“It Will be a Bleed Out, Not a Tsunami”

Lenders are taking properties back from borrowers, but rather than selling buildings in this market, they’re managing the assets in house, according to Dave Karson, managing director of Cushman & Wakefield Sonnenblick Goldman.

“It will be a bleed out, not a tsunami,” Karson said of the commercial real estate market. “Lenders will hold onto the assets.”

Karson was one of the speakers on a recent National Realty Club panel, “Current Mortgage Financing and Joint Venture Opportunities” that was moderated by Allan Riley. Continue reading

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Zero Waste in New York City?

An “anti-garbage” movement called “zero waste” is sweeping the country, according to an article by Leslie Kaufman in the NY Times on October, 20, 2009.

The article states, “The movement is simple in concept if not always in execution: Produce less waste. Shun polystyrene foam containers or any other packaging that is not biodegradable. Recycle or compost whatever you can.”

It turns out that communities don’t want landfills located near them; even residents of rural areas are balking.

So how can we cut down on garbage in an urban environment like New York City?

Vandra Thorburn has found a way in Brooklyn by offering Vokashi™, a product developed in Japan that enables residents to dispose of waste without depositing it in landfills. Landfills contribute to nearly 34 percent of all man-made methane released in the U.S., according to the Vokashi™ fact sheet.

Vokashi-bucket-2

 

Here’s how it works. Thorburn provides a 5 gallon, airtight, Vokashi™ container in which the following can be collected:
fresh fruits and vegetables
prepared foods and leftovers
cooked or uncooked chicken & fish bones
cheese, eggs, and eggshells
coffee grinds and teabags
dried leaves and wilted flowers
biodegradable paper products Continue reading

CMBS Market May Get First Issue in Over a Year

Bloomberg News reported on Oct. 9 that the first new commercial mortgage backed security issued since June 2008 may be sold by Goldman Sachs Group Inc. The article said the underlying asset is a $400 million loan to Developers Diversified Realty Corp. that it is secured by 28 shopping centers. Goldman and Developers Diversified are seeking to include the loan in the Fed’s TALF program, the article said.

Seeing is Believing: LEED Buildings Grow in Brooklyn

DSC00282Seeing is believing. Lori Raphael, director of Real Estate & Development for the Brooklyn Chamber of Commerce, led Chamber members on a tour of three LEED certified buildings that received Building Brooklyn Awards this year–Brooklyn Children’s Museum, Galapagos Art Space, and the Perry Building at the Brooklyn Navy Yard. Stuart Leffler and Con Edison provided bus transportation for the October 7 tour.
  
Brooklyn Children’s Museum
 The Brooklyn Children’s DSC00294Museum, built in 1977, was renovated and expanded by Rafael Vinoly Architects PC and Skanska USA Building. It is now New York City’s first LEED certified museum.

The museum, which doubled in size, features natural light pouring through energy efficient windows, solar panels, recycled materials, a heating and cooling system that uses less energy because it’s drawn from the water table underground, and bright yellow tiles on the exterior that will never require painting.  DSC00290The museum also added a roof deck (right) and dining area to better accommodate families, camp and school groups, and kids participating in the museum’s extensive  after school activities. 

 

 Galapagos Art Space
Galapagos Art Space

Galapagos Art Space

The Galapagos Art Space, 16 Main Street in DUMBO, (right) is the city’s first LEED certified arts space. Robert Elmes, director, said Galapagos doubled the space it had when it was located in Williamsburg, but the utility costs are comparable to what they were in the old building.

The 9,000 square foot building was originally a horse stable and is now used by Galapagos to promote emerging artists.

DSC00284 The steel is 100 percent recycled and tables and stools are placed around a 1,600 square foot lake of well water, which also warms the building. The space features a sustainable wood stage, low lighting, and radiant heating inside the walls.

Perry Building

DSC00314Richard Drucker, of the Brooklyn Navy Yard, hosted the group at the 89,000 square foot Perry Building, which will be home to SurroundArt.  The building features mounted wind turbines, solar panels (photos below) , recycled building materials, and skylights for natural light. It is the nation’s first multi-story, multi-tenanted, green industrial building.  Beginning in 2007, all new buildings constructed in the Navy Yard were required to be built to the U.S. Green Building Council’s LEED Silver or greater standards.
DSC00303Solar panels on the roof of the Perry Building.

Anti-Business Party Wins City Elections

As if the commercial real estate industry in New York City doesn’t have enough to worry about, the Working Families Party, which launched a major campaign last spring in Albany to push for stronger rent laws, claimed major victories in the September 15 Democratic primary and September 29 runoff.

 A March 10, 2009, press release on the WFP Web site said repealing vacancy decontrol was a top priority. The measure died last spring, but Dan Cantor, executive director of the WFP, promised on the night of the runoff to revive the issue. 

John Liu, who was supported by the WFP, won the Democratic runoff for New York City Comptroller with a little more than 26,000 votes. Around 228,000 New Yorkers voted in the runoff, with about 127,000 voting for Liu and 101,000 voting for David Yassky.

The WFP Web site boasted that Liu and Bill DeBlasio, the winner of the runoff for Public Advocate, were victorious because of the WFP’s coalition of neighborhood leaders, union members, tenant activists, advocates for the homeless, and just good old-fashioned civic-minded citizens.

Less than 8 percent of New York City’s voters voted in the runoff and the winning candidates were supported by a coalition that is anti-business, hostile to the real estate industry, and an advocate for tax increases. This at a time when the city is suffering from more than 10 percent unemployment and New Yorkers are desperate to find jobs. The  unions making up the core of the WFP haven’t suffered massive job losses experienced by those working in small businesses, retail, media, advertising, finance, real estate, nonprofits and other sectors.

As part of its anti-business agenda, the WFP is now advocating that the City Council force small businesses to provide paid sick time. The Five-Borough Chamber Alliance affirms its opposition to Intro. No. 1059, Provision of Paid Sick Time Earned by Employees, that will mandate businesses – regardless of size – to provide paid sick time.  Businesses with 10 or less employees will be required to provide five days of sick time to all employees and businesses with 10 or more employees will be required to provide nine days sick time for all employees.  Businesses found in violation will be subject to $1,000 fine for each infraction.

Ed Koch and David Yassky wrote about the WFP threat in the New York Daily News on October 7, 2009.  “..as ‘liberals with sanity’ we see danger when narrow agendas overwhelm the public good. That happened this spring when the WFP masterminded a whopping 9% increase in state spending in a year when the state’s economy is actually contracting. The spending was financed by a steep tax hike and in part by more than $6 billion in one-time-only federal stimulus money–which will leave a gaping budget hole for next year.

“Or a few years ago,” the article continued, “when the WFP pressured a majority of the City Council members to sign on to a proposal for a ‘stock transfer tax’ in New York City. Sticking it to Wall Street may sound good to a lot of people–all the more so now–but a moment’s thought should tell you that the idea would be ruinous for New York.”

“The problem is the WFP is driven not simply by ideology, but also by the very specific interests of its component parts–namely, the city’s largest labor unions. These organizations have a very direct financial stake in the state and city budgets, an interest that is often at odds with public interest.”

See the full article here:

http://www.nydailynews.com/opinions/2009/10/07/2009-10-07_the_working_families_threat.html

Times Reports Debt-Securitization Markets Still in Disarray

The New York Times reported today that even though the government funneled billions of dollars into major financial institutions after the financial crisis began last year, credit is still tight because the debt securitization markets aren’t functioning.

The article by Jenny Anderson explained that the securitization of corporate loans, home mortgages, commercial real estate, student loans, and others made up roughly 60 percent of the credit in the United States before the crisis, and that private investors abandoned them after the collapse of subprime mortgage market.  For example, securities backed by home loans fell from $744 billion in 2005 to $8 billion in the first six months of 2009.  

Experts quoted in the article said the securitization markets are critical to increasing bank lending and economic growth. Of particular concern are the “$50 billion of securitized commercial property loans due to be refinanced in the next year. If this can’t be done, a toxic mix of declining property prices and maturing loans could lead to fresh losses at many banks” Anderson wrote.  The government has used the Term Asset-Backed Securities Loan Facility (TALF) to encourage investment in these markets.

Access the article here http://www.nytimes.com/2009/10/07/business/economy/07shadow.html?emc=eta1

A Bit Better, but Very Far from Best

William Dudley, president and CEO of the New York Fed

William Dudley, President and CEO of the New York Fed

 

New York Fed President and CEO William C. Dudley said in a recent speech that the capitalization rate for commercial real estate has climbed sharply and income generated from real estate has been falling, resulting in “rollover risk” when commercial real estate loans and mortgages mature and need to be refinanced. He predicts more pain lies ahead for the sector.

Here’s the full text of his Oct 5, 2009 remarks at the Fordham Corporate Law Center Lecture, New York. Continue reading