The
Intercontinental Times Square
is set to open
in July.

From the March issue: Just as New York City’s painful and protracted hotel sector slump finally seems to be hitting bottom, the industry has a new problem on its hands: It’s about to be slammed with a dramatic increase in new hotel rooms.

Research by The Real Deal and by hospitality analyst HVS found at least 28 new hotels slated to open this year or next. The largest is the more than 600-room Intercontinental Times Square, which is set to debut in July; the smallest is the boutique 56-room Habita Hotel on the High Line on the West Side.

Meanwhile, another nine are in the works with unknown completion dates. Smith Travel Research estimates the increase of rooms in New York at
5.1 percent, while PKF senior vice president John Fox puts the increase
at a possible 8 percent, with 5,000 to 6,000 new rooms set to be added
to Manhattan’s roughly 72,000 existing rooms available per night. The
jump, Smith estimates, is the largest annual increase in hotel supply
in Manhattan since 1987, the year the firm set up shop. [more]

When ailing banks were lining up for infusions of federal money last year, as part of the government’s $700 billion bailout package, the New York Community Bancorp politely said “no thanks.” The company, whose holdings include savings banks and larger commercial operations, was cleared to receive $596 million in preferred equity stock from the Treasury Department. But its earnings capacity was so solid, according to Joseph Ficalora, its chairman, president and chief executive, the funds weren’t needed. And this may be even more striking considering that a steep 80 percent of its business is real estate loans; among them, 71 percent are apartment building mortgages with another 21 percent to similar residences with stores in their ground floors. And all told, about a quarter of its loans underwrite Manhattan properties. But Ficalora,
who began working for the company in 1965, as a teller at a bank branch
in Corona, Queens, just a few blocks from his house, doesn’t invest in
splashy, high-risk mega-projects. On the contrary. Most of his buildings are comparatively small, old and rent regulated.
Though they may not generate huge multiples, they are dependable bets
over time, which is particularly beneficial when the market tanks, like
recently. And with an average size of $4 million, 60 percent loan-to-value ratio
and four-year payback rate, those loans offer minimal exposure,
Ficalora explained. As a result, the company, which is based in
Westbury, NY, posted a third-quarter profit, in its fifth consecutive
quarter of growth. It may also explain why New York Community Bancorp, with assets of $33
billion, is the country’s 24th largest bank-holding company and the
city’s largest thrift. Click here to see The Real Deal’s Q & A with Ficalora. [more]

Richard Bernstein, vice chairman at Colliers ABR

The vacancy rate for Midtown office buildings hit its highest level in
more than 15 years last month, fueled in part by several large blocks
of space that were placed on the market, a new report released
yesterday by commercial services firm Colliers ABR shows. But overall Manhattan data was mixed, showing some strength in the
Midtown South market where the vacancy rate declined modestly and
prices rose for Class A office space, the report indicates. The Midtown vacancy figure reached 14 percent, its highest level since
March 1994 when the rate reached 14.1 percent, the report covering
October says. Asking rents also fared poorly in the district, falling
1.2 percent to $58.16 per square foot. In a positive sign, the vacancy rate for all classes of buildings in
Midtown South fell .1 points to 14.1 percent and the average price for
Class A office space rose by $1.36 per square foot to $50.88 per foot.
But for all classes of buildings in the district, the average asking
rent fell by $0.48 per foot to $39.88 per square foot. more

Source: Colliers ABR

[more]

Just one month after declines in rents in Midtown seemed to be leveling
off, the average asking rents in October fell sharply as vacancies rose
by their largest amount in nearly a year, a new report by commercial
services firm CB Richard Ellis shows (see the full report after the jump). The average asking rent in
Midtown fell by 99 cents per square foot in October to $56.89 per
square foot, while the vacancy rate rose by .7 points to 10.3 percent,
the CBRE report, covering October, shows. In September,
brokers were buoyed by statistics that showed the average asking rent
in Midtown declined by just 6 cents per square foot, to $57.88 per
foot. But that price support did not continue last month. The price decline in Midtown was the largest since August when it fell $1.46 per square foot, the figures show. The
increase in vacancy is the largest since December 2008, when the rate
rose 1 point to 7.6 percent from 6.6 percent a month earlier, CBRE data
shows. The weakness was not as pronounced in Manhattan overall.
The average asking rent fell by 88 cents per square foot from September
to October, and the vacancy rate rose by .5 points to 9.8 percent. TRD [more]

The Manhattan office market isn’t looking good, as Moody’s/REAL Commercial Property Price September Indices for the borough dropped 22.9 percent between the second quarters of 2008 and 2009. The indices track the price changes of commercial real estate in 10 top U.S. markets. This figure is in line with the 21.2 percent national drop on the same scale, as analysts predict that as much as $700 billion in commercial debt could come due by 2013. Dan Fasulo, managing director at Real Capital, said that while commercial lenders look to foreclosure as an option on distressed properties, it’s not a fait accompli. “I think, at some point, if the building is not performing, if it lost a major tenant or rents went down and they can’t pay debt service, [a lender] might foreclose, but these lenders are not going to give away assets for cents on the dollar,” Fasulo said. “They are going to tuck it away in their portfolio.”

In response to the glut of vacant apartment buildings on the market since the real estate bust, including the Isabella in Clinton Hill, Assembly member Hakeem Jeffries has proposed legislation that would give struggling developers new bank loans at reduced prices in exchange for renting or selling units at lower prices. The developers “can either hope that things turn around and allow these apartments to sit vacant or they can work with the government to actually transform these units into productive apartments,” Jeffries told NBC’s Ida Siegel. He counted more than 60 brand new buildings that are sitting empty or partially full in his Brooklyn district, which includes parts of Clinton Hill, Flatbush, Fort Greene, Prospect Heights, Park Slope and Bedford-Stuyvesant. Jeffries’ proposal could have a negative effect on people who have already purchased units in such buildings. “Unfortunately, the people that bought into [them] are the ones that are going to see damage to their equity,” appraiser Jonathan Miller, of Miller Samuel, said.