By Al Barbarino
Every game has its winner and loser. In the game of Manhattan real estate, Midtown South will be 2012’s crowned victor.
Speaking at a Real Estate Board panel called “Believe in growth, where it’s happening, who’s growing, why it’s happening and how to get in on it,” CBRE vice chairman Kenneth Rapp predicted, “We’re going to see [Midtown South] really surge in 2012.”
The panelists said the neighborhood has become a hub of digital media companies where ideas and subway lines are abundant.
“We’re going to see a fundamental shift in Midtown South,” Rapp said. “I don’t think the Eurozone or the elections are going to affect the technology, creative and new media companies.”
Midtown South got a jolt of energy when tech behemoth Google stomped into town last year. Vacancy rates fell from 8.6 percent to 6.4 percent from the fourth quarter of 2010 to 2011, according to data from Cushman and Wakefield – a national low for any central business district.
There’s also no dispute that Mayor Bloomberg takes every opportunity to play up the scene, as techies wait for Bloomberg’s baby — a joint venture by Cornell and Technion to build a new engineering school — to be delivered on Roosevelt Island.
“This is the most exciting development to be announced in the last ten years,” said Marcus Rayner, managing principal at CRESA Partners New York, LLC. “What you’ve basically done with that is anchor the technology industry in New York… that one development produces 2,600 young, qualified engineers.”
It’s not just Midtown South that will benefit. There was a general consensus among the panelists that all places West stand to benefit from the high-tech surge, as well as an influx of foreign investors and businesses looking for safety.
“This city is very well-positioned, given what’s happening around the world,” said William Elder, a managing director at RXR. “All this points to capital moving into a safe haven and robust market like New York.”
If there is a loser in 2012, it will be Wall Street — though panelists differed in their opinions on just how big of a hit financial services will take in 2012. For some, impending layoffs and downsizing in the city’s bedrock industry will actually be worse than they appear on the surface.
“The multiplication factor of a financial service job compared to any other job is huge,” Raynor said. “In this market, you probably have to create twice the number of jobs that you had to create historically to generate the same level of demand (for real estate space).”
For others, the outlook isn’t quite so bad.
“We’re still largely driven by the financial system, as much as the tech sector has grown,” said Bruce E. Mosler, chairman of global brokerage at Cushman & Wakefield. “That’s not shifting the fundamentals in an enormous way. We’re still 30 to 35 percent driven by financials. We’ll see the tech sector take a piece of that in the go-forward, but our roots are still where they are.”
