Foreign governments are a growth engine for New York City commercial and residential real estate at a time when many cash-strapped European nations are facing financial crises. For example, Sri Lanka’s Permanent Mission to the United Nations has $8 million to spend and is looking at Manhattan office space. Laos recently paid $4.2 million in cash for a five-story townhouse in the Murray Hill neighborhood. Writing in the Wall Street Journal, Anton Troianovski notes that “Even the Western Hemisphere’s poorest country – Haiti – was gearing up to bid on a Second Avenue office condominium when the earthquake struck and derailed its plans.”
Foreign governments “are almost the only game in town,” according to Ken Krasnow, managing director with Massey Knakal. During the boom years, foreign governments looking to buy real estate for consulates and U.N. missions found stiff competition from private developers. Since last year, however, Senegal, Singapore, South Korea and the United Arab Emirates have purchased prime properties for redevelopment. Additionally, governments are paying top dollar – usually in cash – for office space or land sites that are within walking distance of the United Nations. Troianovski notes that “This trend underscores the bench strength of New York real estate: When certain buying groups move to the sidelines, others are waiting to take their place.”
Dealing with foreign governments means that the transaction typically progresses at a glacial pace. Philips International spent three years in negotiations with the Ivory Coast to close on an $8 million office condominium at 800 Second Avenue. The transaction, which closed last September, spent 377 days in escrow.
A combination of limited supply growth and anticipated stabilization of the jobs market could mean that office rents may return to positive growth sooner rather than later. That’s the opinion of Victor Calanog, a researcher at 
, who murdered two U.S. Capital Police officers in 1998.
One of the nation’s healthiest metropolitan areas, Washington is benefiting from government hiring as the Obama Administration works to strengthen the nation’s financial system. The collapse of prominent investment banking firms such as Lehman Brothers and Bear Stearns has triggered increased scrutiny of large banks and created a need for additional workers with auditing and investment expertise in government regulatory offices.