As I write this month’s note, the market appears to be on the brink of catastrophe after the defeat of the government’s bailout plan. Proponents of the rescue plan warn of dire consequences for Wall Street if the government fails to act.
But what about the impact on our industry, which is so closely tied to today’s economic crisis?
To make sense of what the deteriorating conditions mean for New York City real estate, this month, we bring you an in-depth look at what’s happening on Wall Street and in the political arena from a real estate perspective, with an eye on key sectors of the commercial and residential markets. On the residential side, we look at the climate for high-end sales and for affordable rentals. On the commercial side, we examine office leasing, building sales, hotels and retail as well as what’s going on in the mortgage industry. Through detailed reports and analysis, we offer information you won’t get anywhere else.
This month, we also profile Broadway Partners, led by CEO Scott Lawlor, which may be going down the same path as Harry Macklowe, with similarly gutsy moves that now read more like a cautionary tale. After coming out of nowhere to become one of the biggest building buyers during the boom, today, Broadway Partners owes more money on some of its trophy purchases than the buildings are worth.
Other stories include a look at which developers are buying into their own projects, why some brokers are pulling properties from the market and the difference between what Macklowe’s buildings sold for and what he paid for them. We’re talking about a 15 percent discount off what he paid, which perhaps doesn’t seem too terrible for what were essentially distressed assets.
Finally, we bring you excerpts from The Real Deal’s annual forum, a terrific success where nearly 3,000 people jammed into Lincoln Center to network and to hear our high-profile panel, which included Larry Silverstein, Charles Kushner, Barbara Corcoran and other notables offering their insights on New York real estate. I would like to thank everyone who participated in making this year’s forum so wonderful and extend a warm thanks to all of those who attended. As I promised before the event, I am sure you are now smarter than anyone who was not there.
Speaking of being smart: I know some people are panicking as though the world is ending, but this is really just part of the cycle. What goes up usually comes down. While there aren’t many developers sketching out projects on the drawing board right now and thinking about a 2010 or 2011 delivery date, this may be a strategy for a select few who recognize there will be fewer units on the market in the years to come. They will presumably do well because of the lack of competition. The Dursts, for example, like to start their projects during recessions because by the time they are done, the market is on an upswing again, which was the case with 4 Times Square (the Condé Nast Building), finished in 1999.
Now is not the time for posturing. Now is the time to get things done — in Congress, on Wall Street and on Main Street. In his blog, appraiser Jonathan Miller cited Fed chief Ben Bernanke’s recent comment: “There are no atheists in foxholes and no ideologues in financial crises.”
Let’s hope Bernanke is right.
Enjoy the issue.
Amir Korangy