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October 15, 2008

Vampires in Manhattan


Put away your stakes and crosses-we're talking about opportunistic and mezz funds looking to spend money after removing it from the National Bank of Their Mattress. Murray Hill Partners founders Neil Siderow and Norman Sturner know a thing or two about investing (they're looking wise for paying one-third cash for $310M 1250 Broadway in March). We visited their Sixth Avenue office on Monday for predictions, hoping not to get spooooked.


Neil and Norman tell us debt-heavy buyers who purchased buildings at up to 90% debt to equity during the heat wave are having a hard time writing checks today. The shortage of financing is going to push them out of the market, bringing more opportunities for Manhattan office seekers. And cash certainly exists-money that was pulled out of the stock market recently has to go somewhere. Murray Hill, which already owns 3.5M SF of office space in Manhattan, is ready to jump in when the market calls, recently closing its fourth fund at $98M with an additional $600M to $700M in joint purchasing power. While they're waiting, you won't find these best friends on the green-they say they're the rare execs who don't play golf. Pardon us while we try to wrap our brains around that.


Had the 1250 Broadway transaction occurred only seven months earlier, Neil and Norman believe it would have attracted one of today's beleaguered owners. But despite bad borrowing by others, they echoed the positive outlook we've been hearing recently, pointing out that expected million-population growth over the next decade (probably all on the block where you live, no less) will far outweigh job losses, while occupancy and rental rates will remain healthy. And all of Manhattan is fair game. There are no bad areas, Norman contends-only better ones. If this real estate thing doesn't work out, there's probably a UN diplomat seat with his name on it.

Not Easy Being Green

When times are bad, we expect pricey LEED plans to get slashed. Then again, LEED perception is good, so lenders might be willing to shell out. Thoroughly confused, we visited Times Square to see Arent Fox's Stephen Del Percio, one of the first 10 lawyers in the U.S. to receive LEED accredited professional status, for predictions and suggestions.

  • Many developers anticipating anchor financial sector tenants may lose them to downsizing or sublease space (eg, French bank Natixis, which took former JPMorgan space 277 Park after the Bear Stearns meltdown, despite a rumored move to LEED Gold hopeful Eleven Times Square, saving approximately $30 PSF).

  • Every new commercial office project in Manhattan will likely apply for LEED certification thanks to tenant demand and Fortune 500 mandates. But the latter may cause interesting liability in the future if a company signs a lease for a potential Gold building that's certified Silver after delivery. It's a hidden area of risk, and questions remain about who is to blame.

  • There's been an increase in reported claims on sustainable projects, as expectations and definitions do not match up. Some think LEED or Green Globes are standards, while others may be expecting specific green materials or building systems. The best way to align those expectations is a clear contract with every provision reviewed and vetted.

  • Mayor Mike's PLANYC 2030 task force may consider pushing green legislation on private projects, just like it did on public ones. Stephen disagrees with mandating green and suggests incentives like special zoning variances. Otherwise, there's potential for industry-led opposition due to increased construction costs.

Remember, hiring Stephen will garner a point towards LEED certification, so it doesn't hurt to call. At least it will take his mind off the fact that he's number 350 on the waiting list for (the still undefeated) Rangers season tickets.

Oh, Baby!

Two weeks ago, we mentioned that Denham Wolf co-founder Paul Wolf was awaiting the arrival of his third child. We're happy to announce that Matias (8 lbs. 4 oz. and 22 inches long) was born October 7. Congratulations to the entire Wolf family!

Whether it's buildings or babies, Bisnow wants to hear about your new deliveries. Send story suggestions to amanda@bisnow.com.

Department of Corrections:
Our apologies to NAI New York City's Andrew Simon and Robert Kluge, whom we incorrectly identified as C&W execs in Friday's edition. Now that we've filled our Q4 mistake quota, we should be finished for the rest of the year.
Leo A Daly
Arent Fox
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