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December 19, 2008
 
       
 

MARKETING DOWNTOWN;
SURVIVING WORKOUTS


Hey, if you can’t get Giants tix, you fans of college football should hop down to DC this Saturday for the first bowl game ever held in the Nation’s Capital, and the first bowl game of the post-college season. Navy v. Wake Forest. Please see ad to right!

 

Downtown seems busier than ever, with new retail and residential sprouting everywhere and more affordable opportunities opening for office users. We heard there was a new retail push, so we decided to find out more from Downtown Alliance president and neighborhood guru Liz Berger. Liz knows a lot, since she’s lived, worked and played in the submarket for over 25 years; she’s even having a Downtown staycation this holiday.

 

Liz told us the Alliance is putting additional focus on its retail sector through its holiday marketing campaign. Downtown certainly has the fundamentals for retail: it’s experiencing some of the highest values in retail and residential since 9/11; over 12k new residential units have since delivered; and its 2,600-room hotel stock will soon have 1,500 new rooms with the development of eight hotels. (And the visitors have deep pockets: the average household income of guests is $212k.) Overall, the neighborhood sees 318k workers and 57k residents daily, 8M tourists annually, and is the fourth-largest CBD in the US, she tells us.

 

We took this shot of Liz and colleagues Gideon Friedman, Mai Hariu, Jonathan LaChance, and Elizabeth Hewitt during ICSC, the first time the Alliance set up marketing in conjunction with the conference.

 

Although luxury retailers like Hermes and Tiffany’s have already taken space, the Alliance wants to drive more shoppers to the area to show investors and retailers that Downtown has the critical mass to support their stores (like the summer crowds on Stone Street above.)  There are currently 49 retail spaces available, including old banking halls with large floorplates, high ceilings and details from marble surfaces to chandeliers. And space shoppers are going to find bargains now: the average Broadway corridor rent between Chambers Street and Battery Park City is $251 PSF, vs Upper West Side’s $309 PSF and Herald Square’s $643 PSF.


Advice for Workouts
 
It’s been 15 years since the last big wave of workouts, so junior executives in real estate haven’t dealt with such a recession. Gibson Dunn attorney David Furman witnessed 20 years of boom-and-bust markets so we stopped by his MetLife Building office to talk about handling this new era of workouts.
 

Here’s what he told us: Be prepared: Know your loan docs, who your lenders or borrowers are, what personal liabilities you have, and what your options are. Good legal counsel can help you find weaknesses in your loan documents. Have a plan: You don’t want to go into a meeting with your lender or borrower not knowing what you’re going to do. Don’t overplay your hand: Remain calm, considerate and conciliatory. You may be working with the person across the table from you when the market turns up; some of David’s best clients today are ones he went through workout battles with in the early ‘90s. Consider the costs: Decide who’s going to pay fees, and realize that workouts and restructurings are expensive and have tax consequences.

 

Did you know that David’s not only a pro at real estate workouts, but physical workouts, too? Before our meeting, he was at the Velocity Sports Performance gym, doing sled pulling exercises (perhaps a tryout for Santa’s tenth reindeer). He’ll soon head to Vermont for skiing and hiking with his family.

‘Tis the season for giving, so send your story ideas to amanda@bisnow.com. Fruit and cheese baskets also accepted.

 
 
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