Industry takes aim at ad's 'indiscretion'

Real Estate Weekly, Jan 9, 2002 by Parke Chapman

An ad pitching Newark office space has several Manhattan-based real estate sources seething over what they call tactless bid to exploit post-Sept. 11 market conditions.

The ad was published in the Nov. 21 edition of Real Estate Weekly by a group calling itself the Newark Development Council. The NDC is a consortium of Newark-based property owners and developers formed in the weeks after Sept. 11.

"The ad reeks of indiscretion," said Lawrence Fiedler, a professor of real estate at New York University's Real Estate Institute.

The full-page ad began with the following in large black type: "GETTING TO WORK SHOULDN'T BE THE HARDEST PART OF YOUR DAY" Traffic restrictions, the ad reads, have made commuting by car into Manhattan 'unbearable.' Their solution, as featured in the ad, is to "consider Newark," which also happens to be "safe, clean and less expensive than Manhattan," according to the copy.

The man who placed the advertisement denied that his intent was to "capitalize on the tragedy," however.

"But if the [driving] restrictions are permanent people are committing to move out of New York City," said Doug Sarini, vice president of Edison Properties, a real estate firm that owns a chain of parking garages and several commercial properties in Newark. The firm also owns Manhattan Mini Storage.

Jerry Gottesman, chairman of Edison Properties, refused to comment on Sarini's ad.

While lower Manhattan struggles to retain tenants as an incentives package looms, the uncertain future of downtown is on everyone's mind.

But the ad may be the tip of the iceberg. The New Jersey Economic Development Authority has offered about $35 million worth of tax incentives to six companies that are thinking about relocating from lower Manhattan, according to a recent Wall Street Journal article. Meanwhile, the New York City Economic Development Corporation is struggling to keep downtown office tenants from fleeing the city.

Fiedler questioned the ad's use of the word "safe" to describe Newark.

"That's misleading. Safety is always an issue in Newark," said Fiedler.

He recalled that the Real Estate Board of New York explicitly warned its members not to profit off of the Sept. 11 tragedy only days after the attacks. Fiedler suggested that the NDC's actions are similar to what REBNY cautioned against.

"We have some problems. But to capitalize on traffic woes is cheap," said Stephen Spinola, president of the Real Estate Board of New York. "I haven't seen anything like this out there. It's an inappropriate ad," he said.

In January, Edison Properties began working with the Rockefeller Group on a 350,000-SF office tower in Newark's central business district.

Sarini, de facto head of the NDC, said the ad will be the first of a "series" of ads.

Since the traffic restrictions stemmed from gridlock produced by the Sept. 11 attacks, Sarini's basis for the ad is in fact "capitalizing" on the events. The effect--traffic restrictions--are merely removed from the cause--Sept. 11--by a few weeks. The irony is that Sarini's firm may have been impacted by the traffic restrictions since their core business is parking garages in Manhattan. Ever since the restrictions were put into effect, all Manhattan parking garages have suffered losses.

"Everyone's got to sleep at night. But some people in this business have no conscience, and that's unfortunate," said Dudley Ryan, senior vice president at CB Richard Ellis' Newark office.

For the past 12 years, Ryan has worked as a commercial broker here.

"We're all in the same boat. That's why this ad is distasteful," he said.

Or is the ad, as one source believed, status quo for a business known for its Machievellian, cutthroat tactics?

"New York and New Jersey have been vying for tenants for the better part of three decades. Would New York City owners run ads like this if the tables were turned? Yes they would. This is business as usual," said Peter Pattison, a real estate consultant.

Pattison said that "this is the way everyone sells," though he did question the ad's use of the word "safe" to describe Newark.

As for the real effect that such an ad could have on Manhattan vacancies, Pattison spoke metaphorically.

"It's like an elephant being bothered by a flea. The flea doesn't make any difference," he said.