Newsday from New York, New York • 136

jiv4 ll Jl Going for Offices That Say Tve Made It Continued from Page 9 called 17 State Street at the tip of lower Manhattan with magnificent harbor view and a beacon on top is wiring some of the highest rents in the downtown area $47 to $50 per square foot The thin 42-story curved-mirror-facade" building, which is just opening; has yet to announce any tenants, although its design has won praise. The er, Metvyn Kaufman, is intent on finding foreign tenants and has no doubts he will succeed, even though some analysts say foreign tenants prefer Mid-town and that the stock market crash hurt leasing efforts downtown. Im looking for tenants that have class, and theres more class in Europe than in New York, Kaufman said. The center of the world is New York City. Eventually those that need space like this will show up and take it.

Heron Tower, a 26-story, boutique-type building across from Park Avenue Tower, has rented 80 percent of its space at rents ranging from the upper $40s for the lower floors, to between $50 and $60 per square foot for the iwiAlla floors. But despite its tuxedoed concierge, mahogany-doored bathroom stalls and cathedral-ceiling lobby, the top three floors of the 26-floor tower, at $60 to $65 per square foot Bar floors with 4,000 square feet apiece, are still Ufa Chippendale-topped slab and IBMs gray granite tower both on Madison Avenue would garner top rents if their highest spaces were rented out, real- estate analysts said. Buildings like Trump Tower and Olympic Tower on Fifth Avenue dont get top rents because they are mixed-use buildings, and their office spaces are not on top floors. Often, the cost of land and development leaves little dunce but to shoot for the highest rents. Analysts say that may be true of a 53-story tower being erected by Solomon Equities and the Taubman Corp.

at 712 Fifth Ave. near 55th Street, the former site of the Riz-zoli Bookstore and the Coty Building; both of whose neoclassical facades are being retained. Analysts add, however, that the awkward layout of the site may limit rents despite the prime location. Being a little too for out of the prime Plaza area can slash rents, as evidenced tor a new 31-stoxy, Helmut Jahn-de-signed building across from Blooming-dales at 750 Lexington, a blue granite, metal and glass tower with a round top and beacon. Its circular penthouse floors will go for about $50 a square foot, said developer Charles Steven Cohen of Cohen Brothers Realty.

We did not set out to attract the highest rents in town- with our building he said. There is a limited marketplace Bar that." in KNaday A view of the General Motors building on Fifth Avenue. mpty. Corpori ate headquarters buildings Foreigners Cool Manhattan Buying Spree By Hany Berkowitz FTER A HIGH-PRICED buying A Foreign lands foreigrtlnv Manhattan red estate originated. 1971-1967.

Original value v'r v. i ifiauxEE 22251 Newsday 7 VfcacMck Bush square foot, or $301 million, for Tower 49 at 12 E. 49th St Last summer, Sumitomo Realty Development Co. bought the Tishman Building at 666 Fifth Ave. for an erii mated $520 million, or more than $400 a square foot In recent years, Japanese investors also bought the Exxon building for $610 million (the highest price ever paid for a Manhattan office building); the Mobil, Tiffany and ABC Buildings; and two-thirds of the slant-roofed Citicorp Building and one-third of Citicorps 399 Park Ave.

for $670 million. They also have become partners in several development prqjects, indudingaZeckendmfCo.com-plex near Times Square called Worldwide Plaza. This year, Japanese purchases have been rare. Dai-Ichi Mutual Life arranged a convertible mortgage for the new Morgan Guaranty Building at "60 Wall Street that will make the Japanese firm a 49-percent owner. But a partnership of Trammell Crow Co.

and Tishman Speyer beat out Japanese and other investors for the J.C. Penney building, although a Japanese firm provided the financing. Some analysts stress that the amount of Manhattan office space available for purchase has grown scarce. But as evidence of sagging interest among buyers, real estate sources said One New York Plaza, a 50-story downtown tower, was taken ofT the market recently because of low bids. Europeans, too, have backed off a bit from Manhattan in recent years because theyve found alternative investment opportunities at home, or because they lost money on energy-related according to Cushman and Wakefields Montanari.

In the future, cash-rich investors from other foreign nations, including South Korea and Australia, may become active, some analysts say. Last year, Robert Jones Investments of New Zealand bought 44 Wall Street for more than $55 million. Analysts add, however, that Japanese investors time in the limelight has not passed because the Japanese still have a lot of money, and continue to be interested in UA investments. Hie Japanese will continue to be the most prominent investors (in the United States) for the next three to five years, arid Karpf of Eastdil Realty, hi i ay9bfJ spree that lasted several years, Japanese and other foreign buyers of Manhattan commercial buildings have taken a breather this year and helped coohoff prices, analysts say. There is incredible pent-up demand for New York City real estate among foreigners, but they are waiting to see what happens to the economy over the coming months, particularly in a presidential election year, said Paul Pariser, director of Investment services for the real estate firm Jones Lang Wootton USA In explaining this years lull, analysis stress that the Japanese, who with the aid of a strong yen helped boost the Manhattan office market to new price peaks in recent years, have become more cautious and less willing to take the low yields on their investments that super-nigh prices bring.

For the last six to nine months, the Japanese have been taking a wait-and-see attitude to see what the result of the stock market crash would be and if their currency would stabilise; said Charles Bendit, a managing director at Jones Lang Wootton. Now well see renewed investment activity, but on a much more conservative basis. The Japanese are flush with U.S. dollars, Bendit said, but realise now that they dont have to bid as high in order to obtain the properties they want Through the years, foreign investors from different areas; including the Middle East, have come to the fore in the Manhattan market, and Canadian investors including giant developer Olympia York, Manhattans biggest landlord still lead other foreigners in the total amount of office space owned. Foreigners own 59.6 million square feet of office space, about one-fifth of the total in Manhattan.

But in recent years Japanese investors have dominated the market and spent the most. Last year, they accounted for $2.4 billion of a increase in total direct foreign investment in Manhattan office space, according to a Port Authority of New York and New Jersey study. Owners of buildings always say, Can you find me a Japanese buyer for the building or someone who will pay the prices that the Japanese have paid? Where 29.1988 NY Business11 Bendit said. Their expectations have been blown out of proportion. But the Japanese are no longer willing to be as-generoua as before in New York, even though returns in Japan are as low as 1 A to 2 percent and investment opportunities there are few.

When the Japanese first became strong in the New York market around 1984, they were willing to take yields as low as 6 percent here, compared with the 8 to 9 percent sought by U.S. investors, said James W. Montanari, senior vice president of tiie financial services group at Cushman Wakefield. Now, however, the Japanese seek 7 A to 8 percent. The Japanese also are diversifying geographically beyond Manhattan and Los Angeles to some suburbs and cities such as Boston, Chicago and Washington, D.C., said Steven A Karpf, senior vice president of Eastdil Realty, the reel estate arm of Nomura Group of Japan.

And their interest is spreading from office space to residential buildings, retail space and hotels. In Manhattan, the search by Japanese buyers for prime office space centers on the area bordered by Third Avenue and Avenue of the Americas stretching from 46th to 57th Streets, Karpf said. La 1986, Kato Kagaku Co. paid a record $500 per.