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Is This The Beginning of the End of Trump's Real Estate Empire?
The Trump name is being scrubbed off skylines from New York to Toronto to Rio as the brand backfires
The Guardian UK, 18 Jan 2018.
 It takes all of 30 seconds for the doorman at Trump Place to kick me out of the building. “Ma’am, you need to leave,” he says, when I tell him I am a journalist. Then he practically shoves me out the marble lobby, back through the revolving doors .
Tensions are high at Trump Place, 200 Riverside Boulevard. The luxury condominium complex on New York’s Upper West Side is currently embroiled in an increasingly contentious legal battle with the Trump family. Like many of the towers bearing the Trump brand, 200 Riverside Boulevard isn’t actually owned by the Trumps; it simply licenses the name, which is plastered on the building in big brass letters. And now many residents don’t want it any more.
Audrey Nelson lives with her boyfriend in Trump Place. Speaking to me on the street outside, she explains that the condo board surveyed residents about the Trump branding following the 2016 election. “Most people want to get rid of it,” she says. But DJT Holdings, a company largely owned by Donald Trump, got wind of this and was threatening the building with legal action. “I don’t think we’re supposed to talk about it,” says another resident, eyeing me suspiciously.
Plastering the Trump brand – which can cost tens of millions of dollars to lease – on your luxury hotel or apartment complex once added a veneer of prestige and upped profitability; Trump used to boast it would increase a property’s value by 25%. Licensing his name certainly seems to have increased his personal fortune. A financial summary Trump issued when he kicked off his presidential campaign in 2015 valued his “real estate licensing deal, brand and branded developments” at $3.3bn – the most significant single source of what Trump then claimed to be an $8.7bn total net worth.
While these numbers are impossible to verify and have been the subject of much debate, it is unambiguous that the Trump brand has traditionally been a source of considerable value. That may no longer be the case.
Since the Donald embarked upon his political career his surname appears to have become a liability. Speaking to me over the phone, previous 200 Riverside Boulevard tenants told me that Trump’s foray into politics has been disastrous for property prices. Harvey and Peggy Koeppel put their apartment on the market just before the 2016 election. “It sat there for months,” Harvey Koeppel says, until they were forced to “accept 10% less than their asking price”.
It’s not just the Koeppels who have seen the value of their Trump-associated property fall. According to a recent report by CityRealty, a real estate listings and research service, prices in the 11 Trump-branded condo buildings in Manhattan dropped below the borough average for the first time ever at the end of 2017. While the average price per square foot for all Manhattan condos fell by 1%, the price per square foot for condos in Trump buildings fell 7% in the 12 months to November 2017.
“Any building that chooses to end its association with the Trump brand is likely motivated by financial reasons … [and] no doubt greatly influenced by beliefs about how the brand affects the building’s bottom line,” says Gabby Warshawer, director of research for CityRealty. All of which, she says, raises “questions about the viability of the Trump brand”.
Indeed, just down the road from where I’m standing, three other apartment buildings were also once known as Trump Place. Just eight days after the 2016 election, the rental buildings rebranded as 140, 160 and 180 Riverside Boulevard, after hundreds of the building’s residents petitioned the owner, Equity Residential, to “dump the Trump name”. The brand no longer signified premium, but prejudice, said residents: it had become an embarrassment. (The Trump Organization declined multiple times to contribute to this story.)
More recently, a hybrid hotel and condo building in downtown Manhattan also disassociated itself from the president, rebranding from Trump SoHo to the Dominick last December. The building’s owners bought out the Trump Organization’s management contract following unrelenting bad press and reports of low occupancy, some of which, to be fair, predated Trump’s entering the White House.
In 2006 construction of the building was halted when human remains from an old burial ground were discovered on the site, and a construction worker died after falling 42 floors from the building in 2008. The Manhattan District Attorney’s office also opened a criminal case (which it dropped last October) against Donald Jr and Ivanka Trump, investigating them for misleading investors about the value of the SoHo hotel.
With this chequered history, things still took a turn for the worse when Trump entered the White House: 11 of the 12 NBA teams that had once stayed at Trump SoHo boycotted the hotel and Koi, a high-end sushi restaurant that had once been frequented by celebrities, closed in April 2017 after seeing a slump in business that may have related to the new president.
Even the Trump Organization itself seems to have realized that the family name has depreciated in value. In late 2016 Trump Hotels announced a new hotel brand aimed at millennials – called Scion.
The choice of name perhaps reflected prevailing public opinion towards the Trump hotel collection. YouGov data compiled exclusively for Guardian Cities shows that high-income Americans have a dramatically lower impression of Trump-branded hotels than they do other hotel brands at the same price point. While Americans with a family income of more than $100,000 had positive impressions of the Ritz-Carlton, JW Marriott, Four Seasons, Westin and Omni hotel brands, sentiment of Trump hotels alone was overwhelmingly negative: reaching a high of -5.4 in November and a low of -17.1. (YouGov first started tracking attitudes towards Trump brands in June 2017). By comparison, impressions of Ritz-Carlton were 44.6 in November.
But not everyone is pessimistic about the long-term prospects of the Trump name. “The fact that a few Trump affiliated hotels are changing brands is insignificant when you consider the same could be said of a hundred other hotel brands,” says John W O’Neill, a professor at the Center for Hospitality Real Estate Strategy at Pennsylvania State University. “Hotel owners change brands for all sorts of reasons, so it isn’t necessarily negative.” For example, it is possible that some leases may have been up for renewal.
What’s more, some of Trump’s properties are booming thanks to his presidency. Trump’s DC hotel is making record profits and, according to the president’s last financial disclosure about his business assets, released last June, income from his Mar-a-Lago resort in Palm Beach was around $37m, up from $30m in his May 2016 financial report. But these properties seem to be very much the exception not the rule, particularly if one looks at the state of his brand outside the US: the Trump name is being scrubbed from skylines all over the world.
In the two-and-a-half years since he announced his presidential bid, his brand has come off at least seven buildings in four cities: Panama, New York, Rio, and Toronto. Trump-branded hotels in Vancouver and Chicago are also rumoured to be attempting to sever their ties.
Canadians, in particular, have been very clear that they don’t want the Trump name associated with their cities. In December 2015, shortly after he called Mexicans “rapists” and criminals, Toronto councillor Josh Matlow campaigned to get the owners of what was then the Trump Tower to change the building’s name.
“Toronto’s city motto is ‘diversity our strength’,” says Matlow now. “My view, along with many other Torontonians, was there no place for Trump’s name in the skyline of the world’s most diverse city.” In June 2017 the building’s owners spent millions of dollars exiting their contract with the Trump Organization and the Toronto skyline is now Trump-free.
Matlow concedes that “a number of ingredients” factored into the decision to remove Trump’s name, including legal battles by unhappy investors over poor management of the development itself. The final decision was likely “a combination of financial trouble – and then Donald Trump imploding his own brand due to his hateful and divisive rhetoric”.
Today the only Trump-branded hotel left in Canada is in Vancouver, and there are rumoursit may not last there. Brent Toderian, Vancouver’s former chief planner, says he spoke out as soon as the name was first attached to the building, saying “that the Trump name and brand was incompatible with Vancouver’s brand”.
His feelings are widely shared. Vancouver mayor Gregor Robertson refused to attend the opening ceremony of the hotel last year, telling reporters at the time that Trump’s brand had “no more place on Vancouver’s skyline than his ignorant ideas have in the modern world”.
The Trump name may also soon also be scrubbed from Central America. In 2015 owners of the Trump Ocean Club, a luxury apartment building in Panama City, fired Trump’s management company and removed his name from the building. The Trump name remained on the adjoining hotel, with whom the Trump Organization had a separate agreement, but there have been multiple reports that the owners are now looking to follow suit: the Trump name is hurting business.
Data shared with Guardian Cities shows that occupancy rates for Trump Panama in the beginning of January was around 25%, well below the 43.7% average occupancy for luxury hotels in Panama in January 2017 recorded by STR, a data and analytics specialist. “Not even the US embassy staff stay at the hotel,” says a source close to the matter who wished to remain anonymous, citing the Trump Organization’s proclivity for litigation. “We’re at the heart of the hispanic world and he’s alienated most everyone in Latin America and most of the rest of the world. The hotel unit owners are desperate.” (On Friday the US ambassador to Panama resigned, saying he could no longer serve under the Trump administration.)
With so many buildings publicly cutting ties with the president, or seeking to, are we witnessing the beginning of the end of Trump’s real estate empire? One industry expert, who also wished to remain anonymous, says they doubt the Trump name has long-term viability on either residential buildings or hotels. “My instinct says [Trump] is going to end up in a bad situation and developers are going to want to distance themselves. The damage to the name is already profound and will only get worse.”
There are ample signs that the longer Trump remains in DC, the less welcome his name will be in cities around the world.
While the president may be “a very stable genius”, his real estate empire is beginning to look more than a little shaky...
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