October
2003: Manhattan Office, Retail
and Industrial Space Update
As Manhattan office, retail and
industrial vacancies continue
to decline, landlords are starting
to decrease the concession packages
offered to tenants. Current face
rents are 30-50% below their peaks
but prices may soon start to rise.
With little new construction and
the net absorption of space the
market is getting tighter.
Absorption
is occurring for a number of
reasons:
1. Medium and large corporations
are taking advantage of the
historically low rents and the
strong competition among landlords
to attract top tenants, to relocate
to new spaces that better suit
their needs at very attractive
prices. For instance, Cadwalder,
Wickersham & Taft, LLP recently
announced the relocation of
its headquarters from 100 Maiden
Lane (a 350,000-square foot
space) to One World Financial
Center (a 450,000-square-foot
space). Also recently, Associated
Press’s moved from 50
Rockefeller Center to 450 West
33rd Street (a 290,000 square
feet space formerly occupied
by DoubleClick).
2. Non-traditional tenants such
as not for profit organizations,
educational institutions and
medical users continue to consume
space.
3.
The retail carousel keeps spinning
faster as new users come in
and out of the Manhattan market.
Recently, banks, cellular phone
stores and drug stores have
been very active players in
the retail market.
As the economy continues to
improve prices will undoubtedly
start to rise. As such, there
now remains a narrow window
of opportunity within which
to recast leases by extending,
expanding or relocating to lock
in prices that have not been
seen in the last 10 years.
|
MARKET
HIGHLIGHTS |
OFFICE: |
| +
Total Market vacancies declined
from 49.04 million RSF to
47.68 million RSF, while
Class A vacancies declined
from 27.87 million RSF to
26.80 million RSF. |
| +
Total Market vacancies fell
as both Total Direct Lease
and Total Sublease availabilities
declined from 36.24 million
RSF to 35.57 million RSF
and from 12.80 million RSF
to 12.11 million RSF, respectively. |
| +
All three market segments
saw falling vacancy rates.
In Midtown and Midtown South
availability decreased from
27.64 million RSF to 26.58
million RSF and from 9.47
million RSF to 9.17 million
RSF, while Total Downtown
Vacancy rates remained unchanged.
|
| +
Total Vacant space in Midtown
fell as Total Direct Lease
space availability declined
from 19.70 million RSF to
19.25 million RSF, while
Total Sublease availability
declined from 7.94 million
RSF to 7.33 million RSF.
|
| +
Both Midtown South Direct
Lease and Sublease vacancies
declined from 7.19 million
RSF to 6.91 million RSF
and from 2.28 million RSF
to 2.26 million RSF respectively.
|
| +
The Total Downtown Vacancy
rate remained unchanged
as the rise in Direct Lease
availabilities from 9.35
million RSF to 9.42 million
RSF was offset by the decline
in Sublease space from 2.59
million RSF to 2.52 million
RSF. |
|
RETAIL: |
| +
Total Retail Vacancies fell
from 0.46 million RSF to
0.42 million RSF. |
| +
Midtown vacancies declined
from 0.18 million RSF to
0.17 million RSF. |
| +
Midtown South availability
fell from 0.25 million RSF
to 0.22 million RSF. |
| +
Total Retail vacancy rates
Downtown remained unchanged. |
INDUSTRIAL: |
| +
Total Industrial Vacant
space declined from 1.47
million RSF to 1.03 million
RSF. |
| +
Total
availability in Midtown
decreased from 0.73 million
RSF to 0.68 million RSF. |
| +
Vacancies in Midtown South
declined from 0.73 million
RSF to 0.35 million RSF. |
| +
Downtown availability remained
unchanged. |
|
|
CLASS
A (In Millions of Rentable Square Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant Direct |
% Vacant Total |
% Monthly Change |
|
Direct |
Sublease |
Total |
% Monthly Change |
| Midtown |
12.13
|
6.17
|
18.29
|
10.90% |
-4.83% |
|
22.67
|
9.07
|
31.73
|
16.51% |
-1.01% |
| Midtown
South |
0.53
|
0.23
|
0.76
|
8.90% |
-25.9% |
|
0.97 |
0.48 |
1.46 |
14.96% |
-12.9% |
| Downtown
|
5.87 |
1.88
|
7.75 |
15.10% |
0.14% |
|
8.71
|
2.34
|
11.04 |
19.34% |
-0.05% |
| Total |
18.52
|
8.27
|
26.80 |
11.70% |
-3.99% |
|
32.35 |
11.88
|
44.23
|
17.07%
|
-1.16% |
|
| |
TOTAL
MARKET (In Millions of Rentable Square
Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant Direct |
% Vacant Total |
% Monthly Change |
|
Direct |
Sublease |
Total |
% Monthly Change |
| Midtown |
19.25
|
7.33
|
26.58 |
11.90%
|
-3.98% |
|
30.55
|
10.70
|
41.25 |
16.53% |
-2.62% |
| Midtown
South |
6.91
|
2.26
|
9.17
|
15.80% |
-3.26% |
|
8.61
|
2.57
|
11.18
|
18.41% |
-4.32% |
| Downtown
|
9.42
|
2.52
|
11.94 |
15.90% |
-0.03% |
|
12.87
|
3.42
|
16.29 |
19.82% |
-1.15%
|
| Total |
35.57 |
12.11
|
47.68 |
13.30%
|
-2.85% |
|
52.03
|
16.69
|
68.72
|
17.51% |
-2.55% |
|
| |
|
|
TOTAL
MARKET (In Millions of Rentable Square
Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant Direct |
|
Direct |
Sublease |
Total |
% Monthly Change |
| Midtown |
0.17 |
0.00 |
0.17 |
21.80% |
|
0.25 |
0.05 |
0.30 |
32.45% |
| Midtown
South |
0.18 |
0.04 |
0.22 |
29.70% |
|
0.39 |
0.05 |
0.44 |
43.57% |
| Downtown
|
0.03 |
0.00 |
0.03 |
16.90% |
|
0.04 |
0.00 |
0.04 |
18.31% |
| Total |
0.39 |
0.04 |
0.42 |
24.60% |
|
0.68 |
0.09 |
0.77 |
36.27% |
|
| |
|
|
TOTAL
MARKET (In Millions of Rentable Square
Feet)
|
| |
Vacant Space |
|
Available now and in the next two years |
| |
Direct |
Sublease |
Total |
% Vacant Direct |
|
Direct |
Sublease |
Total |
% Monthly Change |
| Midtown |
0.68 |
0.00 |
0.68 |
33.80%
|
|
0.89 |
0.00 |
0.89 |
40.22%
|
| Midtown
South |
0.28 |
0.07 |
0.35 |
13.70% |
|
0.41 |
0.07 |
0.48 |
17.70% |
| Downtown
|
0.00 |
0.00 |
0.00 |
N/A
|
|
0.00 |
0.00 |
0.00 |
N/A
|
| Total |
0.96
|
0.07 |
1.03 |
22.50% |
|
1.30 |
0.07 |
1.37 |
27.84% |
|
|
|
| Total
Market vacancies declined from 49.04 million
RSF to 47.68 million RSF, while Class
A vacancies declined from 27.87 million
RSF to 26.80 million RSF. |
|
|
|
| Total
Market Vacancies fell as both Total Direct
Lease and Total Sublease availabilities
declined from 36.24 million RSF to 35.57
million RSF and from 12.80 million RSF
to 12.11 million RSF, respectively. |
|
|
|
| Total
Direct Lease availability declined from
36.24 million RSF to 35.57 million RSF,
while Total Sublease vacancies declined
from 12.80 million RSF to 12.11 million
RSF. |
|
|
|
Total
Market vacancy declined as all three market
segments saw falling vacancy rates. In
Midtown and Midtown South availability
decreased from 27.64 million RSF to 26.58
million RSF and from 9.47 million RSF
to 9.17 million RSF, while Total Downtown
Vacancy rates remained unchanged.
|
|
|
|
| Total
Vacant space in Midtown fell as Total
Direct Lease space availability declined
from 19.70 million RSF to 19.25 million
RSF, while Total Sublease availability
declined from 7.94 million RSF to 7.33
million RSF. |
|
|
|
Both
Midtown South Direct Lease and Sublease
vacancies declined from 7.19 million RSF
to 6.91 million RSF and from 2.28 million
RSF to 2.26 million RSF respectively.
|
|
|
|
The
Total Downtown Vacancy rate remained unchanged
as the rise in Direct Lease availabilities
from 9.35 million RSF to 9.42 million
RSF was offset by the decline in Sublease
space from 2.59 million RSF to 2.52 million
RSF.
|
|
|
|
| Total
Retail Vacancies fell from 0.46 million
RSF to 0.42 million RSF, as both Midtown
and Midtown South vacancies declined from
0.18 million RSF to 0.17 million RSF and
from 0.25 million RSF to 0.22 million
RSF, respectively. Total Retail vacancy
rates Downtown remained unchanged. |
|
|
|
| Total
Industrial Vacant space declined from
1.47 million RSF to 1.03 million RSF,
as total availability in Midtown decreased
from 0.73 million RSF to 0.68 million
RSF, while vacancies in Midtown South
declined from 0.73 million RSF to 0.35
million RSF. Downtown availability remained
unchanged. |
| |
|
