A hush is building in New York City
TEXT OF STORY
Scott Jagow: We all know bears are roaming Wall Street and eating a lot of things. But the rest of New York city has problems, too: it’s really quiet.
Sally Herships has this report.
Sally Herships: New York City’s streets usually throb with a certain unmistakable sound. But recently, the jackhammers have fallen silent.
Marc Engel works with American Development. He says Wall Street’s collapse has brought construction in the city to a standstill.
Marc Engle: Developer can’t do anything right now. That’s the bottom line, you can’t get financing.
Engel says it’s difficult to get a loan these days because many banks have pulled out of the development business.
Brian Lockner is head of investments for American. He says all this means American has to put more of its own cash on the line.
Bruce Lockner: Those same projects may end up being as profitable on a dollar for dollar basis, but because we have significantly more exposure in the project, more skin in the game, our returns on every dollar that we invest are going to be smaller.
One big reason banks don’t like developers right now: building owners are finding it increasingly difficult to fill all that new space. Real estate firm Cushman and Wakefield says commercial vacancy rates in Manhattan rose 25 percent between the end of last year and the summer.
Rick Dana: Few tenants, lot of spaces. So it’s a very anxious market for these owners.
Rick Dana is a VP at Prudential. He says some tenants are taking advantage of the weak rental market.
Dana: They will stall. They will probably try to see which deals is being presented to them, and then wait a few months and see which one they like better. And should the economy perk up or their specific industry look like it has an upturn, then they’ll be in a better position to move.
All over Manhattan, colorful signs offering space for rent and for lease spell out the message that New York’s commercial property market is on sale.
Jay Neveloff is a real estate lawyer at Kramer Levin. He says this decline is unprecedented, but:
Jay Neveloff: That’s the good part about New York real estate 00 it really does come back and it is a money center, and it’s not as volatile in the long run as a lot of other markets.
Neveloff says New York’s real estate market may be slow for a while. But, he says, the city’s unique position in the global economy means you can bet on a recovery.
In New York, I’m Sally Herships for Marketplace.
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