A week after NYC’s building service and maintenance workers union 32BJ authorized a strike, the organization came to an agreement with the Realty Advisory Board on a new contract that will extend to December 31, 2027. The new contract was promoted by both parties. The Advisory Board President Howard Rothschild said, “We’re proud to come to an agreement that reflects the economic realities that commercial real estate faces by creating the flexibility the industry needs to survive for the long term.”

The local union’s President, Manny Pastreich, had this to say about the deal, “The path to this tentative agreement was not easy. 32BJ members mobilized with intention this year and marched, 10,000-strong, up midtown to make crystal clear their priorities. And today, we found a common path forward with the RAB that rewards workers appropriately and meets the moment for the New York City commercial real estate industry.”

So, what were the terms agreed to in this deal that made both sides so happy? First, the union largely got the pay increases that it wanted. The annual increases for the four-year agreement average out to 3.02 percent. It will also include a one-time $3,000 bonus and a 10 percent increase in pension benefits for future retirees.

The concessions that building owners got in return for these pay increases is a streamlined process for dealing with staffing levels and the changing utilization of space, including that caused by remote work. This includes increased flexibility to change shifts to deal with the lower occupancy being seen on Mondays and Fridays. There is also a clause that allows buildings to reduce staff because of changes in tenant utilization of space.

These negotiations were probably more difficult than usual, given the difficult situation that many commercial buildings are in. For that reason, the outcome is telling of what is important to the property industry. Building owners seem to think that their buildings will remain profitable, even with inflationary pressure. What is more important for the long-term success of many properties is the ability to be flexible and react to a quickly changing office market.

💸 Money moves: Norway’s largest pension fund announced that it would no longer invest in companies and real estate portfolios because of possible human rights abuses and lack of climate mitigation plans.

🤔 Consolidation consideration: The lawyers behind the commission-splitting lawsuits against NAR and some large brokerages have requested that their cases be consolidated and ruled on by the original Missouri judge who ruled in favor of the plaintiffs.