Several different CEOs of commercial real estate investment trusts said
they are optimistic about a recovery in the second half of 2010, during
this morning’s second annual Oppenheimer REITS/Real Estate Outlook
Forum. The five CEOs — Jay Flaherty, CEO of HCP; Steve Sterrett, CFO
of Simon Property Group; Bill Sullivan, CEO of ProLogis; Mark Parrell,
CEO of Equity Residential and Charles Ratner, CEO of Forest City
Enterprises — discussed the future of the market. “People are more
comfortable with their business models and while the first half of 2010
will look a lot like 2009, the second half will be better,” Sterrett
said. However, the industrial REIT sector has already bottomed out,
Sullivan said. “In the industrial sector, occupancies are above 90
percent and there is smaller delta between top and bottom. It is
favorable that there is no new supply,” he said. On the other hand,
Ratner is confident that there will be larger demand for new real
estate supply. “Last year there was an abrupt halt and we did not start
a single project. But as the country continues to grow, there will be a
need for new real estate.” TRD
[more]

In order to attract commercial tenants, landlords are cutting rent,
offering incentives and trying to appeal to a wider audience of
businesses. The managers of the Fashion Tower, at 499 Seventh Avenue,
have shed the name of the building and now refer to it by its address
alone, hoping the property won’t be pigeonholed as a single
tenant-type tower. At 650 Madison Avenue, the landlord dropped the
asking rent to $85 per square foot from $100, and broke floors into
smaller office suites. And many companies offering sublease space are
handing over fully furnished offices. Average Manhattan asking rents
are down 11 percent from their peak last year, to $65 a square foot,
but brokers say the amounts that landlords are actually accepting have
plunged by between 25 percent and 30 percent. [more]

Manhattan-based auctioneer Christie’s has signed a lease for a six-story,
235,000-square-foot waterfront warehouse in Red Hook for an
unspecified price, the largest commercial deal in Brooklyn this year. Commercial brokers estimate the rent for the space, at 62 Imlay Street, at around $8 to
$10 per square foot. Christie’s, which has been
performing well since the economic downturn, said the space fits their
needs. “The location was selected for its convenient location and
adequate space for Christie’s storage requirements,” the company said. [Crain's] and [Brownstoner]

Source: Colliers ABR

While commercial leasing activity has picked up in the past few months,
according to Colliers ABR’s Manhattan May office report (see report on jump), the city’s
Class A vacancy rate increased and average rents fell last month. The vacancy rate of Class A space in Manhattan reached 11.9 percent in
May, up from 11.3 in April. Class B and Class C availability also
increased last month, pushing the overall Manhattan vacancy rate to
13.1 percent, its highest level since reaching the same rate in
December 1996. Meanwhile, the average asking rent for Class A space
fell to $65.43 per square foot in May, down 4.9 percent from $68.83 a
foot a month earlier. TRD [more]

Nearly a fifth of the 15 million square feet in Class A buildings in
the southern portion of the Plaza submarket is available for lease,
according to commercial tenant advisory firm Studley. Nearly 3 million square feet, or 19.3 percent of the total Class A
available space in Manhattan, was on the market in the neighborhood between
Fifth and Second avenues and 50th and 54th streets, according to the
firm’s first-quarter leasing report. The northern half of the Plaza
District is defined as Fifth to Second avenues between 54th and 60th
streets. Overall in Manhattan, the firm predicted the availability rate for all types of office space could hit the same level. [more]

While the market for Manhattan office towers is on hold, sales of
multi-family properties and smaller commercial buildings for $2 million
to $50 million are moving along, commercial experts say. Banks
including Capital One, Bank of Smithtown and New York Community Bank
have all reported increases in their multi-family loan portfolios. “For
smaller deals, the sales volume is still relatively healthy,” said
Massey Knakal Chairman Robert Knakal. Eric Anton, executive managing
director of Eastern Consolidated, said multi-family buildings are
considered the most conservative investments, and that the firm has
closed almost a dozen transactions between $5 million and $20 million
so far this year. [more]