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October 6, 2008



That's the word from Grubb & Ellis investment vet Frank Mancini, who tells us lower market values will open doors for investors actually interested in "brick and mortar" buildings, not just financial plays. It's a good time for tenants, too. We sat down with him at his Americas Tower office to see more in the crystal ball.


We kept a few dozen cabs idling (in the background) in case Frank divulged a tip requiring immediate response. Grubb & Ellis expects asking rents in Manhattan to decline an average of 7% annually and asset prices by 20% over the next 24 to 30 months. He also thinks firms will be putting more sublease space on the market, and the projected vacancy rate will settle between 8.5 and 9%, leveling the playing field between owners and tenants. One result: A flight to quality as options lead tenants to seek out more stable landlords and more bang for their buck. Frank adds that brick-and-mortar buyers who purchase assets based on quality and location, and were priced out of the market based on their competitor's use of creatively structured debt financing, will now be able to compete.


It's probably not his eldest Frank's hearing in his ear. His son just left for freshman year at Vanderbilt (hey, congrats on beating Auburn!); Frank reports he never rings home, and when you leave him a message, takes two days to call back. Sounds like a pretty normal kid, but we think Frank, a St. John's alum, might be keeping his other two college-bound sons closer by these days.


Despite a tentative market, Time Equities Chairman Francis Greenburger says tenants are still discovering the benefits of ownership. Within the past week, the firm sold a number of apartments with prices within 5 to 10% of peak values, and office condos have seen significant price appreciation. Perhaps it's in the aesthetics. Francis hired curator Elizabeth Akkerman to oversee art arrangements and installations in the firm's buildings, which he says elevates the tenants' experience. Behind his desk is one of his favorites: a painting by NYC artist Jane Dixon on an Astroturf canvas.


TEI has an active pipeline, mostly on the residential side. In addition to recently completing the conversion of 425 Central Park West, they're about to finish projects on Stuyvesant Street in the East Village and 93rd between Amsterdam and Columbus. They're also working on plans for Battery Park City's 50 West Street (pictured), a 65-story mixed-use tower comprised of hotel and residential space. Over the past 18 months, Francis tells us, office condo performance has been strong, with one project's price increasing by up to 50 percent from the time it was first offered. Also, 125 Maiden Lane, which came online last year, has completely sold out and seen significant appreciation.  Francis tells us typical prices are between $550 and $800/SF.


An avid and eclectic collector, Francis has a Fifth Avenue office that could qualify as a MoMA annex. Ijeoma Okigbo (acquisitions) and Ann Miller (development) stand with the first piece Francis ever bought, at age 14. Francis is also the founder of the Omi International Arts Center, a non-profit residency program for artists in upstate's Columbia County. He says the artwork above, an elevated train station, reminded him of riding the New York City subway system with his father, although he has since learned it actually portrays Philadelphia. We'll forgive him and just call the purchase a youthful indiscretion.

Leo A Daly
Arent Fox
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