Slow-motion Death for Commercial Towers.
January 1, 2010
By: Peter Kiefer

They are not easily recognizable, but they are out there all around us, on the streets of Midtown and Lower Manhattan.

They are a growing breed of office towers, not quite alive but not entirely dead either. They are New York's City's zombie buildings. And within the commercial real estate world, once a building is tagged as a problem site, it has a difficult time shaking off the negative label, attracting tenants and finding rental income to nurse itself back to health. ...

... Take Worldwide Plaza: Before George Comfort & Sons purchased the 47-story office complex from Deutsche Bank in July, it had hundreds of thousands of square feet of vacant space that couldn't be leased, according to Woody Heller, who heads Studley's capital transactions group.

The building was tainted because it was part of Harry Macklowe's portfolio of Manhattan office towers that was purchased at the height of the market and then returned to lenders. "It had 700,000 square feet available, but if you wanted to lease space in that building, could you have? Not really," Heller said. "You could have gotten a space tour, but who was authorized to sign the lease? Who was authorized to sign a check or concession?" ...

... Heller noted that there are two categories of available buildings: those that can make deals and those that can't. "Until the financial structure solidifies, it is unlikely a tenant broker will put their tenants in a position of peril," he said.

 

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