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The office, retail, and industrial markets continue to tighten with demand increasing and very limited new product coming to market:
Landlords in the Plaza district have hopes of getting $100/RSF again with the General Motors building already there. Large Corporations are extending and renewing their leases which further tighten future potential vacancies. The prognosis for the coming year is limited supply, higher prices and reduced Landlord concession packages (free rent, Landlord work and other lease concessions).
New Construction:
- NEW YORK TIMES HQ: The Times doesn't mind moving across the street from the Port Authority Bus Terminal. This is mainly because Arthur Sulzberger Jr. was allowed to tailor the building to his specifications (designed by Italy's Renzo Piano), but also because the Times and development partner Bruce Ratner were able to buy the land from the state for a bargain price of $85.1 million. The Times will own 850,000 square feet of the 51-story edifice. It will be Ratner's problem to find tenants for the 700,000 square feet at the top that he will own.
- 7 WORLD TRADE CENTER: 7 WTC's 1.6 million square feet are still empty. Asking rents in the $50s per square foot which is about $10-$50 per square foot less than new space in Midtown.
- ONE BRYANT PARK: Developer Douglas Durst expects more than $100 per square foot for 1.1 million square feet in the upper portion of his mega-tower at Sixth Avenue and 42nd Street. Bank of America will have 1 million feet on the lower floors.
- 505 FIFTH AVENUE: Axel Stawski's 28-story, 275,000-square-foot jewel box at Fifth and 42nd. Asking rents in the high $60s to mid-$70s seem in the ballpark.
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Noteworthy NYC Leases: |
- The Lehman Brothers signed a long term lease for 306,700 RSF at 1301 Sixth Avenue.
- Downtown companies "kicking tires" for large blocks of space. Wachovia, which put a half-million square feet of space on the market at the giant 1 New York Plaza, has a sublease out with Morgan Stanley for about 200,000 square feet, sources say.
- Morgan Stanley is going to take 400,000 square feet at 1 New York Plaza's for its Dean Witter unit; the rent would be in the $20s, less than half of what it would be in Midtown.
- New School University rented 194,300 square feet at 79 Fifth Ave. for offices and classrooms.
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New York City Buildings Sold: |
- Collegiate church contracted to sell 1240 First Avenue (located on the SE corner of 67th Street) to an investment group. It was sold at $300 to $400 per build-able foot for the entire 130,000 sq. ft. project.
- 590 Fifth Avenue is in contract to a partnership of Ley Chera, Lloyd Goldman, and Jeffrey Fiel for $54 million. The building contains 100,000 square feet.
- 44 West 14th Street and 121 West 21st Street consisting of 65,000 sq. ft. and 70,000 sq. ft. respectively sold for $245 per build-able feet.
- 478-486 Broadway a 58,000 square foot cast iron building was purchased for 14 million. The previous owner had paid $5 million.
- 521-533 West 57th street condo sold for under 300/RSF to Himmel and Meringoff Properties.
- GM building buyout - George Soros and Vornado Realty trust was bought out by Jamestown. The price and terms were not reported.v
- Tishman Speyer is in contract to buy out the U.S. holdings of GIC Real Estate, a division of the Government of Singapore Investment Corp. It includes the office portion of Cityspire at 156 West 56th Street, 40 Broad Street downtown, and prime properties in Chicago, San Francisco, Greenwich, Philadelphia, Milwaukee, Silicon Valley and Seattle. Tishman Speyer will have the controlling interest in more than 37 million square feet of commercial space worldwide and acquire the controlling interest in over 7 million square feet around the country. Tishman Speyer and its affiliates are actually buying 51 percent of the GIC properties, with GIC retaining 49 percent. Tishman Speyer will take over leasing and management of all the sites. Tishman Speyer Australia Ltd. launched the initial public offering for its Australian Tishman Speyer Office Fund (TSOF), to raise money to acquire a 45.9% interest in a $1.852 billion premium. The portfolio is being acquired for $1.852 billion, which represents a 2% discount to independent valuation and a 32% discount to replacement cost.
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New York City Office Rentals: |
- Total Class A vacancies decreased from 21.57 million RSF to 20.89 million RSF, while Total Market vacancies decreased as well from 36.60 million RSF to 35.37 million RSF.
- Total Market Vacancies decreased as Total Direct availability decreased from 28.70 million RSF to 28.32 million RSF while Total Sublease Lease availability decreased from 7.90 million RSF to 7.05 million RSF.
- Total Direct Lease availability decreased from 28.70 million RSF to 28.32 million RSF, while Total Sublease vacancies decreased to 7.05 million RSF from 7.90 million RSF.
- Total Market vacancy decreased as Midtown South availability decreased from 6.13 million RSF to 5.72 million RSF and Midtown availability decreased from 20.22 million to 19.31 million RSF. However, Total Downtown Vacancy rates actually increased from 10.26 million RSF to 10.35 million RSF.
- Total Vacant space in Midtown decreased due to the decrease in Total Sublease space availability from 5.07 million RSF to 4.35 million RSF, in addition to Total Direct availability decreasing from 15.16 million RSF to 14.96 million RSF.
- Midtown South Direct Lease availability decreased from 5.24 million RSF to 4.95 million RSF, and Sublease vacancies also decreased from 0.88 million RSF to 0.76 million RSF.
- Total Downtown vacancies increased due to an increase in Direct space from 8.31 million RSF to 8.41 million RSF, even though Sublease availability decreased from 1.95 million RSF to 1.94 million RSF.
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New York City Retail Rentals: |
- Total Retail availability fell from 0.40 million RSF to 0.31 million RSF.
- In Downtown, availability remained constant at 0.03 million RSF.
- Midtown availability decreased sharply from 0.20 to 0.12. Total Midtown South vacancy rates dropped from 0.17 to 0.16 million RSF.
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New York City Industrial Rentals : |
- Total Industrial Vacant space remained constant at 0.83 million RSF.
- Midtown vacancy decreases from 0.45 to 0.42 million RSF were offset by Midtown South vacancy increases from 0.35 to 0.38 million RSF. Downtown vacancy rates remained unchanged at 0.03 million RSF.
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Development Sites for Sale: |
- 195 Broadway - asking price is $300 million (originally purchased for $74 million in 1983).
- 3 floors of the St Regis hotel are being converted to condominiums.
- 75 Broad Street - the 1928 tower bought in 1999 (when it was mostly vacant) for $75 million, is now to "surpass" $300 per square foot, or $198 million for the entire 660,000 square-footer.
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