Don't Count On Financial Services

This is what happens when Colliers East region president Joe Harbert doesn't get his beauty sleep. At a Halloween lunch at Aureole, he talked about a recent meeting of 75 financial services execs that he attended; none of them had any clue how many people they'll hire next year. That sector's leasing is down 4.1% from a year ago, but the 2012 darling of the leasing pool, communications/media, took 8.6% less than its busy 2012. And yet, the office market has absorbed as much in the first three quarters of this year as in all of 2012 (1.9M SF).

The Garment Center has beat the pants off other Midtown South areas. Colliers' Marty Meyer says it's benefiting from rising rents elsewhere in the submarket. And word among the Colliers folks is that the elusive Midtown South rent ceiling is finally coming into view. Andy Roos anticipates tenants pushing back when rents reach $65 to $70/SF. (It took a year, but Les Miserables is finally inspiring a revolt.) Alex Jinishian, though, says some are tossing in the towel now at $55 to $60 and looking in Midtown, adding that the availabilities still out there owe to the landlords that are holding fast to their asking rates.

Alex (whom we also snapped at the lunch) tells us something unusual has happened at 501 Madison Ave. When the 85-year ground lease expired, the landowner took ownership of the 185k SF office building (as opposed to the typical story ending: a new ground lease or a sale of the building). But the private family that took over is playing the part of Midtown office skyscraper landlord to a T by renovating. Alex tells us new windows are in; new elevators, HVAC, and storefronts are going in; and a lobby re-do will deliver in January. Colliers renewed 95k SF of the tenants and, after less than a week of marketing, has had good activity on the remaining 80k. The owners also are converting the second floor to retail, and Alex tells us he's looking for a luxury retailer for the 8,500 SF block.