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October 8, 2008

Manhattan In Limbo


Yesterday, we grabbed a seat at Michael's on W. 55th alongside top Cushman & Wakefield execs for the firm's Q3 breakfast briefing; definitely beats standing in a breadline. Metro New York COO Joe Harbert and economist Ken McCarthy valiantly tried to answer the hovering question: how low can  numbers go? Unfortunately, looks like we'll have to wait until at least Q4 numbers to find out for sure. They argued current difficulties appear to be within the range of normal cycles, but said that in New York, statistics lag reality.


Ken and Joe report Manhattan's vacancy rate has hit a two-year high: 7.4%, with Midtown, Midtown South and Downtown all charting increases year-over-year. Available sublease space increased 72%—the biggest jump in nearly four years, thanks to M&A activity and restructurings. Overall, all three submarkets recorded a negative 2.9M SF in absorption, compared to 468k in '07. Rising rental rates have also flattened out, while leasing activity has slowed by 14.4% since this time last year, the lowest YTD since 2003. Investment sales over $10M have fallen 55% as a result of sparse credit. So, doc, what's the good news?


Midtown vet Josh Kuriloff contends this is a cyclical, healthy market cleansing that will last six to 12 months. Of course, optimism is easier when you just repped Macquarie Group's 260k SF lease renewal and expansion (160k SF increase) at 125 West 55th St. —congrats.Colleagues Bob Constable and Dale Schlather didn't give their predictions, but they maintained better poker faces.


CEO of the Americas John Santora with Ken and Midtown office vice chair Mitch Konsker. Ken tells us he's been pulling late nights recently, not just to monitor the markets but to keep up with the Red Sox. John also has a full plate: In addition to working with Cushman's Asian operations, his son's wedding is at the end of the month.


Midtown EVP Jon Serko and Midtown/Downtown office head Suzy Reingold are both busy, but Suzy as usual is taking some time to ride her thoroughbreds.


Also yesterday: Investcorp's Chris Hoeffel (here with AREW prez Jennifer McCool of Moynihan Station Venture, and Rhodes Associates' Jane Lyons) attracted over 170 Association of Real Estate Women to Club 101 for Lions, Tigers and Bears, about the commercial mortgage market. The Bear Stearns alumnus said he felt like he was at the helm of the Titanic when his firm collapsed. Now he sees other icebergs: a capital market is frozen, Wall Street lending down 96%, and life insurance companies' and bank lending down 25%. He predicts even further deceleration in the financial industry before a recovery, the key to which, he says, is shaping up the residential market, which should be helped by Washington's rescue. Still (and maybe we should have made this the headline), Chris seems bullish, thanks to New York's relatively healthy fundamentals compared to the early '90s. Mispriced assets will open up opportunities for investors, he thinks, who will have the ability to make money—hence, his recent move from J.P. Morgan to Investcorp.


M Moser Associates' Paola Nannetti and Shanon Person report that their architectural firm just moved from its South Street Seaport digs to a new SoHo loft at 490 Broadway—complete with New York City's oldest elevator. If we visit, we might just take the stairs.


Floorworks' Dana Endicott, CUH2A's Mary Williamson, and Liberty Title Agency's birthday girl Stephanie Butler, who tells us the title insurance industry is treading water right now, but no worries—Liberty has diversified into insuring fine art, one of the only firms to do so.


Macklowe Properties' Susan LoGiudice, Cambridge Residential's Karen Siedmon, and Corporate Calm's Bonnie Haber. Susan moonlights as an NYU night student, her masters in real estate made possible by an AREW scholarship.

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