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New York businesses, facing a deteriorating economic climate, are increasingly postponing major real estate decisions or opting for short-term solutions.
They are doing so despite being offered the lowest rental costs in years in what has become the worst real estate market since the city fiscal crisis of the mid-1970s.
Either companies are waiting for the market to fall still lower or their own business is so uncertain they are avoiding long-term decisions.
"A lot of major space users do not feel the bottom is in sight," says Stuart Lilien, president of Lansco Corp., a brokerage firm.
Kidder, Peabody & Co. is the latest company to take the cautious approach to its office needs. For more than a year, the securities firm had been considering a major move of all its downtown operations to midtown.
But citing the soft real estate market, the company instead renewed its lease at 10 Hanover Square and rented a trading floor given up by Drexel Burnham Lambert Inc. at 60 Broad St. The term of each deal was only four years.
Similar examples abound. Earlier this year Rupert Murdoch's News America Publishing Inc. backed out of a 1 million square foot deal at 1585 Broadway. The company is now only looking to add 100,000 to 200,000 square feet for its magazine division, a spokesman says.
Meanwhile, Donaldson, Lufkin & Jenrette has abandoned its plans to take the 10 floors in the McGraw-Hill Building, 1221 Sixth Ave., vacated by Marsh & McLennan Cos.
The law firm Phillips, Nizer, Benjamin, Krim & Ballon is reportedly reconsidering a proposed long-term lease for more...