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Real Estate Bisnow
The largest commercial real estate publication in the United States.
   
January 4, 2012 
 
 
 
Monday (Cab) LTile
WHAT THE HECK TO EXPECT IN 2012

 
In response to that headline, it's the status quo. The most frequent word we heard when asking the experts what will happen this year was "continue." That means things will still be hard, but not as difficult as in '08 and '09. Anyone got a juicer? We're suddenly craving some lemonade.
 
Simon Ziff, DC, March 2011
Yesterday, Ackman-Ziff prez Simon Ziff told us CMBS is the most important facet of CRE financing and valuation, and it will come back this year. Insurance companies and, to an extent, banks are financing the top 1% of properties—the country's trophies. (No word on whether this has upset the other 99% of properties.) That translates to the top 10% or so in steamy markets like NY and DC. CMBS, which looks for cash-flowing assets, takes on the next 20% to 30%. And once that happens, values will stabilize or perhaps even tick up a bit. When we asked Simon what scares him, he did his best Scarlett O'Hara and said, "I don't want to think about that today." Hmm, maybe we'll ask him tomorrow.

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BE JEALOUS OF MULTIFAMILY
 
Chiho Michado, Jan. 3, 2012
Rose Associates’ Chiho Machado told us yesterday that apartment vacancy ended the year at an eat-your-heart-out less than 1%. And with no new developments coming online until 2013, double-digit rental rate growth (in some buildings) will continue; some luxury properties in desirable locations even surpassed '07 levels last year. She says a muddy financing picture and lingering uncertainty about job security have kept people parked: Renewals have risen between 6% and 15%.

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OFFICE: MANHATTAN STILL TOPS
 
Matt Van Buren
For Manhattan office, as with apartments, "continuing" isn't a bad thing. CBRE NY tri-state prez Matt Van Buren tells us New York will continue to outperform the nation this year. As of Dec. 1, 2011's 25.3M SF of leasing had surpassed 2010’s 24.2M SF. Renewals accounted for a higher percentage of space leased than in 2010 and 2007; only in the weaker velocity years of '08 and '09 were they more prominent. That should continue in 2012, too, as should the shift in kinds of tenants. Financial, insurance, and publishing are shrinking their occupancy while tech, media, law, and education are taking more. More than 19M SF is scheduled to be developed over the next eight years, an inventory increase of only 5%. (Great news to keep in mind as we hurtle ceaselessly toward the Mayan apocalypse.)

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HUNGRY FOR HOTEL
 
Dan Lesser
Manhattan continues (there's that word again!) to be one of the hottest hotel markets in the world. The mid-'80s occupancy rate trumps the nation’s 60%, says LW Hospitality Advisors CEO Dan Lesser, not to mention plenty of sell-out nights. 2011 ended with 90,000 rooms, but NYC is still “greatly under-hoteled,” he says—and the outer boroughs and suburban areas will benefit. Two closer-in areas worth looking at are Roosevelt Island and Long Island City, which are also sitting pretty near the Cornell and Technion applied sciences campus announced a few weeks ago. Manhattan also holds opportunities for boutique concepts from “cheap chic” to luxury, he says.

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RETAIL: NY OR BUST
 
Joanne Podell and Suzy Reingold, October 2011
Cushman & Wakefield's Joanne Podell (with colleague Suzy Reingold) tells us retailers’ aggressive interest in a NYC presence has not abated, to the extent that she was busy all the way through Friday, Dec. 30, queuing up closings. She says landlords have choices among tenants and aren’t rushing to sign the first prospect that comes along. Foreign retailers have been biting, yes, but domestic ones are emerging from their conservative cocoons and starting to grow. Another trend: early renewals from some tenants to lock in long-term locations. Next on her to-do list is looking at which retailers didn’t do well over the holidays in order to uncover opportunities for other tenant clients.

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INDUSTRIAL RECYCLING
 
Kevin Langtry
CBRE’s Kevin Langtry tells us Westchester's industrial/flex market is tight, with little quality product and nothing new in sight. Of the 31M SF, only 24M is 20k SF or bigger, and much of that is no good for the modern user. “New” product is 30 to 40 years old. "It’s like we’ve been driving around the same car since the ’60s, but it’s on its fourth or fifth engine." During the boom, reuse tended toward residential and retail. Now, Kevin gets a call week from sports/
fitness
center users, among other alternative uses. In fact, Lifetime Fitness has the 230k SF Journal News building under contract, intending to replace it with a 200k SF supergym.
 
Theresa Garelli
Horizon Land’s Theresa Garelli told us yesterday that small deals are the ones moving, especially in Westchester and Rockland counties. In the boroughs, it’s all about brownfield reclamation. Investors are looking for financing (to state the obvious), and the grants and loans that come with public/private partnerships are where to find it.

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REFI @ MSG
 
11 Penn Plaza on Jan. 3, 2012
Last night, we snapped Vornado's 1.1M SF 11 Penn Plaza, across 7th Avenue from MSG. (Seriously, it's cold: On our way, we transfered from the N to the 1 at Times Square just to avoid the one-block walk from Broadway.) Vornado has refinanced the property with a $330M, seven-year loan at 2.64%. The REIT came away with $126M after closing costs and paying back the existing loan.
 
Well, we can't go to the gym today or we'll look like all those New Year's resolution posers. Better to prove our dedication by starting tomorrow. Email amanda.metcalf@bisnow.com.
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