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NEW YORK CITY-With unemployment rates still high and the stock market still low, new construction, nationwide, has virtually come to a standstill. Yet, amidst all the negative performance figures, three real estate developers got together yesterday to explain their decisions for going forward with speculative developments here.

At a Real Estate Board of New York luncheon, held at the Waldorf=Astoria, Veronica Hackett, partner of the Clarett Group; Howard P. Milstein, managing partner of Milstein Properties; and Dr. Axel Stawski of the Kipp-Stawski Management Group, answered questions from moderator Warren Heller, executive managing director of Insignia/ESG, on the state of their respective development projects.

While both are building office properties, Stawski and Milstein are taking dramatically different approaches to filling their speculative space. Stawski’s 253,000-sf building at 505 Fifth Ave., in the Grand Central Station district, is seeking 8-20 small leases to fill its floors. Conversely, Milstein is looking for one major office tenant to put its name on the Times Square property and occupy the entire 850,000-sf building.

Located at 42nd Street and Eighth Ave., Milstein’s project is already in the excavation process with construction expected to begin in about six months. However, he admits that if no major tenant is found by the time of the ground-breaking ceremony, his company will consider building an apartments rather than offices.

“A Times Square building is not a standard building,” he explained. “The retail there is valuable, the signage is valuable and the parking is valuable. You can get about $12 million exclusive of the apartment or office [leases].” He added that the property also marks the last piece of the Time Square redevelopment project.

Having had a previous bad experience with a major office tenant, Stawski now tries to look for diversity in his buildings to avoid dependency on major lessees. “We had a 300,000-sf building, where a 50,000-sf tenant left. We lost a significant amount of cash flow,” he explained. “Now, I don’t like big tenants because they always move out at the wrong time…We don’t want our building to go down the drain with our tenants, so we stick to smaller leases.”

Speaking for a different industry, Hackett detailed her development plans in the multifamily sector. In December, the Clarett Group sold its interest in two buildings that it had under a joint venture with Post Properties in order to form a new JV with Prudential, she said. Now, the residential development partners are looking at space here on 107th Street and Broadway.

“We purchased the property and expect the condos there to be ready in early 2005,” she stated, noting the deal is not yet finalized.

Despite the poor job market, Hackett is convinced that Big Apple real estate will survive the downturn. “We look over 30 years. Supply has historically been low here,” she remarked, noting there will be a need for new multifamily products when the economy turns around.

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