented on this since the FED meeting on Wednesday, is that the Fed you know, communication up until Wednesday was we are data dependent. We're going away to see how economic data evolves and that's going to guide our policy and how we think about the economy. But the message that a lot of people heard on Wednesday was we're going to wait to see what Donald Trump and his administration doesn't that that's going to guid or understanding of the economy. Those are two very different things, and that's I mean, it's still just again was saying devil in the details, like there's just still so much unknown with that, and of course, how much the data of that is going to pick up as well.

You know, and it makes me wonder about kind of this Goldie Locke's economy, perhap, or just write economy that.

You know, and it makes me wonder about kind of this Goldie Locke's economy, perhap, or just write economy that.

President Trump inherited in his second term.

President Trump inherited in his second term.

You write about it in the BusinessWeek newsletter b W Daily that is out on the Bloomberg and at Bloomberg dot com.

You write about it in the BusinessWeek newsletter b W Daily that is out on the Bloomberg and at Bloomberg dot com.

I mean, he came into this.

I mean, he came into this.

Second term with a lot of things doing really well.

Second term with a lot of things doing really well.

Yeah, like Molly was saying, there, you've got a very strong consumer base at the moment, you have strong aggregate GDP. The labor market is cooling, but still in pretty good order. The Fed chairman himself, Jerome Pile, said this week that the economy is in a good place. Of course, the question becomes what sort of a bouncing act President Trump faces under one hounds once a go ahead with these tariffs, how might that impact consumer confidence and business confidence? For example, he also has other programs going on, for example, a deportation program, which is a question mark for businesses who might be impacted by that labor source. But of course, on President Trump's side, he would make the point that they're also pushing for lower taxes that will spur investment. They also say higher tariffs will bring manufacturing and investment back to the US as well, and of course raise revenues to offset fiscal depths. So they're making the case for what they need to do. But I think at the very least, it's a lot of policy change for any economy to manage in a short space of time, and I think there's going to be a lot to assess that's coming at US pretty fast now in the weeks and the months ahead.

Yeah, like Molly was saying, there, you've got a very strong consumer base at the moment, you have strong aggregate GDP. The labor market is cooling, but still in pretty good order. The Fed chairman himself, Jerome Pile, said this week that the economy is in a good place. Of course, the question becomes what sort of a bouncing act President Trump faces under one hounds once a go ahead with these tariffs, how might that impact consumer confidence and business confidence? For example, he also has other programs going on, for example, a deportation program, which is a question mark for businesses who might be impacted by that labor source. But of course, on President Trump's side, he would make the point that they're also pushing for lower taxes that will spur investment. They also say higher tariffs will bring manufacturing and investment back to the US as well, and of course raise revenues to offset fiscal depths. So they're making the case for what they need to do. But I think at the very least, it's a lot of policy change for any economy to manage in a short space of time, and I think there's going to be a lot to assess that's coming at US pretty fast now in the weeks and the months ahead.

We should point out too that, of course, this was a major part of President Trump's campaign, his pledges to impose sweeping tariffs. He is already ready ordered up reports there do April first on overall trade issues in tariffs that could lead him to trigger new levees or to quit the Continental Trade pack giving negotiated with Canada and Mexico in his first term. That agreement, by the way, is up for review in twenty twenty six. One thing I want to ask you, and you know, we filter all of what comes out of Washington through the financial markets, and we did see equity markets take a leg down here on news from the White House Press secretary that indeed there would be Tarr's forthcoming on Canada, on Mexico, and on China. So I do wonder the president is also sensitive to what happens in the financial markets.

We should point out too that, of course, this was a major part of President Trump's campaign, his pledges to impose sweeping tariffs. He is already ready ordered up reports there do April first on overall trade issues in tariffs that could lead him to trigger new levees or to quit the Continental Trade pack giving negotiated with Canada and Mexico in his first term. That agreement, by the way, is up for review in twenty twenty six. One thing I want to ask you, and you know, we filter all of what comes out of Washington through the financial markets, and we did see equity markets take a leg down here on news from the White House Press secretary that indeed there would be Tarr's forthcoming on Canada, on Mexico, and on China. So I do wonder the president is also sensitive to what happens in the financial markets.

What is the overall thinking.

What is the overall thinking.

Within the economic community in terms of how much of it is bluster, how much of it is still campaigning, how much of it is now a real activity, How do you make sense of it, and how much do we think that the president, once he sees some market reaction, might reverse course.

Within the economic community in terms of how much of it is bluster, how much of it is still campaigning, how much of it is now a real activity, How do you make sense of it, and how much do we think that the president, once he sees some market reaction, might reverse course.

It's certainly a moving target. I mean, to your point, a lot of e commists say this is a negotiating tool. Some of President Trump's own officials have made that point. I mean, Howard Lipnik in his hearing for Commerce Secrety made the point this week Tariff's circumbany us for negotiating. Scott Beston has made that point. So there is a kind of a feeling. Now. Critics would say that's complacency among the market watching community, because President Trump has made it very clear to the people during his campaign that he's going to go ahead with tariffs, and he has a mandate to do so. But then to your point, there is a question, and this is what it goes back to. Earlier the point is making about the economy and the bouncing Act. There is there a point where if markets responding negatively, would that put the brakes on President Trump's use of tariffs. This is a talking point among market watchers all the time. You'd have to say, so far, given all the tariff talks since President Trump won the election and come back to office, markets having to really toss themselves upside down on this, certainly not equity markets. There's been bigger moves in currency markets. But if we start to see equities come off sharply over the coming weeks, I think that certainly would add a fuel to this idea that there is a break in President Trump's ambitions. But I wouldn't say we're there yet on that one.

It's certainly a moving target. I mean, to your point, a lot of e commists say this is a negotiating tool. Some of President Trump's own officials have made that point. I mean, Howard Lipnik in his hearing for Commerce Secrety made the point this week Tariff's circumbany us for negotiating. Scott Beston has made that point. So there is a kind of a feeling. Now. Critics would say that's complacency among the market watching community, because President Trump has made it very clear to the people during his campaign that he's going to go ahead with tariffs, and he has a mandate to do so. But then to your point, there is a question, and this is what it goes back to. Earlier the point is making about the economy and the bouncing Act. There is there a point where if markets responding negatively, would that put the brakes on President Trump's use of tariffs. This is a talking point among market watchers all the time. You'd have to say, so far, given all the tariff talks since President Trump won the election and come back to office, markets having to really toss themselves upside down on this, certainly not equity markets. There's been bigger moves in currency markets. But if we start to see equities come off sharply over the coming weeks, I think that certainly would add a fuel to this idea that there is a break in President Trump's ambitions. But I wouldn't say we're there yet on that one.

It's a good point, Molly.

It's a good point, Molly.

One thing I want to ask you, though, if you know a lot of analysis, is to also come down that when it comes to tariffs, if it's kind of one big dump and we know kind of what's hitting us, that's one thing. But if it's a constant barrage every few weeks or every month about some new tariffs being levied, that is a bigger toll on the US economy, right.

One thing I want to ask you, though, if you know a lot of analysis, is to also come down that when it comes to tariffs, if it's kind of one big dump and we know kind of what's hitting us, that's one thing. But if it's a constant barrage every few weeks or every month about some new tariffs being levied, that is a bigger toll on the US economy, right.

And to the point then of as well, what was the real factor on growth in twenty nineteen, back when in the first turn, when this was happening. The broader uncertainty about US trade policy also factors into that that businesses are really just almost paralyzed, you know, in like terms of we just don't know how this outlook is going to evolve. How can you really move forward with investments that are moving on a much longer timeline than what the White House is coming out with every other day. So that really is difficult when you're thinking about how you're going to be making, you know, multimillion billion dollar decisions and you just really have no idea when that moving target is going to hit.

And to the point then of as well, what was the real factor on growth in twenty nineteen, back when in the first turn, when this was happening. The broader uncertainty about US trade policy also factors into that that businesses are really just almost paralyzed, you know, in like terms of we just don't know how this outlook is going to evolve. How can you really move forward with investments that are moving on a much longer timeline than what the White House is coming out with every other day. So that really is difficult when you're thinking about how you're going to be making, you know, multimillion billion dollar decisions and you just really have no idea when that moving target is going to hit.

Yeah, I think important to look at the fine print too of what happens tomorrow, given that some products could be exempted, and you know, get an understanding for what exactly this is going to hit. Hey, next week, we do have more economic data coming a real look at the jobs market next week with Jolts with the January Employment Report survey says for at least the change in private payrolls or changeing non front payrolls, rather one hundred and sixty five thousand jobs added, what's the conversation that you're going to be having around that.

Yeah, I think important to look at the fine print too of what happens tomorrow, given that some products could be exempted, and you know, get an understanding for what exactly this is going to hit. Hey, next week, we do have more economic data coming a real look at the jobs market next week with Jolts with the January Employment Report survey says for at least the change in private payrolls or changeing non front payrolls, rather one hundred and sixty five thousand jobs added, what's the conversation that you're going to be having around that.

Though, honestly, the bigger conversation I keep forgetting that we are getting January data, because the bigger one is more about the revisions to all of last year. So that's really where the conversation is happening. If you remember, we got a report last August, this was an initial estimate of what the revisions might show for payrolls through March of twenty twenty four, and that estimate said that payrolls would be marked down by more than eight hundred thousand and that was the biggest downward revision since two thousand and nine. That was very scary at the time and even drew a lot of attention from Congress, which usually like this is a pretty sleepy report for the most part. So that's where a lot of the eyeballs are going to be. The other big thing is we're going to see how the new population estimates are going to impact the household survey, and right this is going to be really important to the Trump administration as well, because so much of what has boosted the labor market in recent years has been immigration, and if we start to see that that's really starting to falter off, could really change our understanding of the strength.

Though, honestly, the bigger conversation I keep forgetting that we are getting January data, because the bigger one is more about the revisions to all of last year. So that's really where the conversation is happening. If you remember, we got a report last August, this was an initial estimate of what the revisions might show for payrolls through March of twenty twenty four, and that estimate said that payrolls would be marked down by more than eight hundred thousand and that was the biggest downward revision since two thousand and nine. That was very scary at the time and even drew a lot of attention from Congress, which usually like this is a pretty sleepy report for the most part. So that's where a lot of the eyeballs are going to be. The other big thing is we're going to see how the new population estimates are going to impact the household survey, and right this is going to be really important to the Trump administration as well, because so much of what has boosted the labor market in recent years has been immigration, and if we start to see that that's really starting to falter off, could really change our understanding of the strength.

All Right, Molla Smith, thank you so much, Bloomberg News Global Economy Reporter, and of course out there in DC, Bloomberg News Global Economy Reporter.

All Right, Molla Smith, thank you so much, Bloomberg News Global Economy Reporter, and of course out there in DC, Bloomberg News Global Economy Reporter.

End to current.

End to current.

Some newmes from Meta that maybe not surprising since we kind of see a trend maybe happening.

Some newmes from Meta that maybe not surprising since we kind of see a trend maybe happening.

Yeah, the Wall Street Journal reports that Medicine talks to reincorporate in Texas or another state. This would not relocate its corporate headquarters from California, but it follows moves that Elon Musk companies have made as far as leaving Delaware and going to Texas. Again, the Wall Street Journal reporting that news just moments ago.

Yeah, the Wall Street Journal reports that Medicine talks to reincorporate in Texas or another state. This would not relocate its corporate headquarters from California, but it follows moves that Elon Musk companies have made as far as leaving Delaware and going to Texas. Again, the Wall Street Journal reporting that news just moments ago.

And we know most of US companies right are incorporating Delaware, so this would be a little bit of a switch against the trend that we've seen for decades. All Right, folks, you are listening and watching Bloomberg Business Sweek Carol Master, Tim Stanevek, morticalm In just a moment.

And we know most of US companies right are incorporating Delaware, so this would be a little bit of a switch against the trend that we've seen for decades. All Right, folks, you are listening and watching Bloomberg Business Sweek Carol Master, Tim Stanevek, morticalm In just a moment.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five eas during Listen on Applecarplay and Android auto with the Bloomberg Business app or watch us live on YouTube.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five eas during Listen on Applecarplay and Android auto with the Bloomberg Business app or watch us live on YouTube.

The nation's biggest office to residential conversion, it is hitting the market with thirteen hundred apartments carved from a million square foot brick fortress originally built to house computers and not much else, which means they didn't really care too much about window placement.

The nation's biggest office to residential conversion, it is hitting the market with thirteen hundred apartments carved from a million square foot brick fortress originally built to house computers and not much else, which means they didn't really care too much about window placement.

No, they didn't, but after a two year transformation the fifty five year old at building in Manhattan's Financial District. For years it was used to process checks, money transfers, and other paperwork for manufacturers, handover trust and later for back office staff at a company called JP Morgan. That building now Carol It's unrecognizable.

No, they didn't, but after a two year transformation the fifty five year old at building in Manhattan's Financial District. For years it was used to process checks, money transfers, and other paperwork for manufacturers, handover trust and later for back office staff at a company called JP Morgan. That building now Carol It's unrecognizable.

GFP real Estate is one of the developers behind the building. The firm has a portfolio of more than sixteen million square feet, focusing on operating, property management, and development of commercial real estate in addition to owning.

GFP real Estate is one of the developers behind the building. The firm has a portfolio of more than sixteen million square feet, focusing on operating, property management, and development of commercial real estate in addition to owning.

Of course.

Of course.

Brian Steinwertzel, co CEO and principal of GFP real Estate. He joins us from New York City. Brian, so happy to have you here with us. As story, We've been a little obsessed with it. Contextualize it for us. How big of a project was this for your team. How difficult was it to make this conversion?

Brian Steinwertzel, co CEO and principal of GFP real Estate. He joins us from New York City. Brian, so happy to have you here with us. As story, We've been a little obsessed with it. Contextualize it for us. How big of a project was this for your team. How difficult was it to make this conversion?

Well, Carroll, Tim, thanks for having me here. This is the largest office residential conversion projects in the country to date. We took a one million square foot building, basically had to remove all of the brick from the outside of the building, carved two lightwells throughout the building, and then took all of that floor area and restacked it on top for an extra ten stories. And what results from that is over one three hundred apartments which we launched leasing this week. That will include over one hundred thousand square feet of amenities. And if you're in the building today, there is a rooftop deck, indoor and outdoor pool, coworking, pickleball courts, basketball courts, bowling alley, golf, simulators, arcades, pretty much anything anyone would want in a residential building, Brian.

Well, Carroll, Tim, thanks for having me here. This is the largest office residential conversion projects in the country to date. We took a one million square foot building, basically had to remove all of the brick from the outside of the building, carved two lightwells throughout the building, and then took all of that floor area and restacked it on top for an extra ten stories. And what results from that is over one three hundred apartments which we launched leasing this week. That will include over one hundred thousand square feet of amenities. And if you're in the building today, there is a rooftop deck, indoor and outdoor pool, coworking, pickleball courts, basketball courts, bowling alley, golf, simulators, arcades, pretty much anything anyone would want in a residential building, Brian.

For years, Carol and I've been talking to folks in real estate, especially in the wake of the pandemic when people weren't coming to offices in Manhattan and other cities. But there was also a housing crunch and a lot of affordabilly issues in cities such as this. How do you make the numbers work here? Because we were told over and over again it's just too hard to do. In most buildings, the windows don't open, the bathrooms aren't in the right place, the plumbing doesn't make sense. It just doesn't work from a numbers perspective. How do you make it work?

For years, Carol and I've been talking to folks in real estate, especially in the wake of the pandemic when people weren't coming to offices in Manhattan and other cities. But there was also a housing crunch and a lot of affordabilly issues in cities such as this. How do you make the numbers work here? Because we were told over and over again it's just too hard to do. In most buildings, the windows don't open, the bathrooms aren't in the right place, the plumbing doesn't make sense. It just doesn't work from a numbers perspective. How do you make it work?

Well, we start with an extraordinary team and the team at GFP real Estate had just finished building David Geffenhall for Lincoln Center, and we brought on such a Ruddy, which is one of the top firms that does this kind of work, and along with our partner metro Loft, assembled a team that included over a thousand people that have touched this project in order to make happen. You know, New York City unfortunately has suffered a distress commercial office environment, but we are looking to make lemonade where there's lemons. And so we bought this building from the lenders and from the prior owner, and we brought on a capital partner that was willing to take the risk to do this. And with that team of over a thousand people have created this project.

Well, we start with an extraordinary team and the team at GFP real Estate had just finished building David Geffenhall for Lincoln Center, and we brought on such a Ruddy, which is one of the top firms that does this kind of work, and along with our partner metro Loft, assembled a team that included over a thousand people that have touched this project in order to make happen. You know, New York City unfortunately has suffered a distress commercial office environment, but we are looking to make lemonade where there's lemons. And so we bought this building from the lenders and from the prior owner, and we brought on a capital partner that was willing to take the risk to do this. And with that team of over a thousand people have created this project.

And you guys got what a five hundred and thirty six million dollar loan for the acquisition of the building its existing debt and the cost of conversion.

And you guys got what a five hundred and thirty six million dollar loan for the acquisition of the building its existing debt and the cost of conversion.

And you know, so you.

And you know, so you.

Did this, is it fully give us an idea of occupancy what you were seeing, give us an idea of the interest in the building.

Did this, is it fully give us an idea of occupancy what you were seeing, give us an idea of the interest in the building.

So the Financial District has done extraordinarily well over the last decade. I actually lived in the Financial District in two thousand and four, and the neighborhood is completely different today. There's tens of thousands of residents that live there, and every day there's more and more that are coming in. You know, the big building has a big capitalization, but the absorption in this market has been nothing sort of extraordinary. There were two buildings that opened up recently in the last year. Both of those are one of them is completely full and the other one has actually is almost full. And our anticipation just based on opening on Wednesday and the number of tours and inquiries we've had, which is in the hundreds, that we will lease very quickly.

So the Financial District has done extraordinarily well over the last decade. I actually lived in the Financial District in two thousand and four, and the neighborhood is completely different today. There's tens of thousands of residents that live there, and every day there's more and more that are coming in. You know, the big building has a big capitalization, but the absorption in this market has been nothing sort of extraordinary. There were two buildings that opened up recently in the last year. Both of those are one of them is completely full and the other one has actually is almost full. And our anticipation just based on opening on Wednesday and the number of tours and inquiries we've had, which is in the hundreds, that we will lease very quickly.

Can you say how quickly?

Can you say how quickly?

Well, you know, I think for GFP real Estate and our partners were very conservative in our assumptions of how long. Yeah, but our hope is that by the end of next year will be entirely leased.

Well, you know, I think for GFP real Estate and our partners were very conservative in our assumptions of how long. Yeah, but our hope is that by the end of next year will be entirely leased.

Does this create some sort of new blueprint for how you move forward with conversions, is that what's next? Are you interested in converting any more buildings? How are you thinking about the path forward right now?

Does this create some sort of new blueprint for how you move forward with conversions, is that what's next? Are you interested in converting any more buildings? How are you thinking about the path forward right now?

Yeah, So, including this building, we have approximately three thousand units that are in our pipeline that we're creating. So we have several other projects that are coming down the road and will be complete. And I think what's helped us be successful is a partnership with the city and state who recognized early on in the pandemic that this was a major issue and that they had to sit with the industry and come up with a game plan for us to take these distress office buildings and create housing out of them. And so there's a program called the four sixty seven M program that the mayor and governor both put into law last year and that has helped become an accelerator for getting these kinds of buildings done. And we are, along with our partners, fully invested in these programs.

Yeah, So, including this building, we have approximately three thousand units that are in our pipeline that we're creating. So we have several other projects that are coming down the road and will be complete. And I think what's helped us be successful is a partnership with the city and state who recognized early on in the pandemic that this was a major issue and that they had to sit with the industry and come up with a game plan for us to take these distress office buildings and create housing out of them. And so there's a program called the four sixty seven M program that the mayor and governor both put into law last year and that has helped become an accelerator for getting these kinds of buildings done. And we are, along with our partners, fully invested in these programs.

Hey, one of the things, though, you know, you obviously got through it all, what was though, the largest hurdle to overcome with the office to residential conversion of this size and scope.

Hey, one of the things, though, you know, you obviously got through it all, what was though, the largest hurdle to overcome with the office to residential conversion of this size and scope.

It's it's a great. It's a great question, and I'd say there's almost like it feels like the largest hurdle every month when you're in a project of this magnitude. But this is a very complex building. It was designed to look like an IBM punch card, and the way they made the punch card lines is they actually had the facade and each floor jut in and out at different times on every different floor. And one thing that we made a decision on early on in the project is we wanted to actually carry forward that architecture but at the same time have a new window wall throughout. And so one of the most difficult things was we actually have the window wall custom made and it comes in and out on each floor and that architectural feature can still be seen from the inside and the outside of the project. But doing that and preserving that work was one of the most difficult parts of this project.

It's it's a great. It's a great question, and I'd say there's almost like it feels like the largest hurdle every month when you're in a project of this magnitude. But this is a very complex building. It was designed to look like an IBM punch card, and the way they made the punch card lines is they actually had the facade and each floor jut in and out at different times on every different floor. And one thing that we made a decision on early on in the project is we wanted to actually carry forward that architecture but at the same time have a new window wall throughout. And so one of the most difficult things was we actually have the window wall custom made and it comes in and out on each floor and that architectural feature can still be seen from the inside and the outside of the project. But doing that and preserving that work was one of the most difficult parts of this project.

But you knew you wanted to do it right. It wasn't just because you had to. You wanted to. Is that fair?

But you knew you wanted to do it right. It wasn't just because you had to. You wanted to. Is that fair?

Yes, it is. I think every project that we take on, and the majority of our portfolio are historic buildings. We are looking to preserve whatever can be preserved, especially the most important elements of that project, and even if it costs a little bit more or takes a little bit more time to do it important part and I think the residents that will live there will see that and feel good that this was preserved.

Yes, it is. I think every project that we take on, and the majority of our portfolio are historic buildings. We are looking to preserve whatever can be preserved, especially the most important elements of that project, and even if it costs a little bit more or takes a little bit more time to do it important part and I think the residents that will live there will see that and feel good that this was preserved.

Do the economics of this only work when you create them for rentals or would it work for sales as well?

Do the economics of this only work when you create them for rentals or would it work for sales as well?

I think the hard part with sales is the building of this size you're doing. You have to do so much condo sales that it's more suited towards rental. That being said, there are a number of other conversion projects that are condo. Our organization has owned the Flat Iron Building with partners since the nineteen nineties. In that building will be turned into a condominium building, but that building has only a few dozen units, and so it's really a different scale and magnitude.

I think the hard part with sales is the building of this size you're doing. You have to do so much condo sales that it's more suited towards rental. That being said, there are a number of other conversion projects that are condo. Our organization has owned the Flat Iron Building with partners since the nineteen nineties. In that building will be turned into a condominium building, but that building has only a few dozen units, and so it's really a different scale and magnitude.

Hey, Brian just quickly got thirty seconds left.

Hey, Brian just quickly got thirty seconds left.

Here our team Arshanali Bosik catching up with Blackstone president John Gray, and I think members of our team also talking with him. He said they're the world's largest commercial property owner. He said the worst is over for the global office market after prolonged slump fueled by the pandemic. Just got twenty five seconds here.

Here our team Arshanali Bosik catching up with Blackstone president John Gray, and I think members of our team also talking with him. He said they're the world's largest commercial property owner. He said the worst is over for the global office market after prolonged slump fueled by the pandemic. Just got twenty five seconds here.

Do you agree, Well, I certainly hope so, and I would agree.

Do you agree, Well, I certainly hope so, and I would agree.

So.

So.

GFP is the largest landlord of small and medium sized tenants in New York City, and I think for a while now we've seen positive absorption and and tenants returning to the office. I think that he has it right and I hope that continues.

GFP is the largest landlord of small and medium sized tenants in New York City, and I think for a while now we've seen positive absorption and and tenants returning to the office. I think that he has it right and I hope that continues.

All right, great to check in with you, and hopefully we can do so again in the future. Brian stein Wertzel, he's co CEO and principle of GFP real Estate. Joining us here in New York City.

All right, great to check in with you, and hopefully we can do so again in the future. Brian stein Wertzel, he's co CEO and principle of GFP real Estate. Joining us here in New York City.

You are listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Applecarplay and the Android Auto with the Bloomberg Business app, or watch us live on YouTube.

You are listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Applecarplay and the Android Auto with the Bloomberg Business app, or watch us live on YouTube.

I don't need to tell you this, but there's a lot out there for CEOs to navigate. Right now, we got breaking news from the White House on tariffs. We've been covering that this afternoon. Not to mention the new administration in the White House, their priority is geopolitical threats, technological disruption from AI and.

I don't need to tell you this, but there's a lot out there for CEOs to navigate. Right now, we got breaking news from the White House on tariffs. We've been covering that this afternoon. Not to mention the new administration in the White House, their priority is geopolitical threats, technological disruption from AI and.

Yeah, there are so much. Sharon Marcel is CEO of Boston Consulting Group. Here's regularly from chief executive officers from the c suite, and she joins us right now from Raleigh Durham, No, North Carolina. Sharon, good to have you here with us. You are just back from Davos. Our team too. We've all been kind of talking about what was talked about, what was top of mind, what was concerned to the things that I heard It was President Trump and artificial intelligence.