NEW YORK CITY-Nearly 100 British real estate executives heard the ups and downs of the Manhattan office market as Jones Lang LaSalle hosted a market-briefing breakfast here yesterday. The presentation served as a sort of unofficial welcome to attendees of the first North American conference of the British Council of Offices.

Needless to say, the bulk of the news was good, but JLL New York Tri-State region president Peter Riguardi and Raymond Quartararo, managing director of project and development services for the Northeast region, also outlined the challenges that exist. Interestingly, many of the challenges are foreign born.

The positives are clear, in terms of sheer numbers alone. Riguardi stated that Manhattan represents some 45% of the nation’s total CBD office market. And its employment base is essentially assured, given the fact that the city anticipates growth by one million residents in the next 10 years. But the challenges are equally clear, he stated, and the city must address such concerns as its “antiquated mass transit system and its overloaded infrastructure.”

But such potential hurdles can’t cool a hot market, and Riguardi cited such massive projects as the redevelopment of the Farley Post office and the rehabilitation of the West Side yards as key to the reshaping the face of the city. Corporate moves as well will continue to make headlines, and he referenced the Port Authority’s newly inked Downtown space and the coming (rumor says midsummer, though Riguardi wouldn’t commit) relocation of Merrill Lynch as prime examples of Manhattan’s corporate vibrancy.

Quartararo continued the upside prediction for the construction side, pointing out the multiple stadiums that are going up around town as well as the ongoing World Trade Center build. But here’s where the foreign forces–China and Dubai, specifically–present a real and present challenge. Almost “45% of the world’s tower cranes are in Dubai right now,” he said. And China is currently using “five times more concrete than the US.”

Such shortages have contributed to a total 37.9% increase in New York City construction costs. This, Riguardi later added, pencils out to all-in construction costs of $1,200 per foot. “But,” he stated, “there is enough demand to justify that cost.”

But it’s not cost that seems to worry Quartararo. The development pipeline is “fully backlogged,” he stated. “If we go to the market with a $100-million project, four developers will decline immediately.” This state of affairs won’t affect the major players–those with the deep pockets of a Bank of America, let’s say. “But the smaller user will feel the constraints of labor and materials.”

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