The Real Deal asked industry leaders in New York commercial real estate what they are excited and concerned about for 2004. From investment sales remaining hot to bank branches taking over, here s what they had to say:
Jeff Roseman
Executive Vice President
Newmark New Spectrum Retail
What’s hot? Greenwich Village is super hot, now that Crate & Barrel and Pottery Barn have proved that home furnishings can co-exist in this fashion hotbed. The meatpacking district has the hottest nightlife around.
What’s not hot? National chains who analyze and then double analyze and then go to committees and then second committees and drag out deals for months upon months, wasting everyone’s time and money, and then finally pass on a site because some genius in the Midwest thinks that the Soho store will hurt their Upper East Side location.
What are you excited about in the coming year? I am excited about new chains coming into the city and showing us their way of doing things, like Home Depot, Chipotle and Jamba Juice.
What are you worried about in the coming year? I worry about the bottleneck with many of the city agencies, whether its landmarks, zoning or building permits in enabling out of town retailers to continue to come into the city and thrive.
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Robert A. Knakal
Chairman
Massey Knakal
What’s hot? In building sales we anticipate a tremendous flight of capital from Manhattan to the outer boroughs in 2004. In the second half of 2003 we have already seen a dramatic increase in the number of transactions in Brooklyn, Queens and the Bronx, and many of the buyers of these properties have traditionally been Manhattan buyers.
What are you excited about in the coming year? Given the strength of the multi-family sector during the past few years and the relative weakness of the office market, we anticipate multi-family trends continuing to be strong throughout 2004.
What are you worried about in the coming year? Perhaps the greatest impact on the building sales market in 2004 will be the impact of the new lead paint legislation which has been passed. This new legislation is particularly onerous to property owners and may have significant financial implications on multi-family properties.
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Ken Krasnow
Senior Managing Director
Cushman & Wakefield
What’s hot? The investment sales market. Demand for high quality, well-leased properties, with little to no near-term rollover, will stay hot. We don’t anticipate significant changes in interest rates, and this should keep the best buildings fetching high prices throughout 2004.
What are you excited about in the coming year? Leasing has picked up this year compared to 2002, and we anticipate that trend will accelerate in 2004. The economy has shown positive signs of recovery, the stock market is getting back on track and new IPOs are increasing weekly.
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Peter Riguardi
President
Jones Lang Lasalle
What’s hot? We’re finally starting to see a flow of real tenants into the marketplace. World Financial Center in lower Manhattan continues to be the most active segment of the leasing activity in New York.
What are you excited about in the coming year? Most of the financial service firms that are the foundation of the New York City leasing market are planning on adding jobs in the New York area.
What are you worried about in the coming year? Worrying doesn’t get you anywhere. I’m not worried about anything.
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Faith Hope Consolo
Vice Chairman
Garrick-Aug Worldwide Ltd.
What’s hot? Glamour, that’s what. After months of deprivation and being depressed, as the economy bounces back, there is the desire to have a little fun, to enjoy living, to indulge in the luxuries of life. Shopping and shoppers are back. Luxury merchandise is consistently showing the largest increase in sales. We’ve got some money again and it’s okay to spend it.
What’s not hot? Fast food. Fast fashion, however is hot: H & M, Zara, Mexx. To wear fast fashion, it is preferable to look healthy, sleek, and glowing – the antithesis of the fast-food fatty.
What are you worried about in the coming year? Banks. Now, I personally love banks. In the last few years, the luxury (my favorite word) of having a real bank again instead of being an ATM orphan has been great. But an overwhelming amount of banks will crowd out everything else. There must be a better mix: banks, impulse shopping, residential, and service-oriented businesses. The available space can’t be taken over by just one industry.
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Bill Shanahan
Executive Vice President-Partner
(New York Tri-State Region)
CB Richard Ellis
What’s hot? In 2003 there was little that wasn’t hot in Manhattan investment real estate. Residential buildings, especially Downtown, drew a lot of attention from investors, as did retail properties which were bolstered by increases in leasing along key shopping corridors. As evidenced by record-setting sale prices for trophy properties like the GM building, Class A properties were sizzling.
What are you excited about in the coming year? Many investors being priced out of Class A sales or limited by the short supply are now looking into Class B buildings as an alternative investment opportunity. We expect this trend to heat up as we move through the year. Similarly, development sites, both residential and commercial, are piquing interest in the investment community. Corporate users and developers are looking at construction as an appealing option again.
What are you worried about in the coming year? Many pundits believe interest rates will be on the rise after the election in November.
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Kevin Danehy
Senior Vice President
CB Richard Ellis
What’s hot? We expect the biggest news for 2004 to be the beginning of a market recovery. We do not expect a sharp bounce, but rather a reversal of the trends we’ve seen over the last three years. Space availability rates should peak around year-end at 13 percent to 14 percent in Midtown, and 15 percent to 17 percent Downtown.
What are you worried about in the coming year? Anemic job growth will flatten the pace of the recovery so that positive absorption begins in 2004 and coasts into 2005. Long-term, among New York City’s biggest challenges is to broaden the employment base beyond its current concentration on financial services and media-related jobs.