Uncertainty in the financial market has begun slowing down a two-year rebound in the commercial real estate industry, the Wall Street Journal reported, with companies that had been looking for large chunks of office space now delaying their plans. As the article notes, fashion designer Tommy Hilfiger’s plans to convert the Metropolitan Life clock tower, a 1909 office building near Manhattan’s Madison Square Park, into a hotel and luxury condo collapsed this month after Hilfiger and his investment partner weren’t able to secure enough financing.

But some other investors say that the recent turbulence is not more than a bump in the road before commercial real estate values resume their upward march toward near-peak levels in areas such as New York and Washington. [more]

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From the July issue:Double-dip fears notwithstanding, the real estate industry is seeing a resurgence of private equity investment. But this time around, firms who got burned during the financial crisis are taking a different tack.

Instead of doing deals on a one-off basis, with a different developer on each deal, a growing number of private equity funds are forming exclusive agreements with experienced developers through new, independent real estate operating companies in New York City and elsewhere. In an environment where many see enormous potential for growth, these investments give private equity players a leg up on the competition, and a chance to share in higher profits (known as the “promote”) if the project succeeds.

Deals structured in this way are not new; in 2003, for example, the now-defunct developer Clarett Group and Prudential Real Estate Investors formed Clarett Capital LLC, a real estate development company.

But more and more private equity firms are now investing at the general-partner level. [more]

A joint venture of APF Properties and Prudential Real Estate Investors has signed an agreement to buy the 367,000-square-foot office tower at 28 West 44th Street for $161 million from SL Green Realty, the companies announced today. The building, which sits two blocks from Grand Central Station between Fifth and Sixth avenues and is 87 percent leased, is slated for $12 million in capital improvements under its new ownership. “We particularly like the building because it has the characteristics of a core asset, but is trading at a price reflective of its current state as a Class B building,” said Berndt Perl, a principal at APF. TRD [more]

From the October issue: Like a vertical ghost town, 11 Times Square, the city’s largest
speculative office tower, remains entirely unleased more than two years
after breaking ground in the summer of 2007. Some experts give the owners — a partnership between developer SJP
Properties and a fund managed by Prudential Real Estate Investors
called PRISA — little chance of holding on to the 1
million-square-foot building without a significant debt restructuring,
if at all. They cite the current weak economy, the 25 percent decline in rents,
and the cost of the building, a pricey $1,100 per square foot. Those affiliated with the building, which is located at 640 Eighth
Avenue between 41st and 42nd streets, have put on a brave face,
however. They say there is a great deal of activity at 11 Times Square,
which is being marketed by commercial brokerage CB Richard Ellis.