Oil Shock Reshaping NY Business in the City
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CNYB 06-23-08 A 1 6/20/2008 8:05 PM Page 1 TOP STORIES BUSINESS LIVES Willets Point Vive gulf widens as la cuisine board vote looms française PAGE 3 ® Page 35 FreshDirect restocks CEO post; Gristedes snags VOL. XXIV, NO. 25 WWW.CRAINSNEWYORK.COM JUNE 23-29, 2008 PRICE: $3.00 a D’Agostino GROCERS, PAGE 3 PRINT POSITIONS: Mimeo.com will have Oil shock Hot 97’s Angie hired almost 200 specialists by year’s Martinez wants to end, CEO Adam be heard and seen Slutsky says. reshaping NEW YORK, NEW YORK, P. 6 EXECUTIVE PAY NY business G Shareholders’ drive for say on pay Companies cut back hitting customers with fuel sur- stalls Page 21 charges. use of cars, trucks; “If you own a business in the city G Pay packages of New York, your costs are a lot change routes to more now than they were a year hurt by tough job ago,” says Gary Page, owner of G. market Page 21 maximize efficiency Page Wholesale Flowers. G Flower sellers are purchasing The 100 top-paid BY HILARY POTKEWITZ more locally grown stock, because CEOs in New shipping costs for flowers from York Page 24 from wholesale flower sellers on Brazil or Colombia have gone up the West Side to pharmaceutical exponentially. Many are also cut- giant Pfizer Inc. on the East Side, ting back on delivery runs in order the relentless run-up in gas prices to move more flowers in fewer is reshaping the way business is trips, Mr. Page says. getting done throughout the city. Higher fuel prices are even af- The average price of gasoline in fecting the variety of New York City is hovering at $4.38 plants New Yorkers a gallon, up 34% from $3.28 are seeing in their of- a year ago. High prices are fice lobbies and local forcing businesses—big florist shops. and small—to make “There are certain fundamental changes types of flowers that, paul grange paul in their operations in because of their vol- buck ennis order to stay afloat. ume, weight or size, Some are buying are just no longer AT DEADLINE BUCKING TRENDS hybrid vehicles being shipped into or consolidat- this area regularly,” AFTER CITIGROUP INC.’S ing delivery says Mr. Page, who CHIEF FINANCIAL OFFICER runs, while has been in the warned that more substantial others are landov See OIL on Page 8 write-downs are to come, UBS High-tech firms analyst Glenn Schorr quantified the expected damage. He estimates that the bank will mark down another a local bright spot Rents drop as more $8.7 billion in assets and post a second-quarter loss of about the housing and credit markets and $2 billion next month.The Ramp up growth the resulting meltdown on Wall analyst had thought that Citi as revenues rise, Street. space hits market would generate a $1.9 billion “The tech sector has been hold- profit. If Mr. Schorr’s latest VC funds flow; ing up in this prolonged economic president and principal at New- forecast is correct, Citi will public firms set back slowdown,” says Scott Kessler, an Trend set to pick up mark Knight Frank. post its third unprofitable equity analyst at Standard & Poor’s as Wall Street outfits That trend is all but certain to quarter in a row and will have who covers the industry. accelerate as financial firms, which recorded more than $50 billion BY AMANDA FUNG A far cry from their predeces- shed staff, offices account for roughly a third of Man- of write-downs and credit sors,second-generation firms have hattan’s rented space,shed staff and losses since last fall, more than the technology market crashed established profitable businesses space amid the credit crisis. any other financial institution. in 2000, pulling the national econ- that continue to hire staff and grow BY THERESA AGOVINO GVA Williams Vice Chairman omy down with it. New York City revenues. Mark Friedman reckons that ef- A NEW YORK LAW REQUIRING lost tens of thousands of high-tech The number of computer sys- manhattan’s once red-hot com- fective rents, which include the EMPLOYERS THAT RECEIVE jobs, and hundreds of local dot- tem design jobs in the city rose mercial real estate market is devel- cost of concessions offered by state funds to remain neutral coms tanked. about 3% from January through oping a chill. landlords, have already fallen by See AT DEADLINE on Page 2 Now,tech remains a bright spot May, to about 44,900, accord- Vacancy rates are edging higher. about 7%. GVA found that in the in an economy roiled by crises in ing to economist Barbara Byrne The pace of new lease signings is first quarter of the year, midtown Denham. flagging,and the volume of sublease landlords typically gave tenants 25 Google, which employs about space hitting the market is soaring. three to six months of free rent, 5 500 people in its Manhattan office, More important, for the first up from zero to six months in the has at least a dozen New York time in six years, effective rents year-ago period. Similarly, they openings posted on its site. have begun to fall. upped the amount they were will- ELECTRONIC EDITION The local players in the $35 bil- “There’s no question that rents ing to give to tenants for improve- lion industry,mostly privately held are lower than they were last year,” ments to $40 to $50 a square foot, See TECH FIRMS on Page 8 says David Falk, an executive vice See RENTS on Page 8 NEWSPAPER 71486 01068 0 CNYB 06-23-08 A 2 6/20/2008 8:06 PM Page 1 AT DEADLINE Continued from Page 1 initially target fashion and when unions attempt to orga- apparel businesses and will then nize their employees is likely to expand into other markets. be thrown out following a U.S. Supreme Court decision voiding THE UNION REPRESENTING a similar California statute: The 22,000 PROFESSORS AND Supreme Court ruled 7-2 that professional staff members at the National Labor Relations Act the City University of New York takes precedence. A challenge to has agreed on a three-year con- the New York law by a coalition tract with the university. Raises of hospitals, nursing homes and will average 3.4% annually. In other health care providers has May, the union rejected an offer been on hold in the Northern with annual increases averaging District court, pending a decisive 3%, saying that it fell “dramat- ruling in the California case. ically short” of bringing salaries The next step in the local case in line with those of competitive will be determined in the next institutions in the area. week, when the health care pro- viders meet with state Attorney GEOWASH, A MOBILE CAR General Andrew Cuomo. WASH SYSTEM TOUTED AS ECO- friendly, is expected to make its NEW YORK’S DEPARTMENT OF Manhattan debut at the Chelsea BUILDINGS WILL REQUIRE THAT Piers parking garage by the end a safety coordinator be present of July. Using a cart about the at all sites where buildings of 10 size of a scooter, attendants stories or more are being hand-wash each car, using only constructed, beginning July 1. a quarter of a gallon of water. WATCH ME NOW: Currently, the presence of safety Conventional stationary systems, Verizon Wireless’ Leo managers is mandatory only at which are disappearing because Arciniegas says young consumers react well to sites where buildings with at of tougher Environmental the Spanish-language least 15 stories are being Protection Agency regulations, programming. erected.The move is part of an typically use 90 gallons per effort to improve safety wash.The Geowash service buck ennis standards in the wake of two costs $18, or up to double the recent deadly crane collapses. price of a conventional car wash. VENTURE FIRM L CAPITAL THE LEGAL CATEGORY PARTNERS IS EXPECTED TO CONTINUES TO DOMINATE THE Hablamos español announce today that it invested newsletter business, as the num- $4 million in Simparel, a Man- ber of titles grew 8% over last hattan-based startup. Simparel year’s level to 1,125, according to Carriers see opportunity in Hispanic mobile market has developed software that the 2008 edition of the Oxbridge helps businesses manage Directory of Newsletters.The supply-chain processes, such as legal sector was followed by the BY AMANDA FUNG tracking orders and inventory. computers and automation cat- The cash infusion is the egory, which had 953 titles—up at&t wireless will launch a Spanish mobile television service by year’s end, Verizon Wireless company’s first round of 27% from a year ago—and in- is expanding its menu of Spanish-language entertainment and Sprint sponsored a Columbian institutional money; the firm vestment, whose 915 titles rep- rock singer Juanes’ recent U.S. tour.T-Mobile has tripled its budget for ads targeting will use the funds to enhance resented 34% growth over 2007. its technology and expand sales Medical, another top category, Hispanics. and marketing. Simparel will declined 4%, to 813 newsletters. With much of America awash in cell phones, carriers are courting Hispanics more intensely. Overall, nearly 85% of U.S. residents own a cell phone, compared with just 65% of Hispanics, according to Insight Research. THIS WEEK IN CRAIN’S The companies see major opportunities and are tapping into the group’s affinity for high- tech, high-margin services. See CELL CARRIERS on Page 9 VALERIE BLOCK ---------------------------11 THE INSIDER------------------------------------12 WEEK IN REVIEW -----------------------14 SMALL BUSINESS ------------------- 16 HIP, GHI plan in jeopardy REAL ESTATE DEALS--------------18 REPORT: turned down similar conversion ment officials sent EmblemHealth Regulators don’t see plans, which some consumer advo- a letter asking it to substantiate its 37 EXECUTIVE PAY -----------------------21 need for conversion, cates say may allow EmblemHealth assertion that it needs to go public.