Crains: The Europeans to the rescue again!

And in a very timely suggestion for AIG to convert three of its office buildings to residential, no less! Where would we be without buyers from The Europe? http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20080924/FREE/809249980/1072 September 24. 2008 3:55PM For Sale sign looming for three AIG towers The stricken insurance giant, which just agreed to accept an $85 billion bailout from the... [more]

And in a very timely suggestion for AIG to convert three of its office buildings to residential, no less! Where would we be without buyers from The Europe? http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20080924/FREE/809249980/1072 September 24. 2008 3:55PM For Sale sign looming for three AIG towers The stricken insurance giant, which just agreed to accept an $85 billion bailout from the federal government, may find that its best hope lies in residential conversions. Efforts by American International Group Inc. to raise cash by selling off swaths of its vast real estate holdings around the globe will face an uphill battle in a world where financing is now scarce. The insurance giant—which inked an $85 billion federal takeover on Tuesday—has three Manhattan properties that could hit the chopping block. Still, some experts suggest that AIG’s aging headquarters at 70 Pine St. could fetch a healthy sum, even though it has seen far better days. The 775,000 square foot art deco tower would make a beautiful condominium or hotel. “It is a unique art deco property that would be a perfect residential conversion,” says Dan Fasulo, managing director at Real Capital Analytics. He says that even though the Manhattan residential market is also softening, buyers—especially Europeans—would be drawn to the building’s high ceilings and extensive architectural details. Buildings in lower Manhattan typically sell for far less than their midtown counterparts, but experts estimate that 70 Pine St. could fetch between $400 and $500 per square foot. So far this year, 64 office buildings have been sold in Manhattan for an average price of $814 a square foot, according to Real Capital. Midtown towers have fetched an average of $848 a square foot while properties downtown captured an average of $442 per square foot. Those averages represent a 10% to 15% drop from year-earlier levels, according to experts, a decline that stems from both the difficulty in raising capital to buy a building and recent declines in commercial office rents. Cushman & Wakefield is predicting rents will fall anywhere from 10% to 15% from the current average of $73 a square foot. That is already happening. The city’s largest private landlord, SL Green Realty, has recently begun cutting rents in some of its buildings. Buildings in lower Manhattan, such as those owned by AIG command lower rents than their midtown counterparts but Mr. Fasulo notes that downtown is becoming a more attractive place for people to live. That could help the sale of 70 Pine St., as well as that of another art deco building at 72 Wall St., which Mr. Fasulo believes would also be an attractive conversion site. “These older buildings don’t work as modern offices,” he says. In addition, the insurer also owns a 31-story, 592,235 square-foot building at 175 Water St. that was built in the 1980s. Mr. Fasulo said it was possible that AIG could sell the two art deco towers as residential properties and then consolidate workers in the Water Street location. [less]