Or: JUMPING THE SHARK
Some of us remember when saying “cool” was actually cool. When spelling it with a “k” was even cooler. If kool is before your time, then maybe you remember The Fonz. The point is—well you know the point if you can remember a time before ear buds, before “text” was a verb, before the dot.com bust of 2000, before Brooklyn was cool and then it wasn’t, and before Midtown South was cool. A time when Midtown South was exactly what it still is: a neighborhood of old low-rise office buildings, with small floor plates and lots of interior columns, poor lighting, low ceilings, and woefully inadequate infrastructure to support the demands of today’s office tenants without serious upgrades. The difference between then and now is the rent. But that has more to do with supply and demand than the cool factor. Read more »

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In a recent study conducted by the Economist Intelligence Unit, New York City ranked first out of 120 international cities for its ability to attract capital, business, talent, and tourists. But as the Bloomberg era comes to a close, the concern is that our next mayor has the vision and resolve to keep New York City competitive in an increasingly global marketplace. Before Giuliani, international competition was limited to London, Paris, and Tokyo. Since then, our competition has come from every continent, including cities such as Beijing, Hong Kong, Shanghai, Rio de Janeiro, Zurich, and Berlin that as recently as 20 years ago were not on the global radar screen. To keep up our game, our first priority must be to maintain a vibrant and diverse economy that provides meaningful jobs for all. Without a diverse economy, there won’t be jobs for all, without jobs, the economy won’t be vibrant. Without either we will lack the strong tax base it takes to keep New York City the leading competitive city in the world. Read more »

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Have you hugged your landlord lately? Ever? It might be time. The current chill in the leasing market gives tenants a fair amount of leverage in negotiating favorable lease extensions right now. No matter how far out the expiration date is. In fact, this conversation should occur when a lease term is years away under any market conditions rather than when the expiration date is looming and there is the the added threat of losing your address.

So go hug your landlord. But before you go all touchy-feely, go prepared. There some things you should know before you play your hand to keep the upper hand. Read more »

LEE=MC²

Smarter Real Estate

FALL 2013

New York City:
Quintessentially American

My wife and I are fortunate and adventurous enough to travel abroad as often as we can, especially now that our children are (somewhat) grown and on their own. Whenever people ask our nationalities I puff out my chest and proudly proclaim for both of us, “We are New Yorkers.”

I was born in Manhattan and, except for a brief stint away to attend college and graduate school, I’ve lived here my entire life. My wife and I raised our two children in New York City; I’ve built a business here, play tennis in Central Park, and ride my bike all over town. I know every inch of this City and love all its neighborhoods, from the high rises of Midtown to the dense cobblestoned streets Downtown. And, because retail real estate is my business—and retail is my wife’s avocation—I know every shopping corridor in the City from the couture shops that line Madison Avenue to the boutiques of Columbus Avenue on the Upper West Side to the shops of emerging designers in NoLIta to the purveyors of the edgiest fashions in Brooklyn.

Say what you will about the current sky-high retail rents on Madison Avenue, it was disheartening in the years after the financial downturn in 2008 when so many stores shuttered and iconic restaurants went out of business. Immediately following the financial crisis, retail rents on Madison Avenue were around $800 per square foot. Today they average $1100, and the avenue, from 59th to 86th streets, is nearly 100 percent occupied. Fifth Avenue rents, about $2000 per foot during and after the crash, did not really drop during the crisis, though increases slowed; they now top $3000 per foot—second only to Hong Kong retail rents. The biggest jump in retail rents has been in SoHo—in New York City that means south of Houston Street, and does not derive from a hunting cry—where, since the end of the recession, rents have risen at a pace far faster than any other retail corridor in the City. SoHo can now claim its first 4-dgit rental transaction in history with Prada’s recent renewal of its 10,000-square-foot space at Broadway and Spring Street at $1000 a foot. Rents on the rest of Broadway in SoHo average $750 per square foot—a 50 percent jump just this past year.

I love that the retail corridors are packed and that it’s hard to get a restaurant reservation anywhere these days. It means the City is thriving again. Residents are spending and tourist are flocking here, especially the British. Maybe it’s to shop in the American outposts of their boutiques like L.K. Bennett, LUSH, and Karen Millen. We cannot, however, make the claim to a new influx of British restaurants.

Yet there has been an influx of new foreign real estate investors in the years since the recession. New York City recently leapt ahead of London and Tokyo in terms of real estate investment by dollar volume, with much of the capital coming from foreign investors, including Abu Dhabi and China. Since the financial crisis, the composition of foreign investors has changed and now includes more investors from Asia beyond China; the Australian and European investors have backed off a little. And the investments are more direct, meaning in specific properties or in providing financing to a developer. So far in 2013, foreign investment in Manhattan real estate is $1.96 billion.

I’ve tried to explain to outsiders what it is about this City that causes such passion. Talk to any New Yorker. My feelings are not unique. There is the feeling that no matter how long you’ve lived here or how much time you spend exploring different neighborhoods, when you walk out the door something new and unexpected waits. Of course, we have a lot of options for the new and unexpected to appear: New York is a city of 20,000 restaurants, 138 live theaters, nine major league sports teams, over 80 museums, hundreds of nightclubs, more than 3500 retail stores, and eight million people.

My wife and I have strolled Bond Street in London, Avenue Montaigne in Paris, Bloor Street in Toronto, the Ginza in Tokyo, Via dei Condotti in Rome, and every side street of restaurants and shops in between and remain amazed and excited by the ever-changing retail landscape Manhattan reveals. It’s more than a seasonal window-dressing change. Our City’s shops reflect our culture, our economy—up or down, boom or bust—and the whims and swells of neighborhood populations.

If you have a charity benefit to outfit yourself for, you’ll head Uptown to the flagship stores of the Italian and Parisian designers on Fifth and Madison avenues. If it’s an art opening, hop on the number six train to SoHo and walk east and south to Elizabeth Street, or farther south to the Lower East Side to poke through the 300-square-foot shops of on-trend leather and lace t-shirts and leggings. If shopping for clothes is not your thing, but art is, the gallery district of Chelsea is sprouting new restaurants every week, which attract residential development, which, in turn, attract more restaurants and shops. And so it goes in New York: we populate the neighborhoods where we live and work with the kinds of entertainment that reflect our ethos—and sense of style.

New York is more than a melting pot. It is a giant swirling cauldron of diversity. In a few-block stroll down nearly any street in Manhattan you’ll hear a variety of languages other than English. Over 300 distinct languages are spoken here. Every religion—along with every kind of sect and cult—are observed here, openly and freely. You can be anonymous, or you can become famous, though that is much harder. But if you can make it here, as the song goes, you can make it anywhere. And if you make it here, you won’t need to leave.

For all its diversity, and sophistication, and access to everything any time of day or night, New York is a city of small towns. Every 8-block square neighborhood has its own character, architecture, history, dry cleaners, shoe repair shop, nail salon, bodega. You know the delivery guys by name, and they know your order and apartment number by heart. Each succeeding generation welcomes newcomers with, if not open arms, at least with barely a shrug, as long they don’t walk too slowly four abreast and stop en masse and point upward.

Yet we wish everyone who arrives on our little island the success they have the right to earn. We, who’ve been here for a while, are generous in our embrace of the immigrant. We had better be, our ancestors were welcomed into the harbor of New York by the Statue of Liberty and the words of hope and promise inscribed on her base.

But let’s not get sentimental, time’s a wasting and you better keep up because New York City won’t wait for you. We are smart, in a hurry, know everything, and are brash. And, of course, we are very funny. Think the Marx Brothers, Mel Brooks, George Carlin, Penny Marshall, Billy Crystal, Woody Allen, Whoopi Goldberg, Jerry Seinfeld, Adam Sandler, and Saturday Night Live, and the list goes on. We have to laugh; living in New York is not for the faint of heart. If you arrive here after college with nothing but your dreams, you’ll live in a one-bedroom apartment with 37 roommates, and pay more in rent for your share than your parents paid for their mortgage back in Ohio. And you’ll be grateful for the opportunity. Once you’ve made it, you will join the ranks of those of us who have been here our whole lives and judge people by their accomplishments—and nothing more and nothing less.

So if you are smart, tough, and willing to work hard chances are good that you will succeed. If you’re not, the City will chew you up and spit you out. But if you are down and out, whether after a man-made or natural disaster, you can count on New Yorkers to rally round and help its own like no other place on earth. In addition to everything else we may be, or not be to the outside world—patient, easy-going, quiet, free of hand gestures—we are, above all, resilient.

Does everything we are make New York an American city? Does the fact that 38 percent of our population are immigrants, that we attract ever-increasing numbers of foreign investors, that 53 million tourists visit each year, that we admit foreign students to our universities and colleges, that our street signs are written in Spanish, or Korean, or Russian depending on which neighborhood you’re in make New York anything less than the quintessential American city? Our country was founded on the principles of life, liberty, and the pursuit of happiness. Where else but in New York City can everyone have it all—no questions asked?

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