Thank you for sharing!

Your article was successfully shared with the contacts you provided.

NEW YORK CITY-An even bleaker assessment of the economic outlook than the city and state comptrollers have already provided comes from the New York City Independent Budget Office. The IBO forecast projects New York City job losses 40% higher than state comptroller Thomas DiNapoli predicted in late November–a gap which IBO director Ronnie Lowenstein attributes partly to the passage of time.

Without knowing DiNapoli’s precise methodology, “the biggest difference is just that in the past month or so, it’s become clear that the US recession is far deeper than most macro forecasts had anticipated,” Lowenstein tells GlobeSt.com. She adds that the forecasts from DiNapoli and city comptroller William Thompson, Jr. would not have incorporated the December unemployment numbers from the US Labor Department–just released on Friday–and may not have incorporated the November numbers, which have since been revised upward.

“Locally, since these reports came out, we have gotten the news from Citigroup,” Lowenstein says. She’s referring to the financial services giant’s November announcement of 50,000 layoffs worldwide. Another factor influencing the IBO’s job-loss projection–243,000 by 2010, compared to 175,000 in DiNapoli’s forecast–is that “we have had an additional month of unemployment collection data. All of that is evidence that things are worse.”

More than one-third of the projected job losses will occur in the financial services sector. IBO projects a total of 82,300 layoffs, including nearly 49,000 in securities alone. Construction and retail will also shed jobs, with IBO predicting layoffs of 17,700 and 20,900, respectively.

The IBO report notes that the city’s mortgage recording tax and real property transfer tax revenues reached “an all-time high in 2007 at $3.3 billion, having grown at an average annual rate of 24.6% since 2001. Revenues dropped to $2.6 billion in 2008, as the number of real estate sales and mortgage refinancing declined sharply.” Lowenstein expects the combined MRT and RPTT collections for 2009 to “continue their dramatic slide” with combined collections of $1.6 billion, and reach bottom at $1.4 billion for 2010.

The report’s estimates for ’09 and ‘10 for both taxes are below the Office of Management and Budget’s November 2008 projections. “This reflects the worsening economic situation and the extremely low collections in November and December as lending nearly ceased,” the report states. However, the report adds, “Even with this decline of more than 50% over two years, collections will only be about 9% below the levels of 2004.”

A major factor in this decline has been the drop-off in very large sale transactions–those of $500 million or more. “In fiscal year 2008, there were 11 sales of commercial properties valued at more than $500 million,” the IBO report states. “However, since the credit market meltdown of September 2008, there have been no reported sales in this price range.”

Lowenstein says that other macroeconomic factors affecting the outlook for commercial real estate include employment–particularly office employment–personal income and interest rates. With the city having already lost tens of thousands of jobs, it’s clear that one of these indicators has declined, while citywide personal income is down if year-end bonuses are counted. As for interest rates, they’ve been cut, but Lowenstein observes, “There’s no credit.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.