New York Post

A False economy?

Office real estate health could be overhyped



commercial real estate people feeling edgier about the office leasing market than they say?

A few weeks ago, we wrote that several high-profile dealmakers were uneasy about future Manhattan space absorption despite today’s current strong market.

They asked not to be named for reasons that will be clear in a moment. So we kept their comments anonymous.

One big-league broker cited a “lack of depth” to the market beyond a handful of major negotiatio­ns going on.

A different broker pointed out that most large-scale transactio­ns that — it is hoped — will be completed in the next 12 months will actually add to availabili­ty, because companies will leave behind more space than they’re moving into.

Our June 27 column appeared just days after a “Real Estate at a Crossroads” forum sponsored by Bloomberg and EisnerAmpe­r, where SL Green Chief Executive Marc Holliday and others expressed only confidence in the New York City market.

The modest qualms shared privately with us by certain major players apparently got under some skins, even though the column was far from doom and gloom.

Data we cited reflected a still-healthy leasing scene despite a first-quarter availabili­ty uptick to 11.7 percent from 10.6 percent in the same quarter of 2016, according to CBRE.

We also noted many ongoing negotiatio­ns for huge blocks of space. A few hadn’t even been previously reported, including a possible 600,000-square-foot blockbuste­r for Pfizer at Brookfield’s Manhattan West and 200,000 feet for Shiseido Cosmetics at L&L’s 390 Madison Ave.

However, our moles said that some landlords were worried about a lower but crucial market rung — deals of 100,000 square feet and under.

That prompted this retort in a July 5 mid-year market outlook report from Colliers Internatio­nal:

“Despite recent consternat­ion among some real es

tate commentato­rs [italics ours] that the market is weakening,” Colliers said, “especially for lower-profile deals less than 100,000 square feet,” leases from 25,000 to 99,999 square feet totaled 5.29 million square feet in the first half, “on par with 5.31 million in the first half of 2016 and ahead of 4.85 million feet in the same period two years ago.”

Colliers also noted strength in the investment­sale market, where the average office building price was up 7.5 percent over the same time last year.

Another report from Newmark Knight Frank noted strong activity in the under 100,000-square-foot field, which accounted for 60 percent of all the leases signed in the first half of 2017.

Both reports were politely called to our attentionn by no less than developer Bill Ru

din, CEO of Rudin Management Co. and the incoming chairman of the Real Estate Board of New York. He cited strong recent leasing energy at his own properties as well as at those of others.

But to be clear, folks: The source who warned of “not that many deals as landlords would like” below 100,000 square feet was talking not about the past, but about the future — a story yet to be told.

We have no idea, none whatsoever, why Westfield thought it was a great idea to plunk down a tacky “UpClose: Michelange­lo’s Sistine Chapel” exhibition on the floor of the World Trade Center Oculus.

Described as “a way to engage with the master works of art like never before,” it offers reproducti­ons of 34 of the great Italian painter’s Sistine frescoes, all “artfully displayed in near-original size.”

Westfield is presenting the Sistine ceiling images as part of a road show, with stops in other cities including Chicago, Los Angeles and Seattle. Maybe it will impress the folks there. In New York, its main impact is to clog the Oculus floor and block views of the only ceiling that most visitors care about — that of the vast Oculus itself.

Come to think of it, the show also distracts attention from numerous still-vacant storefront­s, especially in the West Concourse, and brings Westfield a minimum $15 a head and up to $25 for “VIP” admission including audio guides. It’s exactly the kind of commercial­ism many New Yorkers feared. Whether you love or hate

Santiago Calatrava’s work, $4.4 billion of public money spent to build the “World Trade Center Transporta­tion Hub” ought to buy us a public space totally free to the public.

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