NEW YORK CITY—In part two of GlobeSt.com's coverage of a recent discussion among leading industry executives, leading brokers, developers, buyers and sellers sounded off on what's pushing the city's commercial real estate market forward and what the future might hold. Provocative questions were raised by moderator Robert Blumenthal, managing director, Deutsche Bank Securities.
Blumenthal: What are the drivers of the market?
Mary Ann Tighe, CEO, New York tri-state region, CBRE: There is a structural change happening in the city. Financial services firms comprised 35% of tenants in 2005; today that number is probably 25%. Plus, the nature of those firms keeps morphing. Take 280 Park Ave., for example.
Instead of one big company moving in, boutique firms that are spin offs firms from financial services are coming and they're all double the size of where they were before. The nature of space usage is very different now. Group M, an advertising firm, is moving into 515,000 square feet of trading floors at the World Trade Center. New York is becoming a very different city.
Stephen Ross, chairman and founder, Related Cos.: The big emphasis in the future is going to be technology tenants and they want the center core and large floor plates. As long as we cater to that, we will continue to attract it and grow. Also, the start up companies we're seeing now are going to be midsized firms in the future—we have to cater to them.
Blumenthal: In terms of amenities, if you were to dream up something, what would you add to New York City to attract people?
William Rudin, vice chairman and CEO, Rudin Management Co.: Open space, such as the High Line, Central Park, and parks in general. The cultural institutions also draw people in. We, the industry, should serve on the boards of those organizations.
Tighe: We need streets devoted to traffic, cars and trucks, not just areas for pedestrians. Vehicles need to be able to re-enter Manhattan.
Ross: We need to create sustainable neighborhoods where people live, work and play. People don't want to spend lots of time commuting and the hours that millenials work today are different.
Blumenthal: What keeps you up at night?
Ross: The cost of doing business. We have to learn to be more efficient with our assets. Land costs are escalating so greatly; if we don't do something about it, we're going to kill the golden goose.
Rudin: Overtaxing ourselves. Also TRIA renewal and making sure the positive momentum keeps going forward.
Mack: It's very important to keep the world geopolitical situation and the threat of terror under control and also to have a strong police department.
Kuhn: There are four things that keep me up: What's good for people and what's good for the economy? We don't have an energy/climate policy and that worries me. Also, are mergers and acquisitions going to create layoffs and a deteriorating unemployment rate? Lastly, I worry about [blocks being put in the way of the New York Police Department].
We're going to put the city in a position where cops will be afraid to search. The one thing that stands in the way of good market conditions is crime and I think we're heading in the wrong direction.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
