NEW YORK CITY—In light of the recent rise—albeit a small one—in interest rates, coupled with the fall of the financial services sector and memories of the recession, one might be concerned about where things are headed.
But not Arthur Mirante II. The tri-state president and a principal of the fast growing services firm Avison Young—and the CEO for 20-years of Cushman & Wakefield, where he toiled in various positions for more than 40 years—is nothing but bullish on the city’s future.
“I’ve never felt as optimistic as I do today about our market’s fundamentals,” he said during a luncheon presentation in Midtown to the local chapter of the Appraisal Institute. “Students, young professionals…everyone wants to be here. We’re a growing technology and healthcare hub, the financial sector has stabilized and may even grow and we’re the most preferred real estate market in the world; we’re a safe haven. Plus, the capital supply from overseas is strong, so I don’t expect cap rates to rise, even with rising interest rates.”
Businesses are moving full-steam ahead, he noted. “Even with warnings in recent years of possible world incidents, such as terrorist attacks, business leaders are starting to feel better and to hire again.”
Looking around the city, landlords are preparing for corporate growth, he added. “Look at 425 Park Ave., which L&L Holding Co. plans to replace with a new 650,000-square-foot tower; 75 Rockefeller Plaza and 280 Park Ave. All over the city, we’re seeing new lobbies and other upgrades to accommodate anticipated growth.”
A good example of this, he said, is Three Hudson Blvd. which, as it happens, is being marketed by Avison Young. “Hudson Yards is the largest private real estate development in history and, at the center of it all is Three Hudson Blvd., which sits at the confluence of the Highline, from the south. The new 7 train terminal is on the site, and 30,000 commuters are expected in the station at peak times. Tenants of the tower won’t have to even cross the street to enter the building from the subway.”
“The building has many efficiencies, it’s column free, has floor to ceiling windows and it’s being built in excess of LEED-platinum status. It’s suited to companies’ densification needs, and that’s something many firms are doing right now.”
The building also features favorable financial terms for prospective tenants, he noted, as the location comes with tax incentives. “An anchor tenant would get a 25% tax abatement. Time Warner executives—who recently announced the company would move to Hudson Yards from its Columbus Circle location—said the move will allow the company to ‘reallocate substantial savings to our core business. ”
Still, 3 Hudson Blvd. won’t be built on spec, Mirante noted. “It needs a 500,000 to 600,000-square-foot anchor tenant, but it’s an as-of-right project, so once a tenant has signed, the project should be ready for delivery in 30 to 36 months.”
“It’s a viable and vibrant new business location,” he added in describing Hudson Yards. Though in general, Mirante sounded a call for vibrant development throughout the city.
“Even with the same rate of employment growth over the next five years as we’ve had for the last five, the city needs another 21 million square feet of office space just to maintain equilibrium.”