July 2003:
Manhattan Office, Retail and Industrial
Space Update
Several major corporations
have relocated within Manhattan
by signing large long-term leases,
locking into place favorable financial
terms while obtaining space better
suited to their needs.
Some
examples of this corporate game
of musical chairs include:
+ Oppenheimer’s move from
498 Seventh Avenue to 2 World
Financial Center (a sublease
from Merrill Lynch).
+ Associated Press’s move
from 50 Rockefeller Center to
450 West 33rd Street (a 290,000
square feet space formerly occupied
by Doubleclick).
+ Time Warner relocating from
75 Rockefeller to the new AOL
Time Warner Center, leaving
about half of 75 Rockefeller
Center available for sublease.
These moves are primarily driven
by corporations taking advantage
of the weakened commercial market
and the aggressive competition
among landlords to lure the
few available tenants. Landlords
are offering to build to suit,
free architects for space planning
and layouts, and temporary space
if needed in conjunction with
long-term leases. It is clear
that they are doing whatever
it takes to make deals happen.
There
are three categories to describe
space being consumed. Space
leased directly from the landlord,
space subleased from a corporation
and “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.
Current estimates of Shadow
Space suggest there exist approximately
5,000,000 square feet throughout
the city.
Apart
from these relocations, the
market as a whole has been relatively
stable and unchanged in terms
of overall space availability
and vacancy rates.
The
Downtown market remains vigorous,
as firms continue to take advantage
of the incentives/benefits available
in the area. The following link
shows the net effective cost
of renting space Downtown: http://listings.downtownny.com/cust/dwalli/calculator/incentivescalc.asp
Also,
the Harlem market remains active,
as many non-profit companies
continue to seek space in East,
Central and West Harlem and
Washington Heights. Given the
limited supply, the rental prices
in these areas are expected
to increase to the Manhattan
market level.
Please
feel free to contact us for
more detailed pricing information.
|
MARKET
TREND OBSERVATIONS |
OFFICE: |
| +
Both Class A Vacancies and
Total Market Vacancies remained
relatively unchanged as
Class A Vacancies rose slightly
from 26.09 million RSF to
26.10 million RSF, while
Total Market Vacancies fell
from 47.87 million RSF to
47.84 million RSF. |
| +
Total Market Vacancies were
relatively unchanged as
the fall in Total Direct
space from 34.25 million
RSF to 34.17 million RSF
was offset by the rise in
Sublease vacancies from
13.62 million RSF to 13.67
million RSF. |
| +
Total Direct Lease space
availability decreased from
34.25 million RSF to 34.17
million RSF, while Total
Sublease vacant space increased
from 13.62 million RSF to
13.67 million RSF. |
| +
Midtown South vacancies
rose from 9.84 million RSF
to 10.09 million RSF, while
both Midtown and Downtown
Vacancy rates fell from
26.17 million RSF to 26.05
million RSF and from 11.86
million RSF to 11.70 million
RSF respectively. |
| +
Total Vacant Space in Midtown
declined as Total Direct
Lease space availability
fell from 17.95 million
RSF to 17.86 million RSF
and Total Sublease availability
fell from 8.22 million RSF
8.19 million RSF. |
| +Midtown
South Direct Lease vacancies
rose from 7.13 million RSF
to 7.27 million RSF, while
Sublease vacancies rose
from 2.71 million RSF to
2.82 million RSF. |
| +
Downtown Direct Lease vacancies
declined from 9.17 million
RSF to 9.04 million RSF,
while Sublease vacancies
declined from 2.69 million
RSF to 2.65 million RSF. |
|
RETAIL: |
| +
Total Retail Vacancies rose
slightly from 0.52 million
RSF to 0.53 million RSF.
|
| +
Midtown vacancies rose from
0.19 million RSF to 0.20
million RSF . |
| +
Midtown South Vacancies
fell from 0.28 million RSF
to 0.27 million RSF. |
| +
Total Retail vacancy rates
Downtown remained unchanged. |
INDUSTRIAL: |
| +
Total Industrial Vacant
space declined from 1.20
million RSF to 1.18 million
RSF. |
| +
Total
availability in Midtown
South declined from 0.52
million RSF to 0.50 million
RSF. |
| +
Midtown and Downtown availabilities
remained unchanged. |
|
| 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 |
601
West 26th Street sublease |
25,000
|
$15 |
747
Third Avenue, 29th Floor |
9,200 |
$22 |
OFFICE |
CLASS
A (In Millions of Rentable Square Feet)
|
|
Vacant Space |
|
Available now and in the next two years |
|
Direct |
Sublease |
Total |
% Vacant |
% Monthly Change |
|
Direct |
Sublease |
Total |
% Vacant |
% Monthly Change |
|
Midtown |
10.67
|
7.04
|
17.70
|
9.80%
|
0.77% |
|
22.69
|
9.68
|
32.36
|
16.62% |
3.02% |
|
Midtown South
|
0.73
|
0.30
|
1.04
|
9.90% |
5.79% |
|
1.17 |
0.46 |
1.64 |
14.74% |
-1.16% |
|
Downtown
|
5.31 |
2.05 |
7.36 |
14.00% |
-2.51%
|
|
8.05
|
2.73
|
10.78 |
19.21% |
-0.86%
|
|
Total |
16.71
|
9.39 |
26.10 |
10.70% |
0.04% |
|
31.91 |
12.87
|
44.78 |
17.10%
|
1.93% |
|
| |
TOTAL
MARKET (In Millions of Rentable Square
Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant |
% Monthly Change |
|
Direct |
Sublease |
Total |
% Vacant |
% Monthly Change |
| Midtown |
17.86
|
8.19 |
26.05 |
10.90% |
-0.46% |
|
31.54 |
11.76 |
43.30 |
16.96% |
0.67% |
| Midtown South |
7.27
|
2.82
|
10.09
|
16.30% |
2.48% |
|
9.07
|
3.36 |
12.43 |
19.36% |
-2.53% |
| Downtown |
9.04
|
2.65
|
11.70 |
15.20% |
-1.43% |
|
12.43
|
3.87
|
16.30 |
20.02% |
-1.39% |
| Total |
34.17 |
13.66
|
47.84 |
12.70% |
-0.08% |
|
53.04
|
18.99
|
72.03 |
17.97% |
-0.35% |
|
| |
RETAIL |
TOTAL
MARKET (In Millions of Rentable Square
Feet) |
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant |
|
Direct |
Sublease |
Total |
% Vacant |
| Midtown |
0.19 |
0.01 |
0.20 |
26.80%
|
|
0.27 |
0.01 |
0.28 |
33.10% |
| Midtown South |
0.24 |
0.04 |
0.27 |
28.80%
|
|
0.45 |
0.06 |
0.51 |
42.85% |
| Downtown |
0.05 |
0.00 |
0.05 |
30.20%
|
|
0.05 |
0.00 |
0.05 |
30.11% |
| Total |
0.48 |
0.05 |
0.52 |
28.10% |
|
0.77 |
0.07 |
0.84 |
38.11% |
|
| |
INDUSTRIAL |
| TOTAL
MARKET (In Millions of Rentable Square
Feet) |
|
Vacant Space |
|
Available now and in the next two years |
|
Direct |
Sublease |
Total |
% Vacant |
|
Direct |
Sublease |
Total |
% Vacant |
Midtown |
0.68 |
0.00 |
0.68 |
34.30% |
|
0.91 |
0.00 |
0.91 |
41.18% |
Midtown South |
0.40 |
0.11 |
0.51 |
18.80% |
|
0.50 |
0.11 |
0.61 |
21.66% |
Downtown |
0.00 |
0.00 |
0.00 |
N/A |
|
0.00 |
0.01 |
0.01 |
N/A
|
Total |
1.08
|
0.11 |
1.19 |
25.30% |
|
1.41 |
0.12 |
1.53 |
30.36% |
|
|
|
| Both
Class A Vacancies and Total Market Vacancies
remained relatively unchanged as Class
A Vacancies rose slightly from 26.09 million
RSF to 26.10 million RSF, while Total
Market Vacancies fell from 47.87 million
RSF to 47.84 million RSF. |
|
|
|
| Total
Market Vacancies were relatively unchanged
as the fall in Total Direct space from
34.25 million RSF to 34.17 million RSF
was offset by the rise in Sublease vacancies
from 13.62 million RSF to 13.67 million
RSF. |
|
|
|
| Total
Direct Lease space availability decreased
from 34.25 million RSF to 34.17 million
RSF, while Total Sublease vacant space
increased from 13.62 million RSF to 13.67
million RSF. |
|
|
|
Midtown
South vacancies rose from 9.84 million
RSF to 10.09 million RSF, while both Midtown
and Downtown Vacancy rates fell from 26.17
million RSF to 26.05 million RSF and from
11.86 million RSF to 11.70 million RSF
respectively.
|
|
|
|
| Total
Vacant Space in Midtown declined as Total
Direct Lease space availability fell from
17.95 million RSF to 17.86 million RSF
and Total Sublease availability fell from
8.22 million RSF 8.19 million RSF. |
|
|
|
Midtown
South Direct Lease vacancies rose from
7.13 million RSF to 7.27 million RSF,
while Sublease vacancies rose from 2.71
million RSF to 2.82 million RSF.
|
|
|
|
Downtown
Direct Lease vacancies declined from 9.17
million RSF to 9.04 million RSF, while
Sublease vacancies declined from 2.69
million RSF to 2.65 million RSF.
|
|
|
|
| Total
Retail Vacancies rose slightly from 0.52
million RSF to 0.53 million RSF, as Midtown
vacancies rose from 0.19 million RSF to
0.20 million RSF, while Midtown South
Vacancies fell from 0.28 million RSF to
0.27 million RSF. Total Retail vacancy
rates Downtown remained unchanged. |
|
|
|
| Total
Industrial Vacant space declined from
1.20 million RSF to 1.18 million RSF,
as total availability in Midtown South
declined from 0.52 million RSF to 0.50
million RSF. Midtown and Downtown availabilities
remained unchanged. |
| |
|
