January 2008: Manhattan Retail, Office and Industrial Market Report

New York Market Overview:

There are 9,072,684 RSF of office space under construction and more office space contemplated and many additional office buildings contemplated. The big question is which will Wall Street and hedge funds start will lay off and how much will they lay and whether the other firms will go back to buisness as usual? Stay tuned.

New Construction Brooklyn

At 75 Flatbush Avenue, a permit to build a 21-story, 108-unit new Flatiron has been issued. The 150,000-square-foot building, which is going up Extension will be 262 feet tall.

Developers of the Domino Sugar Refinery, a historic landmark, will be part of an ambitious $1.2 billion, 10-year residential development project.

Major Market News

Columbia Expansion Approved.
The City Council voted to rezone a 35-acre section of Harlem, allowing Columbia University's $7 billion expansion. Columbia plans to expand onto 17 of the rezoned acres, bounded by Broadway, Riverside Drive, West 129th Street and West 133rd Street.

The Federal Reserve's proposal to curb high-interest lending comes too late for many New Jersey families. About one-fifth of sub-prime mortgage borrowers who took out loans in 2005 and 2006 will lose their homes to foreclosure.

Plans to expand the Jacob K. Javits Convention Center have been scaled back to a renovation and a modest addition to the West Side facility. The Empire State Development Corporation is considering smaller-scale alternatives, including an expansion of about 100,000 square feet. More than half of the $1.6 billion set aside in funding will go toward renovations and repairs.

The City University of New York will pay developer Bruce Ratner $307 million to build an 11 to 14-story City Tech classroom building in Downtown Brooklyn.		 2007 - 2008 Manhattan Office Market Vacancies

2007 - 2008 New York Retail Market Vacancies


Australian real estate company Centro Properties Group, the fifth-largest shopping center owner in the U.S., saw shares drop by 90 percent in the last two days. Slips by office and retail landowners hint that the credit crunch may soon hit the country's commercial market as hard as it did the housing market.

According to a survey by London's Independent newspaper, New York City is the location of the most headquarters for global corporations. The report also put New York in second place as the world's "capital city," behind London in terms of financial markets and entertainment.

Europeans are on shopping sprees in New York City buying more than holiday gifts. They are taking advantage of the weak dollar by buying apartments. The number of foreign buyers has doubled in two years and they have bought one-third of all new condos in the last 18 months.

Developers are moving ahead with 5-15 West 125th Street off Fifth Avenue; 2296 Frederick Douglass Boulevard between 123rd and 124th streets; and 233-237 West 125th Street, the old Victoria Theatre at Seventh Avenue. Reisman Properties are building the hotel at 5-15 West 125th Street, and there is no meaningful lodging facility to accommodate them.

250 W. 55th Street, an office tower, built by Boston Properties on Eighth Avenue between 54th and 55th streets could be built over an existing tenement at 261 West 54th Street side of the project

Brookfield Properties Corp. is regarded as a formidable office landlord, but winning the bid to build the massive Hudson Yards project would confer instant credibility to the upstart developer. Hudson Yards would add a 12 million-square-foot development site to its portfolio of 16 million square feet. It could also add as much as 40 percent, or about $400 million, to its operating profit. Brookfield does not have an anchor tenant in place and is seen as a long shot.

Retail rents in Manhattan average $133 per square foot, up 26 percent from $106 per square foot last year. Downtown, average rents have eclipsed $100 for the first time, increasing 18 percent this year to $109 per square foot. The biggest spike was on Broadway in the Times Square area, where ground-floor rents surged 107 percent to an average of $797 per square foot. Rents average $1,108 on Madison Avenue and $1,250 on Fifth Avenue.

The Port Authority was expected to approve to bring the Westfield Group, a shopping center operator, back to the World Trade Center. Where Westfield will invest more than $600 million and receive a 50 percent stake in 490,000 square feet of retail space above ground and in the two-story concourses connecting to subway and PATH lines.

Tishman Asset Corporation wants to build a 22-story, 333,000-square-foot hotel at the now demolished Playpen Theater at 693 Eighth Avenue. They want to include putting up a small residential building nearby. Tishman purchased the five lots, including the Playpen, for $128 million in July.

It has become increasingly clear that the national housing picture has turned much more gory than anyone might have imagined; likewise, repeated forecasts that a meaningful housing rebound will kick off by mid-2008 appear to have little or no legitimacy.
Some housing industry experts suggest the implications are ominous, that the worsening housing slump will accelerate the likelihood of a recession.

Housing is in a deepening recession that has at least another two to four years to run; it's also in the midst of a serious readjustment of prices." the readjustment will eventually see prices of single-family homes plummet 10% to 20% and condominiums tumble 20% to 40%. "The picture is getting darker and darker by the day.

Wyndham plans at least four full-service, upscale hotels. Wyndham Hotels and Resorts, is opening a hotel in Chelsea at 119-121 West 24th Street, in February and another is opening at 20 Maiden Lane two months later . Three months after that, 341 West 36th Street will open and eight months later, in March 2009, a fourth hotel at 93 Bowery.

New York Buildings For Sale

Hiro North American Properties is selling a 27-story tower at 650 Madison Avenue for $800 million. The sale price would mean the 600,000-square-foot tower would sell for between $1,250 and $1,333 a square foot.

New York Office Rentals:

  • Total Manhattan Office Class A vacancies increased from 10.77 million RSF to 11.86 million RSF.
  • Total Manhattan Office Market vacancies rose from 20.32 million RSF to 22.35 million RSF.
  • Total Manhattan Office direct lease vacancy rose from 17.49 million RSF to 19.16 million RSF.
  • Manhattan Office Sublease vacancy increased from 2.83 million RSF to 3.19 million RSF.
  • Total Manhattan Office Market vacancies increased from 20.32 million RSF to 22.35 million RSF.
  • Total Midtown South Office vacancy increased from 3.96 million RSF to 4.38 million RSF.
  • Total Midtown Office vacancy increased from 10.75 million RSF to 12.49 million RSF.
  • Total Downtown Office vacancy decreased from 5.6 million RSF to 5.48 million RSF.
  • Total vacant Office Sublease Space in Midtown Manhattan increased from 1.71 million RSF to 2.11 million RSF.
  • Total vacant Office Direct Space in Midtown Manhattan increased from 9.04 million RSF to 10.38 million RSF.
  • Total vacant Office Direct Space in Midtown South Manhattan increased from 3.66 million RSF to 4.11 million RSF.
  • Midtown South Manhattan Sublease vacancies decreased from 0.3 million RSF to 0.27 million RSF.
  • Total Downtown Manhattan Office Direct Lease Space decreased from 4.78 million RSF to 4.68 million RSF.
  • Total Downtown Manhattan Office Sublease Vacancies decreased from 0.81 million RSF to 0.8 million RSF.

Manhattan Retail Rentals:

  • Total Available Manhattan Retail Space increased from 1.03 million RSF to 1.06 million RSF.
  • Midtown South Retail space vacancies rose from 0.75 million RSF to 0.77 million RSF.
  • Midtown vacancy stayed at 0.21 million RSF.
  • In Downtown Retail vacancy increased from 0.7 RSF to 0.8 million RSF.

Manhattan Industrial Rentals:

  • Total Vacant Manhattan Industrial Space stayed at 0.2 million RSF.
  • Midtown South Industrial space vacancies stayed at 0.1 million RSF.
  • Midtown vacancy increased stayed at 0.1 million RSF.

Manhattan Office Rentals:

  • ALM leases 90,000 rsf 120 Broadway.
  • Herrick Feinstein leases 72,000 rsf at 2 Park Avenue.
  • Kirshenbaum Bond & Partners leases 67,815 rsf at 10 Hudson Square.
  • Taconic Capital Advisors LP leases 50,000 rsf at 40 West 57th Street.
  • NCR Corporation leases 40,000 rsf at 7 World Trade Center.
  • Polo Ralph Lauren leases 35,664 rsf at 25 West 39th Street.
  • Jump Apparel Inc. leases 32,243 rsf at 1400 Broadway.
  • Markit North America Inc. leases 31,753 rsf at 620 Eighth Avenue.
  • Brennan Beer Gorman Architects leases 30,995 rsf at 350 Fifth Avenue (Empire State Building).
  • Pipeline Financial Group leases 25,000 rsf at 60 East 42nd Street (The Lincoln Building).
  • Ronald Jonas Interiors; Jonas Upholstery Inc. leases 22,610 rsf at 44 West 18th Street.
  • Longacre Fund Management LLC leases 16,858 rsf at 810 Seventh Avenue.
  • Diamondback New York LLC leases 16,858 rsf at 810 Seventh Avenue.
  • Micro Office Solutions leases 16,392 rsf at 1375 Broadway.
  • Shalom International Corp. leases 15,000 rsf at 3 West 35th Street.
  • Excelled Sheepskin & Leather Coat Corp. leases 14,785 rsf at 1400 Broadway.
  • McMahon, Martine & Gallagher LLP leases 12,147 rsf at 55 Washington Street.
  • FYC Apparel Group LLC leases 12,057 rsf at 1384 Broadway.
  • Haver Analytics leases 12,041 rsf at 60 East 42nd Street (The Lincoln Building).
  • Dealogic leases 12,000 rsf at 120 Broadway.
  • National Academy of Recording Arts & Sciences leases 10,745 rsf at 11 West 42nd Street.
  • Fortune Footwear Inc. leases 10,500 rsf at 174 Hudson Street.
  • Business Journals leases 9,038 rsf at 1384 Broadway.
  • YMI Jeanswear leases 8,600 rsf at 530 Seventh Avenue.
  • Fulvio & Associates leases 8,200 rsf at 5 West 37th Street.
  • SLR Acquisitions/Strategic Workforce Solutions leases 7,990 rsf at 65 Broadway.
  • Sage & Coombe Architects leases 7,128 rsf at 12-16 Vestry Street.
  • Gym Tech Inc. leases 7,000 rsf at 188 Varet Street.
  • ATB Holdings leases 5,776 rsf at 14 Wall Street.
  • InterDealer Information leases 5,018 rsf at 14 Wall Street.
  • Gold Village Entertainment Inc. leases 5,000 rsf at 72 Madison Avenue.
  • Hasson Mireles leases 4,700 rsf at 224 12th Avenue (The Terminal Warehouse).

New York City Retail Rentals:

  • Modell's Sporting Goods leases 25,105 sf at 795 Columbus Avenue.
  • Duane Reade leases 17,200 sf at 1657 Broadway.
  • Ana Tzarev leases 14,600 sf at 24 West 57th Street.
  • Smith leases 8,000 sf at 55 Third Avenue.
  • Duane Reade leases 7,573 sf at 378 Sixth Avenue.
  • Jeffrey Chodorow leases 7,000 sf at 44 West 63rd Street (Empire Hotel).
  • Trespa New York LLC leases 6,500 sf at 62 Greene Street.
  • North Fork Bank leases 6,400 sf at 991 Third Avenue.
  • Yuki Sushi leases 5,400 sf at 685 Amsterdam Avenue.
  • Le Pain Quotidien leases 5,000 sf at 2463 Broadway.
  • Hugo Boss leases 4,100 sf at 401 West 14th Street.
  • Frankie's Playce leases 4,050 sf at 8000 Cooper Avenue.
  • Qdoba Mexican Grill leases 3,500 sf at 216 Eighth Avenue.
  • Le Pain Quotidien leases 3,200 sf at 550 Hudson Street.
  • Volcom leases 3,000 sf at 446 Broadway.
  • Magnolia Bakery leases 3,000 sf at 200 Columbus Avenue.
  • Qdoba Mexican Grill leases 2,400 sf at 12 East 46th Street.
  • Cafe Blossom leases 2,000 sf at 466 Columbus Avenue.
  • Athea Kitchens Inc. leases 1,700 sf at 7 Hanover Square.
  • Blue Mercury Inc. leases 1,700 sf at 2305 Broadway.
  • Casa Foods LLC leases 1,300 sf at 173 Orchard Street.
  • Audio Cubes leases 930 sf at 69 East 8th Street.

New York City Buildings Sold:

  • 1177 Avenue of the Americas was sold for over $1 billion to Silverstein.
  • SL Green agreed to buy Citigroup's towers at 388-390 Greenwich Street for $1.575 billion in a partnership with SITQ. SL Green will own 52.5 % of the 2.6 million square foot building which sold for $598 per square foot. Citigroup will lease back the building and cover the costs of operating and maintaining it for 13 years.
  • 450 Park Avenue, a 32-story, 330,000 SF office building, was sold to Somerset Partners LLC for $509 million.
  • 10 Monroe Street (Knickerbocker Village), a two 12-story apartment. Building, 1,590 units, was sold to Apollo Real Estate Advisors for $200 million.
  • 440 Ninth Avenue, an 18-story, 342,600 SF office building, was sold to Paramount Group; Sherwood Equities for $160 million.
  • 470 Park Avenue South, a 17-story, 260,000 SF office building, was sold for $157 million.
  • 360 East 65th Street, a 21-story apartment. Building, 165 units was sold to Stonehenge Partners for $130 million.
  • 235 West 75th Street, a 224,000 SF apartment building, 212 units was sold to Westbrook Partners for $109.12 million.
  • 476 11th Avenue, a Development site, was sold to Rockrose Corporation for $83.4 million.
  • 127-135 West 33rd Street, a 16-story, 171,000 SF mixed-use building, was sold to Time Equities for $70.5 million.
  • 24 West 53rd Street, a 5-story, 100,441 SF building, was sold to Orient-Express Hotels Ltd. for $59 million.
  • 121 West 28th Street (The Hilton Garden Inn Chelsea), a 174-room hotel, was sold to Inland American Winston Hotels for $55 million.
  • 158 West 27th Street, a 12-story commercial building, 15 units, was sold to Louis Dreyfus Property Group for $46 million.
  • 112-126 Ninth Avenue, a 6-story, 60,000 SF building, was sold to Morris Moinian, Fortuna Realty Group for $40 million.
  • 305 West 39th Street (Times Square Comfort Inn), a 78-room hotel, was sold to Gemini Real Estate Advisors for $31.74 million.
  • 29 West 35th Street, a 12-story, 71,180 SF office building, was sold to a New York investor for $30 million.
  • 312-318 East 95th Street, a 5-story, 39,424 SF building, was sold to TDS Acquisition LLC for $25 million.
  • 433-439 West 37th Street, a Development site, was sold to a New Jersey developer for $19 million.
  • 215 West 108th Street and 210 West 109th Street, a 31,425 SF portfolio, 44 units, was sold to Morris Moinian for $16.5 million.
  • Central Harlem portfolio, a 12 mixed-use walk-up building, was sold for $15 million.
  • 19 West 56th Street, a 25,000 SF office building, was sold to Sheldon Solow for $15 million.
  • 2269-75 First Avenue, a 5-story, 45,000 SF building, was sold to The Noam Corporation for $11.5 million.
  • 677 11th Avenue, a 4-story, 32,800 SF commercial building, was sold to Rockrose Development Corp. for $10.048 million.

Legend

RSF-Rentable Square Feet
SF- Square Feet


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