2010 IN A NUTSHELL

We’re happy to say that 2010 was better than we’d expected. Eleven months ago, we attended REBNY’s 114th annual banquet. Unlike the previous year, there had been no bitter cold, no biting wind, and no planes steering into the Hudson—and we heard glimmers of hope from the 2,000 attendees in an uncertain market.

What a difference a year makes. At the end of November, asking rates rose to $47.81/SF, and overall leasing and absorption rates for the month trended strongly positive, according to CBRE’s December MarketView snapshot. YTD, over 22M SF of space has been leased and the 3.6M SF of positive absorption overshadowed the 14.5M SF in leasing and a negative 11.7M SF of absorption at the same point in ’09 (we knew yesterday’s lunar eclipse was symbolic).

The capital markets saw a particular uptick in activity, but all of the transactions were topped by Google’s $1.8B deal to purchase the 2.9M 111 Eighth Ave (where the tech giant leases space) from New York State Common Retirement Fund, Jamestown, and Taconic Investment Partners. Other top deals included Canada Pension Plan Investment Board’s $576M ownership interest in 1221 Avenue of the Americas; SL Green’s $330M purchase of 125 Park; Rockpoint Group's joint-control interest in Park Avenue Plaza and 299 Park; Edge Fund Advisors and HSBC Alternative Investments’ interest purchase in 1540 Broadway for $255M; Boston Properties’ $281M purchase of 510 Madison; and RXR's interest purchase in 340 Madison.

In one of the largest leases this year, Société Générale inked a 20-year, 444k SF deal at Brookfield Office Properties’ 245 Park Ave. Newly delivered Eleven Times Square saw a 400 SF lease with Proskauer Rose, while Condé Nast signed a 1M SF letter of intent for a relocation to One World Trade Center (although not a done deal). But the mega lease wasn’t the only big news to come out of 245 Park: In one of the largest loans originated in Manhattan over the downturn, the Bank of China provided Brookfield with an $800M loan to refi the building. The Bank of China also led the syndicate that provided January’s $475M refinancing of 1515 Broadway, owned by a JV of SL Green and SITQ.

Kenny Kane

And the year also brought great progress at One World Trade Center, to be the Western Hemisphere’s tallest building upon completion. When the Port Authority invited private developers to take an equity stake in the site, numerous leading global companies responded, reflecting private-sector confidence in the tower's success, says Cushman & Wakefield’s Tara Stacom, who leads the leasing and marketing team for the building. She says they’re delighted equity arrangements are being finalized with the Durst Organization. And Condé Nast’s signed letter of intent for 1M SF in the building is another indicator of its appeal, and interest is high among many business sectors, she points out. Construction has reached 52 floors, the halfway mark.

We saw a year-over-year change in attitude at most of the major market events we attended this year, including ICSC’s New York National Conference earlier this month (above), where retailers were abuzz with talks of deals, expansion, and increasing consumer confidence. At last month’s REIT World, companies discussed growing investment and development pipelines, while the following day’s NYU Schack Capital Markets Conference pointed to a potential boom in IPO activity for ‘11. ICSC and NAIOP painted a brighter capital markets outlook at its annual Capital MarketPlace Conference, while speakers at October’s ULI Fall Meeting in DC discussed the back-to-basics demeanor of the industry and how we’re entering an “era of less.” (Seems the common denominator at most of the events was Vornado’s Mike Fascitelli. Perhaps he should be writing this paragraph.)

“This is your market opportunity,” said Cantor Fitzerald executive managing director Michael Lehrman to 650 attendees at Bisnow’s NYC Summit September 15 at Cooper Union—everyone’s going to win, it's just a question of to what magnitude. Above, a captivated crowd listens to execs from Eastern Consolidated, SL Green, Fried Frank, Vornado, FTI Schonbraun McCann Group, Westport Capital, Brookfield Properties, and Cole Schotz, only a few of the illustrious firms that participated in our monthly panel discussions and schmoozes (see tomorrow’s issue for a recap of our events). Our two-year old publication in New York boasts over 25,000 subscribers, and Bisnow now covers real estate daily in 10 markets, including DC, Chicago, Boston, LA, Dallas, Houston, Atlanta, South Florida, and Baltimore. Thank you, readers.

2010 IN A NUTSHELL

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