Current property valuations: I am constantly being asked whether property valuations are decreasing because of increases in capitalization rates. While capitalization rates have increased over the last two years what is more significant is the way in which properties are currently being underwritten. During the boom years, most underwriting utilized assumptions of projected large increases in rents often projecting increases of double digits each year. A clear sign of a market that was out of control. Currently, underwriting has come down to earth with more realistic rent projections. Consequently, property values have been more affected by the change in underwriting standards than by any change in capitalization rates.
Proposed Change in Lease Balance Sheet treatment: for those of you (hopefully, this is all of you) who don't regularly read the International Accounting Standards report you should be aware of a proposed accounting change that could significantly affect how companies view long-term leases. Could these changes encourage more companies to purchase office condominium units? Take a look at the article “Tenants, Landlords Could Face Dramatic Changes.”
High-tech Gizmo of the Month: observed in Boston, a trash can that compacts garbage using solar energy. The benefits: greater capacity for the garbage bin and easier and tidier collections.
Take a tour of the new East River Waterfront: having recently completed a tour circumnavigating Manhattan, I was struck by the huge number of new public parks that have open all around the perimeter of the island. One of the last missing pieces in this puzzle is the East River Waterfront, which, once this park opens, will be completed.
A country built on debt cannot stand: Abraham Lincoln once famously stated that a “House divided against itself cannot stand.” If he were alive today he might modify his speech and announce, “a country built on debt cannot stand.” More and more the American economy has become dependent upon consumer spending that is fueled by debt (either expensive credit card debt or, even worse, debt secured by second and third mortgages on a primary residence). No surprise then that during an economic contraction our economy goes into a deep swoon with high levels of bankruptcy and foreclosures. While less debt will result in less vigorous economic growth it will also result in fewer and less drastic economic downturns. Why then do we continue to bemoan the fact that the US consumer is spending less and saving more? Ultimately, this will lead to slower growth but more economic stability. Read “Consumer debt tumbles $100 billion.”
Do you think they paid overtime? Check out “Chinese workers build 15 story hotel in just six days.” You may want to think twice before checking into this resort.
For some interesting statistics about the third quarter multi-family sales market take a peek at the article “About that Third Quarter.”
Sections of Broadway in Times Square and Herald Square, as part of the city’s initiative to curb congestion on streets and sidewalks, and many hope the changes will also increase business for area retailers. The thoroughfare, from 47th Street to 42nd Street and from 35th Street to 33rd Street will be closed to all vehicles, becoming a pedestrian walkway featuring chairs and benches.
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