commercial real estate

The above chart from Colliers ABR says it all about the Manhattan office market as it enters 2008's final stretch. Vacancy rates, including for top-flight Class A space, continue to rise as asking rents remain flat. The Wall Street crisis, damaging as it is to one of Manhattan's prime office leasers, financial services, won't help matters in 2009.

The projected 80,000 to 90,000 in office-based job losses between now and the end of 2009 could be enough to drive the Manhattan office vacancy rate well into double-digit percentages. A new report from Colliers ABR predicts the rate could rise to somewhere between 12 and 13 percent, well above the September rate of 7.4 percent, as companies shed space after shedding employees.

But there's two things working in the market's favor (and the favor of landlords and landlord brokers):  read more »

Tucked into Charles Bagli's gong-rattling New York Times pronouncement on the end of the local real estate boom were three gems to illustrate the point.

HSBC pulled out of a major lease at Larry Silverstein's downtown gem:  read more »

A new CB Richard Ellis report shows a marked annual drop-off in Manhattan office leasing from August 2007 through August 2008.

Companies leased 2.29 million square feet of space in August 2007, and 1.06 million last month. The availability and vacancy rates understandably increased over the 12 months from August to August.

Why the drop-off? It doesn't have anything to do with the events the past two weeks in the financial services industry, the biggest leaser of the city's top-flight office space. (It's likely tied to the general decline in the national and local economies, and is also a product of furious office leasing in months past--there's just not that much space left to lease.)

The current Wall Street crisis, however, is likely to further curb the appetite for Manhattan office space. More on what pessimistic brokers have to say.

“We have seen on Wall Street the cycle of greed turn to fear," said John Powers, chairman of the New York Tri-State Region for CB Richard Ellis, at CoreNet's New York City Market Update luncheon this afternoon. "Now we’re seeing pain. It will be a while before we see hope. And that is the cycle.”

It wasn't the happy-go-luckiest of real estate luncheons today on the eighth floor of the Time Life Building.

As brokers dug into their filets of salmon, Marisa Di Natale, a senior economist at Moody's Economy.com, imparted the harsh truth as she saw it:

"We believe we are in a recession right now and that we have been in a recession since fourth quarter last year,” Ms.  read more »

In the Manhattan office market, the storyline since last summer has been one of decline measured by greater vacancy amounts and static rents. The narrative held coming out of this summer.

A new report from Colliers ABR shows a Manhattan office vacancy rate of 8.7 percent in August, essentially unchanged from July and 2 percentage points higher than in August 2007. The average asking rent was also basically the same in August as in July (and August 2007) at $65.89 a square foot.

There was no roaring out of the summertime into an especially active fall.  read more »

The last decade may have been awesome for the Fat Cats of commercial real estate -- but the next one isn't looking as promising.

Tax breaks designed to spark commercial real estate development in New York City amounted to $500 million last fiscal year, and the last 10 years saw such tax breaks more than double, according to Reuters, which recapped an Independent Budget Office report issued today.

Unfortunately for commercial real estate developers -- who are already languishing, thanks to the scarcity of financing -- state-wide reforms advocated by Mayor Bloomberg that kicked in this June are expected to shrink those tax breaks:

The Independent Budget Office said its study "provides strong evidence that (the) Industrial and Commercial Incentive Program benefited a far broader group with more generous benefits than might have been necessary to meet the policy goal.

 read more »

Gawker alerted us to what could be the most bizarre casualty of the slumping housing market yet: the owners of a Lord of the Rings-themed, 31-unit housing development in Bend, Ore., have defaulted on a $3.4 million dollar loan for the property.

Founder Ron Meyer sold “The Shire”—named for a fictional area of Middle Earth inhabited exclusively by hobbits in the J.R.R Tolkien novels—to Jan McDonald in June, after attracting a lot of media attention and tourists, but only one buyer since 2006.

The 6-acre community is built in an “English Country Village architectural style around contemporary floor plans," according to  read more »

Commercial brokers call it equilibrium: when the Manhattan office market's vacancy rate ascends to the 7 to 9 percent range, and the negotiation advantage tips toward tenants.

Manhattan may be there now.

A new report on the second quarter from Colliers ABR pegs the Manhattan vacancy rate at 8.7 percent by the end of June, and likely rising fast. That's an increase from 7.8 percent in the first quarter. For top-shelf Class A office space, the quarterly vacancy rate increase was even steeper: 5.7 percent to 7 percent.

The reasons? Rising layoffs among office-based employees amid a generally stagnant economy. From the report:

At long last the official employment numbers are catching up with the anecdotal evidence flying out of New York securities firms.  read more »

• 0 comments

Soon, we'll be as blase about the bad economic news as we were -- oh so recently -- about the good news.

But not yet. On today's downbeat wire, Reuters reports that, "Commercial real estate prices fell 3.5 percent in May, the biggest drop since at least December 2000, as a slowing economy took a toll on property values, Moody's Investors Service said on Monday."

"Commercial real estate prices, as measured by Moody's/REAL Commercial Property Price Index, are down 5.7 percent from a year earlier and 8.8 percent from their peak in October 2007, Moody's said in a report.

May's decline marked three straight months of negative returns for the index, Moody's said in a report."

For more on this dispiriting development, click here.

It’s not every day that you hear New Yorkers complaining about the absence of a Starbucks or a Duane Reade, but the chains that are so often maligned in Manhattan lately are just the type of convenience that people working in Long Island City miss the most.

When Deborah, a Citigroup employee, learned that she was being transferred from Manhattan to Long Island City 10 years ago, she was less than enthusiastic about the move.

“When I first heard I thought, 'Ugh, Long Island City,' because I’d never heard about it,” said during a mid-Monday morning smoke break outside the neighborhood’s first high-rise, high-profile office building, Court Square One.  read more »

Over 414,200 square feet of office space opened up for lease in Midtown in May, according to a new report from brokerage Newmark Knight Frank. Total availability in Midtown, the city's top office market, is now almost 19.4 million square feet, up annually 3.4 million feet.  read more »

Boston Properties’ purchase of the GM Building has not even gone through yet, but it appears that Mort Zuckerman is already shaking things up at the Midtown office tower he and his partners are expected to formally own within the next week.

We visited the GM Building after the deal was negotiated over Memorial Day Weekend, and rumors were already circulating that current maintenance and security crews should expect their marching orders at the end of May.

This morning, a new doorman outside the Apple Store told us his employer Quality Building Services had recently gotten the contract on the GM Building, and Monday was his first day on duty.  read more »

Brokerage giant Cushman & Wakefield will relocate its headquarters to an enormous new space on Sixth Avenue.

C&W, which calls itself the “largest privately held commercial real estate services firm,” signed a 15-year lease for a whopping 156,282 square feet, the entire seventh floor and portions of the eighth and ninth floors at 1290 Avenue of the Americas, between 51st and 52nd streets. The 43-story Emery Roth & Sons-designed building is owned by Vornado Realty Trust.  read more »

We all know that increased concessions (like rent-free months) have been bringing down real Class A office rents for a while now, but for the first time since 2005, asking Class A rents have begun to creep downward.

The Real Deal has crunched the numbers from the first quarter Colliers ABR report and is reporting:  read more »

New York City may be the star of the Grand Theft Auto IV, but from a business standpoint, New York isn’t investing enough in the gaming industry, according to a study released today by the Center for an Urban Future, a Manhattan think tank.

In fact, New York City, whose gaming industry employs just 1,200 people, trails “gaming hubs” like Seattle, Los Angeles, Montreal and Boston (Boston?!?!), according to the study, “Getting in the Game.”

But there is some good news:  read more »

The real estate wonks at Cushman & Wakefield have said it, so it must be true: the market is contracting.

Egad(!) is right.

C&W's "First Quarter 2008 New York Capital Markets Group Manhattan Market Overview" makes the following sobering conclusions:  read more »

Hotelier to the masses Sam Chang continues to retrench amidst market turmoil, selling a Financial District lot to Magna Hospitality for $60 million, according to a report in The Real Deal.  read more »

Shine your shoes and do your hair up pretty, tomorrow's Ingenies Night! The Real Estate Board of New York hosts the 64th annual commercial real estate Oscars at the 101 Club on Park Avenue starting at 5:30. Invitation only!

Who will take home the coveted Most Ingenious Deal of the Year Award? Last year it was Woodie Heller and Howard Nottingham of Studley.

Here's a list of current nominees. See you there!

It’s a sign of the times: Japanese firm Hiro North American Properties’ sale of the office tower at 650 Madison Avenue has closed, and, at $680 million, it’s the biggest building sale of 2008 so far (and the only over $400 million). Wasn’t too long ago—10 months, give or take—that $680 million for a Midtown building was ho-hum.

Not anymore. In the fourth month of 2008, $680 million is the new $1 billion. It’s a deal to be picked apart. So let’s do so.  read more »

“Wow, look at the mist,” murmured Sarah Craig, a Vassar College freshman, as she and 60 other students walked onto the 52nd floor of Seven World Trade Center, developer Larry Silverstein’s glamorous office skyscraper that, this rainy afternoon, pierced the clouds.

Thanks to the top 10 floors still being up for lease, the penthouse hosts a lot of visitors — Mr. Silverstein’s publicist and his staff lead four to five tours a week — and lots of glamorous parties.

On Feb. 12, the starkly gorgeous concrete-and-glass space hosted babealicious swimsuit models celebrating the release of the 2008 Sports Illustrated Swimsuit Issue (the models traded their bikinis for cocktail dresses for a party that Silverstein Properties spokesman Dara McQuillan said was fabulous).

Of course, the Vassar students weren’t there to chat about star-studded fetes. The three classes — Intro to Urban Studies, Urban Geography and Architecture of the Modern World — had bussed in from Poughkeepsie and spent the day touring Chase Plaza and the perimeter of Ground Zero.  read more »

Things will be good, not great, in the Manhattan office market this year, according to a new report from investment sales brokerage Marcus & Millichap. Key findings of the report:

• Citywide, employers are forecast to create 16,000 jobs in 2008, a 0.4 percent annual gain.
• An estimated 3 million square feet of office space will be brought online in 2008.
• Vacancy is forecast to end the year at 5.4 percent.
• Asking rents are projected to advance 8 percent to $57.51 per square.
   read more »
  
  • 2 comments

The front page of the Wall Street Journal this morning had some rare good real estate news, however reserved:

Even optimistic commercial-property developers are stacking sandbags to hold back a financial deluge in the market for office towers, hotels, shopping malls and other commercial real estate.  read more »

• 0 comments

In 2007, nonprofits leased 1,287,743 square feet of commercial space in New York City, according to a new report from Suzanne Sunshine, a vice president at CB Richard Ellis. As of February 2008, 25 nonprofits were looking for 801,000 square feet of space in the city. Got any?

The Real Estate Board of New York has announced the nominees for its 2007 Ingenious Deal of the Year Awards. The commercial real estate awards will be presented on April 15 at the 101 Club on Park Avenue.

We covered the Ingenies last year, when Studley's Harold Nottingham and Woody Heller were the big winners.

The nominees after the jump.  read more »

Crain's reports that Goldman Sachs has extended its lease of 517,000 square feet at Brookfield Properties' One New York Plaza for 15 months as it awaits the completion of its new headquarters on West Street in Lower Manhattan. The headquarters is supposed to be done by late 2009.

The Wall Street Journal today reports that Merrill Lynch is likely to put off a decision on its headquarters location for at least another five years, as it is seeking a five-year lease renewal with current landlord Brookfield Properties at the World Financial Center downtown.

Such a move comes as good news for Brookfield, and seems to be not so great news for Larry Silverstein, who had hoped to lure the bank into his 175 Greenwich Street tower, a.k.a. 3 World Trade Center.  read more »

You're not imagining it: Foreigners really are buying up more of Manhattan lately, and it's not just the condos they adore. They love whole buildings and whole building portfolios, too, apparently.

Foreign buyers account for one-third of the more than $2.6 billion in investment sales in Manhattan currently under contract, according to a report out this morning from brokerage Cushman & Wakefield.

Office-leasing activity in Manhattan dropped in 2007, suggesting a slowdown in a once furiously fast-paced market. In the fourth quarter of 2007, companies leased slightly more than 5 million square feet of office space, less than in each of the previous three quarters, according to a report out today from brokerage Cushman & Wakfield. Leasing dropped 12.8 percent for the year from 2006.  read more »

One more thing on the plans to build a tower over the Port Authority Bus Terminal. Our fellow Observer blog The Media Mob reports that the plans vindicate New York Times' publisher Arthur Sulzberger Jr.'s decision to move the paper's headquarters from 229 West 43rd Street to a new tower at 620 Eighth Avenue.

He sold the old headquarters in 2004, when Eighth Avenue was but the seedy western edge of Times Square.  read more »

Midtown Manhattan is the 12th most expensive office market in the world, well behind the priciest, London's West End, where the cost of occupying office space averages $328.91 a square foot annually. In midtown, the average cost--which includes rent and taxes--is $100.79 a foot, according to a new report from brokerage CB Richard Ellis.

Midtown did top the list of the most expensive office markets in North and South America, well out ahead of the next most expensive, the Calgary Central Business District. Suburban Los Angeles was the third most expensive market in the Americas; and downtown Manhattan was fourth. They were the only other two American office markets besides midtown to make CBRE's top 50 most expensive markets worldwide.

The topmost expensive office markets were all in Europe and Asia. For instance, just ahead of midtown is Singapore with an average occupancy cost of $102.37 a foot annually.

Press release, including the top 50 list, after the jump.  read more »

A fashion company that owns brands such as London Fog, Mudd and Joe Boxer, has signed a 30,556-square-foot lease at Joseph Moinian's 1450 Broadway.

The deal for the Iconix Brand Group was announced today by the Moinian Group, which brokered the deal along with Newmark Knight Frank.

Full release after the jump.  read more »

An market report out today by brokerage Colliers ABR puts the Manhattan Class A office vacancy rate at 5.5 percent for October, up from 5.3 percent in September and 5.1 percent in August, when the rate hit its nadir.

So is the credit crunch – the loyal punching bag for all things negative in the New York City real estate world now – to blame?  read more »

Both the Times and Post are following up today on financial giant Merrill Lynch's potential interest in moving to the current Hotel Pennsylvania site.

According to the Post's Lois Weiss: "Merrill Lynch execs would prefer to be at Vornado Realty Trust's [hotel site]" as opposed to Larry Silverstein's forthcoming World Trade Center redevelopment.

"What Larry [Silverstein] has decked up financially is not superior to [Vornado's] Hotel Pennsylvania, and it's not big enough," our source said.

That statement somewhat contradicts what Merrill Lynch sources told Ms. Weiss just a month ago, when they complained the hotel property was "not attractive enough to employees."

"They can't make up their minds," hotel preservationist Gregory Jones told The Observer.  read more »

Wells Real Estate has closed on 222 East 41st Street for $319.8 million, according to city records.

A press release was sent out in late August announcing that the 25-story office building had been sold. The seller is listed as Ceres Real Estate.

The email accompanying the press release described the 390,000-square-foot property as a “Class A+ midtown office building,” a designation that had yet to be bestowed on a commercial property in Manhattan. So, um, congratulations.  read more »

Does Sheldon Solow have something big in mind for just down the block from his iconic 9 West 57th Street?

The Solow Realty and Development Company has officially closed on 20 West 57th Street for $60 million, according to city records. The property went to contract back in January and closed on July 8, 2007. The sales price on the eight-story, 37,000-square-foot building comes in at approximately $1,611 a square foot.  read more »

Did Harry Macklowe overstep his bounds earlier this year?

A recent issue of Commercial Mortgage Alert says that the Manhattan developer could lose all those properties that he acquired for $7 billion back in February.  read more »

Will Brooklyn offices be hanging “No Vacancy” signs in a year or two?

A new report reveals that the office vacancy rate is right around 10 percent in the borough these days. And if it weren’t for a few blocks of Class A office space that became vacant over the last year, that rate would be lower.

Marcus & Millichap’s second-quarter Office Research Report advises that property owners will be able to increase asking rents by 6 percent this year to $26.95 per square foot.

However, brokers are going to be really happy with this stat: Over the last year, a median sale price of $339 per square foot was recorded in Brooklyn. That is a 27 percent increase from the preceding 12-month period.

The full release is after the jump.  read more »

Real Estate Capital Partners is looking to provide some relief from escalating midtown office rents.

The real estate investment firm recently closed on 229 West 36th Street for $57.6 million, according to city records. The 130,000-square-foot building sold for the very-1999 price of $440 per square foot.  read more »

SL Green’s sale of 292 Madison is a done deal, and the prolific city landlord made a healthy profit off the transaction.

The 193,000-square-foot, 26-story office building sold for $140 million on June 7, according to city records. The New York Post reported when the deal went to contract back in April to the Los Angeles-based Metropolitan Real Estate Investors.  read more »

The sale of 530-534 Broadway and 536-538 Broadway is now official, and so are $1,000- per-square-foot prices for Soho buildings.

The two connected buildings at the corner of Spring and Broadway, which total 190,000 square feet, sold for $190 million on July 19, according to city records. The Observer reported when this deal went to contract to a group of Israeli investors back in May.  read more »

Muss Development announced today that Con Edison and New York City have signed leases totaling 120,000 square feet in Queens Tower.

The city will take 105,000 square feet on the first six floors of 88-11 165th Street in Jamaica, Queens, according to a press release, and Con Edison signed on for 15,000 square feet on the 10th floor. The leases are for 20 and 10 years, respectively.

According to the release, long-time tenant Verizon Communications vacated the 10-story building in 2005, and Muss Development came in and carried out a significant rehab, gutting the building and installing new utilities and elevators.

Full release after the jump.  read more »

The sale of the Atlantic Bank Building at 960 Sixth Avenue is officially a done deal.

The 16-story, 99,000-square-foot property sold for $105 million on July 13, according to city records. The building sits just north of Macy’s on the corner of 35th Street and Sixth Avenue.  read more »

Hearst has added yet one more building to its growing arsenal around Columbus Circle.

The publishing behemoth recently closed on 811 Ninth Avenue for $17.1 million, according to city records. Lightning quick would be appropriate terminology for how rapidly this deal went down: Hearst went to contract and closed on the 21,500-square-foot property on the same day, July 19.  read more »

Luxury lodging is coming to Harlem.

Paul Reisman of New Jersey-based Reisman Properties recently told The Observer that his company is breaking ground in August on a hotel on 125th Street.

“The hotel will run along Fifth Avenue from 125th to 126th Street,” Mr. Reisman said.

Although a flag has yet to be picked for the property, Mr. Reisman said that a number of very high-end chains are in the running. “Right now, who we go with is an open question,” he said. “But we are narrowing it down.”  read more »

Robert Gibson, the powerful retail broker whose clients include H&M, is leaving CB Richard Ellis for Cushman & Wakefield, two sources said.

CBRE might remain the city’s dominant commercial brokerage, but it appears C&W is making in-roads in eroding its retail group. The defection of CBRE retail brokers to C&W is becoming a well-worn path for many (even if it’s not, say, for the leasing side).  read more »

A few things learned from SL Green’s quarterly conference call with investors:

• Andrew Mathias, CIO, said that the company is considering either recapitalizing or selling two buildings: the 1.1-million-square-foot 420 Lexington Avenue and the 560,000-square-foot 625 Madison Avenue.
• Marc Holliday hinted that SL Green might sell the development site near Grand Central where a 900,000-square-foot tower can be built. “We’re working it, looking at it and there is nothing to report now,” he said. “It’s something we’re going to be focused on to try to pass the ball on because the market is right for it now.”
• SL Green will refurbish the 1.8-million-square-foot 1515 Broadway, with or without Viacom, which just signed a 400,000-square-foot lease in Hudson Square. Mr. Holliday said the renovation would be done with the goal to push rents at more than $100 per square foot.
• When SL Green paid more than $300 million for a majority of the land underneath the Lipstick Building, it did so at the same time Haim Revah’s Metropolitan Real Estate went to contract in April. SL Green was not a last-minute investor to help Revah, as one investor and several real estate people thought was the case.
• Anne Taylor signed an unreported renewal at 1372 Broadway for more than 100,000 square feet.