REAL ESTATE
FOR commercial real es tate, the good times seen in the beginning of 2007 proved to be too good to last.
At the end of 2006, we warned, “The city’s commercial real estate market is in the middle of such a perfect Zen balance that something’s bound to disturb it.”
And that’s exactly what happened. Commercial sales values held their own until this past summer, when investment banks decided to tighten lending standards for commercial players, just as mortgage lenders did for consumers.
Though leasing activity has remained robust, and very low vacancy rates have led to more leases being signed at rents that top $100 a square foot – and even exceed $150 – commercial values have begun falling due to lenders’ demand for more equity as a down payment for purchases and a decline in the number of lenders participating in large loans.
Meanwhile, environmentally friendly office space became a must-have among companies looking to promote better living by leaving smaller carbon footprints.
Retail remained a bright spot in the city, thanks to continued demand for flagship locations and the growing number of shoppers from overseas who took advantage of the low dollar.
Lois Weiss
RETAIL
THROUGHOUT 2006, economists had debated whether the housing debacle would impact consumer spending. By spring, the hurt was clear.
Falling home prices – which damped shoppers’ need to fill new living rooms, kitchens and closets with accessories of all kinds – would have been enough to mute sales gains at retailers this year. But consumers also were grappling with soaring gasoline prices and – beginning in late summer – a credit crisis.
The result of the insult and injury could be the weakest year for retailers since 2002.
The profit picture is accordingly bleak for many of Wall Street’s best-regarded retail firms.
Luxury retailer Saks, whose well-heeled clientele are virtually the only shoppers who remain unbowed, is a takeover target for an Icelandic investment firm, but the credit crisis has stalled negotiations. And a deal gone sour between rivals Finish Line and Genesco now threatens their solvency.
James Covert
ADVERTISING
THIS year marked a land grab in the online ad space, with Google kicking things off with its $3.1 billion bid for DoubleClick, followed by the sector’s biggest buyout with the $6 billion Microsoft paid for aQuantive. Yahoo! also scooped up Right Media, while WPP bought 24/7 Real Media.
The breakup between Wal-Mart and former ad chief Julie Roehm turned ugly after the retail powerhouse sacked her and the agency she hand-picked, DraftFCB. The company accused her of an illicit office affair, while Roehm alleged her former bosses engaged in cozy business dealings. Months later, the two sides decided to drop their legal battle.
With TV advertisers clamoring for more accountability, the industry moved to adopt new commercial ratings that track how many viewers watch the ads instead of the program.
The ratings also took into account a portion of viewers who record shows and watch them for up to three days later. The business is still chewing on the ratings, which have resulted in lower viewership and long delays in processing.
Holly M. Sanders