New York Real Estate News Archive for 2012

Last month's Manhattan office leasing volume was not even 25% of last years. Leasing volumes, to date, annualized for 2012 are about ½ of what they were in 2011. Incentives such as naming rights, terraces and bring your dog to work are now being offered by landlords to get tenants interested...

Tenants are continuing to be slow in making long term decisions, therefore leasing volumes have been quiet for the last few quarters. 6 million square feet of new office inventory wil be coming online this year. This will lead to interesting game of blink as to whether Landlords will lower their rents in order to get deals done.

Office building Developers were overly optimistic that they were going to sign millions of square feet of leases with New York corporations looking to consolidate. With the economy in flux, it is yet to happen.

The city's low office vacancy rates and slowly rising rents are overshadowing a disturbing office leasing trend. Ground-up office projects have been unable to secure major tenants, which in turn have stifled development. News that Silverstein Properties might cap off 3 World Trade Center at seven stories because of its inability to land a tenant, is just the most recent example. Three World Trade Center is close to being topped off — 73 stories shorter than initially planned. Crain's reported that if developer Larry Silverstein, president of Silverstein Properties, cannot find an office tenant for the planned 80-story tower by the end of the year, he'll cap it off at seven stories and seek retail tenants to fill the structure. After talks with UBS broke off Silverstein has not come close to finding a tenant, Silverstein will resume construction as planned on 3 WTC with slight delays to the expected 2015 completion date.

Predictions for Manhattan Real Estate – Year 2012

Retail
Prime retail rents will continue to rise but not as dramatic as previous years. Fringe retail rents will continue to fall 10-20%.

Office Space
Class A office rents depend upon the financial success of Banking and Investment Banks. It’s a seesaw, if more layoffs, then rents in Class A Office Buildings could fall 10-20%. If neutral to hiring of employees, prices will continue to rise until it is economically viable to build new office buildings (which needs to be about $100/RSF rent).

Class B office rents will continue to rise because some Class B Office buildings are being converted to residential and hotels (therefore less inventory of Class B buildings).

New York Real Estate News Archive for 2011

December 2011
Office leasing volume tapered off from a strong start at the beginning of the year. This coincided with the recent market gyrations since August. Companies are starting to delay decisions until the stock market volatility lessens.

Prime retail property is full while secondary locations languish.

New Residential construction has restarted. Banks are now lending to experienced, well financed developers. As a result, the number of stalled projects has declined 8% from the previous year.

November 2011
We have been talking about pending new construction for the last few newsletters. Now it has finally happened. Coach is buying a new building to be constructed as part of Related development on the West Side. Brookfield is also about to start constructing the $300 million deck above the rail tracks. This will dramatically change the neighborhood from fringe to potentially the next Rockefeller Center on the West Side.

October 2011
Two trends have occurred this month. The 1st is the stock market has been fluctuating widely. The 2nd is office vacancies have started to increase in Midtown and Downtown though office rents have yet to decline.
A number of high profile retail locations remain vacant as landlords continue to hold out for preferred tenants while secondary locations languish.

September 2011
New construction for both office building and residential is occurring in Manhattan.
European and other foreign retailers continue to enter the Manhattan market and are outbidding American retailers.

August 2011
Midtown office demand and rents are rising to the point that justifies new office construction. This is due to financial firms relocating to Midtown.

July 2011
There was a lot of lateral movement in the Manhattan office market but no net absorption. Conde Nast signed a lease for 1,000,000 SF at 1 World Trade Center but will vacate an equivalent amount. Nomura Securities signed a lease for 800,000 SF at 825 Eighth Avenue vacating World Financial Center but again a lateral movement.

June 2011
New construction about to start again in Midtown. Banks are funding as Midtown office rents exceed $100/RSF … Boston Properties will be the first to construct a $1.05 billion, one million-square-foot office with their anchor tenant Morrison & Foerster at 250 West 55th Street.

May 2011
Quality office buildings in Midtown and Midtown South are attracting multiple offers. Landlords are taking advantage of this trend and are raising their asking prices on their A and B office buildings.

April 2011
With the economy starting to grow and employment picking up, large and medium size businesses are finally signing long-term office leases, in record numbers…..

March 2011
Is the economy really improving? Warren Buffet believes so. So do the 29 large financial firms. They are all vying for the 24 large blocks spaces of 200,000 SF that exist. Other than that, the market is flat…..

February 2011
Downsizing has come to a halt. Companies are hunkering down as wall street, hedge funds and technology firms are back to business as usual.
This means that Manhattan office and retail vacancies will decline over time, as the economy improves.

January 2011
Three major trends as we start 2011
1. Foreign money is looking to buy Manhattan office and residential buildings by paying prices beyond those that make economic sense for domestic buyers.
2. Retail Landlords are actively seeking pop up stores to replace failed retailers. Landlords are still not willing to negotiate with struggling retailers.
3. The Manhattan Office market is a tale of two cities. Wall Street and Law firms have gone from net firing to net hiring. These two employer categories are economic engines for Manhattan and consumers of Class A office space. The other side is N.Y. State and N.Y. City governments that are shrinking and existing N.Y. firms are down- sizing on renewals. The net result is a continued slight tightening on the Manhattan office market over the next year.

NY Real Estate News Archive for 2010

December 2010
Office vacancies decreased in all three markets in Manhattan.

Midtown, Midtown South and Downtown have seen companies lock in leases both large and small. Many companies waited as long as they could and had to sign leases, while others tried to time the bottom.

Now the question is, what else is there? Some say there is some hiring on Wall Street, but then again some firms are still laying off. New York City is doing layoffs and so is New York State. The job market remains bleak in Manhattan. Office demand remains flat for the time being.

November 2010
Distressed real estate is here to stay for the next 12 to 24 months. Multiple panels of real estate experts concurred with this at a recently held distressed real estate conference in New York.

October 2010
Major corporations are continuing to try to lock in historically low rental rates while they can. This accounts for the on going strong leasing volume. The strong leasing volume, has Landlords talking about raising base rental rates. One landlord has actually taken the plunge. SL Green, a major Midtown Landlord, has announced such a price increase.

September 2010
New York is holding its own as city appeals both to start ups and foreigner businesses.
Retail
Flagship activity has picked up dramatically as major retailers are vying for spaces on Madison and Fifth Avenue. There are many new foreign entrants coming into New York looking for small spaces. There are still many large vacancies out there where landlords have yet to take the plunge and divide up the spaces.

Office
Why are vacancy rates not climbing if firms are taking smaller spaces upon renewing their leases? While velocity is up, few firms are expanding.

August 2010
Retail activity is brisk as retailers finally take the plunge and commit to new spaces albeit at recent record low prices, especially in high end retail markets. The same came be said about Class A Plaza district office. The rest of the Office and retail Market remain stagnant.

July 2010
Leasing volume spikes, as firms lock in low rents. Office vacancy increases, as most firms are taking smaller spaces. Landlords are encouraged by the strong uptick in leasing volumes and are starting to think about raising prices or lowering concessions.

June 2010
I just returned from the International Council of Shopping Centers Convention in Las Vegas. The big surprise is how dramatically improved the attitude is compared to a year ago when all was lost. Attendance was up over previous years. People were looking to buy distressed debt, only to find out it is still not readily available.

May 2010
The best lease deals are being done now.
Manhattan Office and Retail rents are at the bottom.
Landlords are still offering generous concession packages to close leases, especially for larger users. This will not last.

April 2010
This month has been a big yawn, in that while leasing volumes have increased it is due primarily to lease renewals that are shrinking and as such prices continue to moderate.

March 2010
Landlords are being very aggressive to retain stable existing tenants, once the tenants have shown they are serious about moving. Tenants have also realized the need for a Tenant broker in these negotiations.

February 2010
Industry executives believe that we are at or near the bottom. The market 12 months ago felt like there was no bottom. Large building sales are starting to get done as sellers acknowledge the new market price. Loans are getting done although at substantially lower debt levels and at more stringent terms. There is still an overhang of zombie residential and commercial buildings where ownership does not have the money to fund build-outs and/or the properties owners have yet to cede ownership to the banks.

January 2010
Long-term leases are now being signed by major corporations, as rents are being discounted 30% to 50% off the all time highs.

This is not true for smaller tenants, as downsizing has increased demand and there is less small office space in the market due to building conversions and former building repositioning for larger tenants.

New York Real Estate News Archive for 2009

December 2009
Over the past 30 days, retail vacancies have increased 18.67 % and office vacancies have increased 1.36%, this should trigger rents to continue to fall and landlord concessions to increase.

November 2009
Manhattan leasing activity picks up for both Retail and Office.
Additional 500,000 RSF of office vacancies came on the market last month, but Tenants are snapping up office and retail spaces as rents are near a bottom and business prospects are more stable.

October 2009
There is some stability in the office market, but it will likely be temporary. The Class A office vacancy rate fell 0.2 points in August to 11.8 percent, while average asking rents rose 19 cents to $64.36 per square foot.

September 2009
Activity has picked up in small and medium sized office and retail leases. Major corporations (Tenants) are still taking a wait and see attitude over the next few months until a clearer picture emerges on the economy before entering into long term leases.

August 2009
The lowest rents in 13 years have caused office and retail tenants to enter back into the market and execute leases.

July 2009
Manhattan commercial vacancy rate hits 13-year high.
While commercial leasing activity has picked up in the past few months, the city's Class A vacancy rate increased and average rents fell last month. The vacancy rate of Class A space in Manhattan reached 11.9 % in May, up from 11.3 % in April.

June 2009
The New York City Office and Retail rental markets remains quiet though bargains abound. Great office space on Park Avenue that last year was $125-175 a square foot can now be rented for $60/SF asking. Same is true in retail where rental rates in many markets are 40-60% less than a year ago.

May 2009
Leasing activity grinds to a near halt. The Midtown Class A vacancy rate is 12.2 percent since April of this year, the highest rate since August 1996. There is 7.8 million square feet of sublease space available in Class A buildings, the most since they started keeping records in 1991.

April 2009
Office and retail leasing activities have dropped to new lows. Managing agents and landlords are now devoting a large percentage of their time working with existing tenants who are looking to downsize or renegotiate their rents. Last quarter, there was nearly 4 million square feet of negative absorption. Pending moves by Merrill Lynch and AIG, millions of additional feet of office space will be dumped back on the market.

March 2009
Office rents are off 30% from their all time highs and will continue to fall as Securities firms and banks may give up to 8 million square feet of office space in Manhattan this year.

February 2009
At a recent real estate conference, Vornado said that retail and high end office rents are having a negotiable factor of between 25 and 50% of asking prices.

In addition, SL Green said that office rents are projected to be down 25%. What this means to office and retail tenants is that there are deals/bargains to be had from motivated Landlords, provided that you are guided by an expert to help you get all these concessions.

January 2009
Building Sales grinded to a virtual halt with only two sales over $50 million.
Office leasing was light as major corporations are taking a wait and see attitude as rents are expected to continue to fall. High end office rents should also deteriorate as fewer and fewer $100/RSF rents are achieved and more hedge fund space comes back on the market.

Manhattan Real Estate News Archive for 2008

New York City Real Estate News Archive for 2007

Manhattan Real Estate News Archive for 2006