May 2003: Manhattan
Office, Retail and Industrial
Space Update
Huge City and State budget
deficits will pose two 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.
The
lackluster economic outlook
in the near term has lead many
firms to postpone or reconsider
any major commercial activity.
As such, the market is relatively
unchanged from the previous
month, except that prices continue
to moderate, and bargains are
much more wide spread than they
were 30 days ago. Now is a great
time to renegotiate an existing
lease by extending the lease
term or expanding or relocating
to a new building that is offering
attractive rents and amenities.
Overall
vacancy rates remained relatively
unchanged in the past 30 days,
with no major changes in any
particular sub market (Downtown,
Midtown South, Midtown, or Uptown).
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.
Prices
continued their slide as more
and more landlords offered further
price reductions and incentives
in order to lure the few available
tenants. As a result Class B
space, or older yet relatively
nicer spaces, in Downtown can
now be rented on a direct basis
for under $20/Rentable Square
Feet (RSF), while in the Flatiron
district space 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 fell from
26.33 million RSF to 26.07
million RSF. |
| +
Total Market Vacancies declined
from 48.19 million RSF to
47.89 million RSF, as both
Total Direct and Sublease
vacancies fell from 34.01
million RSF to 33.76 million
RSF and from 14.18 to 14.13
million RSF respectively. |
| +
Midtown vacancies rose from
25.16 million RSF to 25.82
million RSF, while both
Midtown South and Downtown
vacancies declined from
10.47 million RSF to 9.82
million RSF and from 12.56
million RSF to 12.25 million
RSF respectively. |
| +
Total Vacant Space in Midtown
continued its year long
rise as Total Direct Lease
space increased from 17.03
million RSF to 17.67 million
RSF and Total Sublease vacancies
increased to 8.15 million
RSF. |
| +
The decrease in total vacancies
in Midtown South was largely
a result of a decline in
Direct Lease availabilities
from 7.57 million RSF to
6.99 million RSF. During
the same period Total Sublease
vacancies fell slightly
to 2.84 million RSF. |
| +
While Total Direct Lease
vacancies fell from 9.41
million RSF to 9.11 million
RSF, Total Sublease availabilities
remained unchanged. |
|
RETAIL: |
| +
Total Retail vacancies rose
slightly from 0.49 million
RSF to 0.50 million RSF.
|
| +
Availability in both Midtown
and Midtown South remained
unchanged . |
| +
Downtown vacancies increased
from 0.04 million RSF to
0.05 million RSF. |
INDUSTRIAL: |
| +
Total Industrial Vacant
space declined from 1.06
million RSF to 1.02 million
RSF. |
| +
Availability
in Midtown fell from 0.65
million RSF to 0.59 million
RSF. |
| +
Vacancies in Midtown south
rose slightly from 0.42
million RSF to 0.42 million
RSF. |
| +
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 |
Starrett
Lehigh Building 601 West
26th Street subleases |
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 |
10.48
|
6.76
|
17.24
|
5.80% |
9.50% |
2.21%
|
|
22.22
|
9.11
|
31.33
|
1.00% |
| Midtown South
|
0.65
|
0.34
|
0.99
|
6.40%
|
9.70% |
-50.2% |
|
1.16 |
0.46 |
1.63 |
-6.70%
|
| Downtown
|
5.51 |
2.33 |
7.84 |
10.70% |
15.20% |
-1.85%
|
|
7.87
|
3.29 |
11.17 |
-11.3%
|
| Total |
16.64
|
9.43 |
26.07 |
6.80%
|
10.70% |
-1.00%
|
|
31.26 |
12.86
|
44.12 |
-2.40%
|
|
| |
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 |
17.67
|
8.15 |
25.82 |
7.40% |
10.70% |
2.54% |
|
31.12 |
11.52 |
42.64 |
1.09%
|
| Midtown South |
6.99
|
2.84
|
9.82
|
11.30%
|
15.90% |
-6.57%
|
|
9.06
|
3.63 |
12.69 |
-1.51%
|
| Downtown |
9.11
|
3.15 |
12.25 |
12.10% |
16.30% |
-2.50%
|
|
12.24
|
4.71
|
16.95 |
-7.02%
|
| Total |
33.76 |
14.13 |
47.89 |
9.00% |
12.70% |
-0.61%
|
|
52.42
|
19.85
|
72.27 |
-1.27%
|
|
| |
| |
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant |
% Monthly Change |
|
Direct |
Sublease |
Total |
% Vacant |
% Monthly Change |
| Midtown |
0.13 |
0.01 |
0.14 |
18.40% |
19.20% |
-1.31% |
|
0.20 |
0.01 |
0.21 |
7.04% |
| Midtown South |
0.26 |
0.04 |
0.31 |
29.10% |
33.90% |
0.33% |
|
0.46 |
0.07 |
0.53 |
1.67% |
| Downtown |
0.05 |
0.00 |
0.05 |
30.40% |
30.40% |
24.07% |
|
0.06 |
0.00 |
0.06 |
24.07% |
| Total |
0.45 |
0.05 |
0.50 |
27.70% |
25.00% |
2.45% |
|
0.72 |
0.08 |
0.79 |
4.71% |
|
| |
INDUSTRIAL
(Total Market)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant |
% Monthly Change |
|
Direct |
Sublease |
Total |
% Vacant |
% Monthly Change |
| Midtown |
0.56 |
0.03 |
0.59 |
29.70% |
31.30% |
-10.0% |
|
0.75 |
0.03 |
0.78 |
-5.52%
|
| Midtown South |
0.40 |
0.03 |
0.43 |
15.50% |
16.70% |
2.88%
|
|
0.51 |
0.03 |
0.54 |
8.69%
|
| Downtown |
0.00 |
0.00 |
0.00 |
N/A |
N/A |
N/A |
|
0.00 |
0.00 |
0.00 |
N/A |
| Total |
0.96
|
0.06 |
1.02 |
21.50% |
22.90% |
-4.56%
|
|
1.25 |
0.06 |
1.31 |
0.30%
|
|
|
|
| Class
A Vacancies fell from 26.33 million RSF
to 26.07 million RSF, as Total Market
Vacancies fell from 48.19 million RSF
to 47.89 million RSF. |
|
|
|
| Total
Market Vacancies declined as both Total
Direct and Sublease vacancies fell from
34.01 million RSF to 33.76 million RSF
and from 14.18 to 14.13 million RSF respectively.
|
|
|
|
| Total
Direct Lease vacancies fell from 34.01
million RSF to 33.76 million RSF, while
Total Sublease vacancies fell slightly
from 14.18 million RSF to 14.13 million
RSF. |
|
|
|
Midtown
vacancies rose from 25.16 million RSF
to 25.82 million RSF, while both Midtown
South and Downtown vacancies declined
from 10.47 million RSF to 9.82 million
RSF and from 12.56 million RSF to 12.25
million RSF respectively.
|
|
|
|
| Total
Vacant Space in Midtown continued its
year long rise as Total Direct Lease space
increased from 17.03 million RSF to 17.67
million RSF and Total Sublease vacancies
increased to 8.15 million RSF. |
|
|
|
The
decrease in total vacancies in Midtown
South was largely a result of a decline
in Direct Lease availabilities from 7.57
million RSF to 6.99 million RSF. During
the same period Total Sublease vacancies
fell slightly to 2.84 million RSF.
|
|
|
|
While
Total Direct Lease vacancies fell from
9.41 million RSF to 9.11 million RSF,
Total Sublease availabilities remained
unchanged.
|
|
|
|
| Total
Retail vacancies rose slightly from 0.49
million RSF to 0.50 million RSF, as Downtown
vacancies increased from 0.04 million
RSF to 0.05 million RSF. Total Retail
vacancy rates in both Midtown and Midtown
South remained unchanged. |
|
|
|
| Total
Industrial Vacant space declined from
1.06 million RSF to 1.02 million RSF,
as availability in Midtown fell from 0.65
million RSF to 0.59 million RSF. Industrial
vacancies in Midtown South rose slightly
from 0.42 million RSF to 0.42 million
RSF, while Downtown availabilities remained
unchanged. |
| |
|
