THIS MORNING AT CB; LAST NIGHT AT NYCREW
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|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.|