August
2003: Manhattan Office, Retail
and Industrial Space Update
Signs of economic recovery
appear as Wall Street layoffs
abate, low interest rates continue
and threats of war and layoffs
from city and state government
agencies subside.
With
corporate downsizing slowing
down and the majority of firms
now profitable, the potential
for hiring in Manhattan could
cause rental prices to bounce
back from their recent historical
lows. As the downsizing abates
and firms start rehiring, they
will require space for the new
employees. This will in turn
reduce available sublease and
direct lease space, enabling
landlords to offer fewer incentives
and less competitive prices
. Before this shift occurs,
it is a very good time to renegotiate,
recast, extend and or relocate
to take advantage of today's
great values.
Overall
vacancy in Manhattan did increase
in the past 30 days. Two theories
exist to explain this trend.
One possibility is that a lot
of large leases recently finalized,
forcing contingent spaces back
on the market and freeing up
old spaces that firms have completely
vacated. The second possibility
is that firms may finally be
relenting and listing their
shadow space. Shadow space is
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.
The
buildings for sale market remains
active with prices continuing
upwards as buildings offer an
attractive alternative investment
opportunity. With Class A office
building yields at just under
7%, real estate is becoming
an increasingly integral part
of and receiving increased asset
allocation in personal, corporate
and pension fund portfolios.
Also
apparent is the active change
in property structure downtown,
as commercial space continues
to be converted to residential.
Propelling this conversion are
historical low interest rates,
Liberty Bond financing , and
the fact that residential rents
have not fallen as much as commercial
rents. Hell’s Kitchen
and Chelsea are also proving
to be hot neighborhoods for
this new residential construction.
Please
feel free to contact us for
more detailed pricing information.
|
MARKET
TREND OBSERVATIONS |
OFFICE: |
| +
Both Class A Vacancies and
Total Market Vacancies rose
from 26.10 million RSF to
27.53 million RSF and from
47.84 million RSF to 48.95
million RSF respectively. |
| +
Total Market Vacancies rose
as Total Direct Lease availability
increased from 34.17 million
RSF to 35.23 million RSF
and Total Sublease vacancies
increased from 13.67 million
RSF to 13.72 million RSF. |
| +
Midtown South vacancies
decreased from 10.09 million
RSF to 9.73 million RSF,
while both Midtown and Downtown
Vacancy rates increased
from 26.05 million RSF to
26.97 million RSF and from
11.70 million RSF to 12.26
million RSF respectively.
|
| +
Total Vacant Space in Midtown
rose as Total Direct Lease
space availability increased
from 17.86 million RSF to
18.47 million RSF and Total
Sublease availability increased
from 8.19 million RSF to
8.50 million RSF. |
| +
Midtown South Direct Lease
vacancies declined from
7.27 million RSF to 7.22
million RSF, while Sublease
vacancies declined from
2.82 million RSF to 2.52
million RSF. |
| +Downtown
Direct Lease vacancies rose
from 9.04 million RSF to
9.55 million RSF, while
Sublease vacancies rose
from 2.65 million RSF to
2.71 million RSF. |
|
RETAIL: |
| +
Total Retail Vacancies fell
from 0.53 million RSF to
0.46 million RSF. |
| +
Total Retail Vacancies fell
from 0.53 million RSF to
0.46 million RSF . |
| +
Midtown South Vacancies
declined from 0.27 million
RSF to 0.24 million RSF. |
| +
Total Retail vacancy rates
Downtown rose slightly from
0.05 million RSF to 0.06
million RSF. |
INDUSTRIAL: |
| +
Total Industrial Vacant
space rose slightly from
1.18 million RSF to 1.22
million RSF. |
| +
Total
availability in Midtown
increased from 0.68 million
RSF to 0.70 million RSF. |
| +
Vacancies in Midtown South
rose from 0.50 million RSF
to 0.51 million RSF. |
| +
Downtown availability rose
to 0.01 million RSF. |
|
|
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 |
11.37
|
7.20
|
18.57
|
10.20% |
4.68% |
|
22.66
|
9.86
|
32.52
|
16.61% |
0.48% |
| Midtown
South |
0.73
|
0.28
|
1.01
|
9.60% |
-2.47% |
|
1.17 |
0.48 |
1.64 |
14.77% |
0.49%
|
| Downtown
|
5.82 |
2.13 |
7.95 |
14.80% |
7.37% |
|
8.59
|
2.78
|
11.37 |
19.86% |
5.16% |
| Total |
17.91
|
9.61 |
27.53 |
11.20% |
5.20% |
|
32.42 |
13.12
|
45.53
|
17.24%
|
1.65% |
|
| |
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 |
18.47
|
8.50
|
26.97 |
11.30%
|
3.40% |
|
31.16
|
11.87 |
43.03 |
16.83% |
-0.63% |
| Midtown
South |
7.22
|
2.52
|
9.73
|
15.70%
|
-3.71% |
|
9.01
|
3.05 |
12.06 |
18.77% |
-3.02% |
| Downtown
|
9.55
|
2.71
|
12.26 |
15.60% |
4.57% |
|
12.91
|
3.88
|
16.79 |
20.21% |
-2.94%
|
| Total |
35.23 |
13.72
|
48.95 |
12.90%
|
2.28% |
|
53.08
|
18.80
|
71.88 |
17.84% |
-0.20% |
|
| |
|
|
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 |
0.16 |
0.00 |
0.16 |
20.40%
|
|
0.24 |
0.05 |
0.29 |
31.72% |
| Midtown
South |
0.20 |
0.04 |
0.24 |
24.90%
|
|
0.43 |
0.06 |
0.49 |
24.90% |
| Downtown
|
0.06 |
0.00 |
0.06 |
31.70%
|
|
0.06 |
0.00 |
0.06 |
31.63% |
| Total |
0.42 |
0.04 |
0.46 |
23.80% |
|
0.74 |
0.11 |
0.84 |
36.22% |
|
| |
|
|
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 |
0.70 |
0.00 |
0.70 |
33.80% |
|
0.93 |
0.00 |
0.93 |
40.42% |
| Midtown
South |
0.44 |
0.07 |
0.51 |
19.00% |
|
0.54 |
0.07 |
0.61 |
21.74% |
| Downtown
|
0.00 |
0.01 |
0.01 |
99.80%
|
|
0.00 |
0.01 |
0.01 |
N/A
|
| Total |
1.14
|
0.08 |
1.22 |
25.60% |
|
1.47 |
0.08 |
1.55 |
30.31% |
|
|
|
| Both
Class A Vacancies and Total Market Vacancies
rose from 26.10 million RSF to 27.53 million
RSF and from 47.84 million RSF to 48.95
million RSF respectively. |
|
|
|
| Total
Market Vacancies rose as Total Direct
Lease availability increased from 34.17
million RSF to 35.23 million RSF and Total
Sublease vacancies increased from 13.67
million RSF to 13.72 million RSF. |
|
|
|
| Total
Direct Lease availability increased from
34.17 million RSF to 35.23 million RSF,
while Total Sublease vacancies increased
from 13.67 million RSF to 13.72 million
RSF. |
|
|
|
Midtown
South vacancies decreased from 10.09 million
RSF to 9.73 million RSF, while both Midtown
and Downtown Vacancy rates increased from
26.05 million RSF to 26.97 million RSF
and from 11.70 million RSF to 12.26 million
RSF respectively.
|
|
|
|
| Total
Vacant Space in Midtown rose as Total
Direct Lease space availability increased
from 17.86 million RSF to 18.47 million
RSF and Total Sublease availability increased
from 8.19 million RSF to 8.50 million
RSF. |
|
|
|
Midtown
South Direct Lease vacancies declined
from 7.27 million RSF to 7.22 million
RSF, while Sublease vacancies declined
from 2.82 million RSF to 2.52 million
RSF.
|
|
|
|
Downtown
Direct Lease vacancies rose from 9.04
million RSF to 9.55 million RSF, while
Sublease vacancies rose from 2.65 million
RSF to 2.71 million RSF.
|
|
|
|
| Total
Retail Vacancies fell from 0.53 million
RSF to 0.46 million RSF, as Midtown vacancies
declined from 0.20 million RSF to 0.16
million RSF, while Midtown South Vacancies
declined from 0.27 million RSF to 0.24
million RSF. Total Retail vacancy rates
Downtown rose slightly from 0.05 million
RSF to 0.06 million RSF. |
|
|
|
| Total
Industrial Vacant space rose slightly
from 1.18 million RSF to 1.22 million
RSF, as total availability in Midtown
increased from 0.68 million RSF to 0.70
million RSF, while vacancies in Midtown
South rose from 0.50 million RSF to 0.51
million RSF. Downtown availability rose
to 0.01 million RSF. |
| |
|
