May 8, 2009 by jack petrie.

The German-American Chamber of Commerce, Inc. New York celebrated 15 years of young executive networking in the German-American business community with an art opening on April 30th, 2009, hosted by CresaPartners.  The event featured German-born New York artist, Jim Avignon, who exhibited his latest work.

Avignon employs a narrative structure in his paintings to present political, social, artistic and pop-cultural themes through motifs from the world of fables and fairy tales, using animals as his subject to represent the human condition.  His works have served as a stage for a wide variety of protagonists taken from cartoons, anime and fantasy settings.  The bright, cheerful mood that prevails in his paintings conceals a feeling of the unknown creeping in the background.

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May 8, 2009 by jack petrie.

Adzinia Media Group Expands in NYC

While Amazon has mostly been grabbing headlines this week for the launch of its new Kindle device, Adzinia Media Group, a division of Amazon, has relocated its offices in New York.  Adzinia sells online display and email advertising products to advertisers on Amazon.com web sites.

Adzinia will be moving into a 10,050 rsf space at S.L. Green Realty Corp.’s 1350 Avenue of the Americas location.  Prior to this it was located in 2,400 rsf offices in S.L. Green’s 420 Lexington Avenue property.

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May 8, 2009 by jack petrie.

Tenant’s Viewpoint

Opportunity knocks at the door of commercial tenants!  This real estate market will continue to soften for the remainder of 2009 and into 2010.  This, however, does not mean that tenants cannot achieve opportunistic terms today.  The wait-and-see mentality created by the economic shocks has begun to subside as opportunistic tenants create market leverage by planning ahead and becoming more knowledgable.  Many landlord’s are responding to the slower velocity of leasing by considering all offers and negotiating all terms.   In fact, in today’s leasing market everything is negotiable!  Tenant-friendly terms such as lease takeovers, termination options, lower loss factors and greater flexibility are more prevalent today.

Market Overview

The Manhattan office market continues to decline, while the statistics are still catching up to the true state of the market.  While vacancy rates remain below 10% in all submarkets, availability (which includes occupied space available for sublease) is now greater than 13% in Midtown and 10% in Downtown.  Asking rents have declined at an accelerating pace since Q1 2008 and the spread between asking and taking rents has increased as concessions (free rent and improvement allowances) have increased dramatically.  Unemployment continues to rise with many economists predicting 300,000 job losses from peak employment levels, 40% of this loss in the financial services sector.

Trends & Statistics

Midtown
Midtown Class A vacancy rates increased from 6.4% to 7.4% in the last quarter.  Asking rents for Class A space dropped by 7.5% to $72.32 per rentable square feet (”rsf”) on average.  Midtown Class B vacancy increased to 5.4%, with a third consecutive quarterly reduction in asking rents resulting in an average rate of $46.83 per rsf.  There was negative net absorption in Class A space, while Class B space had a small amount of positive absorption.

Midtown South
Vacancy rates in both Class A and B space rose significantly from 3.9% to 6.6% while asking rents fell from an average of $54.03 to $51.73 per rsf.  Net absorption was slightly negative at (38,212) rsf.

Downtown
Class A vacancy increased slightly from 5.8% to 6.1% with a corresponding decrease in asking rents from $53.41 to $48.11 per rsf.  Net absorption was negative.  Class B property saw a jump in vacancy rates from 8.8% to 9.4% with asking rents falling dramatically from $47.03 to $40.75 per rsf.  Downtown Class B space also experienced negative absorption.

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May 8, 2009 by jack petrie.

On Wednesday, May 27th, 2009, CresaPartners will host the iBreakfast panel discussion on iPhone Apps & Mobile Platforms - How is this Software Store Shaping Up?, featuring Eric Litman of Medialets and Larry Reich of Digital Age.

With upwards of $100 million of iPhone applications sold, this is emerging as the growth platform of the digital industry.  But is it reaching a plateau or are we at the beginning of a market expansion that will crossover to all other mobile device makers and cellular carriers?

About Medialets/Eric Litman

Eric Litman is Chairman and CEO of Medialets, a NYC-based premium advertising network and analytics provider for mobile platforms such as iPhone and Android.  Eric began his career with technical and software engineering positions at GEnie and NeXT Computer.  He pioneered the commercialization of the internet as a cofounder of Proxicom.  Previously, Eric was instrumental in building digitalNATION, a world-leading web hosting and services provider, from its launch through its $100m acquisition by Verio Internet/NTT.

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May 8, 2009 by jack petrie.

McLean, VA-based Clearspring inks lease at 584 Broadway

Clearspring, a maker of the proverbial “widget” (internet-style), has relocated its offices from the Grand Central submarket to 584 Broadway in Soho.  The company was represented by Aaron Berkey, Jamie Addeo & Jack Petrie of CresaPartners.

About Widgets

A widget, or web applet, is a portable chunk of code that can be installed and executed within any separate HTML-based web page by an end user without requiring additional compilation.   Widgets often take the form of on-screen tools such as clocks, tickers, daily weather, etc.  Web widgets offer commercial interest primarily because they provide interactivity and viral distribution through social networks, such as Facebook and MySpace.  The first known web widget, Trivia Blitz, was introduced in 1997.

About Clearspring

Clearspring creates, distributes, tracks and monetizes widgets for web publishers.  Clients of the firm include RockYou, NBA.com, NBC/Universal, Adobe, Time, Discovery Channel and Maxim.com.  According to comScore’s October 2008 data, Clearspring’s monthly reach jumped more than 30% to 332.5 million unique worldwide visitors, furthering their position as the worldwide leader in widget distribution.

Clearspring is headquartered in McLean, Virginia with offices in Los Angeles and London in addition to NYC.

About 584 Broadway

584 Broadway is a 220,000 rsf, 12 story property located on the eastside of Broadway between Prince & Houston Streets in New York City’s historic “Soho” neighborhood.  The building, constructed in 1897, was renovated in 1990 and now boasts dual renovated lobby entrances and onsite owner-management.  The current asking rental rate is $57.00 per rsf.  Major tenants include AM Collections, Slover & Company, cFX Incorporated and Dailycandy.   The property is owned by Olmstead Properties Inc.

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December 5, 2008 by jack petrie.

Wealth in Widgets

On December 18th, 2008 CresaPartners is hosting an iBreakfast panel discussion on Wealth in Widgets - How Small, Useful Programs are Making Money.  The event will be held at 100 Park Avenue, 24th Floor, New York City from 7:30AM-10:00AM and features Michael Chin of KickApps and Chris Damsen of Netvibes.

Why are these mini-sites that stick to other websites becoming so valuable?  Because they stick - and that trait is attracting advertisers and other marketers looking to grow and keep a loyal audience.  Find out how this market works at the next iBreakfast.

Widgets are increasingly becoming the small working wonders of the internet.  Find out how savvy marketers and web developers are using them as the ad vehicles and business builders of Digital Media.

About the Speakers

Michael Chin/KickApps - Michael’s mission is to bring the KickApps platform for major brands, global media companies, marketing agencies and professional web developers.  He was a director at Bite Communications.

Chris Damsen/Netvibes - Chris is responsible for bringing the Netvibes’ European brand and leadership position to the Americas.  Chris spent over six years at Interactive Corporations’s Ask.com and was a key principal in establishing and building the Distribution and Syndication Division for Ask.com.

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November 26, 2008 by jack petrie.

Companies Advised to Be Patient and Prudent—and Not Panic

The meltdown of capital markets is beginning to shake up the commercial real estate market in Manhattan.  While some areas of the country are more vulnerable than others—especially metro centers like New York City with large financial institutions—all sectors of the economy are taking a hit. And while the bailout may start to provide relief as the government purchases troubled loans, this process will likely take an extended time, and the prevailing feeling among corporate real estate executives will continue to be uncertainty.     

How bad is it?  That is debatable, but certain dynamics are clear.

With some companies shutting down and many others forced to cut back, the unemployment rate is going up.  Unemployment in Manhattan is rising and job layoffs in companies in the financial services sector will take their toll.  Layoffs will result in space disposition, and we are already seeing large amounts of sublease space coming online.  Within the last couple of months, several large blocks (>100,000 square feet) have been listed in Manhattan, and this may be the tip of the iceberg.

This will lead to rising vacancy levels, negative absorption, and declining rental rates.  In short, we have the signs of a prolonged recession—or worse, if the bailout doesn’t work.

Yet, despite this seemingly bleak forecast, most landlords are still projecting an air of confidence.  They say that the New York City vacancy rate remains one of the lowest in the country and rents remain the highest.  Statistics, they say, don’t lie, and landlords are hoping their tenants won’t question them.

The Real Pulse

The truth is that statistics are much better at recording the past than reflecting the present and forecasting the future.  In fact, conditions on the street today will not be reflected for one or two quarters.  But landlords and their brokers know the score: 

1. Velocity is down dramatically, and we expect this to continue through next year.
2. Companies are shedding more space, and we forecast that vacancy will climb an average of 2-4% over the next two quarters.
3. Asking rents are now down an average of 20% in the last quarter. Rents will likely continue to decline for another two quarters before the market levels off.
4. Venture capital investments have dropped substantially, and commercial mortgage-backed securities are completely stalled.
5. Sales in commercial real estate have declined about 90% this year, and limited trading is expected as long as financing remains hard to secure.
6. Limited new inventory is expected to come online, with fewer existing construction projects and virtually no new building anticipated. 

But before we push the panic button, let’s put this meltdown in perspective.  Yes, this may be the worst credit crisis since the Depression, but what’s happening now is in fact an inevitable market correction that has parallels to the subprime housing debacle.  In both the residential and commercial real estate markets, loans have been awarded for much more than the properties were worth, and now banks are trying to unload bad loans while there seems to be no buyers. 

Still, the mess in the commercial market is not nearly as pronounced as it’s been on the residential side.  In the typically stable commercial market, there is much less supply and many more income sources.  In general, landlords can still generate enough cash, and defaults are low, though values are declining and pressures are mounting for landlords and investors to maintain their assets.

The Silver Lining

So what is our advice to tenants during these unsettled times?  We are counseling them to be deliberate and strategic.  Indeed, companies can find a silver lining in today’s volatile economy if they do the following:

• Exercise greater control.  It’s now (or becoming) a tenants’ market, which gives companies more leverage in dealing with landlords who desperately want to hold onto credit-worthy tenants.  Tenants should keep this in mind as they consider negotiating new lease terms like expiration rights as well as new tenant improvements and additional concessions.  Companies with leases approaching expiration should determine what assets they want to hold onto and what they might dispose. Companies with longer-terms leases may want to consider disposing space, especially if they face job layoffs. And all companies should make sure that decisions on short vs. longer term leases are aligned with their business plan.   

• Protect the bottom line.  It’s now more critical than ever for companies to protect their assets and cut costs.  Real estate remains the second greatest corporate expense, following payroll, and the risks today are enormous.  In considering cost-saving measures, tenants should note that if they negotiate directly with landlords (as opposed to outsourcing to service providers), they may overpay by about 20%.  And they can save more by partnering with a tenant advisory firm that exclusively represents them, not landlords.

• Think strategically and long term.  Another way to save in the long run is to make modest upfront investments in strategic planning and project management.  By working with project managers, companies can reconfigure their space and improve productivity.  This is particularly important to companies that may need to downsize or “right-size.”

• Ask about conflicts of interest.  Landlords wary of their cash flow are now putting enormous pressure on brokers to close deals. This can be problematic to tenants when they consider that brokers from traditional firms (which represent tenants and landlords) cannot adequately serve two masters and avoid conflicts of interest.  Especially in this environment, tenants need to ensure that their broker is putting their interests first. 

The Changing Landscape

To be sure, tenant rep firms and traditional firms are colleagues that work together. But the tenant rep model is gaining traction during this time as companies realize how much is at stake. Increasingly, we encourage companies to apply due diligence in selecting a brokerage firm, considering variables such as the firm’s financial stability. In this light, the plummeting stock of some of the largest publicly traded real estate providers may be cause for concern.  Public companies are also beholden to the stockholders, not the tenant.

Another concern is that many real estate firms have recently merged in attempts to bolster their revenue. But what’s good for a brokerage’s bottom line may not be good for tenants, and companies may want to consider the advantages of partnering with non-biased, independent advisory firms.

In the final analysis, we are telling tenants that we feel their pain.  Their fears of the unknown are partly justified because no one knows exactly how the bailout will play out. But we do know that this is a time for patience and prudence, not panic. The meltdown is a reality, and we may now be witnessing just the tip of the iceberg.  But commercial real estate is built on a firm foundation, and we can take steps to weather the storm.

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November 26, 2008 by jack petrie.

New, Above-Standard, Grand Central Sublease Availability

CresaPartners has been engaged to market a new sublease listing at 330 Madison Avenue (42nd Street).  The space is an entire tower floor, measuring 9,507 rentable square feet (”rsf”), newly constructed in 2005.  The sublease term is for approximately 6+ years and the rental rate is negotiable.

The space has an existing, above-standard installation with 16 perimeter offices, 3 interior offices, conference room, bullpen (12 positions), pantry and reception.  There is supplemental air conditioning throughout the space and the furniture is available.  Additionally, there are great Midtown views in all four directions.  The space is wired for 50+ positions.  For additional information contact Jack Petrie or Jamie Addeo at 212.758.3131.

About 330 Madison Avenue

330 Madison Avenue is a 789,000 rsf, 39 story property located on the northwest corner of Madison Avenue and 42nd Street.  The property, built in 1965, is currently owned by Vornado Realty Trust, a real estate investment trust headquartered in Manhattan.  Major tenants include Bank Julius Baer,  Stanford Group, Ann Taylor, HSBC & Morgan Stanley.  The retail tenants include Citigroup and Ann Taylor.

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November 26, 2008 by jack petrie.

CresaPartners is hosting the New York Software Industry Association’s (”NYSIA”) Sales & Marketing Special Interest Group’s December 3rd, 2008  presentation on Networking Excellence.  The event will take place from 8-10AM on Wednesday, December 3rd at 100 Park Avenue, 24th Floor.  The event is free for NYSIA members and $5.00 for non-members.  To register online, visit www.nysia.org.

A Facilitated Networking Event

More structured than a networking mixer, more comfortable than speed networking, and more hands-on than a seminar, this lively and fun event facilitated by networking expert Liz Lynch offers a unique opportunity to learn important techniques and practice them first hand while having meaningful interactions with fellow participants.

Discover and apply the foundational skills that all successful networkers know:

• How to increase your value and be seen as a go-to resource
• How to ask for what you want without putting people off
• How to become a connector

Plus, get guided instructions on how to develop a clear elevator pitch to use throughout the event, and specific action steps to make follow up afterwards a breeze. You’ll leave with REAL connections, not just contacts.

About Liz Lynch

Liz Lynch is the founder of the Center for Networking Excellence and the author of the book “Smart Networking: Attract a Following in Person and Online”.  She is a sought-after speaker and top business networking strategist whose products, programs and seminars help entrepreneurs and professionals get clients, build their businesses and accelerate their careers through networking.  Liz also runs a successful strategy and business development consulting firm, Liz Lynch Ltd., which she has grown exclusively through networking, no cold calling required!  Before pursuing an entrepreneurial path, Liz earned an engineering degree from UC Berkeley, an MBA from Stanford University and worked at Goldman Sachs, Disney, Booz Allen & Hamilton and Time Warner.

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September 4, 2008 by jack petrie.

CresaPartners will host the September 10th New York Software Industry Association’s (NYSIA) Sales & Marketing Special Interest Group (SIG) discussion on Web 2.0 Marketing.  The event will take place from 7:30-9:30AM at 100 Park Avenue on the 24th Floor.  Registrations are now being accepted at www.nysia.org.

Marketing in the Web 2.0 Era

Over the past few years, social networking, search engine marketing, blogs, wikis, software-as-a-service, collaborative computing and web communities have grown tremendously.  These new technologies are changing many of the rules and companies with all sorts of business models have arisen to capitalize on emerging trends -but all have not been successful.  What separates the winners from the losers?  In this discussion, we will uncover how marketing has (and hasn’t) changed in an era of accelerated technological innovation.  Despite all the hype of Web 2.0, business is still all about finding customers, giving them what they want and building long-term relationships.  Companies that forget the fundamentals as they pursue the latest fads will not survive in the long-term.

About David Shiang

David A. Shiang is Vice President of Infrastructure and eBusiness Software Consulting at IDC. He has more than twenty-five years of information technology marketing and management consulting experience.  He has an MBA in management from the Kellogg Graduate School of Management at Northwestern University and an undergraduate degree from MIT and was a Danforth Graduate Fellow in English at the University of California, Berkeley.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company.

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