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NEW YORK CITY-A panel of heavy-hitters in the New York real estate industry met yesterday afternoon at New York University's Capital Markets in Real Estate conference to discuss New York City's future. The panel included Larry Silverstein, president and CEO of Silverstein Properties; Marc Holliday, president and CEO of SL Green Realty Corp.; William Mack, founder and managing partner of Apollo Real Estate; Stephen Ross, chairman and CEO of the Related Cos.; and Michael Fascitelli, president of Vornado Realty Trust. It was moderated by Dean D. Kenneth Patton.
"New York is in a period of time you'd just like to freeze," Mack said, to which all the panelists agreed. "It ain't never been better," Ross said despite the concerns he has about a possible recession and potential security problems. But even with concerns of the future, the panelists foresee growth in all the property types especially in the year to come.
Manhattan's increasingly tightening office market is on the forefront of real estate minds. "The unavailability of sites is a real concern," Silverstein said. Qualifying that many panelists agreed that there was a lack of desirable sites in midtown but there were plenty of sites elsewhere in the city. Mack said, with the rezoning of the Westside in the Hudson Yards area and the planned redevelopment of Penn Station, new office hot-spots are likely to emerge. "Penn Station [area] could become another Rockefeller Center," Mack said. He's determined the redevelopment will be approved in 2007 and construction on Madison Square Garden will begin by 2008--changing the face of the area.
But Fascitelli said the price of land, driven primarily by condo development in the city, has priced developers out of available sites. "We need triple figure rents to make that pencil," he said. But that might not be far off. Holliday said that while his company has been focused more on acquisitions than development, he is beginning to see economics that work for development. "Growth will occur," he said. "It may not happen all at once, but it is going to happen."
Beyond being short on the office supply, Manhattan is also an under-retailed market. Ross said that if you compare New York City to other places the city is under-served, but that it is not likely to change in the next few years. "National retailers all realize they need to be in New York, and in several locations [here]," Mack said. But finding the space and rental rates comparable to other markets is next to impossible.
Fascitelli, whose company just purchased the Manhattan Mall earlier this week, said in most US cities the cost of office and the cost of retail rents are about the same, but here the retail portion of a building is worth far more.Holliday said his company has recently focused on buying retail condos around the city, and has found a great value in that investment, saying tenants are willing to pay very high prices to just have a storefront in the city. "But there are only so many retail condos in the area," he said.
Big Boxes and additional retailers are on the horizon, although no one offered a projected arrival time for the stores.
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