'Phantom' Vacancy Haunts Office Market as Job Losses Mount
	Manhattan’s Stuyvesant Town Loan Falls to Special Servicer
	Real Estate Economists Parse October Jobs Report
	Ravenous for Bite-Size Retail

Amid rising unemployment and weakening demand for space, the U.S. office vacancy rate rose to 13% in the third quarter. But it could climb as high as 19% if companies consolidate their space to reflect smaller workforce levels.

Analysts fear that the nation’s job losses are not yet fully reflected in the office vacancy rates. If employers across the country cut their space needs to match layoffs when tenants’ leases come up for renewal, soaring vacancies could later wallop the office sector.

The nation’s unemployment rate reached a 26-year high of 10.2% in October, and more layoffs are expected in months ahead. Meanwhile, the gap between the current vacancy rate and the rate statisticians project based on the unemployment rate stands at six percentage points, according to Bethesda, Md.-based research firm CoStar Group.

The owners of the massive Stuyvesant Town and Peter Cooper Village apartments, which occupy 80 prime acres in Manhattan, have suffered a major blow with the transfer of the property’s $3 billion loan to a special servicer.

The loan transfer and request for relief by Tishman Speyer Properties, headquartered at Rockefeller Plaza in New York, and BlackRock Realty, also based in New York, was expected after cash flow generated by the property became insufficient to service the debt, according to Fitch Ratings.

Tishman Speyer and BlackRock bought the apartments in 2006 for $5.4 billion, and the multifamily properties’ costs have placed an increasing burden on the companies.

The October employment report released by the U.S. Bureau of Labor Statistics last Friday reflects a familiar but troubling pattern for a commercial real estate industry desperately seeking green shoots.

While the pace of job losses continues to moderate, total non-farm payroll employment nationally has fallen by a whopping 7.3 million since December 2007. The end result is rising vacancies and falling rents across all major property types, and the industry’s woes are likely far from over.

The continuing deterioration in labor market conditions for young adults is particularly problematic for the apartment sector, according to Sam Chandan, president and chief economist of New York-based Real Estate Econometrics

They're just mad about corned beef in Chicago. And hamburgers. And pizza and frozen yogurt. For the first time in years, as large-format retail development has screeched virtually to a halt, it's the small-store tenants who have come out from the shadows and moved to center stage in the Windy City.

Quickly expanding chain restaurants, many of them franchised fast-food emporiums offering deep-discount value to budget-strapped consumers, have brightened up an otherwise dreary retail landscape in the nation's heartland.

A couple of large projects left over from pre-recession planning — including the 280,000 sq. ft. Block 37 urban mall in the middle of the downtown Loop developed by Joseph Freed and Associates — are poised for completion soon. But they've become a glaring exception in an otherwise becalmed retail marketplace that has seen major big-box chains such as Lowe's, Target and Best Buy bring new construction to a standstill for the first time in nearly two decades.