New York Market Overview
The office and retail markets are starting to cool from all time highs, as Banks and Investment Banks continue layoffs, 34,400 layoffs in the last six months. These financial firms are now releasing unused and expansion back to the market which total more than 2.5 million square feet with more to follow. There are still a number of large users looking for space, but now there is more of a selection and as a result pricing and terms will improve.
Developer Larry Silverstein seeks $12.3 billion in damages from the destruction of the World Trade Center. The $12.3 billion amount of the lawsuit had not been known until now and is by far the biggest of any litigant. The claims total about $23 billion. Silverstein is seeking $8.4 billion for the destroyed buildings, $100 million a year in rent to the Port Authority and $300 million a year in lost rental income, along with the cost of marketing and leasing the new buildings.
The City Council approved the rezoning for Sheldon Solow's $4 billion development on the East River, making the way for seven towers to rise on nine acres of First Avenue from East 35th Street to East 41st Street. The project will create about 3,000 apartments, 1 million square feet of commercial and 69,000 square feet of retail. The development will include affordable housing, a public school and five acres of public space.
Gov. David Paterson and Mayor Michael Bloomberg have hailed Tishman Speyer's plan for developing the MTA's 26-acre Hudson Yards. Tishman Speyer owns Rockefeller Center, a fact that was probably not lost on the MTA as it considered which of the five developers could pull off one of the city's biggest projects. Tishman has cut its planned office from 10 million to 8 million square feet. The project will create 12 million square feet of office, residential, retail and community space.
The Department of Buildings, said new building permits issued in January and February were 40 percent down compared to the same period last year. The department granted 451 permits in the first two months of this year, compared to 764 last year and 859 in 2006.
Manhattan's real estate market has managed to ward off the turmoil caused by the credit crunch, a series of condos and office expected to hit the market in 2010 may cause a surplus that could aggravate any economic downturn. Several large-scale real estate deals have already slowed, including Harry Macklowe's inability to sell the GM Building after several months and delays at Bruce Ratner's Atlantic Yards project. However, despite the danger of flooding the market, several big projects are still in the works, which include Sheldon Solow's development on First Avenue and Larry Silverstein's World Trade Center.
Subway riders will be upset that the MTA must delay $30 million in planned improvements because real estate tax revenues were lower than expected, but the larger implications are the troubling signs for the city's real estate market. The MTA's revenue from mortgage and transfer taxes this year is $306 million, $21 million below its prediction. Revenues from February’s transactions were half of their year-ago level. All four taxes on sales of commercial property and residential and commercial mortgages drew lower revenues last month, which the MTA called unusual. The tax on residential mortgages fell the most, dropping to its lowest one-month level since January 2002.
Williamsburg property owners are upset about a plan to rezone 13 blocks and 254 properties around Grand Street. Some property owners say they did not know about the plan and want a seven-story limit. The City Council is to vote on the rezoning. A proposed 14-story project at the Karl Fischer-designed 227 Grand Street prompted demands for rezoning in the neighborhood, which are mostly three- and four-story buildings.
Indefinite delays at the Atlantic Yards project mark the latest sign of trouble for Downtown Brooklyn and its surrounding neighborhoods, as the weakening economy and the credit crisis threaten to derail Brooklyn's biggest mixed-use development. The project promised to deliver more than 1.6 million square feet of office and 6,000 apartments, but developer Bruce Ratner now says the Brooklyn office tower will not be built until an anchor tenant is found and financial problems could delay the residential development. Atlantic Yards' ardent supporters remain optimistic that it will be fully built at some point.
Reportedly, the Yankees and Mets are in negotiations with the city to buy their old stadiums before they are torn down, so they can sell seats, bricks and other scraps to fans. Shea Stadium's 55,000 orange seats could sell for $500 each. Bricks from Yankee Stadium could bring in $100 to $300 each. Those prices could appreciate over time: a brick from Ebbets Field, the Brooklyn Dodgers' stadium demolished in 1960, sells for $1,000 and a seat can go for as much as $5,000.
New York City is bracing for more job cuts at Wall Street firms, following the collapse of Bear Stearns and the credit crunch. While economic slumps are nothing new, the city is more reliant than ever on the financial service sector: the industry accounted for almost a third of all wages earned in the city last year. Following the sale of Bear Stearns to JP Morgan Chase, many of the firm's 14,000 workers could be cut. Big banks have already cut 5 to 10 percent of their staff, and could make similar-sized cuts again over the next few months.
JP Morgan Chase plan to develop the 5 World Trade Center site, the former Deutsche Bank building, despite its new plan of moving its investment banking business to the Bear Stearns building, which it acquired when it bought the firm. JP Morgan Chase, which scrapped plans to relocate its investment banking headquarters to Lower Manhattan earlier this week, might still acquire the former Deutsche Bank building site at 5 World Trade Center and flip the property. JP Morgan Chase might either acquire the development rights for 130 Liberty Street and possibly sell them, or even proceed with a scaled-down office building on the site and then sell it for a profit. JP Morgan entered an agreement in June 2007 to relocate its investment banking headquarters to the former Deutsche Bank site and develop a 1.3-million-square-foot tower that would hold 7,000 employees.
The seven Manhattan office towers that developer Harry Macklowe bought for $7 billion could soon be up for sale, as a deal with his creditors is almost being hammered out. Macklowe bought the buildings last year in a highly-leveraged deal, and the short-term debt on them is overdue, forcing him to sell the General Motors Building.
Major Financial Firms giving up space:
- Goldman Sachs is busy refining its real estate needs based on the opening of its new 2 million-foot tower in 2010. The investment bank will give up about 3 million feet of in at least five buildings - more than its new headquarters. Goldman will vacate from 1.1 million-foot at 85 Broad Street and 800,000 feet at 180 Maiden Lane. Goldman will also vacate 546,000 feet at One New York Plaza and another 200,000 feet at One Liberty Plaza. Goldman has already listed places for sublet the entire 561,549-foot at 77 Water Street where they have a net lease through June 2021.
- Nomura gives up 100,000 feet at 2 World Financial Center.
- American Express is giving up 70,000 feet at 2 World Financial Center.
- Royal Bank of Scotland is giving up 140,000 feet at 7 World Trade Center from its purchase of ABN, Amro.
- Lehman Brothers, recently rented 400,000 feet at the Time-Life Building at 1251 Sixth Avenue may no longer want it.
- Bank of America, which will move into One Bryant Park Tower, will also be giving up around town.
- Deutsche Bank gave a broker a 500,000-foot assignment. The firm has offices in a few Park Avenue locations and must determine if they will renew or consolidate elsewhere.
JP Morgan Chase & Co bought Bear Stearns at a $10.00/share/rescue deal. They may occupy Bear Sterns headquarters for its investment banking department. JP Morgan Chase is expected to cut at least one-third of Bear Stearns' employees once it completes the deal.
Mr. Silverstein has one anchor tenant for the Port Authority, which has signed a lease to occupy 600,000 square feet in Tower 4. The city also has agreed to lease 600,000 square feet in the tower if Mr. Silverstein cannot find a private tenant to occupy the space.
Mr. Silverstein was not worried about lining up tenants and speculated that the project's completion date would be December 2012.
Federal officials have approved plans to decontaminate and demolish CUNY's Fitterman Hall at Ground Zero. The Environmental Protection Agency's approval clears the way for the New York State Dormitory Authority to replace the former building at 30 West Broadway, after two years of delays. Once the site is cleared, it will take over two years to build a new Manhattan Community College academic building. The site has drawn the ire of developer Larry Silverstein, whose newly built 7 World Trade Center is across the street.
The Helmsley Park Lane Hotel, where the late Leona Helmsley lived, may reportedly go up for sale. The Central Park South tower, built in 1971, could go for nearly $1 billion. The hotel needs a renovation.
The contentious rezoning of Harlem's 125th Street cleared its first hurdle, as the New York City Planning Commission approved by an 11-2 margin, a plan that could transform the historic commercial corridor. The vote had been expected, and the City Council must now approve the plan. City Planning Commissioner hailed the vote. Some residents fear that the rezoning will displace them and small businesses, Burden said the plan will preserve the community's brownstone residences, while encouraging affordable housing, commercial office space, entertainment venues and retail outlets.
According to the Lower Manhattan Development Corp., more than 25 retailers will open in Lower Manhattan and over 8,000 new homes will be occupied by year's end.
The credit crunch may have an affect on several big projects pushed by city and state politicians that are still being planned, from Moynihan Station to Hudson Yards to the Fulton Street Transit Center. Lending restrictions have tightened, construction costs keep increasing and tax revenues are dropping.
New York City Buildings Sold:
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- Manhattan, Queens and Bronx portfolio, 9 apartment buildings, was sold to Northbrook Partners for $300 million.
- 450 West 16th Street, an 8-story, 286,000 sf industrial building, was sold to Stellar Management for $161 million.
- 180 Madison Avenue, 275,000 sf office building, was sold to The Claret Group; Prudential for $150 million.
- 1199 First Avenue, 21-story, 195,000 sf apartment building, was sold to Stonehenge Partners for $126 million.
- 511-519, 521-539 and 541-543 West 25th Street, 3 mixed-use buildings, was sold to Halcyon Real Estate Investors; Cardinal Real Estate Investment for $97 million.
- 600 Broadway, 6-story office building, was sold to Alex Adjimi for $71 million.
- 156 William Street, 250,000 sf office building, was sold to Capstone Equities for $60 million.
- 16 West 57th Street, 5-story office building, was sold for $60 million.
- 318 East 15th Street (Booth House), 130,000 sf apartment building, 148 units total, was sold to Arun Bhatia Development Corp. for $56 million.
- 5 Beekman Street, 10-story, 128,220 sf office building, was sold to Bonjour Capital; Joseph Chetrit for $50 million.
- 155 Fifth Avenue, 7-story, 32,500 sf office building, was sold to The Eretz Group for $38 million.
- Lafayette Avenue and Tiffany Street (The Bronx), a 400,000 sf industrial complex, was sold to Taconic Investment Partners; Denham Wolf Real Estate; Credit Suisse for $32 million.
- 325 West 33rd Street, a Development site, was sold to a Hotel developer for $31 million.
- 530-542 West 27th Street, a 6-story commercial building, was sold to Centaur Properties for $29 million.
- 1343-1347 Second Avenue and 242 East 71st Street, a Four 5-story mixed-use buildings, was sold for $27 million.
- 113 Jane Street (Hotel Riverview), 5-story, 43,618 sf hotel, was sold to Sean MacPherson; Eric Goode for $27 million.
- 553 11th Avenue, a Vacant lot, was sold to The Moinian Group for $24 million.
- 435 West 33rd Street, a Development site, was sold to a Long Island hotelier for $24 million.
- 340 East 23rd Street (Gramercy by Starck), 13,850 sf retail condo, was sold to Omnispective Management Corp. for $22 million.
- 8 Stone Street, a Development site, was sold to Sam Chang for $17 million.
- 49-53 Ann Street, a Development site, was sold to The Lam Group for $13 million.
- 330 East 73rd Street and 309 East 93rd Street, a Two 5-story apartment buildings, was sold to Carlton Management for $10 million.
- 62 Thomas Street, a 12,000 sf retail condo, was sold to Zar Property NY.
- 442 West 36th Street, a 15-story, 20,344 sf hotel, was sold to Gemini Real Estate Advisors.
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Manhattan Office Leases: |
- Total Manhattan Office Class A vacancies decreased from 11.52 million RSF to 11.44 million RSF.
- Total Manhattan Office Market vacancies decreased from 21.4 million RSF to 21.02 million RSF.
- Total Manhattan Office direct lease vacancy decreased from 18.22 million RSF to 18.04 million RSF.
- Manhattan Office Sublease vacancy dropped from 3.18 million RSF to 2.98 million RSF.
- Total Manhattan Office Market vacancies decreased from 21.4 million RSF to 21.02 million RSF.
- Total Midtown South Office vacancy decreased from 4.04 million RSF to 3.9 million RSF.
- Total Midtown Office vacancy decreased from 11.66 million RSF to 11.6 million RSF.
- Total Downtown Office vacancy dropped from 5.7 million RSF to 5.52 million RSF.
- Total vacant Office Sublease Space in Midtown Manhattan decreased from 2.06 million RSF to 1.88 million RSF.
- Total vacant Office Direct Space in Midtown Manhattan rose from 9.6 million RSF to 9.72 million RSF.
- Total vacant Office Direct Space in Midtown South Manhattan increased from 3.75 million RSF to 3.6 million RSF.
- Midtown South Manhattan Sublease vacancies dropped from 0.28 million RSF to 0.3 million RSF.
- Total Downtown Manhattan Office Direct Lease Space decreased from 4.86 million RSF to 4.72 million RSF.
- Total Downtown Manhattan Office Sublease Vacancies dropped from 0.84 million RSF to 0.8 million RSF.
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Manhattan Retail Leases:
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- Total Available Manhattan Retail Space increased from 1.07 million RSF to 1.12 million RSF.
- Midtown South Retail vacancies increased from 0.72 million RSF to 0.76 million RSF.
- Midtown vacancy stayed at 0.25 million RSF.
- In Downtown, Retail vacancy increased from 0.10 million RSF to 0.11 million RSF.
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Manhattan Industrial Leases:
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- Total Vacant Manhattan Industrial Space decreased from 0.33 million RSF to 0.32 million RSF.
- Midtown South Industrial vacancies stayed at 0.15 million RSF.
- Midtown Industrial Space vacancy stayed at 0.18 million RSF.
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Manhattan Office Leases
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- Goldman Sachs Group leases 517,000 sf at One New York Plaza.
- AXA Financial leases 450,000 sf at 1290 Sixth Avenue.
- SunGard leases 120,000 sf at 340 Madison Avenue.
- Crowell & Moring LLP leases 100,000 sf at 590 Madison Avenue.
- Scripps Networks leases 76,801 sf at 1180 Sixth Avenue.
- Prudential Douglas Elliman leases 58,524 sf at 205 East 42nd Street.
- Kaufman BorgeeSt & Ryan LLP leases 48,161 sf at 120 Broadway.
- Converse leases 46,400 sf at 28 West 23rd Street.
- Columbia University leases 35,127 sf at 490 Riverside Drive.
- Silver Lake Partners leases 31,800 sf at 9 West 57th Street.
- Jacob Perlow Hospice leases 25,000 sf at 39 Broadway.
- Bonhams & Butterfields leases 23,400 sf at 580 Madison Avenue.
- John V. Lindsay Wildcat Academy leases 23,050 sf at 17 Battery Place.
- Kirby McInerney & Squire LLP leases 20,556 sf at 825 Third Avenue.
- Castle Hill Apparel leases 20,354 sf at 1400 Broadway.
- Principal Financial Group leases 19,000 sf at 888 Seventh Avenue.
- Prudential Douglas Elliman leases 17,855 sf at 675 Third Avenue.
- The New York Review of Books leases 15,049 sf at 435 Hudson Street.
- China Merchants Bank leases 14,000 sf at 535 Madison Avenue.
- Lower Manhattan Dialysis Center leases 13,000 sf at 202 Centre Street.
- MM&R leases 12,607 sf at 512 Seventh Avenue.
- Goldin Associates leases 10,577 sf at 350 Fifth Avenue (Empire State Building).
- DelGreco & Company leases 10,000 sf at 242 East 58th Street.
- Weisscomm Partners leases 10,000 sf at 1251 Sixth Avenue.
- Padone & Partners leases 8,711 sf at 48 West 27th Street.
- Richard Chai leases 8,600 sf at 107 Grand Street.
- Perkins & Eastman leases 8,400 sf at 1140 Broadway.
- Rachel Roy leases 7,200 sf at 148 West 37th Street (The Lefcourt Central Building).
- The Standard Life Insurance Company of New York leases 6,509 sf at 420 Lexington Avenue.
- Valcon Construction Consultants leases 6,154 sf at 317 Madison Avenue.
- ArtiStreet Group International leases 6,000 sf at 150 East 58th Street.
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New York City Retail Leases:
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- Circuit City leases 31,000 sf at 1961 Broadway.
- Joyce Leslie leases 21,250 sf at 670 Broadway.
- Duane Reade leases 17,300 sf at 1657 Broadway.
- Duane Reade leases 9,886 sf at 1235 Lexington Avenue.
- Duane Reade leases 9,100 sf at 152-154 Second Avenue.
- Duane Reade leases 9,000 sf at 459 Broadway.
- Duane Reade leases 6,000 sf at 184 Fifth Avenue.
- Duane Reade leases 6,000 sf at 350 Greenwich Street.
- Montenapo by Bice leases 5,274 sf at 620 Eighth Avenue.
- John Varvatos leases 4,300 sf at 315 Bowery.
- Andrew and Jonathan Schnipper lease 3,200 sf at 620 Eighth Avenue.
- North Fork Bank leases 3,000 sf at 123 Third Avenue.
- Moschino leases 2,700 sf at 401 West 14th Street.
- 383 Third Avenue Corporation leases 2,700 sf at 383 Third Avenue.
- 317 Madison Avenue Bake leases 2,585 sf at 317 Madison Avenue.
- AT&T leases 2,373 sf at 532 Broadway.
- Y-3 leases 2,200 sf at 317 West 13th Street.
- Paramount Electronics leases 2,100 sf at 1657 Broadway.
- The Sun Lounge leases 1,700 sf at 265 West 72nd Street.
- Breil leases 1,600 sf at 148 Spring Street.
- The Rani Company leases 1,500 sf at 587 Tenth Avenue.
- Dolce Vita leases 1,100 sf at 181 Grand Street.
- Pita Joe leases 1,050 sf at 2 West 14th Street.
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| Legend |
RSF-Rentable Square Feet
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