Equity Office CEO hails hot NY market

By Mark McSherry

NEW YORK (Reuters) - Demand for office space in Manhattan is reaching new highs as professional services firms step up their hiring, according to the chief executive of Equity Office Properties Trust EOP.N, the largest publicly traded office building owner.

"I have never seen anything like this," Richard Kincaid, chief executive of Equity Office, said at the Reuters Real Estate Summit in New York.

"There is just not a lot of space. You are just seeing really, really big rents popping up all over the place.

"I know the stuff we are working on, I just can't say. It is just ready to spike."

Kincaid said New York's strength in white-collar expertise is driving the growth, and that it did not feel like the Manhattan market was developing into a bubble.

"You have still got a lot of big financial services firms that want space," Kincaid said.

"Where the economy is growing plays into New York's strengths. It's professional services. It's consulting. Advertising is back. Investment banks are hiring like crazy.

"For accounting, Sarbanes-Oxley has been a boom in hiring."

EXCESS CAPITAL

In the wider U.S. market, Kincaid said there was a chance that current easy money might lead to excess capital and create bargain opportunities further down the road.

"The financing markets are unbelievable," said Kincaid. "People are getting 90 or 95 percent financing. The only thing I can compare it to is the late 1980s on the financing side.

"If you are the buyer, you are getting what is in effect a pretty free option ...

"Free options in real estate usually don't end well."