Down Go Office Rents And Up Go Vacancy Rates

Source : The Business Times, March 5, 2009

(SEATTLE) Brookfield Properties Corp, owner of New York's World Financial Center, said that office rents are falling and vacancy rates rising in Manhattan in the wake of mounting losses tied to the collapse of credit markets.

'Clearly, rents are going down, both downtown and in midtown' Manhattan, Brookfield chief executive officer Richard 'Ric' Clark said on Tuesday at the Citigroup 2009 Global Property CEO Conference in Naples, Florida. The presentation was webcast.

'At the moment, vacancy rates have moved more meaningfully in midtown than in downtown. Midtown's been on the losing end of firms that have gone out of business.'

Mr Clark said that he expects vacancy rates in downtown New York to rise in the 'low teens' over the next two years.

Brookfield has interests in 108 properties with 74 million square feet in the US and Canada. It also has 4,339 residential development lots, mostly in Colorado and Alberta.

The company's portfolio is 96.3 per cent leased and only 3 per cent of leases will renew in 2009 and about 4.5 per cent in 2010, Mr Clark said. He said that next year's rollover rate could fall to less than 3 per cent by the beginning of 2010.

Brookfield has enough cash flow to meet maturing debt obligations and sees 'no need' to cut its dividend, Mr Clark said. The company may buy back debt, he said.

Brookfield said that it expects Bank of America Corp to make a decision by summer on whether to renew a lease at the World Financial Center now occupied by Merrill Lynch & Co, which the bank bought on Jan 1, Mr Clark said. -- Bloomberg