Last week’s jobs numbers really are more of the same—slow improvement, but not enough to help boost occupancies and increase rents dramatically. Mall vacancies, for example, are still near record highs and office occupancies inch ahead barely—suburban markets remain particularly weak.
I told you the Christmas sales results would be fairly mediocre—it’s amazing the hype that goes on around Black Friday, which usually does not pan out. But the internet gains continue to be compelling. The market share for online shopping will keep expanding. It will be interesting to see what happens when state governments finally and inevitably work out a policy with the Feds to tax internet sales. I still say the convenience factor will keep propelling internet advances, but we’ll see.
I was in Tel Aviv last week—Israelis tout the fact that they trail only Canadians among top foreign investors in U.S. real estate last year. But like everyone else they wisely get more selective. Their interest focuses on top gateway markets and office, retail, and apartment sectors, but not hotels or industrial properties.
Have you noticed how more cities are trying to expand convention centers? Miami, Boston, and New York are recent examples. Of course, the idea is to attract more hotel and visitor related business. The convention scene has been pretty lackluster in the dull economy. The most attractive places have excellent airports with direct flights from most major cities as well some form of entertainment or attractions. Miami’s sun and fun works in the winter and Boston’s facility couldn’t be much more convenient to Logan Airport, although the city’s staid milieu isn’t a big conventioneer selling point.
Now New York has all the attractions and plenty of hotel rooms, but its Javits Center on Manhattan’s West Side is too small to accommodate large trade show extravaganzas, and the local pols would prefer to turn that site over to developers in return for big development rights fees. So Governor Cuomo cooks up a deal with a Malaysian casino operator to build a new convention center in the shadow of JFK Airport at the old Aqueduct Race Track where a new gambling hall has been drawing in locals. The governor talks up all the construction jobs and the shot in the arm for Queens. But it looks more like a ploy to expand the casino business.
Why in the world would anyone want to hold a convention in an outer borough off the already totally congested and dilapidated Belt Parkway without any mass transit service into the bright lights big city. A cab ride would cost a $45 dollar one-way tab and take at least 30 minutes under the best conditions. And you’re telling me that slots and blackjack will be enough of a draw? Well, I’m sure the Chinese impresarios will gin up some Vegas style entertainment too. But if I come to New York, I want the real Manhattan scene not some ersatz gambling mecca nightlife—for that I can go to Las Vegas and get real ersatz.
The bottom line--when cities and states start down the casino path it’s a big, waving red flag that they are in financial distress. More on that next week…
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
