June 2003:
Manhattan Office, Retail and Industrial
Space Update
There are some signs
of improvement in the commercial
real estate market in Manhattan.
According to the City’s comptrollers
office NYC added 10,700 jobs in
April, the largest monthly increase
in 2.5 years. In addition Pfizer
and the Bank of America both recently
announced expansions in New York.
Pfizer plans to relocate 2000
jobs to New York from other parts
of the country and the Bank of
America in a planned expansion
is about to enter into an agreement
to build a new headquarters in
Times Square. The Bank of America’s
midtown headquarters will however
be a loss to the downtown revival
as they were a potential lead
tenant for the replacement towers
at the WTC site.
While Midtown and Midtown south
vacancies increased slightly,
Downtown vacancy declined as a
few major corporations signed
leases and Citigroup removed 400,000
square feet from the downtown
market. 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. Further space is
likely to be available shortly
as many Wall Street firms and
insurance companies who are undertaking
corporate dispersal start vacating
Manhattan offices for New York
City boroughs, Westchester, New
Jersey and Connecticut.
Huge City and State budget deficits
continue to pose risks to the
already fragile NYC economy. Firstly,
higher taxes will encourage more
businesses to relocate out of
the city. Secondly, the layoffs
of city and state workers will
add additional space to an already
saturated real estate market.
Prices continue to moderate, and
bargains are much more wide spread
than they were 30 days ago. Now
is a great time to relocate to
a new building that is offering
attractive rents and amenities,
expand or renegotiate an existing
lease by extending the lease term.
As more and more landlords offered
further price reductions and incentives
in order to lure the few available
tenants prices continued their
slide. As a result, Class B space,
older yet relatively nicer space,
Downtown can now be rented on
a direct basis for under $20/Rentable
Square Feet (RSF), while space
in the Flatiron district 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 remains active
as firms continue 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.
|
MARKET
TREND OBSERVATIONS |
OFFICE: |
| +
Class A Vacancies and Total
Market Vacancies remained
relatively unchanged. |
| +
Class A Vacancies rose slightly
from 26.07 million RSF to
26.09 million RSF, while
Total Market Vacancies fell
from 47.89 million RSF to
47.87 million RSF. |
| +
Total Direct Lease space
availability increased from
33.76 million RSF to 34.25
million RSF, while Total
Sublease vacant space decreased
from 14.13 million RSF to
13.62 million RSF. |
| +
Downtown vacancies fell
from 12.25 million RSF to
11.86 million RSF, while
both Midtown and Midtown
South Vacancy rates rose
from 25.82 million RSF to
26.17 million RSF and from
9.82 million RSF to 9.84
million RSF respectively.
|
| +
Total Vacant Space in Midtown
continued to increase as
Total Direct Lease space
availability rose from 17.67
million RSF to 17.95 million
RSF and Total Sublease availability
rose from 8.15 million RSF
8.22 million RSF. |
| +
Midtown South Direct Lease
vacancies rose from 6.99
million RSF to 7.13 million
RSF, while Sublease vacancies
fell from 2.84 million RSF
to 2.71 million RSF. |
| +
While Total Direct Lease
availability increased from
9.11 million RSF to 9.17
million RSF, Total Sublease
vacancies decreased from
3.15 million RSF to 2.69
million RSF. |
|
RETAIL: |
| +Total
Retail Vacancies rose slightly
from 0.50 million RSF to
0.52 million RSF. |
| +
Midtown vacancies rose from
0.14 million RSF to 0.19
million RSF . |
| +
Midtown South Vacancies
fell from 0.31 million RSF
to 0.28 million RSF. |
| +
Total Retail vacancy rates
Downtown remained unchanged. |
INDUSTRIAL: |
| +
Total Industrial Vacant
space rose from 1.02 million
RSF to 1.20 million RSF. |
| +
Total
availability in both Midtown
and Midtown South increased
from 0.59 million RSF to
0.68 million RSF and from
0.43 million RSF to 0.52
million RSF respectively. |
| +
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 |
10.62
|
6.94
|
17.57
|
9.80%
|
1.86% |
|
22.36
|
9.03
|
31.39
|
16.21% |
0.18%
|
| Midtown South
|
0.65
|
0.33
|
0.98
|
7.80% |
-1.54% |
|
1.17 |
0.49 |
1.65 |
12.59% |
1.57% |
| Downtown
|
5.50 |
2.05 |
7.55 |
14.60% |
-3.94%
|
|
7.94
|
2.94
|
10.87 |
19.80% |
-2.68%
|
| Total |
16.77
|
9.32 |
26.10 |
10.70% |
0.06% |
|
31.47 |
12.46
|
43.91 |
16.78%
|
-0.47%
|
|
| |
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 |
17.95
|
8.22 |
26.17 |
11.00%
|
1.33%
|
|
31.45 |
11.56 |
43.01 |
16.86% |
0.86% |
| Midtown South |
7.13
|
2.71
|
9.84
|
15.60%
|
0.21% |
|
9.17
|
3.57 |
12.74 |
19.27% |
0.45% |
| Downtown |
9.17
|
2.69
|
11.86 |
15.70% |
-3.30%
|
|
12.38
|
4.15
|
16.52 |
20.56% |
-2.57%
|
| Total |
34.25 |
13.62
|
47.87 |
12.70%
|
-0.04%
|
|
53.00
|
19.28
|
72.27 |
17.99% |
0.01% |
|
| |
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 |
0.18 |
0.01 |
0.19 |
25.80%
|
|
0.26 |
0.01 |
0.27 |
32.25% |
| Midtown South |
0.24 |
0.04 |
0.28 |
31.10% |
|
0.47 |
0.06 |
0.53 |
46.17% |
| Downtown |
0.05 |
0.00 |
0.05 |
28.70% |
|
0.05 |
0.00 |
0.05 |
28.57% |
| Total |
0.47 |
0.05 |
0.52 |
28.70% |
|
0.78 |
0.07 |
0.85 |
39.35% |
|
| |
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 |
35.20%
|
|
0.87 |
0.00 |
0.87 |
40.94%
|
Midtown South |
0.42 |
0.11 |
0.52 |
19.30% |
|
0.52 |
0.11 |
0.63 |
22.34%
|
Downtown |
0.00 |
0.00 |
0.00 |
N/A |
|
0.00 |
0.00 |
0.00 |
N/A
|
Total |
1.10
|
0.11 |
1.20 |
25.90% |
|
1.39 |
0.12 |
1.51 |
30.42% |
|
|
|
| Both
Class A Vacancies and Total Market Vacancies
remained relatively unchanged as Class
A Vacancies rose slightly from 26.07 million
RSF to 26.09 million RSF, while Total
Market Vacancies fell from 47.89 million
RSF to 47.87 million RSF. |
|
|
|
| Total
Market Vacancies were relatively unchanged
as the rise in Total Direct space from
33.76 million RSF to 34.25 million RSF
was offset by the decline in Sublease
vacancies from 14.13 million RSF to 13.62
million RSF. |
|
|
|
| Total
Direct Lease space availability increased
from 33.76 million RSF to 34.25 million
RSF, while Total Sublease vacant space
decreased from 14.13 million RSF to 13.62
million RSF. |
|
|
|
Downtown
vacancies fell from 12.25 million RSF
to 11.86 million RSF, while both Midtown
and Midtown South Vacancy rates rose from
25.82 million RSF to 26.17 million RSF
and from 9.82 million RSF to 9.84 million
RSF respectively.
|
|
|
|
| Total
Vacant Space in Midtown continued to increase
as Total Direct Lease space availability
rose from 17.67 million RSF to 17.95 million
RSF and Total Sublease availability rose
from 8.15 million RSF 8.22 million RSF.
|
|
|
|
Midtown
South Direct Lease vacancies rose from
6.99 million RSF to 7.13 million RSF,
while Sublease vacancies fell from 2.84
million RSF to 2.71 million RSF.
|
|
|
|
While
Total Direct Lease availability increased
from 9.11 million RSF to 9.17 million
RSF, Total Sublease vacancies decreased
from 3.15 million RSF to 2.69 million
RSF.
|
|
|
|
| Total
Retail Vacancies rose slightly from 0.50
million RSF to 0.52 million RSF, as Midtown
vacancies rose from 0.14 million RSF to
0.19 million RSF, while Midtown South
Vacancies fell from 0.31 million RSF to
0.28 million RSF. Total Retail vacancy
rates Downtown remained unchanged. |
|
|
|
| Total
Industrial Vacant space rose from 1.02
million RSF to 1.20 million RSF, as total
availability in both Midtown and Midtown
South increased from 0.59 million RSF
to 0.68 million RSF and from 0.43 million
RSF to 0.52 million RSF respectively.
Downtown availabilities remained unchanged.
|
| |
|
