Crains New York - January 21, 2013 - (Page 4)

IN THE Sixth Avenue landlords ask: MARKETS Where have the tenants gone? by Aaron Elstein BY DANIEL GEIGER Financial services giant AXA Equitable is casting a 400,000-squarefoot block of Sixth Avenue office space onto the market as a longterm sublease. It is just the latest in a series of large spaces to hit what is becoming an increasingly glutted market on the famed Avenue of the Americas. The Manhattan-based life insurance company has more than 500,000 square feet at 1290 Sixth Ave., between West 51st and West 52nd streets, but plans to vastly shrink its operations there and shift employees to locations it has on the far side of the Hudson River in Jersey City, several sources familiar with the company’s plans say. Cautious moves The sublease stretches for 10 years, making it competitive with the long list of spaces being offered directly by landlords in the area. “If you look at what’s going on in the economy right now, it’s affecting corporations and their decisionmaking, and Sixth Avenue is the Large firms are ‘not leasing spaces’ and are even ‘giving space back’ the coming months as a number of big tenants make planned cuts or moves. That would be the highest vacancy rate seen on the avenue in nearly 20 years, Mr. McCarthy said. Among the likely vacancies looming on the horizon are a number of major blocks of space.The Internal Revenue Service could give up nine floors totaling roughly 250,000 square feet at 1133 Sixth Ave., according to sources. British media outfit Pearson will also be leaving, relocating from about 150,000 square feet at 1330 Sixth Ave. to Hudson Square in the next few months. On top of all that, Microsoft reached a deal early this month to leave 1290 Sixth Ave. and move into 200,000 square feet at 11 Times Square. Blocks of space Those spaces will add to several major blocks that have lingered in the neighborhood for months.French financial company Société Générale left behind about 400,000 square feet at 1221 Sixth Ave. more than a year ago. Dewey & LaBoeuf, the law firm that went bankrupt last year,dumped about 470,000 square feet on the market at 1301 Sixth Ave. Brokers fear that even more space could come on the market. Morgan Stanley, which has hundreds of thousands of square feet at 1221 Sixth Ave., has signaled major layoffs that could cause it to shrink or even eliminate its presence in that building. Publisher McGraw-Hill has also hinted, according to sources, that it may put space at the same tower on the sublease market. Ⅲ Convenient access to major business hubs. Subways & Highways just blocks away. COMMERCIAL UNITS WITH FLEXIBLE SPACE. PREBUILT/BUILT TO SUIT www.bushterminal.com W H E R E B U S Iwww.bushterminal.com E S NESS LIV Industrial, Ofﬁce, Creative, Warehouse/Distribution, Manufacturing, Retail, and Technology. 866.361.0769 lease@bushterminal.com 4 | Crain’s New York Business | January 21, 2013 882 Third Avenue, Brooklyn TIMOTHY RYAN: “I never thought it was necessary,” bank industry chief said of the Volcker Rule. bloomberg news Vacancy rate jumps as big corporations downsize or move across the Hudson home of the large corporate users,” said Ken McCarthy, Cushman & Wakefield Inc.’s chief economist. “They’re the ones being cautious right now. They’re not leasing spaces, and in some cases they’re giving space back.” Mr. McCarthy said that Sixth Avenue had the poorest absorption of office space of any submarket in the city last year. He noted that about 550,000 square feet of space were added to the market there in 2012. Sixth Avenue’s vacancy rate currently stands at 10.7%, but that figure is expected to swell to 13.8% in Why banks might sue over Volcker W ith Washington bureaucrats devising all sorts of ways to regulate Wall Street, it’s no wonder there are so many grumpy people at the industry’s chief trade group, the Securities Industry and Financial Markets Association. Lobbyists there are irritated with a proposed Labor Department rule concerning financial advisers that competes with a similar one contemplated by the Securities and Exchange Commission. They’re angry with edicts set to take effect this summer that would require banks to spin off some of their derivatives trading business. But nothing gets SIFMA leaders foaming at the mouth more than the Volcker Rule, which would restrict banks from using their capital to gamble in the markets. It would also rein in other risky activities, such as investing in hedge funds and private equity. “I never thought it was necessary,” SIFMA CEO Timothy Ryan harrumphed at a press conference last week. For now, SIFMA and other bank lobbyists are working behind the scenes to water down the muchdelayed rule before it is formally adopted, which supposedly will happen later this year. If SIFMA can’t sufficiently weaken the rule, look for the group to sue to block it. Banks traditionally have acquiesced after their regulators spell out the rules of the road. But in the past few years, Wall Street has begun turning to the courts to halt regulations it doesn’t like. One reason is that the stakes are so high. A good 80% of the $50 trillion global debt market fell under the initial draft of Volcker, according to a 2011 analysis by Sanford C. Bernstein & Co. Litigation over the Volcker Rule seems likely if only because business groups have had success using the courts to block several recent financial reforms. For example, in late 2011 SIFMA and another banker group, the International Swaps and Derivatives Association,sued the Commodity Futures Trading Commission over a new rule that set limits on speculative futures trading.Last September, a federal judge ordered the CFTC back to the drawing board. In 2010, the U.S. Chamber of Commerce and the Business Roundtable sued the SEC over a new rule aimed at making it easier for shareholders to unseat corporate directors.An appeals court vacated the rule in 2011. But the Volcker Rule has a special place in bankers’ hearts because it reaches deeply into what they care about most: their pay. Recall that making enormous bets fueled with debt or derivatives was a much bigger business for a handful of large banks last decade than making loans or taking companies public. The Volcker Rule seeks to curtail those activities, which means banker bonuses would fall, too. Mr. Ryan, for his part, will soon fight the Volcker fight from another perch. He’s leaving his SIFMA job next month to become head of regulatory strategy and policy at JPMorgan Chase. He said last week it’s premature to discuss a lawsuit because the Volcker Rule isn’t finalized yet. “We’ve made no judgments about what we will do or will not do,” he added. Sounds like litigation is coming, doesn’t it? Ⅲ http://www.bushterminal.com http://www.bushterminal.com

Table of Contents for the Digital Edition of Crains New York - January 21, 2013

Crains New York - January 21, 2013
In the Boroughs
In the Markets
The Insider
Business People
Corporate Ladder
Opinion
Greg David
Real Estate Deals
Report: Small Business
Classifieds
New York, New York
Source Lunch
Out and About
Snaps

Crains New York - January 21, 2013