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November 13, 2009
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THAT'S ALL, BULLS
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| Today’s market can be viewed as a Warner Brothers clip: Wile E. Coyote (aka, real estate) spent the past few years chasing after Road Runner (capital flows), and now Wile E. is taking a freefall off of the cliff. Either that, or Miller Ryan’s Jonathan Miller watched too many cartoons before opening ULI New York’s annual “Emerging Trends” report at The Union League Club yesterday. (With the market in freefall, can you blame his escapism?) |
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The 31st annual report is the largest to date, with over 900 real estate individuals completing surveys or interviews. The takeaways: ’10 will be a test of who can survive; the next two years will present the opportunity of a lifetime on the buy side—if you have cash. We’ll see more gloom in ’10 as we hit the bottom, which will be worse than the early ‘90s. Housing will lead recovery, and we’ll see more write-downs and deleveraging. Expect growth in IPOs, litigation messes, and interest rates.
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The SRO audience of 375 listens in rapt attention to Jonathan, who says ’10 will not be a good year for retailers or developers. Apartment renters are doubling up, but the sector will come back first, while office users will seek productivity gains until its ’11-’12 recovery. Metaphorically: development and construction are on life support; lenders and CMBS bondholders are critical; conservative owners with re-fi issues are in serious condition; and public REITs and low-leveraged owners are stabilizing. The strongest markets, in order, are DC, San Francisco, Boston (mmm, Boston Market), NYC, Houston, Seattle, Denver, Dallas, LA, and San Diego.
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Benenson Capital’s Richard Kessler (ULI-NY’s incoming chair), Jonathan, O’Connor Capital Partners’ Joseph Zuber, Cushman & Wakefield Sonnenblick Goldman’s Steven Kohn, CBRE’s Darcy Stacom, Citadel Realty Advisors’ Joel Ross, and RREEF’s Chuck Leitner. Steve led a panel with Joseph, Darcy, and Chuck, who discussed what they’re seeing in the investment market. It’s not a timing game, but a long-term game with a new environment coming, says Chuck. We’ll be at the bottom for a long time, Joseph adds, as the market continues to trade space instead of create tenants. Watch for the flood of offshore capital, Darcy notes—the Bank of China, in particular, is looking to place $1B here.
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| Got Change? |
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Who better to address differentiation than Malkin Properties prez Tony Malkin, whose company just underwent a major rebranding effort? Tony joined NAIOP New York City Wednesday evening at Haworth’s Park Avenue showroom to discuss the rebranding, as well as some of the significant infrastructure improvements W&H Properties, its NYC pre-war flag, has taken to upgrade the Empire State Building. The improvements also include an energy sustainability program in partnership with JLL, a model that he says could be adopted by owners of older buildings for retrofits globally.
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Tony (third from left) with some of NAIOP NYC’s board members, including JLL’s Jim Wenk, Ackman-Ziff’s Joe Tufariello and Rick Lechtman, JLL’s Paul Formichelli, and Langan Engineering’s DJ Hodson. The association will soon be undergoing some of its own changes, as Rick passes on the presidential torch to Joe, and Paul hops on board as president-elect for ’11.
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| YJP's Elite |
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A Young Jewish Professionals’ Real Estate Network panel discussed a variety of topics Wednesday in Chelsea, including Stanley Chera’s $117M acquisition of St. Regis New York’s 24.7k-SF retail portion (from Starwood Hotels & Resorts Worldwide in a JV with Goldman Properties and The Feil Org). The panel: The Witkoff Group’s Steve Witkoff, BLDG Management’s Lloyd Goldman, Stanley Chera (Crown Acquisitions), Carlton Group’s Howard Michaels, CBRE’s Steve Siegel, and Murray Hill Properties’ Norman Sturner.
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Another standing room only crowd. If Bill Thompson had promised the city more chairs, perhaps things would've turned out differently.
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| UPCOMING EVENTS |
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November 13 - SMPS Foundation Think Tank: "Breaking through the Commoditization Barrier and Creating Strategic Advantage" for A/E/C Firms - Networking reception Nov. 12. McGraw-Hill Companies, 1221 Avenue of the Americas. Info
November 17 - ICSC - Retail runway featuring expanding food operators including Bruegger's Bagels, Goodburger, Hill Country, Muscle Maker Grill, and LDV Hospitality. Karaoke with a live band to follow. Hill Country on 26th St. 5:30-8:30pm. Info
November 17 - NRC - Real Estate and the Media - How the real estate business is viewed in the press; what you can to raise your media profile. Info
November 17 - REBNY - Members Luncheon - Real Estate, The Economy and Washington D.C.: What Does It all Mean For NYC 11:45 A.M. – 2:00 P.M. New York Hilton Hotel Grand Ballroom. Registration required. djones@rebny.com
November 18 - Uniting Against Lung Cancer, "Strolling Supper with Blues & News." Performance by Grammy-Award winning blues artist Delbert McClinton. Tix start at $300. Call 212-627-5500 or click here. 6:30-9:30pm - Manhattan's Gotham Hall, 1356 Broadway.
November 19 - REBNY - Inside Secrets of Top Brokers - Residential - 5:30-7pm - Registration Required. Members Only. Location: Mendik Education Center, 570 Lexington Avenue.
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This newsletter is a journalistic news source which accepts no payment for featured interviews. It is supported by conventional advertisers clearly identified in the right hand column. You have been selected to receive it either through prior contact or professional association. If you have received it in error, please accept our apologies and unsubscribe at bottom of the newsletter. © 2009, Bisnow on Business, Inc., 1323 Connecticut Avenue, NW Washington, DC 20036. All rights reserved.
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