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October 10, 2008

CB's Outlook;
Latest Deals


Gourmet breakfast. Optimistic outlooks. We could get used to this. A day after we scoped out Cushman's Q3 breakfast briefing, we visited the Metlife Building to hear CB Richard Ellis execs paint the Manhattan picture. Cyclical was the word du jour. Meaning, we can kick worry to the curb for a while. But, they say, that's only if New York can stop its knee-jerk reactions to how the financial crisis will affect vacancy. The verdict? Cautious optimism, recalling the city's legendary resiliency.


Global brokerage chair Steve Siegel and Tri-state SVP Simon Wasserberger, pictured here with Tri-state prez Mitch Rudin, suggested fallout from the collapse of Bear Stearns and Lehman Brothers hasn't been as bad as expected. Although many assume that layoffs cause more space on the market, firms can't sublease without consolidation, taking a financial hit, and keeping future employment needs in mind—so they're more cautious about subleasing this time around. The CBers predict we won't see a major decline in rents unless we hit over 140k in layoffs—triple Moody's expectation. Worst-case scenario: 12% vacancy by '11. Best case scenario: They add lox to the menu at the Q4 breakfast.


We also learned that a majority of Manhattan's top low-leverage landlords will ride out the turbulence, and tenant demand for alternate-to-Midtown neighborhoods will also remain strong. Maybe that's why consulting group head Susan Nagler-Cohen and Midtown brokerage expert Matt Van Buren find 7th-grade math homework more difficult than real estate these days. Both parents report being in their own storm of schoolbooks and soccer games.


CB's resident athletes: Tri-state retail head Alison Lewis and downtown head Sheldon Cohen. Alison's perfecting her golf game and actually welcomes this cooler weather, while Sheldon is training for the ING New York City Marathon, less than a month away. No truth to the rumor that the market crisis has dropped it to a 10K.


Investment Sales

Madison Capital purchased the retail condominium portion of Manhattan House on 200 East 66th from O'Connor Capital Partners for $86M. The $1.1B conversion project is home to tenants Lululemon Athletica, Staples Express, ALDO, Icon Parking, Club Monaco and Madame Paulette. Eastdil represented O'Connor in the deal.


Macquarie Group led the leasing pack by inking a 260k-SF renewal and expansion (by 160k SF) at 125 West 55th. Josh Kuriloff and Robert Tanzmann of Cushman & Wakefield represented the tenant, while Andrew Levin represented landlord Boston Properties internally.


In a deal valued at $7.5M, the Government of Flanders leased 7,400 SF at the New York Times HQ on 620 Eighth Ave. for its investment and trade office, office of tourism and cultural promotion entity Flanders House. Andrew Simon and Robert Kluge represented the tenant, while Evan Haskell of CBRE represented landlord Forest City Ratner.


Integrated Design Group signed a seven-year, 4,000-SF deal at The Craftsman Building on 6 East 39th. Elliot Warren of The Kaufman Org. represented the tenant, while Marc Bengualid represented landlord Lafayette Holdings internally. Terms of the lease were undisclosed, but the asking rent was $45 PSF.

Lease Assignments

The Hearst Corporation tapped the CBRE team of Bill Shanahan, Richard Hodos, David LaPierre, Steve Sjurset and Janelle Rovengo as the exclusive retail leasing agent for its landmark Hearst Tower at 8th Avenue and 57th Street. The building currently has ground-floor opportunities of 12,210 SF and 2,510 SF.

Exec Moves

Pat Breslin, Andrew Connolly and Kenneth Yip joined Grubb & Ellis as part of the firm's East Coast Retail Group, and will take roles in expanding the company's national retail presence. Pat will take on the newly-created position of president; Andrew as managing director; and Kenneth as analyst and associate. All three came over from GVA Williams, where Pat was president of the firm's retail group. During his career, he has leased more than 5M SF of retail space valued in excess of $2B.


GVA Williams, in turn, made a trio of new hires in Annie Yao, Joshua Gurwitz and Rogelio Galindo. Annie, who came from Newmark Knight Frank, will manage global real estate accounts. Josh joined from architectural firm Gensler and will take on a consulting and brokerage role. And Rogelio, from consulting firm TGP Associates, will serve as a research analyst.


Stephen Grill joined NAI New York City's office as senior managing director, following five-year and 30-year stints at Murray Hill Properties and Julien J. Studley. He brings with him extensive office and retail leasing, investment sales, consulting and international experience, and has sold or leased approximately 1M SF in his career, including a 230k SF lease for SFX Entertainment at 220 West 42nd.

New Business Lines

Savills launched a distressed real estate division to assist real estate companies and their lenders with liquidity needs. John Wilcox, Fredric Leffell and Jeffrey Baker will head the group, with more than 25 years of experience over a few downturns. It will tap its international investment base for recapitalizations, the acquisition of joint venture interests, investments in operating companies, and programmatic joint venture investments. It also has the capability to handle multi-jurisdictional and cross-border workout and bankruptcy assignments.


CBRE started the Asset Reposition Management, which will provide industrial and institutional property repositioning services group, within it Global Corporate Services line of business. It tapped Bruce Rasher, formerly of Michigan-based Consumers Energy, to spearhead the group, based out of Detroit.

Leo A Daly
Arent Fox
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