What if the "office formation" dynamic shifts for good.
I work for a general contractor. The space is way to nice and to big for the grunts we employ (myself included)
It looks like we should be a marketing company...
Reversions to the norm are all around us... More to come!
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2009 Phrase of the Year: "Generational Opportunity"
That's bullish for REIT's, right?
These numbers are not believable. I am in the process of renewing my residential lease. My rent on the new lease will go down 14%. If we had been willing to move (not again) we could have seen a 20 - 25 percent drop in our monthly rent. That would be moving into a newly renovated luxury building. I spoke to a bartender last night that might move to 95 Wall Street. They are offering 4 months free on a 15 month lease. I spoke to a friend earlier today. He is looking at Hanover Square. They are offering 3 months free on a 15 month lease.
There are retail and office vacancies everywhere. There is no way that prices on new leases are only down 6 percent. The reality for landlords in Manhattan is much, much worse. The cannibalism will begin shortly. He who eats first, eats best. Six percent? My rear.
I wonder if the REITs made conservative projections, factoring in the possibility that rents would not keep rising over time, and in fact may actually contract? Surely these metrics fall inside the expected bounds of their models?
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At least the Freedom tower has been delayed ... all they need is more space right now. - CR
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Must not be 'shovel ready'... I thought EVERYTHING shovel ready was gonna be 'shoveled' ASAP.
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I can't fathom why they would rebuild the World Trade site. They are building for a past that ain't coming back. I wonder how much BofA regrets building that monstrosity at 1 Bryant Park. That is a disgusting building. When I first moved here I would walk by that site every day. At that time it was nothing but a big hole in the ground. It looked better when it was just a big hole in the ground. That building is a monument to the sterility and soullessness of the financial world. Good job, boys.
Months "free" for extended leases tells you everything you need to know. They want your 2009 dollars in 2011 because they know by then your 2009 dollars will go much further.
--Like it or not, there will be an Exurban Nation--
NYCityBoy,
What are the monthly rents on those places offering free months?
Repost from last thread... more relevant here.
U.S. asking rents off 0.6% in the first quarter. Effective rent is down 1.1% after accounting for promotions.
http://uk.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idU...
No surprise that the CPI components contradict this data. Rent of Primary Residence (NSA) went from an index level of 247.3 to 248.3 from December to February. OER (also NSA) went from an index level of 254.9 to 255.8 from December to February.
Skyscrapers are great inventions. No more relying upon couriers and mail to transmit vital information when a phalanx of pneumatic tubes and secretaries can do the job.
--Like it or not, there will be an Exurban Nation--
I had a vision of a phalanx of little frogs wrestling with Elmo.
Question: Given the recent history, what does "good enough for government work" mean now?
" What if the "office formation" dynamic shifts for good.
I work for a general contractor. The space is way to nice and to big for the grunts we employ (myself included)
It looks like we should be a marketing company... "
Tell me. My university department could afford to move off campus to a slick office building built for dot-coms; rent was tres affordable, I'm told.
Our old campus office was a converted horse-barn, and that's exactly as bad as it sounds. And we _are_ a marketing organization; just a very low-rent and underfunded one.
"What are the monthly rents on those places offering free months?"
Of course they don't want to lower the base rent for voodoo accounting reasons. In the cases I listed the rent would average out to $2,000 - $2,000 per month. We were in one such place in 2008 but decided to move out. Our rent on a similar place would have been $2,700 - $2,800 in 2008. That means a 20 - 30 percent drop in one year.
There are deals everywhere. And more inventory is set to flood the market. Projects are completing everywhere. Denial still reigns in Brooklyn. They are about to get run over like nobody could have ever imagined. Oh, the laughter that I will know when that happens. How sweet it is.
For those that don't know, the final straw that made me realize the world had gone mad occurred in the fall of 2005. I called on some lofts in Harlem. The woman on the phone told me they were proud of their project because they had kept the units affordable. Her idea of affordable was the low 800s. And I mean $800,000. I hung up the phone and immediately set out to find what had gone wrong with in the financial world. Prior to that time I didn't pay much attention. It took about two weeks to understand just what a mess the whole economy was. And yet the "economists" couldn't see any of it. Lofts in Harlem were going for $800,000 and being deemed "affordable" and yet "nobody could have seen this coming." Okay!
$2,000 - $2,200 per month is what it should have read.
"Question: Given the recent history, what does "good enough for government work" mean now? "
It doesn't apply. None of what was done the last eight years qualifies "government work." It was all Wall Street sock puppets wearing George Washington wigs. The last thing they wanted to do was real "government work." That was for the market.
NYC is different, it's more expensive.
Imagine just how cost prohibitive NYC would be in a world without all the financial tomfoolery.
Imagine how over-built NYC would be in a CONsumer/financial great recession. Madison Ave would have to pitch Walmart execs in Benton, AK - lol.
"good enough for government work"
"if your plan impoverishes at least 300 million people, it's good enough for government work"
"If you spend at least 1000 times what you make in income, it's good enough for government work"
"if absolutely everyone involved has 100% plausible deniability, it's good enough for government work"
"if you fuck things up so bad, on a massive scale, such that the guilty parties constitute a larger percent of the population than the innocent, it might be good enough for government work"
just what came to my mind
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Related story... I talked to a biz buddy. He is being 'solicited' to buy a company [industrial version of a 'short sale']... bank/previous owner trying to sweeten the deal and tells him they will throw in the building for only $500K... a 'real steal'. My buddy asks me what I think... I tell him ask for the building *FOR FREE* and offer 50% of what the bank/previous owner want for the total 'short sale'. Oh and no 'shared equity' - he takes the albatross off from around their necks or they can keep it [previous owner wanted an 'option' to buy back in later if the deal works out - had problems written all over it].
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My buddy about drops his jaw in his salad at lunch when he hears the 'bid' I would make or 'walk away'.
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I continue: I tell him to go out to I 94 [this company is located between Chicago & Milwaukee FYI] and start counting all the vacant industrial buildings out there that are BETTER than the one he is looking at [kinda old - inner cityish & tough to support logistically]... the rents on those are almost *FREE* so why buy a cow when the milk is free? Especially an old dried up cow.
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This conversation is being repeated ALL across America. It is the repricing of excess. Enjoy.
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" NYCityBoy, that is 6% in one quarter - a 25% annual rate. This is just starting ...
best to all."
CR - I understand. But I still disagree. I think that the move down is even faster than 6% in one quarter. This city's economy is dying so quickly that I would guess that the number is much higher. I bet you could find a lot of commercial that is down 15 - 20 percent since January 1. It is that bad.
Good thing nobody bought office buildings at super low cap rates based on rents climbing to new records, right?
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"no one is pricing in low, mid teens unemployment in any of their assumptions." - Meredith Whitney
Someone wake me up when Trump goes bust...
Crispy & Cole...saving the world one comment at a time!
I continue: I tell him to go out to I 94 [this company is located between Chicago & Milwaukee FYI] - dryfly
"Milwaukee Iron" == boat anchor. Best thing they could do is convert to NatGas stationary heat pumps. IMO the modern designs are actually well suited to the task.
--Like it or not, there will be an Exurban Nation--
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Skyscrapers are great inventions. No more relying upon couriers and mail to transmit vital information when a phalanx of pneumatic tubes and secretaries can do the job.
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Dawg, was that a subtle jab at cenurbanists?
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Wow, nice pump and dump at the end.
Must be tough trying to make a living as a daytrader with these moves.
Looks like the Germans were just a twitch late unloading the Chrysler building lease as well....
Nostrovia,
At this point, Trump owns very little in the way of actual real estate. He has some golf courses, but those are rarely money makers. Trump has been licensing his name. That gig will die with along with so much other vanity.
CR,
Do you have any info on inventories, and whether they're growing, stagnant, or shrinking? That'd help show (in part) where unemployment is going.
Thanx,
xxxxx
Dawg, was that a subtle jab at cenurbanists?
I don't do subtle. Well, actually I do but people keep missing it.
Skyscrapers are no longer functional constructs. They had their time but ever since the Sears Tower it has been inertia for functionality and ego for implementation.
--Like it or not, there will be an Exurban Nation--
well, I didn't have the balls to let it all hang out for the AA earnings. I bought some April calls on C and HIG, plus some puts on SKF to hedge. Rest of this week is going to be crazy. Can't afford to go bust this early in the cycle.
Angry Saver,
If I'm not mistaken, his Chicago project will wipe him out personally
"Stupidity beyond a certain point becomes a public menace".
--Ezra Pound
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPPY7XFSHnzk&refer=home
U.S. Consumer Credit Decreased by $7.48 Billion (Update1)
Share | Email | Print | A A A
By Courtney Schlisserman
April 7 (Bloomberg) -- The pace of borrowing by U.S. consumers fell in February as fewer Americans sought credit to make purchases amid what may become the worst recession in seven decades.
Consumer credit fell by $7.48 billion, or 3.5 percent at an annual rate, to $2.56 trillion, the Federal Reserve said today in Washington. Credit increased by $8.14 billion in January, more than previously estimated. The Fed's report doesn't cover borrowing secured by real estate.
Does anyone really believe NYC will come back in the next 3-5 years? The city is in for a real estate death spiral
Crispy & Cole...saving the world one comment at a time!
We just had our first round of layoffs right as we moved to new offices with over 3x the square footage. The timing wasn't so well planned out, but the commitment to move was made a long ago.
All the empty space is kind of ghostly.
AA 1Q Loss $497M
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Base hits win ballgames.
If you don't take your profits, someone else will.
new post ladies
Rob Dawg,
Prices will fall of course, but the dense areas will still have lower costs than rural areas (eg last thread, dryfly asking about having some industrial power hooked up). Mad Max will not happen simply because it requires more work than cooperation.
crispyandcole (member) wrote on Tue, 04/07/2009 - 4:02pm.
Does anyone really believe NYC will come back in the next 3-5 years? The city is in for a real estate death spiral.
I'll pose as my response the little "witticism" I use to describe the future of the area I live in:
"In 12 months, which of the following will be bankrupt?
A: The city
B: The county
C: The state
D: The nation
E: All of the above."
AA loss .61/shr
EvilHenryPaulson wrote on Tue, 04/07/2009 - 1:06pm.
Rob Dawg,
Prices will fall of course, but the dense areas will still have lower costs than rural areas
Huh? Which rural v urban comparisons are you looking at?
--Like it or not, there will be an Exurban Nation--
"Generational opportunity to rent office space in Manhattan."
Recessive gene, skips a generation...
And yet, 3000 miles away on LA's west side. We get this (comment from a local blog):
I am a realtor in socal and I don't believe prices are going to move downward by any significant amounts.
A couple of reasons–
1. Many first time home buyers have saved up their funds and have been waiting for the right time to wade into the market. Many of them were not able to get in the last go-round (lucky for them as it turns out), but they are determined to not miss the boat this time.
2.There are a tremendous number of investors with tons of money in the market. California is on sale, and investors are licking their chops and behaving like kids in a candy store. Cash is king, and the banks that own these properties love them. Many investors are quietly negotiating with various banks and buying up prime properties that will never hit the market.
Well priced houses in decent locations are attracting a minimum of five offers. I have clients that have great credit and have been offering $20 to $30k over asking price, and are still getting out bid! In my humble opinion, I think prices should fall a bit more, because they are still out of line with most incomes.
That being said, low interest rates, pent-up demand from renters, and the fact that regardless of an unemployment rate of 10.3 %, there are still 89.7% of Californians employed somewhere, mid-range houses will continue to move at a pretty good pace. If you want to prove this, just ask anyone you know who is actively seeking to buy a home in a desirable area how their search is going and how many offers they have had rejected. Low ball offers need not apply.
Last, to those market observers that say they see so many for sale signs, those are most likely short sales that have not yet been approved. In most areas, if you took the short sales off of the market, the supply would shrink dramatically and it would truly be a seller's market, which in some areas, it already is.
*sigh*
energyecon - Elmo's crash-fu was strong today...
Anybody have comments about AA results vs. what was expected? Nothingburger?
"All the empty space is kind of ghostly."
Paintball?
Next time OBL attacks New York, it won't be called a terrorist attack. It will be called "Necessary Controlled Demolition of Unused Office Space And Related Workers".
"regardless of an unemployment rate of 10.3 %, there are still 89.7% of Californians employed somewhere, mid-range houses will continue to move at a pretty good pace."
I see this binary math a lot, for an analog world.
Iffen I were de guvmint I'd forbid paintball as a threat to de republick.
--Like it or not, there will be an Exurban Nation--
Oof Flurry Kitten is Mean.
"Next time OBL attacks New York, it won't be called a terrorist attack. It will be called "Necessary Controlled Demolition of Unused Office Space And Related Workers"."
Blackhalo (member) wrote on Tue, 04/07/2009 - 4:12pm.
Oof Flurry Kitten is Mean.
I think he's a rebranded Werner.
Hey NYC Boy, Couldn't agree more with your "point of awakening" regarding the economy. I too knew we were in the bubble of all real estate bubbles when places like Newark, Oakland, East Palo Alto were becoming posh places to live and were out of my price range. There are and will always be arm pits.
"regardless of an unemployment rate of 10.3 %, there are still 89.7% of Californians employed somewhere, mid-range houses will continue to move at a pretty good pace."
I remember when Ben Stein, Neil Cavuto and the rest of the drones on Fox Noose Channel were blathering on about "98 percent of homeowners are current on their mortgages". Propaganda is silly. Today it came out that 39% of subprimers are late on their mortgage. Often times what seems like a silly statement one day seems like a ridiculously silly statement a year or two later. This comment about mid-range houses is one that Ben Stein would be proud of.
We were driving through a nasty part of Newark (sorry for the redundancy) in October 2007. A dumpy old building had a sign hanging off of it that read, "Luxury Condos". That should have been seen as The Seventh Seal of The Housing Bubble.
No but at cute flurry kitten level every punch is below the belt anyway 
NYCityBoy wrote on Tue, 04/07/2009 - 1:19pm. "...This comment about mid-range houses is one that Ben Stein would be proud of."
Agreed, sadly, it is still the prevailing wisdom around here (L.A. from Western Ave to the sand) among realtors, sellers, and a fair number of buyers. It's really quite astounding...
OT--JNPR and FFIV preannounced top line misses (but by cutting jobs/costs made bottom line--stocks are up).
Asking a realtor if now is a good time to buy is like asking a car salesman if now is a good time to buy. It's always a great time to buy! And if people are still bidding up prices by 30%, even on a repo, then clearly we have not learned the lesson. But then again, isn't that what Bernanke, Geitner, and Obama want......their healthy bubble economy back?
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Agreed, sadly, it is still the prevailing wisdom around here (L.A. from Western Ave to the sand) among realtors, sellers, and a fair number of buyers. It's really quite astounding...
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The only ones that matter are the buyers - as long as they continue to drink the high priced koolaid the others [realtors & sellers] will be 'right'...
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"The only ones that matter are the buyers - as long as they continue to drink the high priced koolaid the others [realtors & sellers] will be 'right'..."
Yep. And LA has seen a lot of people make a lot of money in RE from around 2000 to 2007-ish. There is still an ingrained belief that *that* market is gonna come back. Until people (buyers) realize that it isn't, the game is still on. Though at a much reduced level.
"The only ones that matter are the buyers - as long as they continue to drink the high priced koolaid the others [realtors & sellers] will be 'right'..."
Up here in Santa Cruz, for clean nothing-special homes, prices are off 25 percent two or three years ago. And if that puts it under $600K and nothing's wrong with it, it sells. Apparently plenty of buys think that this is the bottom, or close enough.
I don't.
I have a broker friend here in sonoma county who started telling people not to buy in november,he has several buyers with $ lined up as I do but could not see what I did as soon as I did.I suspect that 20 years of selling in a "fortress community" was a large part of the reason he believed "It can't happen here".When markets are sane I like real estate as an investment because the individual can have more control over success and failure than in most markets.This is assuming a certain level of skill and due diligence and the willingness to walk away from a bad deal....
Tom Stone
"regardless of an unemployment rate of 10.3%, there are still 89.7% of Californians employed somewhere"
This moron doesn't even know the difference between U-3 and U-6. I know a real estate agent. Hasn't sold anything in almost a year. Now complaining about not being able to receive UE benefits. Smug on the way up and whiny little bitc_es on the way down.
The guy looks like he has aged five years in a span of nine months.
Generational opportunity to rent office space in Manhattan.
- Nemo