Forest City, Avoiding Default on 10 MetroTech, Will Demo for Residential
One of Forest City Ratner’s first Brooklyn office buildings, which has a $40 million mortgage in default, will soon be demolished for–what else?–housing. Read More
Jotham Sederstrom
The Power 5: The City’s Top 5 Markets
In honor of this week’s Power 100 rankings of real estate professionals, I figured I would create the first annual Power 5 rankings of the top submarkets by year-to-date leasing activity. To make things even across all 17 submarkets, they are based on leases signed and renewed as a percentage of the submarket’s total inventory. So without further ado, here are the Power 5.
Power, This Time for the Keynesians
Speaking of power, the Austerians have lost one of their most powerful corroborations. At least for political purposes, the oft-cited and rather particular relationship between sovereign debt and growth has been sundered by a graduate student’s homework assignment. Never has so much of consequence turned on a spreadsheet error. Read More
Manhattan Leads All Boroughs in Sales
The Manhattan investment sales market typically serves as a lead indicator for the sales market citywide, and in the first quarter of 2013, it was once again.
The Manhattan submarket (defined as south of 96th Street on the East Side and south of 110th Street on the West Side) led the way in the first quarter of 2013 with $5.5 billion in investment sales transactions. This represented 85 percent of the $6.5 billion citywide total. Read More
The Landlord’s Market: Midtown South’s Uphill Climb
Midtown South is starting to look a little like Downtown North.
In the latest sign of the evolution of Manhattan’s former no-man’s land between Midtown and Downtown into the hottest office submarket in the U.S., Cushman & Wakefield last week noted a migration of financial firms into Midtown South and a corresponding overflow of technology and media firms into the Financial District over the past 10 years.
“We’ve never seen such an intertwining of the Midtown South market and Downtown,” Andrew Peretz, executive vice president at C&W, said in an interview. Read More
Midtown Madness: Leasing Still Sluggish in Manhattan’s Priciest Market
Midtown Manhattan, the biggest and most expensive U.S. office market, is still adapting to New York’s post-financial-crisis economy, as technology and new media companies flood into the more affordable areas and banks remain wary of expanding in higher-priced real estate.
With construction getting under way on millions of square feet of planned Class A offices on the West Side, much of the leasing action for the year to date has centered on neighborhoods like Murray Hill, the Penn Station area and the Garment District, which are attracting companies that have been priced—or crowded—out of the technology hub in Midtown South, brokers said. Financial companies, traditionally the biggest occupiers of Midtown real estate, remained conservative, pursuing greater efficiency in their use of real estate rather than growth.
“The days of bigger is better are gone,” said Eric Thomas, senior vice president of Cresa, a specialist in tenant representation. “Capital preservation is still key. That’s why renewals still reign in many cases.” Read More
Lower Manhattan, By the Numbers
While the story in Midtown South over the past two years has inarguably been Class B and, to a lesser extent, Class C buildings and their increasing cachet among tech startups, the story in lower Manhattan is still all about Class A properties. With approximately five million square feet of new inventory coming online next year with the completion of 1 World Trade Center, the market will boast some of the most efficient and modern space in all of Manhattan.
More immediately, however, approximately two million square feet of space at the World Financial Center is expected to be made available by next month, thanks to lease rollovers by Nomura and Deloitte, among other major tenants. With such availability of Class A space, no wonder the asset class saw a 30 percent uptick in leasing from last February. Jonathan Mazur, director of research at Cushman & Wakefield, clued The Commercial Observer in on some other big statistical changes in lower Manhattan last week and gave us a sense of what’s to come in 2013. Read More
Downtown Rising: Once Down, Leasing Up Again in Lower Manhattan Offices
After the storm, things are looking brighter for the lower Manhattan real estate market.
Even with construction scaffolds clogging the district’s narrow streets in a reminder of Hurricane Sandy’s devastation, Downtown office leasing activity jumped 73 percent in the first two months of the year, according to Cushman & Wakefield. Read More
Edward Tufte’s Art Gallery Hits Market
For Stuart Siegel, an executive vice president at CBRE, 547 West 20th Street is a building that has figured prominently in the star broker’s career.
Roughly 12 years ago, he sold the five-story building to new owners while it was still a warehouse space, as much of the remote area along 11th Avenue near Chelsea was at that time. As luck would have it, however, a pair of zoning changes five years later made it possible for the owners to convert the building into residential condominiums with a pair of commercial condos on the ground floor.
Today, those ground-floor spaces are occupied by two art galleries, one leased by Elizabeth Dee, the other by the statistician and professor Edward Tufte, who also dabbles in art. While the former gallery still has several years remaining on its term sheet, Mr. Tufte’s lease is month to month, and as such, Mr. Siegel has been retained by the owners once again to market the 4,773-square-foot gallery space.
After the jump, Mr. Siegel reviews the floor plans with The Commercial Observer and discusses what, exactly, potential tenants can look forward to from the space. Read More
Had Today’s Occupancy Trends Existed in 1967, Mad Men’s Don Draper Would Have Worked Remotely From Home
The New York commercial real estate market has undergone an impressive recovery since a devastating collapse in 2008. Since 2009, in fact, the city’s office employment numbers are up 9.5 percent and occupancy rates are up 3.3 percent. Meanwhile, overall asking rents are up 20.7 percent from 2010. Occupancy trends are changing from their precrash levels, however.
The Plan: Check Out SBFI’s New Showroom for Trading Desks
WHEN SBFI, a vendor of financial and control room furniture, sought to relocate its showroom space, company executives repeatedly found themselves touring a web of buildings associated with Randy Sherman, an executive managing director at Murray Hill Properties who also represents Rose Hill Properties Associates.
But it was a 12-story asset at 461 Park Avenue South that solidified the company’s decision to commit to Midtown South. Despite initial worries about high rent, officials at SBFI, which counts seven of the world’s 10 largest investment banks as clients, were persuaded to move from 701 Seventh Avenue earlier this year. The change of heart, said Mr. Sherman, an executive managing director at Murray Hill Properties who represented the landlord, occurred shortly after SBFI officials were shown a clearer picture of just how tight a market Midtown South had become—yet a newly renovated lobby at the 31st Street building may have clinched the deal.
Mr. Sherman reviewed the plans with The Commercial Observer and discussed what, exactly, drew SBFI to a 4,775-square-foot, 10th-floor office earlier this year after a lease-signing in July. Read More
Accounting Firms, By the Numbers
As we all know and dread, it’s tax season. Between that and the sustained political brouhaha over tax reform and the series of fiscal cliffhangers in Washington, it’s a wonder any of the accountants The Commercial Observer contacted had time to speak with us for our semiannual accounting issue.
But the experts were happy to chime in about a range of accounting matters currently affecting the real estate industry. It’s also not surprising given, each accounting firm’s workload, that the industry is rapidly expanding in New York.
Last year, Deloitte relocated to a 430,000-square-foot office at 30 Rockefeller Plaza while many of the city’s other top firms grew their employee ranks, possibly signaling future land grabs. Below, a breakdown of firms making the biggest moves. Read More
REIT So Sweet: Investors Reconsider Real Estate Investment Trusts
Tax-advantaged Real Estate Investment Trusts are likely to gain favor among investors, boosted by increasing tax rates, recovering real estate prices and faster-than-anticipated growth, according to Paul Becht, audit partner at Holtz Rubenstein Reminick LLP.
The U.S. already raised the tax rate on qualified dividends to 20 percent, from 15 percent, making REITs more attractive relative to other equity investments. And there’s a possibility of more tax rate adjustments as the government continues to cast around for ways to balance the budget. Read More
Brick-and-Mortar Sleuthing: The Forensic Number-Crunchers Behind This Year’s Biggest Accounting Trend
The recession and slow-growing economy of the past four years have led to more forensic lease audit work for accountants, as tenants and landlords try to rein in expenses.
Disputes over tenants’ responsibility for repair and improvement costs in addition to their base rent are seldom publicized, since they tend to be settled out of court, but substantial money can be at stake.
“In one instance, I actually recovered $1.9 million for a tenant,” said Thomas Woodward, director of real estate advisory services at Holtz Rubenstein Reminick LLP. “It’s not unusual for me to come up with a million here and a million there.” Read More
The B Team: The Biggest Occupancy Shifts in Class B and Class A Buildings
For the first time in recent history, the availability rate across Manhattan’s stock of Class B buildings is lower than that of their Class A counterparts, suggesting a flight to value, propelled in part by the latest wave of technology startups and media companies looking for affordable space. Indeed, at 10.6 percent, the current availability rate for Class B space is 170 basis points less than the Class A rate of 12.3 percent, according to Richard Persichetti of Cassidy Turley.
With Cassidy Turley’s help, The Commercial Observer decided to put a spotlight on some of the most dramatic occupancy shifts across Manhattan over the last three years. Read More
