Turchin: opportunity lies with 'bread & butter' deals.
Master broker Marty Turchin told a gathering last week that there is still a lot of opportunity for leasing brokers today, especially in the "bread and butter" category.
"You will find more than 70 percent of all leasing activity has taken place in transactions of 50,000 square feet or less," said Turchin, vice chairman of Edward S. Gordon Company, Inc., to the Young Men's/Women's Real Estate Association luncheon at the Waldorf Astoria.
There has been relatively "small fall off", between 1989 to 1990, in this layer of the market, Turchin said. Therefore, brokers must be more "nimble" than before.
Turchin, who recently closed the Sony/AT&T deal in which Sony subleased AT&T's headquarters, focused on the diverse Midtown market, which, he said, has eight geographic districts and six size segments.
|How Bad Is It Doc?'
Donning a toy stethoscope, Turchin gave a prognosis of the market. "The market has fairly well stabilized in the amount of transactions consummated in this year as opposed to last year," said Turchin.
In 1988, there were 19 million square feet leased, in 1989 14.5 million square feet, and 11 million in 1990, and there was 5 million square feet leased in the first six months of 1991.
While there is still a lot of activity out there, Turchin said, the real problem is one of absorption. Rents have dropped 30 or 40 percent since 1988 while availability rose 8 to 9 percent. Small vacancy swings, he said, are causing big shifts in price. This is "not a good sign for brokers," Turchin said.
Without any major changes in supply and demand, Turchin said, we are going to be looking at a pricing structure that is "fairly stable."
While 1980 to 1989 were "euphoric years" in the real estate business, Turchin said, total occupied space only went up 10 million square feet - from 150 million square feet to 160 million square feet. Today, according to the Edward S. Gordon, Midtown report to September 1991, there is 189 million total square feet of office space.
Waiting on Indecisive Tenants
"Many companies today seem to be on the sidelines" said Turchin. "Many brokers say to me they can't get a tenant to make a deal."
Tenants making a "housing decision", Turchin said, have a certain amount of flexibility or "elasticity", but eventually they will have to sign. "They can't do nothing," he said. "It's not like an investment decision... It is our role to guide them in that decision process."
PHOTO : Marty Turchin, vice chairman of Edward S. Gordon Company, Inc., was guest speaker at a luncheon of the Young Men's/Women's Real Estate Association. Leslie Harwood, TM\YWREA vice chair; Turchin; Mitch Rudin, chairperson. Caleb Koeppel, program chairperson; Ben Irlander, secretary; Leon Manoff, governor; Stefan Ensler, governor; Anita Grossberg, governor; Joe McCluskey, tresurer.