Anecdotally, for the past month or so, brokers have told me that leasing has been quiet. Are you seeing that on the sales side at all?
Ms. Stacom: I would say the appetite of buyers has definitely been picking up as the lending market seems to be opening back up again and sort of the duel combination should definitely be positive for the market place. You just have to have the assets priced right. A lot of assets that went on the market at the second half of last year that were not priced right or met with some kind of disadvantage in the marketplace didn’t trade.
Mr. Shanahan: Or suffered from what I would call inadequate underwriting and disclosure of spends in the building.
Ms. Stacom: They were too aggressive in the underwriting or, you know, didn’t really talk enough about the condition of the building system—things like that.
How has the underwriting changed? Since becoming more conservative as a result of the recession, have underwriting standards loosened back up?
Ms. Stacom: Our underwriting has been more conservative. I can’t speak for the others.
You facilitated the sale of Park Avenue Plaza at 55 East 42nd Street for about $600 million to SoHo China recently. Are you seeing increased interest from Chinese buyers?Ms. Stacom: A lot of people are looking. [SoHo China] was very sophisticated in the manner in which they entered the market, and we spent a lot of time with them several years ago. I think they’d spent a lot of time getting ready. And I think others have been far less systematic. I think just like any offshore investor you have to have a little ramp-up time. You probably have to lose a deal or two before they’re ready to go. I would say that there are more Chinese groups that have either started or are in that ramp-up period.
Are there other foreign investment groups that are showing a lot of interest?
Mr. Shanahan: We’re seeing some ramp-ups from the Malaysians. There’s a lot of money coming out of Malaysia. We’re starting to see money coming out of it at each end.
Ms. Stacom: Malaysia’s definitely doing a lot in London right now, and that’s often the stepping stone to head over to the U.S.
Is that simply because the economy isn’t suffering there the way that it is elsewhere?
Ms. Stacom: Yeah, it’s booming. They’re doing great. The Chinese are doing great, the Sicilians are doing great. I think we’ll see more money coming up in South America. We have a very tight network of brokers around the world, and the nice thing is they’re also handling major trophies in each of their market places. So we can often get their runner-up lists or get introductions to their strong relationships. So we tie that together well.
What trends are you seeing on the investment sales front?
Ms. Stacom: Certainly the market has now become one brokered recapitalization, or sales of partial interest where at one time those were often trades between partners. That’s something we’ve spent a lot of time working on and building up an acceptance in the market place. And now I think you almost have more buildings go to market to be recapitalized versus outright sold. So it’s an interesting dynamic change in the market.
Why is that happening?
Mr. Shanahan: You’re seeing these big retailers are not consistent in every city. The tenancies are relatively homogenous. So, you know, you look at the credits in each of the markets and investors get comfortable with the high street retail.
Ms. Stacom: And then, just like they like Park Avenue or they like Fifth Avenue, the same type of thing happens with retail. “O.K., I’ll take Madison, O.K., I’ll take Fifth,” and there’s a scarcity factor that makes them comfortable in these investments. And just like we saw residential go from typical trades being you know $30, $80, $150 million and then suddenly they became, you know, $300, $500 million. We’re starting to see that trend opening up for retail.
I imagine that with what’s happening in the foreign markets these days you both must spend a lot of your time poring over international business headlines. Is that fair to say?
Ms. Stacom: I like to read the comics.