GLOOM has finally overtaken the giddy glee of last year as the city has gotten caught in the cross hairs of the country’s ongoing financial and real estate crisis.
“Everyone is in a fog right now,” said one downtown broker. “No one knows what will happen.”
Indeed, real estate brokers are increasingly touchy these days, skittish about the state of New York’s commercial property market.
Brokers say the more empty space on the market, the more rents will come down from their peak.
However, since most city tenants are still so far under the current market rates, rents are still likely to rise for any tenant that moves or renews.
And while the sales market is already off 10 percent to 15 percent from highs last year, things are likely to get worse. Some estimates have the market falling 15 percent to 25 percent from 2007’s robust levels.
“The problem is getting the financing,” said one broker.
Nevertheless, commercial-mortgage brokers are still optimistic they can track down financing for anything. Just tell that to Harry Macklowe and his son Billy.
We reached out to Jonathan Mechanic, Fried Frank’s real-estate practice head who is front and center on many big deals, to get the lowdown on the holiday shindig, but he didn’t get back to us by press time.
There is no doubt that the ongoing financial-services crisis will seriously affect the construction of several projects, including the 9/11 Memorial and Larry Silverstein‘s ability to get investment anchors for his World Trade Center towers.
What’s more, there will certainly be fewer companies left standing that are in need of new technologically superior office space.
To be sure, there are a few large buildings on the block, including HSBC’s 500,000 foot headquarters at 452 Fifth Ave. near Bryant Park, which has bids due tomorrow.
Brokers at Jones Lang LaSalle have been guiding bidders toward offering more than $500 million for these first-round bids.
Part of the deal includes a leaseback for around one year.
A significant amount of its footage, however, is comprised of retail – the bank has a branch in the building, too – plus a data center that would likely become a potential buyer’s back office.
Thus the need for smaller digs which is why HSBC also has a lease out with Silverstein Properties for six floors comprising 254,835 feet at the top of 7 World Trade Center, where the asking rent is around $75 a foot.
It’s raw space and would take about a year for a build out – thus the need for an HSBC leaseback of its own building. A comparable space in Midtown would run over $100 a foot if it was available.
That’s not the only space available at 7 WTC. With the Royal Bank of Scotland having purchased ABN Amro, the latter company never moved into its perch on the 30th through 33rd floors, which has kept that 142,634-foot space on the sub lease market for the last year with a “negotiable” rent through Grubb & Ellis.
Downtown will also soon have the current Goldman Sachs spaces and towers to contend with.
Meanwhile, George Comfort & Sons was described as having “a slight lead” on the pack pursuing the former Macklowe Properties’ Worldwide Plaza and 1540 Broadway. But that road is still bumpy as Guggenheim Partners is among the debt holders still trying to keep a position in any possible purchase of Worldwide Plaza.
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GVA Williams executives are selling a 65 percent stake in the company to FirstService Commercial Real Estate.
The local moniker will change to “Williams Real Estate, a FirstService Company,” and become the hub office for the global Colliers International, which actually does not own that name in New York and is not affiliated with Colliers ABR.
GVA William’s Robert Freedman will become executive chairman and Mark Jaccom will become CEO of the new firm.
