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January 14, 2009 
 
       
 
Monday Properties
 
THIS MORNING
AT CB;
LAST NIGHT
AT NYCREW

 

Looks like the Obama era is spreading the word "hope" even to hardened New Yorkers. Yes, CBRE said that its quarterly review this morning could be labeled "No Easy Way Out," but it also said it's seeing the first small indications of—we hope we don't jinx recovery by saying the word—liquidity. Gulp. Be still, our beating hearts. 

 

We snapped this of CBRE Tri-State president Mitch Rudin in CB's offices this morning in Met Life, where we went for a breakfast overview of the Tri-State market. Yes, they see 125,000 workers losing their jobs, meaning 15M SF will be back on the market (their formula is 250 SF per person but shed by firms only at a 50% rate—we'll trust their math). But they point out that's only 5% of the total 300M. Plus, they take a longer view because they saw the dissolution in the late 80s of Drexel Burnham and Salomon and know that sometimes restructuring can stimulate new demand. Already they see boutique firms picking up talent from Bear Sterns, Lehman, Merrill Lynch, and AIG.

 

Shelly Cohen, left, heads CB's downtown office (85M SF, defined as south of Canal), and Matt VanBuren runs midtown (225M SF). CB points out that although there was already negative absorption of 13M SF in '08 compared to positive absorption of 2M in '07, they see financial firms stabilizing and deals still getting done, like Viacom's 1.3M SF renewal and expansion of its HQ at 1515 Broadway in Q4, the third largest leasing transaction in NY history. (Renewals were 35% of velocity last year compared to 28% in 07.) And they point out we got spoiled in recent years; although '08 was obviously off from '07, it was still 29% more than '05

 

These are among the top brokers in America. Mike Geoghegan has been the point person for Lehman; Bob Alexander the top producer in the country in recent years for CB; and Bill Shanahan the top capital markets guy (who with partner Darcy Stacom sold the Macklowe portfolio). Mike is the one who said you can call the current situation "No Easy Way Out," and Bill admitted those once ballyhooed $1,000 a foot sales prices are, for the time being, history. Excluding the GM Building and forced sales, average prices look more like $654. But here's the good news: They see liquidity "slowly creeping back into the system" and hope it will be seriousy by Q3 or Q4, and certainly by Q1 2010. We trust Mike especially, an '83 Annapolis grad who did 15 years in the Navy flying P-3 Orions off Japan and Bermuda looking for enemy subs, so we think he can spot danger. Anyway, he's sanguine enough to maintain his family's skiing routine: They're just back from Deer Valley, although that might be because they're happy their hockey-playing son has moved on to college and their schedule's more flexible now.


LAST NIGHT AT NYCREW
 

The pain is real for commercial real estate, but it's better positioned to weather the storm than other sectors. So says Deloitte's Dennis Yeskey, who spoke to NYCREW last night at the HSBC building on Fifth Avenue. He went on to say that the economy will get worse before it gets better. He predicts negative growth into the second half of '09, while other real estate fundamentals will continue to erode. Financing will stay limited; sales and values will keep dropping. Capital providers will remain active in anticipation of distressed opportunities, and investors will re-evaluate global interest as domestic opportunities re-emerge. He says Obama may bode well for the market, but the crisis won't be over until someone goes to prison, a point that got enthusiastic applause from the crowd.

 

Dennis with the NYCREW board: HSBC's Kate Stentebjerg-Olesen; Ferzan Robbins & Associates' (and NYCREW prez) Liz Muskat; Justdan Realty's Karen Dome; Eurohypo AG'sJo Hastings; Cole Schotz's Wendy Berger; Community Development Trust's Joan Berkowitz; and Trinity Real Estate's Sharon Khurdan. Dennis has been busy on the speaking circuit, recently discussing bankruptcies and workouts at DB Bistro Moderne (otherwise known as the home of the $150 DB Burger Double Truffle) for an hour and a half after the kitchen closed. (In the spirit of the recession, they just consumed just the regular $32 burgers.)


PRESTO!
 

This is Monday Properties COO Brian Robin showing us around this morning at the 1.3M SF "Jewel of Park Avenue" building they own at 230 Park, built originally in 1928 for Northern Central Railroad, which is of course the one you drive through on Park. If it looks like Brian's a magician in this picture, that's because he is: They're about to create another Visitors Entrance so those of you without badges will be able to enter from either 45th or 46th.  

 

This morning was chilly (17 degrees) but sunny and clear, so with Chief Engineer Darryl Montoya (who's been on the job there 27 years) we took the elevator to the 39th floor, then climbed another four floors of mostly spiral stairs to the amazing old cupola on top of the building. So you see, New York is still lookin' pretty good.

 
 
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