This comes after Web-consulting firms, Scient, Xpedior and iXL Enterprises all announced major job cuts and office closings. Scient is a co-tenant with Jones & Day at a Tishman-Speyer property in mid-Manhattan. Lower ad budgets at dotcom firms and a lessening of demand for Internet business services are contributing to the downturn.
"I don't have a problem with service businesses in general," says Tony Malkin, president of W & M Properties. "But you have to look towards the credit of these businesses and how it equates to the level of risk that you are prepared to take. There is a certain risk in service businesses; there is a greater risk in service businesses in rapidly changing or evolving areas."
"The ripple has become a splash," he observes. "Capital markets are not funding these businesses. But this is healthy because we need the space and the workers. Companies are starved for employees."
The ripple effect is a concern. The feeling is that the dotcom demise will be followed by a related demise by the service industries associated with them.
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