INSTABILITY IN THE FINANCIAL SECTOR...

One of the biggest jolts to hit New York City in quitesome time occurred earlier this month as three major financialservices firms in rapid succession—Lehman Brothers, Merrill Lynchand AIG—went through radical changes. In the case of Lehman, it wasa bankruptcy declaration followed by a distressed sale of much ofits assets to Barclays PLC. Merrill was sold to Bank of America toavoid a similar fate, while AIG's rescue took the form of a bailoutby the federal government. Considerably less of a jolt was theresults of a GlobeSt.com poll asking readers to gauge the effectsall of this will have on commercial real estate. Seventy-eightpercent of you think the Wall Street upheaval will "decimate" theoffice market. A local expert who also thinks along these lines isRichard Persichetti, research manager for the New York region ofGrubb & Ellis. He produced a special report last weekpredicting that the fallout will be a sizeable increase in subleasespace. Persichetti commented further on this issue in conjunctionwith last week's poll.

"Obviously, it will have an impact on the New York market, sincefinancial service firms are the biggest occupiers of space inManhattan. There's no way around that. In the past few days, it'salmost like the world has changed. You wake up every morning andfind more global financial services firms restructuring. There's anew piece to the puzzle every minute, and it's look everything isquickly changing. On the positive side, New York will retain itsposition as the anchor for the world financial structure. It's justthat the whole global service industry is going to shift alittle.