Manhattan Awash In Open Office Space

Source : The Business Times, December 4, 2008

Finance firms giving up space as they downsize, picture could get worse

(NEW YORK) Last year, when the New York real estate market was still frothy, large blocks of office space were hard to come by. Not anymore.

More space soon: The concrete core of the Freedom Tower being built, on the site of the World Trade Center. The new building, higher than the Empire State Building, will add to the glut of Manhattan open office space available

Almost 16 million square feet is currently listed as available in large blocks in 68 office buildings in Manhattan, according to Colliers ABR, a commercial brokerage firm. That is nearly double the space available a year ago, both in terms of the number of large office blocks - which in New York usually means 100,000 sq ft or more - and in terms of total square feet.

Those figures are widely expected to go much higher, said Robert L Sammons, the managing director of research for Colliers ABR. He said it was difficult to get a handle on exactly how much space financial companies alone might put back onto the Manhattan office market over the next year or so.

'Honestly, I don't think any of these financial firms knows how this is going to play out,' he said. 'They are trying to figure out how many people they will need on staff, and in some cases how they are going to stay in business.'

Pending layoffs in the financial industry certainly account for some of the space on the market. But there are other factors. Some companies are moving into new headquarters - which were first planned years ago - while others are disposing of real estate that they came into through acquisitions.

By far the biggest increase in availability has been in the sublease market. Currently, at least 16 large office blocks are being marketed for sublease in Manhattan, up from just three listed at this time last year, according to Colliers ABR.

Michael Colacino, the president of Studley, a real estate brokerage firm that specialises in representing office tenants, said the sublet space that had come onto the market recently was attractively priced.

He said some tenants might do better by shopping the sublet market rather than trying to renegotiate a better rent with their current landlords. 'A lot of landlords are still in denial,' Mr Colacino said, 'but the sublease space is priced realistically for the actual market conditions.'

Mr Colacino estimates that the actual rents on deals signed in the last three months are down by as much as 20-30 per cent from the going rents at the end of the summer - to around US$75-80 per sq ft annually in midtown and around US$45 per sq ft downtown.

Among current offerings - including both subleases and direct leases from owners - roughly a quarter of the space in the midtown and downtown office markets became available because a financial company either did not renew its lease or decided to market the space for sublet.

But the picture could become much starker next year. Among large office blocks that brokers expect to hit the market, Mr Sammons estimates that the financial industry will account for roughly one-third of the new space coming on the market in midtown and more than half of the new space downtown.

Lehman Brothers, Merrill Lynch and Deutsche Bank all have leases that Mr Sammons counted among the potential new listings of large office blocks. And that list does not include Citigroup - although the banking giant has announced that it will lay off more than 50,000 employees worldwide - because Mr Sammons said it was too soon to know if Citigroup would give up any large office blocks in Manhattan.

So far this year, brokers say, the main event in midtown has been the completion of One Bryant Park, a 54-storey office tower that recently opened at the corner of 42nd Street and the Avenue of the Americas.

As the main tenant Bank of America moves employees into this new building, it is giving up earlier leases for hundreds of thousands of square feet in other prominent midtown office buildings. -- NYT

Developers In China Scramble To Raise Cash

Source : The Business Times, December 4, 2008

(BEIJING) Suffering from a slumping housing market, Chinese developers are scrambling to find new ways to keep the cash flowing in and creditors at bay, with anything from factories to timeshares in their sights.

An oversupply of new apartments in an economic downturn, and the lingering effects of government steps to stamp out rampant property speculation have sent home sales and prices tumbling.

Capital markets are closed, and loans have dried up.

'Banks give you an umbrella when it's sunny and want it back when it's raining,' said Li Xiaodong, chairman of J&J Assets Management, whose US$300 million fund invests with property firms.

'So you have to choose products that are more suitable for the market at the moment,' he advised developers at a conference in Beijing. 'There's money out there, but there's no confidence.'

In a five-year boom, China's developers grew quickly and notched up huge profit margins, often of as much as 50 per cent, as they built on land accumulated cheaply and sold apartments in a fast rising market.

But many who bought land at a 2007 price peak are suffering now, with sales down by as much as half from last year. The country's biggest developer, China Vanke, has slashed prices by a third, and others have gone further. And now they are looking away from housing. Beijing-based Antaeus Group is selling rooms at Hainan island resorts, giving buyers stays of 30 days each year and a share of room rates.

'A lot of movie stars and real estate developers are buying,' said the firm's chairman, Zhang Baoquan. 'We need to survive the winter,' he said of the market downturn. 'But once spring comes, demand will be released.'

Shanghai-listed developer Vantone Estate aims to spend three billion yuan (S$667.2 million) on industrial property in the next couple of years, according to Wu Dongwei, general manager at the unit responsible for the venture.

His first deal, which is still being negotiated, is for a factory in Wuxi that will be bought and leased back to a television maker faced with slowing exports.

'We're trying to diversify,' Mr Wu told Reuters. 'There are a lot of companies that bought a lot of land very cheaply, or for zero because local governments gave it to them,' he added. 'But now is a very bad time, so they're trying to get more cash in and divesting assets.'

Holding investment properties usually produces much lower returns on assets than building homes because equity is tied up for much longer.

But Hong Kong developers have used the tactic well to smooth earnings, in a volatile property market. Office and retail rents are typically renegotiated every three years, while industrial and warehouse property leases can last a decade. -- Reuters

No New Site For Land Sales

Source : The Straits Times, Dec 4, 2008

THE Government is not adding any new sites to its land sales programme for the first half of next year, given the continuing weak global economic outlook.

The Government is not adding any new sites to its land sales programme for the first half of next year, given the continuing weak global economic outlook. -- ST FILE PHOTO

It is also offering less commercial space. And there will not be any new supply of private home units from Government agencies, outside of the land sales programme.

'The global economic outlook is likely to remain weak in 2009 and this would have an impact on Singapore's economy, including the property market,' said the Ministry of National Development in a statement on Thursday.

This means that there will only be 'reserve list' sites available for sale in the first half of 2009. Such sites will only be put up for tender if a developer indicates interest in it by submitting a minimum bid that the Government finds acceptable.

A total of 38 sites are available on the reserve list, of which 37 are carried over from the reserve list for the second half of this year, and one is the unsold executive condominium site in Punggol. The unsold EC site was from the confirmed list, which meant that it was for outright sale but there was no demand.

At the start of last month, the Government already announced that it will be suspending outright land sales in the first half of next year. It was to stave off the risk of oversupply given the weak property market outlook.

Developers, who prefer the reserve list system as it allows them to adjust supply to meet demand, had cheered the move.

Lee Tat Wins Legal Battle Against Grange Heights Residents

Source : Channel NewsAsia, 02 December 2008

A dispute between property developer Lee Tat Development and Grange Heights residents over a strip of land came to an end on Tuesday as the Court of Appeal ruled in favour of Lee Tat, overturning an earlier appeal decision.

It is extremely rare for the Court of Appeal to re-look a case that it has passed judgement on.

Since the 1970s, Lee Tat has been trying to stop the residents from using a pathway, which is surrounded by land owned by the developer, as a shortcut to nearby shopping centres and bus stops.

After four court proceedings over many years, the Court of Appeal has finally given the right of way to Lee Tat.

In the ruling, it is noted that for more than 30 years, residents have not used the pathway often. - CNA/so

10 Sites For Worker Dorms

Source : The Straits Times, Dec 3, 2008

THE government will release 10 additional sites for development as temporary foreign worker dormitories, which can take up to 20,000 bed spaces.

'The temporary dormitories are part of the efforts of the Government to provide proper housing for foreign workers while more purpose built dormitories come on stream over the next few years,' said the MND. -- ST PHOTO: DESMOND LIM

Three of them are vacant state properties which previously housed the Queenstown Polyclinic building at Margaret Drive, the former CAAS office at Upper Changi Road and the CPG Corporation Airport development division in Upper Changi Road North.

The others are vacant state lands in Jurong Road, Mandai road, Old Choa Chu Kang Road, Hougang Avenue 3, Seletar West Farmway and Kim Chuan Road, which will be available for tender on short leases of up to six years.

The sites will be launched in tandem with demand over the next few years, said the Ministry of National Development in a statement on Wednesday.

The temporary dormitories are expected to be completed within six to eight months from the date of construction.

'The temporary dormitories are part of the efforts of the Government to provide proper housing for foreign workers while more purpose built dormitories come on stream over the next few years,' said the MND.

'This complements other short-term efforts, such as relaxing the guidelines for the conversion of factory premises into dormitory spaces. These efforts will help to relieve the current overcrowding in residential premises arising from a shortage of foreign worker accommodation, which could pose public health and fire safety risks to the general public.

MND said it will be working with the Ministry of Manpower to step up enforcement action against employers who house their foreign workers in improper premises.

The ministry said it has, over the past two months, consulted the respective Advisors and grassroots organisations on each of the temporary dormitory sites.

Following these consultations, several measures will be put in place to minimise disamenities posed by the dormitory developments.

Among the requirements, the dormitories will have to provide adequate facilities for workers, appoint a liaison officer as a point of contact for the grassroots organisations and conduct educational programmes within the dormitories to inform workers of the social norms and laws in Singapore.

'Police will adopt the necessary measures to prevent and detect crimes in the neighbourhood and will also work with community stakeholders to initiate safety and security projects where appropriate,' said MND.

The Government is also currently engaging the advisers and grassroots leaders of existing areas with very high foreign worker populations to identify and implement appropriate measures, added the ministry.

The siting of a foreign workers' dormitory in Serangoon Gardens stirred up a furore, when many in the private residential estate opposed having it near their homes. They expressed concern over a rise in crime, disorderly behaviour and traffic congestion.

However, the plan is going ahead. A school will be converted to house up to 600 workers, mainly factory workers in the IT and electronics industries.

Official figures show Singapore had 475,000 foreign workers in 2006 and it jumped to 577,000 last year, excluding 180,000 maids. This is 102,000 more, or double the increase in 2006.

The swell is sparked by the strong economic rebound in the past two to three years, as more were brought in to keep a lid on business and living costs.