New York City 'bashing' unfounded.
The media has had a "Bash New York" party these last several months which has made it appear that the city and, of course, its real estate are collapsing. Nothing could be further from the truth and it's about time the media started boosting the City and telling people just the way things are.
Of course there's been a decline in values as a result of a national recession. Banks have been hurt and, as a result, they're not making and new construction loans at the present time. However, banks have to stay in business and their main source of income is lending, so that as soon as they see an opening in the office space market they'll be back into the business of lending. The truth is that this isn't very far away and there is evidence right now of a momentum that's been missing because there are certain big companies who are looking for new and expanded space, and they realize that values have bottomed out and from here on in rents will definitely be on the increase. Heretofore, it's been mostly the American service companies that have taken expansion space in the city, and now, since New York is recognized as the financial capital of the world, many foreign companies will open offices here. This is particularly true because of the pending enormous expansion in business triggered by the E.E.C. which will commence in 1992. Also, the disintegration of communism in Europe will have an enormous impact on private sector expansion in business, which, of course, will inure to the benefit of New York since all of these countries will be represented here in many different industries.
In my opinion, we'll see the large amount of vacant space dwindling in 1992 so that by the end of next year prices will have to increase since the demand will be greater and the supply much shorter. It's at that time that the banks will start lending again and developers will start building again. Companies are beginning to realize this, so that in the next six months of this year I foresee a great deal of activity and space absorption. It takes a while for companies to act because everyone looks for the bottom of a market in a real estate recession, and I believe that most everyone is convinced that the market has reached its lowest point, so that businesses looking for additional space better act soon and take advantage of what has been a tenant's market. It still is, but in my opinion, not for long. And this will be the best medicine for the regaining of New York's financial health.
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|Title Annotation:||Mid-Year Review & Forecast Section I; real estate market|
|Author:||Cohen, Jerry L.|
|Publication:||Real Estate Weekly|
|Date:||Jun 26, 1991|
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