BOMA kicks-off new year on optimistic note.

"As I look ahead to the new year, I am optimistic that the market can build on its momentum of the past year-- particularly if the economic upturn materializes, as expected, and the new City government does its part," stated Stephen B. Siegel, President of Edward S. Gordon Company, Inc., as featured speaker at the January 12 luncheon sponsored by The Building Owners' and Managers' Association of Greater New York, Inc. (BOMA/NY).

Addressing more than 400 real estate industry professionals as the kick-off speaker for the BOMA/NY 1994 Luncheon Series, Siegel said that "1993 was the best year for Manhattan real estate in at last four years...All three markets - Midtown, Downtown and Midtown South - showed improved activity, and in most segments, total availabilities fell for the first time in several years."

Looking ahead to 1994, Siegel said he was "encouraged that the recovery of Manhattan real estate will continue." For the first time in years, the consensus view for the national economy is upbeat, the benefits may finally be felt locally, and this may be the best year for the economy since the mid 1980s, he stated.

Pointing to recent reports that call for modest growth in employment of 20,000jobs in New Year City this year, Siegel said this could create a demand for an additional 2.5 million square feet of office space.

While remaining optimistic, the real estate veteran also called on the government--at both the City and State levels to do its share, emphasizing there is "plenty that government can do...and the new Giuliani Administration offers a clean slate - a fresh start - to address some of the fundamental problems in New York."

Siegel cited a number of contributions he felt Giuliani and his administration could make:

* Eliminate the commercial rent tax; rather than being a 'cash cow' it reduces the City's competitiveness and is a punishing double tax;

* Move forward on the "quality of life" initiative, which has the potential to reduce crime so that people can walk the streets safely and send their children to safe, effective schools;

* Put in place tax incentives and zoning variances that would encourage the redevelopment of Downtown Manhattan;

* Become serious about creating incentives for more small business formation, for example, by eliminating the 4 percent tax on unincorporated businesses;

* Designate high vacancy areas in Downtown and elsewhere as small business incubators; exempt start-up businesses locating in such areas from the unincorporated business tax and give them other tax breaks.

Siegel was also encouraged by the Mayor' s efforts to privatize services and enact more competitive bidding procedures, and called for the City Council to allow such measures to move forward.

At the state level, Siegel called the Cuomo proposal to eliminate the tax surcharge on real estate capital gains "a welcome shot in the arm" for the investment sales market, the real estate sector hit hardest by recession. "We can all take solace in the fact that the 'Cuomo Tax' surcharge on capital gains may be on its last legs - if the Governor and legislature can act on the proposal made during the State of the State address."

Downtown has had its own particular crop of problems and Siegel stated emphatically that for Downtown to show dramatic improvement, a substantial upgrade of infrastructure, and an infusion of retail and residential investment is required. A perimeter bus line would make the area far more accessible to commuters, particularly those from the northern suburbs, and conversion of outmoded office properties into residential and retail facilities would contribute greatly to making Downtown the 24-hour community it needs to be in order to thrive as a viable market.

"If the City can get its fiscal house in order, we can achieve the tax relief that is so necessary to spur meaningful growth in the economy," adding that after five stagnant years, a strong economy would "do wonders" for sustaining the nascent real estate recovery and return the market to a state of equilibrium. "We are still several years from that point, but I'm hopeful that steady progress will continue in 1994," he concluded.