Wall Street Journal- For the past two years, financial institutions fueled the robust office markets of New York and London.
Rental rates soared to record highs as hedge funds and a few other financial institutions elbowed each other out of the way for offices with amenities that reflected their presumed power: grand views of parks or waterways, easy commuting access and world-class restaurants nearby for entertaining clients. The vacancy rate for top-quality space plunged below 6% in both lower Manhattan and the City of London, the British capital’s financial district.
But now the two cities’ heavy dependence on financial-sector jobs has real-estate brokers and analysts debating whether the gusher will shut off. Caveats abound, with experts saying the answer depends on how long the turmoil continues, how much bad debt financial firms end up swallowing, and how many hedge funds go under. One thing market experts agree on, though: Most finance firms will take a timeout on real-estate decisions until they see how everything shakes out.
