So do you believe in psychic bad energy?

It's been quite a memorable last 10 days in New York -- Kristen andclient #9 started it off and then the crane came crashing down justas JP Morgan Chase and the government were lowering the boomon Bear Stearns. We've heard about all condo troublesin Miami, Vegas, and Southern California. Well, this crane accidentcould be symbolic for what's happening to some of these Manhattanhigh-rise residential projects. Yes, New York has the benefit offoreign buyers taking advantage of the weak dollar, but the numberof high-end apartment buildings going up around town is just offthe charts. And now the Wall Street outlook sours dramatically. IfI'm a developer pouring concrete on the 24th floor of my sliverdevelopment in the East 50s, I'm already getting anxious before thefrigging crane keels over.

Some of these buildings are pretty ridiculous -- askingmulti-millions for views looking out from floor-to-ceiling windowsacross narrow streets smack dab into other buildings in second andthird class neighborhoods. You've got to be from out of town to beinterested in some of these locations especially at thepricetags.

Some more on the Manhattan office market from my mailbox (a notefrom an old boss): He writes: (Besides the Wall Street travail)"you also have all the big law firms laying off tons of lawyersconnected to CMBS and sub prime so that component is shrinking.There are also a lot of companies committed to new space that arenow trying to get out of the lease or will be on secondarymarket. You are on to something. There is going to bean increase in vacancy and drop in rents. I do not think itwill be that dramatic -- 5% drop in occupancy and 10% to 20% inrent per square foot."

Long term holders will weather any storm just fine. It's the guyswho bought in the last two years at those near basement cap ratesand their bankers who financed 90% or more of the deals who can'tbe feeling too swell.

© Miller Ryan LLC 2008