American Crossroads: A 2025 Business Journey - My Recent US Trip
Setting the Scene: Economic Headwinds and Political Tensions
My 2025 business trip to the USA to learn about real estate, business, and investing couldn't have come at a more pivotal moment. April and May are unfolding with daily surprises, coinciding with the first 100 days of the Trump administration's return to power. Relations between the USA and Australia have grown increasingly strained due to dramatic shifts in the longstanding free trade policies between our countries.
America's decision to impose blanket tariffs globally—including on the uninhabited Heard and McDonald Islands, home only to penguin and seal colonies—suggests this is merely an opening gambit in a larger economic chess match. The bold stroke has sent ripples through global markets and boardrooms alike.
Penguins protesting the targeted US tariffs
"An act of war," declares Warren Buffett of Berkshire Hathaway, a sentiment echoed by Ray Dalio of Bridgewater Associates and Ken Griffin of Citadel LLC. These financial titans agree that tariffs are a blunt instrument to tackle the trade imbalance, primarily between China and America. The U.S. deficit stands at an alarming $36 trillion—124% of GDP—compared to Australia's more modest 37.1%. This confrontation resembles two gorillas arm-wrestling: one the world's biggest producer, the other its largest consumer.
The economic landscape shows troubling signs. The first negative GDP quarter (-0.3%) since March 2022 has triggered speculation that another poor report would signal an official recession. Dark clouds are building as we await the June quarter numbers due July 3rd.
Meanwhile, California has climbed to fourth position among the world's largest economies, leapfrogging Japan to sit behind only the USA, China, and Germany with $4.1 trillion in annual output. This success, though not widely celebrated across most of America, underscores California's role as the engine room of new business ideas and technology, with artificial intelligence driving the next wave of innovation.
The work-from-home revolution is facing corporate pushback. New York now expects employees in-office 4-5 days weekly, while San Francisco demands 2-4 days. Yet I notice "peak hour" in New York beginning at 2pm and running until 7pm, while San Francisco sees exodus from 3pm until about 6:30pm. The reality is clear: people are leaving work earlier when compelled to be physically present, raising profound questions about productivity and the employer-employee trust dynamic.
Peak hour
Despite the economic and political turbulence, I've been warmly welcomed everywhere. I feel safe in all my travels, and my Australian accent seems to attract rather than repel—a promising sign. Americans understand the importance of tourism and generally hold fond feelings toward Aussies (and penguins).
New York: Renaissance Amid Uncertainty
New York is experiencing a property renaissance that feels both surprising and encouraging—precisely why I allocated six days to explore the city. In my experience, New York property owners understand both the value of a dollar and the value of time. They'll give you time, but not much, knowing that timing makes or breaks property deals.
The city pulses with tourists again, approaching pre-COVID numbers of around 64 million annually. Retail property owners have masterfully managed vacancies and tenant relationships by adjusting rents to reflect a percentage of turnover rather than clinging to legacy base rents calculated in better times. This flexibility has preserved jobs and re-established NYC as the dynamic, exciting metropolis it has always been. In my view, it remains the greatest city in the world.
Through my friend and colleague Courtney Adham of GFP RE, I tour their landmark project at 25 Water Street in the financial district. This represents America's largest office-to-residential conversion, creating 1,320 apartments that are predominantly "free market" units. The transformation is remarkable, featuring the most diverse range of on-site amenities I've ever encountered.
JC Castro of Compass, who handles leasing, shows me several available units—each beautifully presented to help prospective residents envision maximizing every m². The building creates a self-contained community with virtually no reason to leave once you've settled in. Questions about financial viability remain, however, with answers lying in complex deals for additional space, government loans, and lengthy tax incentives rather than in straightforward property fundamentals. Nevertheless, it's inspiring to witness the reimagining of a 1969 office building that previously held little appeal.
I visited New York's iconic Flatiron Building, though this year my friend Sunny Atis, who has been building super for 35 years, isn't present. This architectural marvel, completed in 1902, has appeared in countless Hollywood movies and once held the distinction of being New York's tallest building—a genuine skyscraper of its era. The triangular structure is now undergoing conversion from offices into 60 luxury condominiums—units that can be sold individually and will undoubtedly attract the super-rich as collector's items, given the building's storied history, cinematic fame, and unparalleled location.
Flatiron building at cnr 23rd and Broadway
In the luxury retail sector, and as a result of my relationship to Krystle Pascoe, I met with Tom Fullerton of Louis Vuitton to understand their property strategy in New York. His insights reveal a world where consumption reaches mind-boggling levels and where LV creates physical retail experiences that online shopping cannot begin to replicate. Tom has recently dressed the Fifth Avenue store as six of the brand's famed luggage pieces stacked on top of each other while the building undergoes demolition. The creative hoarding has generated four billion TikTok impressions—a rare instance where temporary construction barriers outshine the architectural marvel they conceal.
While New York shows remarkable resilience, challenges persist. The office market continues to struggle with widespread work-from-home arrangements, and the new tariff regime casts uncertainty over whether markets can withstand another economic shock. Real estate no longer dominates newspaper headlines, requiring dedicated effort and specialist connections to discern genuine market trends.
Omaha: Buffett's Transition and Midwestern Pragmatism
In Omaha, I witnessed a historic moment at the Berkshire Hathaway Annual Meeting: Warren Buffett's announcement that he's stepping down as CEO. Nothing had suggested the 94-year-old Oracle would relinquish his position, and while his mind remains razor-sharp, his body is showing signs of fatigue. His successor will be Greg Abel, a 62-year-old Canadian who has served as Vice Chairman of Berkshire Hathaway's non-insurance operations for 25 years.
Buffett isn't disappearing entirely—he'll remain as Chairman with plans to orchestrate "one or two very big deals" before fully retiring. I sense these transactions will benefit both shareholders and America at large, likely involving public utilities in the electricity or energy sectors.
I met with the leadership of Nebraska Furniture Mart (NFM), a $2 billion annual revenue business that has expanded from its local roots into neighboring states including Kansas, Texas, and Iowa. The company's extraordinary culture traces back to founder Rose Blumkin, who lived to 104. Her grandsons Irv and Ron serve as Chair and Vice Chair respectively, and our meeting includes CEO Tony Boldt and head of community relations Andy Shefsky.
With Vice Chairman Ron Blumkin and CEO Tony Boldt in Nebraska Furniture Mart in Omaha
Despite its size, NFM operates with family-business principles, with the Blumkins dining with Warren Buffett every six weeks. Their transparency is refreshing—I spend over three hours with about 30 Australian fund managers, venture capitalists, and wealth managers, discussing everything from retail strategy and property development challenges to employee trust. Notably, the company has never laid off a single employee in its history.
Omaha stands out as the only city on my itinerary with a new office building under construction: Mutual of Omaha's forthcoming 44-story headquarters, set to become the tallest building in the city when completed in 2026. The 800,000-square-foot (74,322 m²) project embodies the practical, forward-looking mindset characteristic of Warren Buffett and the Midwest.
Mutual of Omaha new headquarters due 2026
The city faces its share of social challenges, but initiatives like the community soup kitchen I visit—Table Grace Cafe—offering good food with the option to donate or not pay—demonstrate a pragmatic approach to social enterprise that feels distinctly Midwestern.
Omaha's transformation during the shareholders' meeting is remarkable. With 137,000 credential passes requested and approximately 45,000 shareholders descending on the city, the event has become a pilgrimage. The main venue holds only 18,000 seats, leaving many to watch proceedings on screens throughout the city. My 4:30am queuing strategy typically secures a reasonable position, but requires dedication. The wait becomes an opportunity to connect with fellow shareholders, each drawn by the wisdom of the Oracle of Omaha.
San Francisco: Recovery and Reinvention in Silicon Valley
San Francisco presents a paradoxical picture of remarkable potential and daunting challenges. The city is making progress but has considerable work ahead. In 2023, the empty streets could have served as backdrops for zombie films; the city felt virtually dormant. Office values plummeted to 10-20 cents on the dollar as remote work became entrenched and residents fled urban centres, particularly those with homes and sufficient space to work remotely.
Crime surged during this period, with serious drugs like Fentanyl creating human statues on street corners. Law enforcement, stretched thin with limited resources and an overwhelmed prison system costing $81,000 per inmate annually, amended policies to decriminalize thefts under $950. The results were predictable: rampant shoplifting and retail closures.
The situation has improved somewhat—homelessness is less visible, and retail operators have adapted their security approaches. Theft is once again treated as a criminal offense, but significant damage has been done. Retail vacancies abound as major brands have departed: Nordstrom, Bloomingdales and Saks Fifth Avenue have all left and Macy's has announced it will follow. Westfield and Brookfield walked away from the loan on Westfield San Francisco Plaza and it is now San Francisco Plaza and a dead mall. Amazon Go had closed four outlets, others that have left include Walgreens, Old Navy, Whole Foods, North Face and 175-year-old shoemaker Johnston and Murphy.
On the bright side, Ikea has a large store built in 2023 on Market Street and watchmakers Rolex, Patek Philippe, and Brietling have opened next door to each other. Zara, Allbirds, and Athleta have also opened recently. Property owners' halfhearted leasing efforts suggest desire for occupancy but little strategic vision to achieve it.
Waymo's autonomous vehicles now patrol the streets—a clever marketing approach for the rideshare service. I used it four more times during my stay, bringing my total to six rides. Each journey reveals new capabilities of these self-driving cars. I appreciate the consistently clean vehicles and the option for silence rather than forced conversation. The service remains limited to city centres at speeds under 25 mph (40 km/h), prioritizing safety and reliability. Waymo currently operates in four U.S. cities—Phoenix, Austin, Los Angeles, and San Francisco—with plans to expand into Washington DC, Miami, Atlanta, and Boston. Their fleet of 600 Jaguar E-Pace vehicles may soon grow, as preliminary discussions with Toyota could add another 2,500 robo-taxis.
Waymo autonomous vehicles prowl San Francisco’s streets
In Palo Alto, my friend and colleague Ben Stern offers an optimistic outlook. Office vacancy rates that reached 22% several years ago may soon drop to single digits, driven primarily by AI-related demand. Ben also expresses confidence in San Francisco city's apartment market recovery.
Ben Stern of Newmark Palo Alto
In San Jose, I witnessed transformation with CityView, developer Jay Paul's ambitious pivot toward creating a residential living city. I visit Nvidia's headquarters and other properties they own, gaining insights into the tech giant's real estate strategy.
Jay's agent for major transactions, my colleague Phil Mahoney, provides valuable perspective on market conditions. The recent tariffs have directly impacted his business: a 50,000-square-foot deal has shrunk to 30,000, and a ten-year lease commitment has contracted to three years—clear indicators of tenant uncertainty following the new trade policies. Phil worries about broader implications: waning business confidence and potential brain drain as talent seeks opportunities in other countries.
Phil Mahoney of Newmark San Jose
We discuss the evolving vocabulary for vacant spaces—"direct vacancy," "sublease vacancy," "shadow vacancy"—and buildings with questionable futures now labeled as "zombie buildings" or "generational ghost buildings." Phil's prediction from last year holds true: market recovery hinges on space absorption by the "magnificent seven" tech companies, which for now remain in consolidation rather than expansion mode.
My friend Andrea Arata, Head of Research at Newmark, meets me with her team—Erin Proto, Jack Baughman, and Reed Watson—for a wide-ranging property discussion. Andrea concurs with Phil regarding the crucial role of tech giants in the market's trajectory. The Magnificent 7 has 30.7 million sq ft (2.85 million m²) of office and R&D space in the Bay Area between San Francisco and Silicon Valley, in a combination of leased and owned properties. She shares Ben's optimism, noting that there is currently 20 million sq ft (1.8 million m²) of total demand for space of which AI accounts for 3 million sq ft (278,000 m²). Whilst proportionately small, it is the most exciting as it's new enquiry comprising start ups as well as expansion. Overall rents have declined roughly 20%, and she anticipates construction costs will rise further due to tariffs.
Andrea Arata of Newmark San Francisco Research
Andrea has observed opportunistic investors entering the office market, capitalizing on depressed prices with patient capital. She believes we've reached the bottom of the cycle—at least for the U.S. market—an assessment I'm inclined to share.
At 995 Market Street, I encountered John McCartney, the building superintendent for 22 years who has served under five different ownership regimes. I had highlighted this property last year when its value plummeted from $65 million to $6.5 million. The buyer has since sold to BerlinHouse for $11 million, which appears to be rebuilding community and occupancy. It's encouraging to witness investors willing to take calculated risks at market bottom.
John McCartney building manager at 995 Market Street SF
I drive to San Jose twice and I catch the Bart train service from the airport to the city. The drive is monotonous, so although I typically rent an electric car like a Tesla or a Mustang, this time I do it in my Make America Great Again car - the Dodge Challenger. This car is new but probably a 30-year-old design. I think it speaks to the desire for US manufacturing and what are supposed to be more jobs. The problem is though that surely this car will be made robotically so where are the jobs?
Los Angeles: Fires, Films, Distressed Commercial Real Estate and Olympics 2028
I don't know much about LA commercial real estate but I always like to add another city to my annual tour and my friend and colleague, Benjamin Osgood has moved to LA from San Francisco and does both markets with his client focused real estate business, Recreate. I'm also intrigued as Phil Mahoney assured me in 2023 that there would be no new building in LA for 20 years. In 2024 he revised his prediction to 10 years and this year is inclined to take it back to 20 years again. I'm fascinated by the surplus of space and why?
The wild fires which took so many homes are beginning to resolve themselves. Developers have moved in and offered homeowners a price for their land. Anecdotally I'm told offers have been attractive and people have accepted and used those funds to buy a house in LA. If that's the case then that is the best outcome and allows developers to buy multiple and presumably adjoining parcels to undertake new subdivisions. It seems that this matter is now in the past for many.
The film industry dominates LA with Warner Bros, Paramount Pictures, Sony Pictures, Universal Pictures, Walt Disney studios and 20th Century Studios. The negative impact in the industry started with COVID and then the Writers and Actors strike and because other global players can produce movies at lower costs Hollywood is considered expensive. On top of that the success of streaming by players like Netflix has changed entertainment consumption. This industry dominates LA and that means that jobs are impacted.
The commercial real estate story in LA is less about the office leasing market as enquiry is low and vacant space is high, like around 30%. That means that there is more distress in the investment market place and buildings are selling for 20-30 cents in the $1. I visit Downtown LA and look at two recent transactions Tower 777 and 555 West Fifth street where significant Class A buildings have traded for $200 - $250 psq ft.
LA has great weather and many new and exciting neighbourhoods. It misses out on beautiful street trees which would soften and shade the bareness of the architecture. In 2028 Los Angeles hosts the Summer Olympics which should be great for the USA and uplifting for LA.
Reflections on America's Economic Crossroads
As my journey through America's business landscape concludes, I'm struck by the contradictions and resilience I've witnessed. The nation stands at an economic crossroads, with tariff policies threatening short-term pain while potentially recalibrating long-standing trade imbalances.
The purpose of this educational trip is to share my knowledge with my clients and colleagues. Each year I learn more about the similarities between our markets but in most instances it is the USA which leads the change first. From what I can see the US takes a more business-like and capitalist approach to commercial real estate problems and the political figures usually help major investors to solve big problems like rezoning, government loans, tax discounts and even assistance in negotiating with large companies who are tenants. I don't see much of this cooperation in Australia, in fact I see politics as a barrier to progress. Because of this difference I don't believe Australia has progressed as quickly so it is not at the bottom of its cycle yet.
Real estate markets tell different stories across regions: New York's creative adaptability, Omaha's steady pragmatism, and San Francisco's halting recovery each reflect unique local conditions while responding to national economic currents.
The tech sector's evolution—particularly AI's expanding footprint—suggests the next wave of innovation continues despite policy headwinds. Whether this innovation can overcome the challenges of tariffs, potential recession, and workplace transformation remains the central question for America's economic future.
What's clear is that opportunity exists amid uncertainty for those with patience, vision, and capital. As Warren Buffett demonstrates even at 94, the long view often reveals value where others see only risk. Perhaps that perspective is what America needs most as it navigates these turbulent economic waters.
I will dismantle each aspect of the property transactions in follow up stories so that you can understand the detail of what I have learned.