One of the "Local Legends" in the opening panel, CB Richard Ellis' Stephen Siegel, said the reason everybody on the stage was a survivor was that they knew how to take advantage of opportunities amid a downturn. And the current downturn, said moderator Anthony Malkin, president of Malkin Holdings, is not the worst in the panelists' memory; nor was the market peak of 2005-2007 the best they had ever seen.
In the view of Jerry Cohen, principal at Tishman Speyer Properties, the lowest of the lows was the early 1970s, when New York City nearly declared bankruptcy and "tenants were evacuating the city." Julien Studley, founder in 1954 of the tenant-rep firm that bears his name, concurred, saying that the early '70s was the first time his company had to think about letting employees go. Conversely, while Siegel, CBRE's chairman of global brokerage, said the past few months would represent the busiest leasing year on an annualized basis that his company has seen, for him the best market was around 2000, when dot-com start-ups were gobbling up space.
Siegel called optimism and the ability to find opportunities key to survival. Cohen said a willingness to work harder and move faster amid a downturn could make the difference for brokers. Stephen L. Green, chairman of S.L. Green Realty Corp., stressed that as an owner, "you have to buy when nobody else is buying and sell when everybody else is buying." Lawrence Benenson, EVP of Benenson Capital Partners, summed up his family's century-old history in the business with three concepts: a contrarian outlook, a conservative approach and attention to real estate fundamentals.
The annual Town Hall Meeting that followed, titled "Outlook for Leasing, Investment and Development in the New York City Market... One Year Later," posited that where the market is today is not where anyone would have predicted a year earlier. David Levinson, chairman and CEO of L&L Holding Co., said that 12 months earlier, the general assumption was that there would be an RTC-like flood of distressed assets on the market at fire-sale prices by now. Instead, Levinson said, "Everybody's trying to figure out how to revive the marketplace. The amount of money out there on the sidelines to invest in real estate is just staggering."
[IMGCAP(2)]Opportunities will come, panelists agreed, but not for pennies on the dollar. "It is an absolute tale of two cities between what we're seeing on the leasing side and the investment side," said Bruce Mosler, co-chairman of Cushman & Wakefield. Mosler said that when the sales market loosens up, "cities like Manhattan will be at 7% cap rates or maybe less." He predicted a major shift in ownership from entrepreneurial to institutional.
Meanwhile, the city's fundamentals are still in better shape than many had feared. Steven Spinola, president of the Real Estate Board of New York, noted that 96,000 jobs have been lost in the current downturn, out of a projected 150,000. "I think we all expected worse," said Spinola, noting that some laid-off Wall Streeters have since established financial services start-ups.
However, Spinola expressed concern that the specter of higher taxes and proposed rent-control guidelines for the commercial sector are drags on a recovery. "Some companies will pay anything to stay in New York City, but most look at the bottom line," he said.
An "Up Close with…" one-on-one discussion with Larry Silverstein, president and CEO of Silverstein Properties Inc., emphasized the developer's drive and commitment to get SPI's three World Trade Center towers built. When the redeveloped WTC is complete, Silverstein predicted, it will "change the dynamic of the area totally, and for the better," doing for Downtown what Rockefeller Center did for Midtown in the 1930s.
At present, SPI is in arbitration proceedings with the Port Authority of New York and New Jersey, which Silverstein said is intended "to clear the path for building the Trade Center. It is, at the moment, years behind schedule." John Salustri, editorial director of ALM's Real Estate Media Group, moderated the half-hour discussion.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
