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Our friends who work in the financial world seem to be looking over their shoulders constantly. We asked our loyal GlobeSt.com readers what the results of all the layoffs in financial services will bring and almost half (49%) think this will shatter the market. Nearly a third (29%) don’t believe layoffs will have much impact. An optimistic 22% think the empty spaces will create expansion opportunities for other tenants. Abraham Hidary, president of Hidrock Realty, spoke to GlobeSt.com about how the layoff situation could influence the market.

“I disagree with those 49%, but I’m not surprised that 49% say that. There’s so much negative sentiment in the market nowadays that people are constantly perceiving the glass as half empty. Rents will come down, yes, but are they going to come down to where the market will be destroyed? No. Rents will come down 10% or 15%, which makes it significantly easier for tenants to lease space. It’s not destroying the market. Destroying the market is when rents are cut in half. There’s not enough layoffs or potential vacancies to make that happen.

“I think the market is more complicated. It’s not so black and white. I think it depends on two things: A) how big your building is and B) where your building is located. When you’re talking about the market, it’s a little too broad.

“I think the Downtown Manhattan market will be hurt dramatically because it’s such a big financial hub. There may not be any other companies there to take the space, so it could remain empty. That area will probably be hit the most of anywhere in the city. Midtown obviously is very financial as well. That will be hurt, but not as bad because it is so much more diverse than anywhere else. The prices will come down, but there will be other companies that will be in the market for that space.

“The smaller buildings won’t be impacted. Larger buildings with 100,000-sf blocks of space will be hurt more. Bear Stearns-type buildings will never break up those spaces into 40 little spaces. Smaller companies aren’t moving into those spaces. You’re not going to have vacancies created in the smaller buildings, because financial companies aren’t in those buildings.

“The silver lining is that it gives the tenants the chance to rent affordable space. I don’t see too many people expanding in today’s market. People are not inclined to take more space than they think they need.

“I’ve seen the period of 2002-2003, when you had the dot-com burst and you suddenly saw a lot of space thrown on the market. This was a parallel situation, but it happened in a different part of the city.

“The main trickle-down effect is that companies are not expanding. I haven’t seen too many companies closing up shop; more often they may not have access to debt or liquidity, so they’re keeping their payrolls constant and maybe laying off a few people. I don’t think there’s a dramatic negative effect, but things will stay where they are.

“Our economy and American people in general are resilient and very creative and will find the next big thing. We went from dot-com to the real estate boom, from the real estate boom to a financial boom. There will be something new. Will it be healthcare or biomed? I don’t know, but there will be something that will be a big moneymaker. There will be something to fill the void, keep people busy and keep people working.”

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