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As seen in
October 3, 2001
Plymouth Partners president pessimistic
about real estate future
The decline in
the stock market yesterday, triggered by the destruction of
the World Trade Center, only reflects what is yet to come as
far as the New York City commercial real estate market is concerned,
according to James Meiskin, president of Plymouth Partners,
a New York-based commercial real estate firm.
"I expect New York City's commercial real estate market, which
is closely tied to the financial markets, to experience deep
decline as we enter into a recessionary environment," Meiskin
said. "Before the World Trade Center tragedy and the decline
of the New York Stock Exchange and Nasdaq, New York City-based
companies were already suffering from a weak economy, poor earnings,
high unemployment, and an already substantial decline in the
major financial indexes."
In fact, many of these companies were already implementing or
were about to implement a major overhaul of their operations,
including a substantial reduction in their workforce, said Meiskin.
"The strategy and operational plans of these firms are now compounded
by the conditions currently being experienced because of the
Twin Towers disaster," said Meiskin. "As a result, I'm very
confident that we will not see more than half of the twenty
seven million feet of space that has been destroyed or damaged
return to the marketplace for at least seven to ten years, which
is when we will perhaps see the cycle improve. Then again it
all depends on whether or not there will be a New York City,
considering we may enter into World War Three."
Overall, Meiskin does not expect to see any new development
in New York City because there is over twenty five million square
feet of direct and sublease space available on the market now.
Most of this space, he said, is a result of corporate downsizing,
a poor economy, the bursting of the dot-com bubble, and other
factors.
"This space has been sitting on the market languishing for a
lengthy period of time, and is largely being marketed at very
reduced rents," said Meiskin. "Thus new construction, which
in today's world requires at least $75 per square foot in rent
to break even, would never be able to complete, and would also
take too long to build. We're talking about a twenty four to
thirty six month process at the very least."
However, if anything, Meiskin does see buildings on the West
Side being converted from industrial and manufacturing use into
office use, and he expects the same in Long Island City, where
it has recently been rezoned for commercial office space from
manufacturing and industrial use. The 39-block rezoned district
in Long Island City will permit in upwards of 25 million square
feet worth of development rights, he added.
As far as leasing in trophy buildings, Meiskin said the World
Trade Center disaster is resulting in New York city companies
shying way from high-visibility buildings like the General Motors
Building, the Metropolitan Live Building, Citicorp Center, the
Empire State Building and others like them. Instead, he expects
tenants opting for buildings, which attract far less attention.
According to Meiskin, Plymouth Partners is working with a number
of World Trade Center companies who have been in lower Manhattan
for over 20 years. He said several of these companies have expressed
interest in remaining in Manhattan, but will not stay downtown
because of the infrastructure damage, mass chaos and psychological
damage caused by the World Trade Center tragedy.
"Overall, I'm very negative about the future of the New York
City real estate market and the city's economy," Meiskin said.
"I suspect that we will be in for a long touch cycle, and I
do not think we will see any light for seven to ten years -
if ever again."
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