June 2007: Manhattan Retail, Office and Industrial Market Report

New York City Market Overview:

Retail and Office tenants are in for a rude surprise as the city assessments and lease escalations dramatically rise. The market is starting to get a little slower as the temperatures begin to get warmer and summer sets in.

New York City New Construction:

Skyline Developers will construct a 150,000 foot luxury high rise building at 1831-1839 Third Avenue (corner of 79th Street).
Ian Shrager’s plans to bring a high-end hotel/residential project to One Madison Avenue may be over, as he & his partners have accepted an offer to sell the vacant building.
Extell Development Corp has begun work on an over 50 story mixed use development featuring a five-star hotel at the base and condos with central park views on the north side of W. 57th Street across from Carnegie Hall.
Manhattan’s West Side rail yard is now on track to become home to a new riverside development which includes office towers, apartment buildings, retail shops, and a green space as big as Bryant Park. The project will be constructed above the rail yards on a platform.
The Spitzer administration announced the settlement of all insurance claims at ground zero, ensuring that $5.55 billion will be available to rebuild the World Trade Center site.
The unsettled insurance claims were the last major barrier to rebuilding and have been bitterly contested for almost six years. This is the largest single insurance settlement.
Mayor Bloomberg and City Council leaders are considering expanding property tax cuts to help property owners stave off the effects of soaring assessments. The increase in tax relief of as much as 3.5% would come on top of a 5% cut the mayor proposed in his $59 billion budget plan.

New York Office Leases:

Total Manhattan Office Class A vacancies decreased from 12.46 million RSF to 12.24 million RSF.
Total Vacancy decreased from 21.58 million RSF to 20.92 million RSF.
Total Manhattan Office direct lease vacancy decreased from 18.56 million RSF to 17.95 million RSF.
Sublease Vacancy decreased from 3.02 million RSF to 2.97 million RSF.
Total Manhattan Office Market vacancies decreased from 21.58 million RSF to 20.92 million RSF.
Midtown South Office vacancy decreased from 3.91 million RSF to 3.13 million RSF.
Total Midtown Office vacancy decreased from 11.48 million RSF to 11.32 million RSF.
Total Manhattan Downtown vacancy increased from 6.12 million RSF to 6.48 million RSF.
Total Vacant Office Space in Midtown Manhattan in sublease space increased from 1.885 to 1.924 million RSF.
Total Vacant Direct Space decreased from 9.60 million RSF to 9.39 million RSF.
Midtown South Office direct lease vacancy decreased from 3.50 million RSF to 2.83 million RSF.
Sublease vacancies decreased from 0.476 million RSF to 0.296 million RSF.
Total Downtown Manhattan Office vacancies increased with direct lease space increasing from 5.46 million to 5.73 million RSF.
Total Vacant Sublease Space increased from 0.655 to 0.747 million RSF.

NYC Retail Leases:

Total available Manhattan Retail Space increased from 0.90 to 0.97 million RSF.
Midtown South Retail space vacancies stayed at 0.65 million RSF.
Midtown vacancy increased from 0.12 million RSF to 0.17 million RSF.
In Downtown, retail vacancy increased from 0.13 million RSF to 0.15 million RSF.

New York Industrial Leases:

Total vacant Manhattan Industrial Space stayed at 0.70 million RSF.
Midtown Vacancy stayed at 0.55 million RSF.
Midtown South Vacancy stayed at 0.11 million RSF.

New York Retail Leases:

Dean & Deluca (SOHO) has renewed their lease for another 15 years.
Giorgio Armani has signed a lease for 40,000 sf at 717 Fifth Avenue.
Guicci will take over the former Asprey space at Trump Tower.
Tiffany’s will open on the ground level of 37 Wall Street.
Annie’s and Hunter’s restaurants are set to close.
10 Downing will be the home of new restaurant, 10 Downing. With 200 feet of frontage of Sixth Avenue.

New York City Buildings Sold:

183 Madison Avenue was sold for $107 million.
170 East End Avenue is 90% sold.
The Schack family has put 530, 532, 536 Broadway on the market for sale.
LeFrak Organization has signed a contract to sell 12,000 apartments for $250 million.
Elad Properties is set to sell Triplex Penthouse at the Plaza Hotel for $56 million to an undisclosed London businessman.
The Hard Rock Hotel at 235 W. 46th Street is in contract to be sold for approximately $200 million.
The Brill building at 1619 Broadway is being sold for just over $150 million.
14 Penn Plaza is on the market for sale and could fetch us much as $400 million.
225 West 34th Street is on the market for sale.
As Florida’s real estate boom nears completion, dozens of investors are trying to break contracts. Condo sales prices have increasingly dropped.
Lev Leviev has purchased the New York Times Building, and 50% ownership of Apthorp apartment complex on the Upper West Side.