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May 2005: Manhattan Office, Retail and Industrial Space Update
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Manhattan Office, Retail, Industrial Market Overview |
NEW YORK CITY MARKET HIGHLIGHTS
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Sales market remains tight with limited new construction on the horizon. However, several major hotels were sold for conversion into condos. Approval for the Jets stadium is still up in the air.
The Consumer Price Index (CPI) rose 1.7 percent in the New York City area, the largest month-over-month increase in 23 years. The rise was driven by rising real estate sales and rental markets as well as the increase in travel, clothing and mass transit. The Jets stadium is in jeopardy with Sidney Sheldon threatening litigation to squash any plans for a stadium. Talks for the Goldman Sachs headquarters downtown are still ongoing. Goldman has assured the city that they have no plans to leave New York City.
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New Manhattan Construction: |
- The 880 foot pier at 15th street and the Hudson River is being developed by Giuseppe Cipriani. There are plans to create “The Leonardo at Pier 57” which would feature rotating art exhibits, ice-skating rink, a marina, three restaurants and the city’s largest banquet hall.
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New York City Buildings for Sale: |
- 85 Tenth Avenue is for sale. The 15 story, 600,000 square feet building is expected to go for $300 million.
- 40-42 Thompson Street, home to Next Model Management, is for sale and is expected to sell for close to $17 million.
- 25 Broad Street, a 345 unit property with 30,000 square feet of commercial space, is for sale and could reach levels of over $200 million.
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New York City Buildings Sold: |
- 257 West 12th Street in the West Village was just sold for $4.2 million.
- 110 East 31st Street, a vacant walk-up at in Murray Hill, was sold for $2.95 million.
- SL Green Realty Trust and Gramercy Capital Group have signed a joint venture agreement for One Madison Avenue. Under the agreement, SL Green will own 55% of the 1.2 million square foot building. SL Green and Gramercy will acquire the building for $803 million. Credit Suisse Bank occupies 95% of the South Tower and has 15 years remaining on the lease while the North Tower will be converted to residential condominiums.
- SL Green Realty and Morgan Stanley Real Estate fund are selling 180 Madison for $350 per square foot or $92.7 million.
- Aimco has purchased a portfolio of seven pre-war apartment buildings and six retail stores for $27.65 million from Kamran Hakim.
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New York Hotels Sold: |
- Sutton East Hotel at 330 East 57th was sold for $52.25 million to Alchemy Properties.
- Essex House at 160 Central Park South is being sold for close to $400 million to the REIT, Host Marriot.
- Righa Royal was sold for close to $183 million to the Blackstone Group.
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New York City Office Rental: |
- Total Manhattan Office Class A vacancies decreased from 20.65 million RSF to 20.44 million RSF, and Total Market vacancies decreased from 35.08 million RSF to 34.40 million RSF.
- Total Manhattan Office Market Vacancies decreased as Total Direct availability decreased from 27.75 million RSF to 27.31 million RSF and Total Sublease Lease availability decreased from 7.33 million RSF to 7.09 million RSF.
- Total Manhattan Office Direct Lease availability decreased from 27.75 million RSF to 27.60 million RSF, while Total Sublease vacancies decreased from 7.33 million RSF to 7.12 million RSF.
- Total Manhattan Office Market vacancy decreased as Midtown South availability dropped from 5.51 to 5.23 million RSF although Midtown availability increased from 18.72 million to 18.75 million RSF. However, Total Downtown Vacancy rates decreased from 10.85 million RSF to 10.41 million RSF.
- Total Vacant Office space in Midtown increased led by an increase in Total Direct availability from 14.16 to 14.34 million RSF. However, Total Sublease space availability decreased from 4.56 to 4.41 million RSF.
- Midtown South Office Direct Lease availability decreased from 4.77 million RSF to 4.52 million RSF, while Sublease vacancies dropped from 0.74 to 0.71 million RSF.
- Total Downtown Manhattan office vacancies decreased due to an decrease in Direct space from 8.82 million RSF to 8.44 million RSF, in addition to Sublease availability decreasing from 2.03 million RSF to 1.97 million RSF.
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New York City Retail Rental: |
- Total Manhattan Retail availability decreased slightly from 0.49 million RSF to 0.46 million RSF, led by an decrease in Midtown South availability from 0.18 to 0.16 million RSF while in Midtown availability increased from 0.26 to 0.27 million RSF. In Downtown, availability dropped to 0.03 million RSF from 0.05 million RSF.
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New York City Industrial Rental : |
- Total Manhattan Industrial Vacant space decreased from 0.62 to 0.57 million RSF. Midtown vacancy remained constant at 0.31 million RSF. Midtown South vacancy rates dropped from 0.28 to 0.22 million RSF while Downtown vacancy rates continued to remain unchanged at 0.03 million RSF.
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Noteworthy Manhattan Leases: |
- Arche resigned their lease for 1,000 square feet at 1045 Third Avenue for 10 years.
- Lazarus Funds is expanding to a total of 21,000 square feet at 825 Third Avenue.
- Futurestep is leasing the entire 4th floor at 148 Madison Avenue for 5,000 square feet.
- Allianz Global Risks US Insurance Company is leasing 9,206 square feet for the next ten years at 317 Madison.
- KeySpan Corporation renewed its lease at Metrotech for 335,000 square feet.
- Aristeia Capital signed a lease for 8,500 square feet at 136 Madison Avenue.
- Fashion Avenue Knits relocated from Queens to 225 West 37th Street and signed a 10-year lease for 11,000 square feet comprising the entire eighth floor.
- UBS took the entire 25th and 26th floors consisting of 28,368 square feet at 623 Fifth Avenue.
- L’Oreal took 28,106 square feet of additional space at 565 Fifth Avenue for a total of 39,243 square feet including their space at 575 Fifth avenue.
- McDermott, Will & Emory signed a lease for 160,000 square feet at 340 Madison Avenue.
- Tommy Hilfiger leased an additional 80,000 square feet at the Starrett Lehigh Building making Hilfiger’s total occupancy 300,000 square feet.
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