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New York City commercial real estate transactions plunged 61 percent in 2008 through October as the global credit crisis roiled lending and sidelined buyers.

About $17 billion of transactions have closed so far and the market is headed for its worst year since 2004, according to data from Real Capital Analytics Inc. of New York. Sellers have made 237 deals of $5 million or more, a four-year low in a market that posted a record $51 billion in sales in 2007.

“The banks are not lending, and most of them are saying we're done for the year,'' said Scott Latham, executive vice president for New York investment sales at Cushman & Wakefield Inc., the largest closely held commercial brokerage. “In all likelihood, you will see next to no transactions between now and the end of the year.''

The property recession that began in housing during 2006 is spreading to the commercial market. About 85 percent of domestic banks tightened lending standards on commercial and industrial loans to large and mid-size firms in the past three months, the highest since the Federal Reserve's Senior Loan Officer Survey began in 1991, the Fed said yesterday. Financial firms have recorded writedowns and losses of more than $680 billion.

The office market will likely get worse in 2009 and may not improve for at least another year, said Andrew Simon, executive managing director for the New York City office of NAI Global, a worldwide network of 325 independent commercial property brokerages. The bankruptcy of Lehman Brothers Holdings Inc., the takeover of Merrill Lynch & Co. and the city comptroller's forecast that New York may lose as many as 165,000 jobs are also weighing on the market.

No Rosy Outlook

“I don't think the first half of 2009 is going to be very rosy,'' said Simon. “I believe you're talking about a year from now before you see more movement toward normalcy.''

Buyers and sellers are looking for a bottom, he said.

“People are going to be waiting on the sidelines until a floor is established,'' said Simon. “People aren't going to sell unless they have to sell. Unless that floor is established you will not see significant sales.''

With no letup in sight for the property industry, investors have dumped real estate investment trusts focusing on offices.

The 14-member Bloomberg Office REIT Index lost 43 percent in the 12 months through October, led by Maguire Properties Inc. and SL Green Realty Corp., which together control almost 50 million square feet of office space in the Los Angeles and New York metropolitan areas.

Sales Fall

SL Green, the biggest owner of Manhattan office buildings, has dropped 65 percent in the 12 months through October. Maguire, the largest owner of downtown Los Angeles office towers, has plunged 87 percent and is the worst performer in the index.

Global commercial sales fell 57 percent this year through August, Real Capital said in an Oct. 9 report. In the third- quarter, they fell 64 percent from the same period a year ago, according to preliminary data from the company.

In the U.S., sales have declined 72 percent this year through October, the biggest drop since the firm's recordkeeping began in 2001, Real Capital said. Starting in 2004, property investors, fueled by cheap and abundant debt, began an unprecedented run to $514 billion of U.S. deals in 2007, said Dan Fasulo, Real Capital's director of market analysis.

“I think it will be a while before we get to that figure again,'' Fasulo said. “We're going to do less than half of that in 2008.''

`Disastrous' September

September was “disastrous'' for the financial and commercial property markets, Real Capital said bad credit cash loans. Office sales totaled $13.4 billion in the third quarter in the U.S., the lowest since the first quarter of 2004. Sales for all of 2008 aren't likely to exceed the volume of the first quarter of 2007.

“Until we have some kind of watershed transaction that gives people a sense of what the market is, you're not going to see a lot of transactions,'' Lynne Sagalyn, director of the Paul MilsteinCenter for Real Estate at Columbia University, said in an interview.

Sales involving New York real estate investor Harry Macklowe, perhaps commercial real estate's most prominent casualty of the credit crisis, accounted for more than two- fifths of New York's year-to-date dollar figure through October.

Macklowe paid $6 billion last year for seven Midtown skyscrapers, primarily using short term debt. His lender, Deutsche Bank AG, took control of the towers in February and sold five of them for $2.83 billion. Macklowe also sold the General Motors Building and three other buildings for $3.97 billion to Mortimer Zuckerman's Boston Properties Inc.

Mortgage Originations Sink

Second-quarter commercial and multifamily mortgage originations tumbled 63 percent in the second quarter from the same period a year earlier, according to the Mortgage Bankers Association in Washington.

Office property loans fell 65 percent, retail property loans fell 63 percent and industrial property loans slid 57 percent, the MBA said. Loans slated for the commercial mortgage- backed securities market declined 98 percent in the second quarter from a year earlier, the group said.

Financing of deals by so-called portfolio lenders, companies like commercial banks and life insurers that originate loans and keep them on their books, was also down. Loans by banks fell 29 percent and 27 percent for insurers, the MBA said.

The few deals being made usually require sellers to either provide financing or allow buyers to take over their existing loans, said Howard Michaels, chairman of the New York-based Carlton Group LLC, a real estate investment banking firm, which arranged the recapitalization of the GM Building for Macklowe in 2004, and Chicago's Sears Tower in 2007.

Wachovia Sale

At 1372 Broadway, a 20-story pre-World War I office building in New York's Garment District, buyer Lloyd Goldman received financing for 86 percent of the tower's cost from the seller, Wachovia Corp., the lender being acquired by Wells Fargo & Co.

Wachovia and partner SL Green sold the building for $274 million, $61 million less than what they paid a year before, according to city records. The price dropped $20 million from the signing of the contract in July and last month's closing, said people familiar with the transaction.

A standoff between sellers and buyers over price appears to be stalling the market, said Michaels.

“Most people are waiting to see how 2009 shakes out. Until then, nobody's putting any buildings on the market unless they have to.'' he said. “I don't think that anybody would voluntarily sell into this market right now.''

Two properties remain on the market five months after they went up for sale. They are Worldwide Plaza on Eighth Avenue, a 1.7 million square-foot tower, and 1540 Broadway in Times Square, the former Bertelsmann Building.

The seller of both buildings: Harry Macklowe's lender, Deutsche Bank.

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The cost to protect Asia-Pacific corporate and government bonds from default rose to the highest in five weeks, credit-default swaps show.

The Markit iTraxx Australia Index advanced 8 basis points to 156 at 9:40 a.m. in Sydney, Citigroup Inc. prices show. Contracts on Japan's benchmark measure of credit risk climbed 7 to 142, according to Morgan Stanley. The swaps, which rise as perceptions of credit quality deteriorate, are both at the highest since July 16, according to data compiled by Bloomberg.

The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan, including the Thai government and Hong Kong conglomerate Hutchison Whampoa Ltd., rose 6 basis points to 155, ICAP Plc prices show. The region's benchmark of 20 high-risk, high-yield borrowers outside Japan, climbed 19 to 561.5.

The indexes are benchmarks for protecting bonds against default and traders use them to speculate on changes in credit quality payday loans. A basis point, or 0.01 percentage point, is worth $1,000 on a swap that protects $10 million of debt from default.

Credit-default swaps on Macquarie Group Ltd., Australia's biggest securities firm, posted the biggest increases among the nation's financial companies, Citigroup data show. Contracts on the Macquarie's subordinated debt rose 25 basis points to 345 and protection costs on the senior debt climbed 15 to 235.

Subordinated bonds are less likely to be repaid in a bankruptcy than the senior notes, which rank higher in the payment order.

Credit-default swaps are used to protect against or speculate on default. They pay the buyer face value in exchange for the underlying securities if a borrower fails to adhere to its debt agreements.

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TJX Cos. says second-quarter profit more than tripled from a year ago as the apparel discount retailer benefits from shoppers looking for cheaper alternatives. The retailer has also raised its earnings outlook.

The retailer said Tuesday that it earned $200.2 million, or 45 cents per share, compared with $59 million or 13 cents per share, in the year-ago period. Revenue increased 7% to $4.6 billion from $4.3 billion cash advance loan.

TJX Cos (TJX, Fortune 500).’s fiscal 2008 results includes an impairment charge of $10 million, after tax, or 2 cents per share related to its Bob Stores division. 

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The amount of money Americans pulled out of their homes is at a four-year low as homeowners battle falling home values and stricter standards among lenders, Freddie Mac said Thursday.

Homeowners "cashed out" about $68 billion in home equity during the first half of the year, the lowest since the first six months of 2004, according to the McLean, Va.-based mortgage finance company.

About $38 billion in home equity was cashed out through refinancing of loans made to prime borrowers in the second quarter - less than half the $79 billion cashed out during the same period last year, said Amy Crews Cutts, Freddie Mac (FRE, Fortune 500) deputy chief economist.

In the second quarter, 66% of homeowners who refinanced loans purchased by Freddie Mac "cashed out" at least 5% of their equity.

Tapping home equity allows homeowners to get cash out of their homes no fax payday loans. And economists watch that number closely because it affects consumer spending and investment decisions.

Consumer spending, which accounts for two-thirds of total economic activity, remains under severe strains, as the housing market downturn, combined with rising food and gasoline costs, have hurt consumer confidence. 

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Airline stocks on Wednesday traded higher as oil prices - the industry’s greatest burden - plunged.

AirTran Holdings (AAI), the parent company of AirTran Airways, led the pack as its stock surged 25.7%. Shares for other airlines, such as United Airlines’ parent UAL Corp. (UAUA, Fortune 500), JetBlue Airways Corp. (JBLU) and US Airways Group (LCC, Fortune 500), also closed more than 10% higher.

The stock for Northwest Airlines Corp. (NWA, Fortune 500), which reported a net loss for the second quarter, traded 15.2% higher.

The price of oil fell as investors became less concerned that Hurricane Dolly, which crashed into the Texas-Mexico border on Wednesday, would disrupt oil production. Light, sweet crude for September delivery fell $3.98 to $124.44 a barrel, after an inventory report showed higher-than-expected stockpiles of crude and gasoline.

Ray Neidl, analyst for Calyon Securities, said the drop in oil prices was largely responsible for gains in airline stocks over the past two days. When oil prices fell on Tuesday, the Amex Airline Index (XAL) shot up 22%.

Northwest Airlines on Wednesday reported a net loss for the second quarter, joining other airlines in blaming the rising price of jet fuel for sending it into the red. Despite the loss, Northwest managed to beat analyst projections.

Northwest - which has agreed to merge with Delta Air Lines Inc. - reported a second-quarter net loss of $377 million, or $1.43 per share. That reflected an impairment charge of $547 million, as well as a gain of $250 million from the successful hedging of fuel prices.

The loss was much worse than Northwest’s performance in the second quarter of 2007, when the airline emerged from bankruptcy and reported net income of $2.1 billion. This included $1.9 billion related to reorganization.

Without the impairment charge, the airline said it would have had income of $170 million in the recent quarter.

Northwest did not report its non-charge income in terms of cents per share. But in reporting a gain, Northwest beat the analyst consensus projection from Thomson/First Call, which expected a net loss of 54 cents per share, without charges.

Northwest also said that its operating revenue totaled $3.6 billion in the second quarter, a 12% jump from the same period in 2007. That beat the analyst consensus projection from Thomson/First Call, which expected an 8% gain in revenue to $3.4 billion for the second quarter payday loans lenders.

Northwest said the rising cost of fuel was largely responsible for its financial hardships. The airline said fuel costs increased by $637 million, compared to the year before and not counting the savings from fuel hedging.

The carrier said it paid $3.45 per gallon of jet fuel in the second quarter, compared to $2.04 per gallon in the same period last year.

Rising fuel prices have hit the airline industry hard. The Air Transport Association expects the industry’s fuel costs to total $61.2 billion this year, up from $41.2 billion in 2007.

Many airlines are raising their fares to offset the rising fuel costs. Fares increased 4.4% industrywide in the first quarter, compared with the same period a year ago, according to the Department of Transportation’s Bureau of Transportation Statistics on Wednesday. This is the largest year-to-year increase in nearly two years.

Airlines are cutting costs wherever they can. Northwest, which has lost more than one-third of its stock value so far this year, said July 9 that it was cutting 2,500, or 7%, of its total workforce, and will begin charging a $15 fee for the first checked bag.

Like many other airlines, Northwest is also eliminating its least fuel-efficient flights. By the fourth quarter, the airline plans to reduce capacity by 8.5% to 9.5%.

"The unprecedented rise in fuel prices has had an adverse effect on our second-quarter results," said Northwest Chief Executive Doug Steenland in a teleconference with reporters. But Steenland said that Northwest is now "very well positioned" to face the challenge of higher fuel prices, considering that its pending merger with Delta is expected to close in the fourth quarter of this year.

Steenland said the imminent merger with larger airline Delta "positions Northwest to not only survive, but to prosper in this environment."

Northwest is the fifth-largest U.S.-based airline in terms of annual sales, behind American Airlines’ parent AMR Corp. (AMR, Fortune 500), United Airlines, Delta (DAL, Fortune 500) and Continental Airlines (CAL, Fortune 500). 

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The number of private sector jobs fell by 79,000 in June, according to a payroll report released Wednesday, with the decline exceeding economists’ forecasts.

The National Employment Report from Automatic Data Processing showed a 76,000-job drop for goods-producing businesses, the 19th monthly decline in a row, coupled with a 3,000 job decline in the services sector.

A majority of the production job losses came from the manufacturing sector, which lost 44,000 easy payday loans.

Economists polled by Briefing.com had expected jobs to decline by 20,000 in June.

The ADP report measures non-farming private employment based on payroll data. 

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Billionaire Kirk Kerkorian’s investment company said Tuesday its tender offer for 20 million additional shares of Ford Motor Co. attracted a huge response and will easily enable it to increase its stake in the automaker to about 5.5%.

Tracinda Corp. said in statement its tender offer of $8.50 a share drew offers of more than 1 billion of the company’s shares. It will buy 20 million shares for about $170 million.

Nearly half of Ford’s (F, Fortune 500) 2.17 billion outstanding shares were tendered.

"The response from investors is understandable given that the offer represented a significant premium over Ford’s current share price," said Mark Truby, a Ford spokesman.

"The Ford team remains focused on executing our plan to transform Ford into a lean global enterprise delivering profitable growth for all," Truby said in an e-mail.

Tracinda launched a cash tender offer on May 9 for the additional shares, which was a slight premium to the stock’s May 8 closing price of $8.20.

But Ford shares have since declined more than 20%, and were down 6 cents to $6.30 in premarket trading Tuesday.

The Dearborn, Mich.-based automaker announced last month that it no longer expected to return to profitability by 2009 free instant credit score estimator. Ford is cutting production in North America for the rest of this year as high gas prices and a weak economy cut into sales.

Tracinda began accumulating 100 million Ford shares, or 4.7% of the outstanding stock, on April 2 at an average cost of $6.91 per share.

Ford’s board of directors had said it was neutral and would express no opinion about the offer.

The tender offer officially expired at 5 p.m. on Monday. Tracinda had the option not to buy the additional shares under certain circumstances. They included: "any change or prospective change in the affairs" of Ford that has a "materially adverse effect" on the company or any event that "would adversely affect the extension of credit by banks or other financial institutions." 

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When the city of Youngstown, Ohio, proposed incentives to move people out of declining neighborhoods, it sounded like a good idea - in theory.

The city hoped to lure holdouts living on nearly empty blocks and relocate them to more lively areas, as part of its plan to remake itself in the wake of the steel industry’s departure and the foreclosure crisis. It’s already cleared some lots for things like playgrounds.

Now Youngstown wants to close entire streets and bulldoze abandoned properties so it can shut down city services like street lighting, police patrols and garbage pick-ups that it can no longer afford to maintain.

To do this on a large scale, the city needs to get about 100 residents to relocate. Each is eligible for $50,000 in incentives - plenty, in this town, to buy a new home and move. The hitch: Youngstowners don’t seem to want to leave their homes, no matter how blighted or abandoned the neighborhood may be.

"I’m East Side born and East Side bred and when I die, I’ll be East Side dead," said Rufus Hudson, a director of work force development at Youngstown State University. "We love our side of town. The same people who watched me grow are watching my children grow."

Only one of the half dozen residents who have been contacted by the program since June agreed to relocate, according to Bill D’Avignon, the city’s community development director. And in interviews with CNNMoney.com, another seven residents vowed that they too would stay on their deserted blocks.

The woman who did agree to move lived on a block filled with burned out homes, and a street that could easily be closed without disturbing traffic patterns. But she fell ill, and the move is now on hold.

D’Avignon, who has been surprised by the resistance, said the city may have to up the ante to overcome the resistance, which seems to stem, in part, from community loyalty.

Marie Rodriguez lives on the city’s gritty South Side, next to a big empty lot on her right and vacant houses behind her. "That bothers me a little," she admitted.

There are only eight occupied homes left on her street, but she still likes living there. "It’s pretty good, nice and quiet," said the retired cook. "I wouldn’t move even if I was the last one on the block."

People are understandably attached to homes that they’ve cared for, and which hold fond memories.

"I put a lot of money in the house, and I raised seven kids here," said Rodriguez.

Another South Sider, Anna Maria Gay, has lived in Youngstown for 47 years and also won’t be persuaded to move from her block. "I like the people here; I would never move away," she said. "It’s very homey, not high class but not quaint either."

Youngstown’s East Side was slated for development back in the 1950’s, when the city’s population was about 200,000.

But the neighborhood withered as Youngstown’s population dwindled to about 80,000. Many of the houses that were built have been demolished, roads have gone un-repaired and others have been closed. Large wooded areas and fields - and even a 10-acre farm - lie within a 10-minute drive of downtown.

Arlette Gatewood, an 80-year-old retired steelworker and union official, has lived on the East Side since its heyday, and he too intends to stay in his home credit scores.

"Turning these mostly empty blocks into green spaces would be better for the neighborhood and cheaper for the city," he said. "But it’s not my intention to ever move."

The area has too many memories for him to give up.

"I worked in the steel mills for 32 years, five months and 28 days," said Gatewood. "I came up at a time, graduating from high school in 1947, when the opportunities for young black men were limited."

But the mills were hiring. "We made good money," he said. "The work was hard; it was dirty."

Going home to the East Side after a tough day was pleasant, though. He remembers beer gardens, grocery stores and other retailers. These are gone. Now Youngstowners drive to the suburbs to shop.

The desire to stay put leads to some odd juxtapositions.

Take Meadow Street, which is near downtown. It’s just a block long and the southern half of it will soon close when Fireline Inc., a ceramic molding manufacturer, takes possession. The company already owns most of the block.

But there’s one holdout - a modest, wood-frame house a third of the way down the street. The Fireline plant, which employs 102 people, nearly surrounds this sliver of land where Nathaniel and Lulu Byrd live.

The company would like to take over the entire street, but for the Byrds.

According to Fireline, the couple has no intention of moving. "We’ve offered [the Byrds] ten times their home’s valuation," said Gloria Jones, who founded the company with her husband.

But Nathaniel Byrd’s mother gave him this house as a wedding gift. "They have a great deal of affection for the house," said Jones. "They want to stay."

So far city planners have been patient. Relocations are strictly voluntary, and the city intends to keep it that way - there are no plans to invoke eminent domain.

Meanwhile, the city has crafted plans for over 170 neighborhoods. In the Idora Park area, for example, near where an amusement park once stood, there are just a few occupied houses where the "entire swath of land should be open greenery," said community development director D’Avignon.

To make that happen, city planners may sweeten the deal - possibly offering to pay off small mortgage balances of $20,00 or $30,000.

They may have to, if they want any Youngstowners to move.

Issue #1 - America’s Money: All this week at noon ET, CNN explains how the weakening economy affects you. Full coverage.

Under the government’s economic stimulus plan, 130 million people will receive tax rebate checks for $300 and up, starting April 28. What do you plan to do with your check? How do you think the stimulus plan will affect the economy? Send us your photos and videos, or email us and tell us what you think. 

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Delta Air Lines is trying to determine whether to push ahead with a Northwest Airlines merger, without a prearranged deal between their pilots, a move that could change certain details of the deal, two people familiar with the discussions said Monday.

Delta (DAL, Fortune 500) and Northwest (NWA, Fortune 500) are looking at their route structures and how a combination now would affect them given $100-a-barrel oil and a decision by both carriers to cut domestic capacity.

"When that happens, the merger details could change," the person said. "That will also affect the pilots."

Overarching issues such as retaining the company’s Atlanta headquarters, Delta Chief Executive Richard Anderson taking charge of the combined entity and using the Delta name for the new company, are not likely to change, the person said.

The other person said there is no particular timeline or deadline for the airlines to decide whether to proceed with a deal, and things could still fall apart.

The people requested anonymity because of the sensitivity of the talks.

No meetings are scheduled this week between officials from both companies, though Delta’s board met last week, one of the people familiar with the talks said.

The usual approach in airline combinations has been to have pilots work out a joint union contract after a deal announcement. Atlanta-based Delta and Eagan, Minn.-based Northwest for months took a different approach in their talks, figuring that if they could obtain full pilot agreements in advance they would reap the benefit of a combined airline much sooner.

With that in mind, pilots were in line to get raises and equity in the combined company payday loans. But the two groups couldn’t agree on seniority, which determines who flies more desirable aircraft and routes.

Now, the rising cost of oil has put all airlines under intense financial pressure. Since the talks began, Delta and Northwest have announced plans to reduce capacity this year, and Delta has announced plans to eliminate 2,000 jobs.

The pilot negotiating committees at Delta and Northwest have not had any recent meetings, but there has been informal contact between members of the two unions, one of the people familiar with the discussions said.

Delta has said it would be interested in a combination under the right circumstances, including the ability to protect its employees’ seniority. It has said it has a strong standalone plan and is not obligated to find another partner if a deal with Northwest falls through.

Another option that remains on the table is a "light" deal between Delta Air Lines Inc. and Northwest Airlines Corp. in which they would combine some corporate functions but keep separate pilot ranks and operations, the people familiar with the talks said. 

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Another former Starbucks employee is suing over the way the coffee chain store divides up tips.

Starbucks (SBUX, Fortune 500) is already planning to appeal a California judge’s order that it pay $100 million in tips and interest because supervisors shared in the tips given to baristas. And on Wednesday another state lawsuit was filed in Massachusetts.

Now a Minnesota lawsuit accuses Starbucks of the same thing. It says Starbucks broke a Minnesota law that prohibits employers from requiring employees to share tips fast cash advance. The lawsuit claims that some of those who shared in the tips were supervisors.

Starbucks says its baristas and shift supervisors share tips because they all provide the same customer service. They’re all hourly employees. Starbucks says store managers do not get tips.

The Minnesota case is in Washington County and seeks class-action status. 

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