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From the October issue: Three years ago, with the country in the midst of a financial crisis, major global banks looked to cut costs by subletting their unneeded office space to other companies. Just weeks after Lehman Brothers Holdings filed for bankruptcy, financial institutions like MetLife, Citigroup and Bank of America dumped more than 1 million square feet of this so-called sublease space on the market. As the downturn dragged into 2009, the total amount of sublease space peaked, with Manhattan financial services firms listing at least 4.4 million square feet by the middle of the year. Today, news of Wall Street’s financial losses has pushed banks to take out the knife once again, looking for ways to cut back on expenses. And some real estate insiders expect those boardroom decisions to lead to another increase in sublease space in the Manhattan market. [more]

Chelsea may not succumb to the all-too-familiar pattern of artists being ousted from developing neighborhoods, because a significant number of the neighborhood’s arts businesses were smart enough to buy their gallery and studio spaces, rather than lease them, the New York Times reported.
“The difference between Soho and Chelsea is that so many artists, or even art companies or art investors, bought condos in Chelsea, so they actually made investments as opposed to leasing,” said Barbara Byrne Denham, chief economist at Eastern Consolidated. “I think that will preserve their spaces, and the flavor of Chelsea as kind of an art mecca,” she said. [more]

The city’s real estate industry added 700 jobs in January, or 0.6 percent of the sector’s workforce, according to an Eastern Consolidated employment report released today. The construction industry lost 2,200 jobs, while employment in the hotel and architecture-engineering sectors was relatively flat, each shedding 100 workers during the month. Anything under 1,000 is considered minimal, said Barbara Byrne Denham, chief economist at Eastern Consolidated. TRD

State Sen. Daniel Squadron has criticized the FDIC’s decision to leave its home at 20 Exchange Place for the Empire State Building.

From the January issue: Resilient. That’s the word for Lower Manhattan’s commercial real estate
market for the past 12 months. In the aftermath of the greatest
financial meltdown in recent history, Lower Manhattan boasts the lowest
vacancy rate of any market in the city at 7.3 percent, according to CB
Richard Ellis data for November. Midtown and Midtown South had rates of
10.2 percent and 9.8 percent, respectively, in the same month. Sounds like good news, right?
Not so fast. There’s a looming cloud.
“In many instances it is always calm before the storm,” said Hal Stein,
who heads up Newmark Knight Frank’s Downtown office. “Here is the
issue: [In 2010] there is going to be substantial space hitting the
market from some of the financial firms and that is going to be a
telltale sign.”

Job losses in the construction sector have been worse than in the brokerage industry, but conditions may improve more quickly in the former, according to a new report. An estimated 5,300 real estate broker-related positions have been lost in New York City since August 2008, according to a monthly report from Eastern Consolidated, while approximately 12,400 construction jobs have been lost during the same time period. “A lot of construction jobs come to a halt more abruptly [when the economy suffers], whereas real estate didn’t give up so quickly,” said Barbara Byrne Denham, chief economist with Eastern Consolidated. “It’s really up to the broker to quit.” Brokers hang on to jobs longer than those in construction in times of economic stress, according to Denham, which would account for the different job loss trajectories between the sectors. “It’s not a surprise considering the state of the market,” Denham said. “I don’t see [the jobs] picking up at least for the next six months.” [more]