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Once considered a boom town, Manhattan's glory days are behind it. The real estate frenzy that catapulted developers to the top of Forbes magazine list of wealthiest Americans has taken a drastic turn, epitomized by Donald Trump's inability to pay interest on billions of dollars in debt.
An enormous supply of space has created strong downward pressure on office rents, especially in new, vacant buildings. That pressure is creating major cash flow problems for the owners, raising specters of major problems for their lenders, which include not only the large New York banks but major foreign banks as well. Cash Flow Called Inadequate
"There's no question that some buildings will not generate enough cash flow to cover the debt, or that there will be foreclosures," said a prominent broker who requested anonymity.
A plunge in the fortunes of the financial services industry that accompanied the stock market crash of October 1987 caused much of the problem for Manhattan's commercial real estate market. Wall Street and commercial banks have been laying off employees ever since. High Growth Doubted
"There is no way that Wall Street will sustain the sort of employment growth that it had in the mid-1980s," said Charles H. Wurtzebach, senior vice president of the Prudential Realty Group Inc., Newark. "There's serious softness in the trends of employment growth in New York, and the prospects for at least the next 36 months are not attractive."
In fact, there is more office space vacant or under construction in Manhattan today than was built during the 1980s - 63.3 million square feet against 54 million square feet, according to Cushman & Wakefield Inc. And that number does not include another four million square feet that will be rising on Times Square beginning in 1991.
Break-even rents for empty office buildings in the Times Square area are...