Battling Mike Bloomberg Don’T Deliver Triumph in 2001 Over Democrat Mark Isn’T a Fluke,Even in a City Where NEW YORK, NEW YORK, P
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CNYB 10-06-08 A 1 10/3/2008 7:37 PM Page 1 TOP STORIES BUSINESS LIVES Project Onetime AIDS Runway’s L.A. star eclipsed by move miffs former employee New Yorkers PAGE 3 ® P. 39 Banker, comic top readers’ list of most influential VOL. XXIV, NO. 40 WWW.CRAINSNEWYORK.COM OCTOBER 6-12, 2008 PRICE: $3.00 PAGE 3 Bob Woodward, Bill O’Reilly books Battling Mike Bloomberg don’t deliver triumph in 2001 over Democrat Mark isn’t a fluke,even in a city where NEW YORK, NEW YORK, P. 6 Two decades in the cold? Green was chalked up to the terrorist at- Democrats comprise two- tack of Sept. 11. Their smashing re-elec- thirds of registered voters High Line and other Democrats face crucial test; tion victories were attributed to the pow- and dominate elected of- new parks buoy a plan for Thompson, Weiner er of incumbency. fices at every other level. surrounding areas But Mr. Bloomberg’s de- Two prominent De- INSIDE cision last week to seek a ocrats, City Comptroller BY ERIK ENGQUIST third term could make William Thompson Jr. and REAL ESTATE REPORT, P. 21 EDITORIAL It’s a long way it 20 consecutive Rep. Anthony Weiner, aim to to 2009 vote next year’s mayoral race will be a gut years without a return City Hall to Democrat- P. 12 check for the Democratic Party. Democrat ic hands even if Mr. 2009 INSIDER When Republican Rudy Giuliani up- running Bloomberg makes the bal- Scramble down set Mayor David Dinkins in 1993, it was the city. lot. Each has raised sev- the ballot P. 14 seen as a singular event caused by height- Two eral million dollars and For ty ened racial tension. Michael Bloomberg’s decades See BATTLING on P. 10 under newscom THE CRISIS CONTINUES 4O NEW AUTHORITY CRAIN’S ANNUAL SEARCH FOR NEW YORK’S Rating agencies RISING STARS STARTS TODAY calling the shots TO NOMINATE 2009 CANDIDATES, GO TO of subprime mortgages. crainsnewyork.com/nominate SLICE ’N’ DICE: After subprime Since diners didn’t “We’ve never been more rele- want to spend, Jim fiasco, credit cops vant,” says Sean Egan, co-founder Botsacos had to of Egan-Jones Ratings Co., a 13- AT DEADLINE rethink the concept bounce back; life- year-old firm that has distin- of Abboccato. guished itself in the past 12 THE PORT AUTHORITY OF NEW and-death power buck ennis months by predicting the difficul- YORK AND NEW JERSEY SAYS ties of bond insurers and other fi- it is working with its RESTAURANT REVAMPS BY AARON ELSTEIN nancial players. congressional delegations to Last week, Egan-Jones’ clout extend the deadline for issuing with the financial system was demonstrated when shares in the Liberty Bonds for the Owners sweeten prostrate and the titans of Wall SLM Corp. plummeted by a World Trade Center site. By Street in full retreat,power is being third—their worst one-day de- law, the bonds must be used by seized by a group of number cline ever.The plunge came on the the end of 2009. But last week, crunchers paid a fraction of the heels of an Egan-Jones report the agency issued new menus with deals banking world’s Armani-clad al- warning that the cost of insuring construction target dates that pha males. the student lender’s debt may suggest the bonds won’t be The new masters of the against default had tripled needed by then.The bonds servers’ black vests and—most im- universe are the thousands $5B and that its continued ac- were supposed to be used to Pare back prices, portant—slashed his menu prices of credit analysts working DECLINE in cess to capital was a “major by 40%. market value of build the Freedom Tower and start happy hours; away in the warrens of such the Hartford after concern.” developer Larry Silverstein’s “People didn’t want to spend firms as Fitch Ratings, threatened loss Similarly, an analyst at three office towers. Some Americans scarce money, so we had to rethink the Moody’s Corp. and Stan- of A+ rating Fitch Ratings sent shock experts hope Mr. Silverstein’s whole concept of the restaurant,” dard & Poor’s. These pen- waves through The Hart- buildings will be delayed. says Mr. Botsacos, who is the chef cil pushers are shaking markets ford Financial Services Group Inc. BY LISA FICKENSCHER and also a partner in the four-year- daily, and determining the fate of last Monday by announcing that FACING A SUDDEN HOLE IN old Italian eatery. banks and insurers as terrified in- he was worried about the insurer’s THE CURRENT STATE BUDGET, in may, Jim Botsacos closed his Long before the financial crisis vestors turn to them for guidance exposure to subprime mortgages Gov. David Paterson midtown restaurant, Abboccato, hit full throttle last month, restau- on which institutions are safe.It’s a and cutting its credit outlook. summoned the Legislature for three days. He changed the rateurs were feeling the chill of a dramatic reawakening for a group Two days later, The Hartford See AT DEADLINE on Page 42 lighting and upholstery, scratched cooling economy. In response, that a few months ago was reviled insisted that it was “confident” the white tablecloths and the See EATERIES on Page 9 for its “all is well”call on mountains See RATING on Page 8 40 MORE OFFICE SPACE CREDIT GREG 5 ON THE Commercial CRUNCH DAVID IMPACT market goes into Small firms find On the ELECTRONIC EDITION OF THE hibernation as RETAIL SPACE that they just front lines FINANCIAL chill intensifies Asking rents can’t borrow of a panic CRISIS P. 2 bound to fall P. 2 P. 8 P. 13 NEWSPAPER 71486 01068 0 CNYB 10-06-08 A 2 10/3/2008 7:59 PM Page 1 THE CRISIS CONTINUES THE IMPACT OF THE CHAOS Branch closings FIGHTING FOR WACHOVIA WELLS FARGO & CO. trumped Citigroup Inc.’s fire-sale bid for Wachovia Corp.’s banking operations alter retail landscape by offering a deal of $7 a share and no government backing. But Citi ON THE STREET argued it had a definitive deal, the Federal Deposit Insurance Corp. supported Citi, and the two firms laid Vacancies will ground for battle. force down rents; THAIN’S NEW ROLE some areas are still BANK OF AMERICA announced that seeing increases John Thain, chief executive of Merrill Lynch & Co., will serve as BofA’s president of global banking, BY ADRIANNE PASQUARELLI securities and wealth management after the merger. as the financial storm rips through New York, claiming large buck ennis AIG SELLS OFF commercial banks and small busi- GOING AND GONE: The storefront at 367 Third Ave. has been empty for more than a year. WaMu branches are expected to close soon. INSURANCE GIANT American ness owners as victims, real estate International Group Inc. agreed to experts are waiting for the other sell its life insurance and retirement shoe—namely, retail rents—to example, some brokers expect that trepreneurs in her neighborhood. conditions raised neighborhood operations in the United States, drop. In some cases, brokers are J.P.Morgan Chase will close more Ms. Johnson, who had her shop on rents to more than $130 a square Europe, Latin America and Japan to predicting decreases of 20% from than 10% of WaMu’s 144 city Orchard Street for seven years,says foot, tenants such as Video Stop, at help pay off its $85 billion current asking prices. branches. Experts think that the she will concentrate on her e-com- 367 Third Ave., were pushed out. government loan. “Rents will have to come excess inventory will make a rent merce business for the near term. After more than a year, its 2,500- down,” says Neal Ohm, a director correction inevitable and that Trendy districts all over the city square-foot space is unfilled. A PIECE OF LEHMAN at CitySites Commercial Group. prices will revert back to pre-ex- have taken a hit.Vacancies are even “There’s no other way.” pansion levels, if not lower. popping up on Bleecker Street be- Forty-year fixture PRIVATE EQUITY FIRMS Bain Capital It has not been smooth sailing “[Landlords] will not be able to tween Hudson Street and Seventh similarly,department store Mor- Partners and Hellman & Friedman for property owners.The failure of achieve the rents in this Avenue,a high-end strip ris Brothers,a 40-year fixture on the are buying Lehman Brothers Washington Mutual,which will be current economic cli- with such tony tenants Upper West Side, was forced to va- Holdings Inc.’s money management absorbed by J.P.Morgan Chase & mate that they might as Marc Jacobs. Asking cate 18 months ago after its rent firm, Neuberger Berman, as part of a Co., most likely means that a sig- have gotten six months 20% rents in the area have went up. The landlord, Eagle $2.2 billion deal. nificant number of its New York to a year ago,” says THE EXPECTED jumped in recent years to Court, is still searching for a tenant PACE’S FROZEN FUNDS City branches will be on the list for Robin Abrams, a bro- DROP in retail nearly $400 a square for the 5,600-square-foot space, shuttering. That follows moves by ker with Lansco Corp. rents in certain foot, according to the whose rent is $325 a square foot. PACE UNIVERSITY was one of 1,000 such established retailers as Star- neighborhoods, most recent retail report Landlords are looking to inter- colleges with money in an investment bucks to close stores because of Still soaring according to from the Real Estate national retailers with deep pockets, fund frozen by Wachovia Bank.