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Fallout: The Financial Crisis

Struggling hedge funds shed space

Amy Scott Feb 19, 2009
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Fallout: The Financial Crisis

Struggling hedge funds shed space

Amy Scott Feb 19, 2009
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TEXT OF STORY

Bill Radke: During the great bull market of the last decade, an ocean of hedge fund money poured through Greenwich, Conn. Real estate in that town was transformed. Marketplace’s Amy Scott took a drive with a Greenwich real estate agent who thrived as the tide of money rose, and who is now watching it fall.


Amy Scott: Steven Greenbush picks me up in a black Audi convertible. He’s got a Bluetooth headset clamped to his ear. Greenbush works for CB Richard Ellis, helping financial firms lease office space. He’s been in real estate for 15 years. But when hedge fund money started flowing into Greenwich, he decided to specialize in meeting their needs.

Steven Greenbush: It was very good for my business personally. For the brokerage business, for the construction business, for the office furniture business. For the architectural business, and the legal business. It helped everybody. These companies brought big money, they spent big money, they lived big. They ate at big restaurants and had big parties and bought expensive cars. It was good for everyone.

Now, everyone in Greenwich is feeling the loss of a lot of that money. Particularly anyone involved in real estate. Greenbush drives me by one building recently vacated by a now-defunct hedge fund.

Greenbush: So the building went from 100 percent occupied to 50 percent occupied. Additional sublease space hits the market.

And that’s driving rents down. Just months ago, Greenbush was doing deals for upwards of $130 a square foot. That rivals Manhattan prices. But as hedge funds have lost money and laid off workers, they’re unloading commercial space, and willing to take less for it.

Greenbush: We can talk about 20 or 30 percent reductions.

That means lower fees for agents like Greenbush. He’s making less money now. But all the fees he collected doing hedge fund deals paid for the house he built a few years ago. And he knows almost anywhere else in the world, he’d be considered quite well off.

Greenbush: Here’s the thing with these hedge funds, you become so jaded, you think if you make six figures for a living you’re poor. You think if you don’t live in a 5,000 square foot house you’re not successful. It’s a different world, Greenwich.

It’s a place Greenbush thinks will always attract business… partly for its proximity to New York. And he’s already seeing some start-ups sniffing around the empty space. He’s seen these cycles before. Ten years ago, Greenbush specialized in office space for dot-coms.

In Greenwich, I’m Amy Scott for Marketplace.

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