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August 27, 2007
Cracks are starting to appear in office rents
Crain's NY Business
By Theresa Agovino
The credit crunch that is roiling the stock market, paralyzing merger and acquisition deals, and stalling building sales is also slowly chilling Manhattan's hot commercial rental market. The financial services sector--the key driver of lower vacancy rates and higher rents in recent years--accounts for about one third of the space leased in Manhattan. There's now concern that firms will slash staff and relinquish space.
...
Most vulnerable to a downturn: those buyers who have paid staggering sums for office towers and need continuing substantial rent increases to be able to refinance or meet their debt obligations.
NoLandGrab: Since we first began tracking Bruce Ratner's controversial Atlantic Yards plan, we've kept an eye on the market for Class A office space in NYC, which was depressed when the project was first announced, but then rebounded during the past couple of years — except in Brooklyn, where Ratner has been trying to remarket his MetroTech complex to the trend-setting creative-services industries.
Any shake-up in the market in Manhattan could keep prices depressed in Brooklyn, but, more importantly, a sustained credit crunch would affect Ratner's ability to secure financing and affect his bottom line for the reasons stated above in the Crain's article.
Posted by lumi at August 27, 2007 7:26 PM