Saturday, August 08, 2009

Who is Ground Zero's Ombudsman? (

Excerpt From
by Cody Lyon
NEW YORK CITY-The sidewalks surrounding the 16 acres in Downtown Manhattan known as Ground Zero are still covered by tourists, who are forced to hold cameras high above their heads in an attempt to peek over the blue-shrouded fence guarding the construction site. Eight years after the event that drew those tourists there in the first place, construction at the site has been slow to come, marred by inefficiency and public frustration, and for the last year or so, a very public dispute between politicians, a massive public agency and commercial retail interests.

Over the past few days, the Port Authority of New York and New Jersey, Silverstein Properties Inc. and the politicians who support them, have all raised the volume higher. The main players, including Gov. David Paterson, Mayor Michael Bloomberg, SPI and the Port Authority have issued statements and counter-statements that appear to point the finger at the other parties involved.

"If you get anyone involved who is part of the political process, or the construction process, you’ll get the same old tired answers," says construction attorney Barry LePatner, author of Broken Buildings, Busted Budgets: How to Fix America’s Trillion Dollar Construction Industry. "There should be huge outrage over this, but we’re in the middle of recession which draws our attention to a zillion other problems."

Others agree that that the volleying between the involved parties has grown confusing. "The political ping-pong game is very disconcerting to tenants and the brokerage community at large, because people are seeking clarity and specific direction in this marketplace," says Robert D. Goodman, senior managing director at FirstService Williams.


Saturday, August 01, 2009

What size is that next shoe to drop? CRE woes threaten Economy

excerpt from
by Cody Lyon
NEW YORK CITY-Last week, Federal Reserve chairman Ben Bernanke presented his agency’s semi-annual Monetary Policy Report to both houses of Congress. In response to Senate questions, Bernanke admitted that the rising tide of problems in the commercial mortgage market could pose "serious and major challenges to the banking system." But, when asked by New Jersey Sen. Robert Menendez if the Fed had the tools to "stem" any approaching crisis, Bernanke replied that he did not know.
Experts agree that the sea of maturing commercial real estate mortgages is the next shoe to drop in the nation’s recession. But the size of that shoe remains to be seen, and just how far it falls is anyone’s guess. And there’s no consensus, on whether greater government intervention will jump-start the sleeping industry and perhaps soften any blows the crisis throws at the nation’s banking system.

"We’re in for some tough times," says Robert Dobilas, CEO/president at Realpoint LLC, the credit rating agency based in Horsham, PA. He adds, "we’re midstream in the fall."

Undoubtedly, the commercial sector’s nose-dive at least has the potential to further destabilize the nation’s financial markets. The Fed says US banks hold around $1.8 trillion in commercial real estate loans. Data from Real Capital Analytics’ mid-year report show that during the first half of 2009, the number of distressed commercial properties rose by $67 billion to $115 billion, an increase of 122%.