The attack on the Twin Towers has spurred a new real estate and construction boom – along with concerns about price gouging.
“Unfortunately, it’s a boon,” said Lenore Janis, president of Professional Women in Construction. “From tragedy some good things come to an industry that was beginning to look down a dark hole.”
The city real estate industry had been facing 9 million square feet of vacant sublease space, much of which could be readied quickly for tenants. Another 5 million square feet was vacant and available directly from building owners, said Bruce Mosler, President of Cushman & Wakefield USA.
And while 15 million square feet has vanished, Morgan Stanley analyst Greg Whyte believes as much as 25 million square feet of Downtown space could be affected by the fallout from the suicide bombers. Others are saying 27.5 million, representing 20 percent of Lower Manhattan’s 95 million square feet of inventory below Chambers Street.
“There is a huge dislocation involved here, make no mistake about that,” said Richard T. Anderson, president of the Building Congress. “But the scale of the city is large enough that this kind of office demand can be accomodated.”
Mayor Rudy Giuliani met with real estate leaders at the Real Estate Board of New York on Wednesday, and urged them not to price gouge. “That didn’t go over well,” said one source, as most companies have already been offering free brokerage services and other help.
City average rents were $65 a foot, according to Bruce Mosler, President of Cushman & Wakefield USA. But some newer space will be more, and older space less.
In Elizabeth, the owners of an office building agreed to drop the price to $10 a foot to get small tenants in quickly, said Marvin Schnee, a Long Island-based broker. “They are not looking to gouge,” he said.
But some owners that were cutting deals way below asking prices are now standing firm on the asking rents, said Georgia J. Malone, an attorney whose eponymous company handles brokerage and development deals. “Suddenly, the market changed,” she said.
And while some building owners are asking for longer-term leases, others are giving tenants an option to walk sooner.
“I have two deals where landlords have indicated that we will give you a lease, and where your building gets rebuilt, you can cancel the deal at your discretion,” said Mark S. Weiss of Julien J. Studley. The tenant rep firm is also not taking fees, in some cases.
“We all have to live with ourselves and do what is right for our city or country,” said Weiss. “Because we are not trained paramedics or firemen or police, we can do what we are trained to do, which is to help companies that have suffered such serious losses. And if we can help them, we can stand up and be proud.”
