Tech companies were active in Manhattan last year. How did that affect pricing overall?
Last year, New York became the second-largest recipient of intra-capital funding as a city—second to Silicon Valley. Traditionally, the second-largest recipient had been Boston, and had been for a long time. So that’s very exciting, and it shows up in a number of ways. It’s no coincidence that Midtown South has the lowest vacancy rate in the country. Why? Because that’s where the tenants are heading.
Well, as these tenants head to Midtown South, and the vacancy rate goes down, which obviously means the rents go up, where do the tenants who are getting priced out of Midtown South go? And the answer is, they go downtown. And so, downtown, a market that has been somewhat sleepy and perhaps a tad overlooked in the last decade, is now the fortunate recipient of a lot of the tenants who are being displaced in Midtown South.
Will Downtown Brooklyn feel that ripple effect after it moves across lower Manhattan?
Yeah, you’re a step ahead of me. We were touring a building there recently, and when we walked outside, one of my younger guys said to me, “You know, I could barely restrain myself from saying, if you live Brooklyn, raise your hand.” And so the answer is, a lot of the workers do work in Brooklyn. Brooklyn is enjoying a remarkable reissuance.
You were involved in the development sale of 400 Park Avenue South. Considering how few development sites have traded, what made that site stand out?
That’s a site that wasn’t in any way in stress. There wasn’t a lender that was taking a discounted payoff. You know, the owner made an enormous profit based upon what they had paid for the site, and I think it was just a family decision by the family that had owned the site that they were happier enjoying the appreciation of the land than going forward and developing it. It’s not always rational reasons that back up those decisions.