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New York Real Estate News Archive 2004 News February 2004

February 2004: New York City Retail, Office and Industrial Market Report

New York Market Overview:

Vacancy rates decrease in Midtown and Downtown as major space commitments are made. The tightening in part is temporary in nature as the major space commitments are relocations not expansions and therefore when the previously occupied space comes onto the market the vacancy rates will return to previous levels.

Midtown Leases


  • PricewaterhouseCoopers just signed a 800,000 square feet at 300 Madison 30-year sublease from CIBC worth nearly $2 billion and move from 1177 and 1301 Sixth Avenue and 75 Varick Street.
  • PWC is subleasing 283,000 square feet at 1177 Sixth Avenue to law firm Kramer Levin Naftalis & Frankel who will leave 909 and 919 Third Avenue.
  • Details and Women's Wear Daily is renting 234,000 at 750 Third and is relocating from 7 West 34th Street.

Downtown Leases


  • The Downtown market also tightens as many buildings are currently being converted to residential or space warehoused for later conversion. There are some 22 buildings being considered for full or partial conversion. Recent buildings in the news include:
  • Woolworth Building top floors planned to convert to 145 rental units using $80 million in Liberty Bonds.
  • 25 Broadway Wolfson Group has requested $50 million in Liberty Bonds for 50 units.
  • 20 Exchange Place and 67 Wall Street were bought by Metro Loft Management for possible conversion from office to luxury residential. 100 Maiden Lane was sold for $57 million and will be converted to residential when the current owners, Cadwalader Wickersham & Taft move into the World Financial Center.

Small and medium space users are back in the market hoping to lock in today�s low rental rates.

Market vacancies long term likely to increase as new buildings come on the market and planned corporate dispersals take place.

Announced relocations:


  • Tiaa Cref will move out of 750 Third and the adjoining 485 Lexington -putting 1.6 million square feet of space on the market as TIAA-CREF moves its operations to Denver and Charlotte, N.C.
  • Goldman Sachs is considering moving support staff and equity trading to Jersey City having rented 600,000 RSF there.
  • Morgan Stanley which bought the former Texaco World Headquarters, a 725,000 Square Foot Facility in Harrison, Westchester plans to move 2,100 to 2,200 jobs there.
  • Bank of New York is moving their back offices to a 396,000 square feet tower in Brooklyn and is expected to move 1,400 employees there in mid-2004.
  • MetLife plans to move 1,700 employees to Long Island City. New York Life is considering moving 1,000 employees to Westchester.

Currently under construction:


  • 7 World Trade Center, a 1.7 million square foot building. The Hearst Tower, an 856,000 square foot office tower at 959 Eighth Avenue.

Planned commercial buildings:


  • Bank of Americas new 2.1 million square foot tower of which they are moving into 1.0 million square feet.
  • The New York Times Headquarters, a 52-story 1.54 million square foot building on Eighth Avenue opposite the Port Authority.
  • InterActive Corps construction of a new headquarters in the Chelsea district. Pfizer is negotiating to occupy a 2 million square foot skyscraper at 708 First Avenue.

Sales:


  • Sales market remains active. Recent transactions include:
  • The Lipstick Building a 586, 589 RSF building located at 885 Third Ave is reported in contract with Tishman Speyer for around $300 million target, or about $508 per RSF.
  • 1540 Broadway, a 1,172,383 RSF building, is being purchased by the Paramount Group, for around $425 million or about $362/RSF.
  • 44 Wall Street a 340,000-square- foot office building sold for less than $200 a square foot, and purchased by Kent Swig and Asher Zamir.

Large Residential Pending Sale:


  • Macklowe Properties apartment portfolio of East Side apartment buildings were purchased by Parkoff Organization for $180 million valued at more than 12 times the rent roll.

New Residential Construction:


  • Glenwood Management is planning a 56-story rental at 10 Barclay Street between the Woolworth Building and Freedom Tower. Using Liberty Bond financing from the state's Housing Finance Agency.




New York Office Leases:

  • Total Class A vacancies decreased from 27.77 million RSF to 27.17 million RSF, while Total Market vacancies decreased slightly from 40.54 million RSF to 40.26 million RSF.
  • Total Direct Lease availability declined from 31.50 million RSF to 31.29 million RSF, while Total Sublease vacancies continued their two year declined falling to a new low of 8.75 million RSF from 9.25 million RSF.
  • Midtown availability decreased from 22.18 million RSF to 22.39 million RSF, while Midtown South availability increased from 7.74 million to 8.01 million RSF. Total Downtown Vacancy rates dropped from 10.42 million RSF to 10.06 million RSF.
  • Total Vacant space in Midtown increased as Total Direct Lease space availability increased from 16.55 million RSF to 16.69 million RSF outweighing the decline in Total Sublease availability from 5.84 million RSF to 5.49 million RSF.
  • Midtown South Direct Lease availability rose to 6.36 million RSF from 6.12 million RSF, while Sublease vacancies rose as well from 1.62 million RSF to 1.66 million RSF. Total Downtown vacancies fell as the decrease in Direct Lease space from 8.62 million RSF to 8.45 million RSF, adding to the fall in Sublease availability from 1.80 million RSF to 1.61 million RSF.


Manhattan Retail Leases:


Manhattan Industrial Leases:

  • Total Industrial Vacant space increased from 1.03 million RSF to 1.04 million RSF due to a incline in Total vacancies in Midtown South from 0.37 million RSF to 0.39 million RSF.
  • Vacancies rates in Midtown and Downtown remained relatively unchanged.


Legend

RSF-Rentable Square Feet
SF- Square Feet