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April
2003: Manhattan Office Space Update
With the war
in Iraq now in full bloom, apprehension
over a prolonged conflict coupled
with a lackluster economic outlook
in the near term has lead many
firms to postpone or reconsider
any major commercial activity.
As such, the market is relatively
unchanged from the previous
month, except that prices continue
to moderate, and bargains are
much more wide spread than they
were 30 days ago.
Overall vacancy
rates remained relatively unchanged
in the past 30 days, with no
major changes in any particular
sub market (Downtown, Midtown
South, Midtown, or Uptown).
However, major amounts of “Shadow
Space” still loom. Shadow
space is the space vacated by
major corporations who have
as yet to list the space for
rent, since doing so would require
them under the tax laws to recognize
the loss in the current year.
Estimates of Shadow Space are
5,000,000 square feet with more
space pending unless the economy
picks up soon. Some Shadow Space
was recently leased when Deutsche
Bank subleased 380,000-Rentable
Square Feet to Clifford, Chance.
Prices continued
their slide as more and more
landlords offered further price
reductions and incentives in
order to lure the few available
tenants. As a result Class B
space, or relatively older yet
nice spaces, in Downtown can
now be rented on a direct basis
for under $20/Rentable Square
Feet (RSF), while in the Flatiron
district space can be rented
for $15 –18/RSF and direct
deals in Midtown can be made
for $30-40/RSF.
Landlords are
more aggressive now than they
have been in 10 years. They
are offering to build to suit,
arrange free architects to do
space planning and layouts,
and provide temporary space
if needed in conjunction with
a long-term lease. Couple these
with incredibly favorable rents
and lease terms, and it is obvious
landlords are doing whatever
it takes to make deals happen.
The downtown
market is active with many firms
looking to take advantage of
the downtown incentives/benefits.
The following link shows the
net effective cost of renting
space there. http://listings.downtownny.com/cust/dwalli/calculator/incentivescalc.asp
The Harlem market
remains hot, as many not-for-profits
are seeking space in East, Central
and West Harlem and Washington
Heights. Given the limited supply,
the rental prices are expected
to be as high as other markets
in Manhattan.
Please feel
free to contact us for more
detailed pricing information.
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MARKET
TREND OBSERVATIONS |
OFFICE: |
| +
Total Market Vacancies rose
from 47.05 million RSF to
48.19 million RSF, owing
to an increase in Total
Direct Lease space from
32.79 million RSF to 34.01
million RSF. |
+
Class A Vacancies rose from
25.69 million RSF to 26.33
million RSF.
Total Direct Lease vacancies
rose from 32.79 million
RSF to 34.01 million RSF,
while Total Sublease vacancies
fell slightly from 14.26
million RSF to 14.18 million
RSF. |
| +
All three market segments
saw a rise in total vacancy.
In Midtown availability
rose from 24.59 million
RSF to 25.16 million RSF,
while in Midtown South and
Downtown total vacancy rose
from 10.33 million RSF to
10.47 million RSF and from
12.14 million RSF to 12.56
million RSF respectively.
|
| +
Total Vacant Space in Midtown
Continued to rise as Total
Direct Lease space increased
from 16.53 million RSF to
17.03 million RSF and Total
Sublease vacancies increased
to a new high of 8.06 million
RSF. |
| +
The increase in Total Vacant
space in Midtown South was
a result of a rise in Direct
Lease availability from
7.57 million RSF to 7.32
million RSF. During the
same period Total Sublease
vacancies fell to a new
low of 2.89 million RSF..
|
| +
While Total Direct Lease
vacancies Downtown rose
from 8.94 million RSF to
9.41 million RSF, Total
Sublease availability declined
from 3.2 million RSF to
3.15 million RSF. |
|
RETAIL: |
| +
Total Retail vacancies rose
from 0.44 million RSF to
0.49 million RSF, as Retail
vacancies in both Midtown
and Midtown South rose from
0.12 to 0.14 million RSF
and 0.29 million RSF to
0.31 million RSF, respectively.
Downtown vacancy rates remained
unchanged. |
INDUSTRIAL: |
| +
Total Industrial Vacant
space increased from 0.8
million RSF to 1.06 million
RSF, owing to an increased
availability in both Midtown
and Midtown South. Total
availability in Midtown
rose from 0.54 million RSF
to 0.65 million RSF, while
in Midtown South it rose
from 0.26 million RSF to
0.42 million RSF. Downtown
availabilities remained
unchanged. |
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| SELECTED
AMAZING DEALS: |
| Building
Address
|
Size
|
Price
|
11
West 42nd Street. Motivated
credit sublessor |
16,250
|
Low
20s
|
20
Exchange sublease. Hi-end
furniture and phone |
24,600
|
High
20s
|
485
Madison sublease, 21st
floor with terrace |
7,440
|
High
20s
|
32
Old Slip. Amazing Hi quality
installation. Good credit
sublessor |
17,298
|
$18
|
19
West 21st Street. Direct
space ask |
3,015
|
$18
|
12
West 27th Street. Direct
ask |
5,000
|
$15 |
444
Broadway. Hi end loft
installation. Recent hi
end loft installation |
7,500-30,000
|
$18 |
Starrett
Lehigh Building 601 West
26th Street subleases |
25,000
|
$15 |
747
Third Avenue, 29th Floor |
9,200 |
$22 |
| |
CLASS
A (In Millions of Rentable Square Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant Direct |
% Vacant Total |
% Monthly Change |
|
Direct |
Sublease |
Total |
% Monthly Change |
Midtown |
10.28
|
6.58
|
16.86
|
5.70% |
9.30% |
2.44% |
|
22.08
|
8.93
|
31.02 |
1.23% |
Midtown
South |
1.10
|
0.39
|
1.49 |
10.80% |
14.60% |
-0.94% |
|
1.18
|
0.56
|
1.74
|
3.05% |
Downtown
|
5.64 |
2.35 |
7.99 |
10.70% |
15.10% |
3.08% |
|
8.70 |
3.73 |
12.42 |
0.52% |
Total |
17.02
|
9.31 |
26.33 |
7.00% |
10.80% |
2.44% |
|
31.96
|
13.22
|
45.18 |
1.11% |
|
| |
TOTAL
MARKET (In Millions of Rentable Square
Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant Direct |
% Vacant Total |
% Monthly Change |
|
Direct |
Sublease |
Total |
% Monthly Change |
| Midtown |
17.03
|
8.13 |
25.16 |
7.10% |
10.50% |
2.27% |
|
30.71 |
11.46 |
42.17 |
0.57% |
| Midtown
South |
7.57 |
2.89
|
10.47 |
12.20% |
16.90% |
1.33% |
|
9.18
|
3.69 |
12.88 |
3.04% |
| Downtown
|
9.41
|
3.15 |
12.56 |
12.40% |
16.50% |
3.37% |
|
13.07
|
5.07
|
18.14 |
0.99% |
| Total |
34.01 |
14.18 |
48.19 |
9.00% |
12.70% |
2.35% |
|
52.96
|
20.23 |
73.19 |
1.11% |
|
| |
| |
TOTAL
MARKET (In Millions of Rentable Square
Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant Direct |
|
Direct |
Sublease |
Total |
% Monthly Change |
| Midtown |
0.14 |
0.00 |
0.14 |
19.30% |
|
0.20 |
0.00 |
0.20 |
19.30% |
| Midtown
South |
0.26 |
0.04 |
0.31 |
35.10% |
|
0.45 |
0.07 |
0.52 |
35.10% |
| Downtown
|
0.04 |
0.00 |
0.04 |
34.00% |
|
0.04 |
0.00 |
0.04 |
34.00% |
| Total |
0.44 |
0.04 |
0.49 |
28.40% |
|
0.69 |
0.07 |
0.76 |
28.40% |
|
| |
| |
TOTAL
MARKET (In Millions of Rentable Square
Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant Direct |
|
Direct |
Sublease |
Total |
% Monthly Change |
| Midtown |
0.62 |
0.03 |
0.65 |
32.70% |
|
0.79 |
0.03 |
0.82 |
34.30% |
| Midtown
South |
0.39 |
0.03 |
0.42 |
15.00% |
|
0.46 |
0.03 |
0.49 |
16.20% |
| Downtown
|
0.00 |
0.00 |
0.00 |
N/A |
|
0.00 |
0.00 |
0.00 |
N/A |
| Total |
1.00
|
0.06 |
1.06 |
22.40% |
|
1.25 |
0.06 |
1.31 |
23.80% |
|
|
|
| Total
Market Vacancies rose from 47.05 million
RSF to 48.19 million RSF, while Class
A Vacancies rose from 25.69 million RSF
to 26.33 million RSF. |
|
|
|
| Total
Market Vacancies rose as Total Direct
Lease space increased from 32.79 million
RSF to 34.01 million RSF. |
|
|
|
| Total
Direct Lease vacancies rose from 32.79
million RSF to 34.01 million RSF, while
Total Sublease vacancies fell slightly
from 14.26 million RSF to 14.18 million
RSF. |
|
|
|
| All
three market segments saw a rise in total
vacancy. In Midtown availability rose
from 24.59 million RSF to 25.16 million
RSF, while in Midtown South and Downtown
total vacancy rose from 10.33 million
RSF to 10.47 million RSF and from 12.14
million RSF to 12.56 million RSF respectively.
|
|
|
|
| Total
Vacant Space in Midtown Continued to rise
as Total Direct Lease space increased
from 16.53 million RSF to 17.03 million
RSF and Total Sublease vacancies increased
to a new high of 8.06 million RSF. |
|
|
|
| The
increase in Total Vacant space in Midtown
South was a result of a rise in Direct
Lease availability from 7.57 million RSF
to 7.32 million RSF. During the same period
Total sublease vacancies fell to a new
low of 2.89 million RSF. |
|
|
|
| While
Total Direct Lease vacancies rose from
8.94 million RSF to 9.41 million RSF,
Total Sublease availability declined from
3.2 million RSF to 3.15 million RSF. |
|
|
|
|
|
|
| Total
Industrial Vacant space increased from
0.8 million RSF to 1.06 million RSF, owing
to an increased availability in both Midtown
and Midtown South. Total availability
in Midtown rose from 0.54 million RSF
to 0.65 million RSF, while in Midtown
South it rose from 0.26 million RSF to
0.42 million RSF. Downtown availabilities
remained unchanged. |
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