Search
 

Downtown Office Stability Hinges on Incentive Window

NEW YORK CITY-Industry experts tell GlobeSt.com that site developer Larry Silverstein stands in a strong position to undercut the Downtown market, unless federal subsidies continue to hold the discrepancy between rents he can charge and what others must ask in abeyance.

By Michael Gilliard | Updated on June 13, 2002

NEW YORK CITY-Downtown office rents could hit freefall as Larry Silverstein puts his World Trade Center office space back online, using funds from his insurers to cover construction costs. Industry experts tell GlobeSt.com that the developer stands to undercut the market unless his competitors rents remain buttressed by federal incentives, and that, ironically, the new space could upset the stability of an environment it was intended to unify.

“My concern is that, given the insurance proceeds that they could have a price advantage over two different types of product: either new buildings that are proposed, or, given the degree of the price advantage, perhaps even over existing class A buildings,” Woody Heller, executive managing director, Capital Advisors Group at Insignia/ESG tells GlobeSt.com.

“These buildings could be constructed at a cost structure which would give them an advantage over existing buildings,” says Heller. “The new properties would have a low break-even point, which would suggest that in a down market, or maybe not even in a down market, they could lease for lower rents than traditionally class A buildings demand, which could put downward pressure on the market overall.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.