October
2004: Manhattan Office, Retail
and Industrial Space Update
Office and
retail vacancies decline as demand
increases and limited new office
buildings are created:
Landlords are feeling upbeat based
on the declining vacancy figures
for class A office are down to
10.5% from 10.6% from first quarter
numbers and 10.7% a year ago.
Landlords are decreasing concessions
(free rent and work) to lessees
as demand rises and limited new
product is coming to market. All
of Manhattan is seeing a decrease
in availability and Midtown Manhattan
saw the largest jump in leasing
activity with nearly as much leasing
in the first half of 2004 as it
did in all of 2003.
According to a recent survey,
downtown companies are increasing
their likelihood of renewing their
leases, 55% are planning on renewing
up from 47% last year. Of those
deciding not to renew half said
they would be staying in the downtown
area. The major concerns cited
for not renewing or undecided
was cost (22.6%); concern about
disruptions from construction
of the former WTC site (19.5%);
and weak business (6.8%). The
positives were the convenience
for employees (58.3%); a good
deal on rent (49.1%); and a desire
to be located in the “financial
center of the world” (44.1%).
Office space demand has also risen
given the change in the employment
market. Over the past 12 months,
more companies increased the size
of their staff than decreased
it by a ratio of three to two.
Over the next six months, four
times as many plan on new hiring
as opposed to layoffs—23.6%
plan to add employees, versus
5.8% who plan to downsize.
Meanwhile, Manhattan investment
sales continue, with demand unabated
and properties changing hands
for record prices; "the city
continued to be active for international
and private buyers.” Sales
of more than $500,000 during the
first six months of this year,
were $8.51 billion (a new record)
in sales versus $8.3 billion during
the last six months of 2003.
New Construction:
- 218 East 57 Street is being developed Broadway Management, a 24-story residential condo.
- 207 East 57 Street a 30 story residential condo.
- 7 World Trade Center a 1,675,000 square feet (SF) office building, Freedom Tower a 1776 foot tower and Tower 2 are being built on spec by Larry Silverstein "at Ground Zero. The 3 buildings will contain 4.7 million SF.
- Goldman Sachs Group will pay $161 million to the Battery Park City Authority, for the right to build its new headquarters a 2 million-square-foot building on "Site 26" on West Street, between Vesey and Murray streets. Goldman plans to use $1 billion in tax-free Liberty Bonds.
Noteworthy leases:
- Home Depot 105,000 SF store at 28-40 West 23rd Street.
- Estee Lauder has leased three full contiguous floors of about 63,000 SF at 110 East 59th Street.
- Benningans opens at 771 Eigth Avenue in a 8,000 SF 2 story corner location. (Leased by IGDNYC, Inc.)
Buildings Sold:
- Vornado Realty Trust acquired a $50 million interest in a $200 million loan on the General Motors Building at 767 Fifth Avenue owned by an affiliate of Soros Fund Management and is secured by partnership interests in the building and additional collateral.
- Triangle Equities Development Company bought 146,000 SF of city-owned property in Flatbush/Midwood Brooklyn for $2.15 million. Triangle intends to build a three-story retail center and five-level public parking garage.
- 180 Maiden Lane a 1.1 Million SF Office Building Sold to Almah LLC, and financed by The Moinian Group. Sellers were Paramount Group Inc., for $355 million, about $325/SF.
- 717 Fifth Avenue office space was purchased by Equity Office, for $160.5 million. The seller was a joint venture between Germany's HGA Capital and Walton Street Capital. A private investor group bought the ground-floor retail space, as well as fourth-floor office space, for about $193 million. Walton bought the building two years ago from Yale University for $266 million.
- 6 Times Square was sold to Sitt Asset Management and Steven J. Sutton by SL Green Realty Corp. for $160 million, or about $537 per SF. SL Green acquired the property in 1998 from the estate of Harry Helmsley, for $65.3 million.
- 790 Eighth Avenue was sold to Highgate Holding for $70.2 million.
- 851 Eighth Avenue was sold to Highgate Holding who also bought the 300 room Howard Johnson's for $76.7 million.
- 310 West 52nd Street the SIR studios site was bought by El-Ad group at for $43 million from Vikram Chatwal's and will construct a luxury condominium using the air rights from Chatwal's Howard Johnson.
- 1265-1269 Broadway aka 886-890 Sixth Avenue was bought by Hersel Torkian for $15.2 million. The eight-story office building has 56,000 SF plus ground floor retail the seller was Jim Krugman.
- 1234 Broadway and 34-36 West 31st Street, a 126,429 SF mixed-use building was sold for $18.95 million or $149.89 SF.
|
MARKET
HIGHLIGHTS
|
OFFICE: |
- Total
Class A vacancies decreased
from 22.31 million RSF
to 21.84 million RSF,
while Total Market vacancies
decreased as well from
37.54 million RSF to 37.05
million RSF.
- Total Market Vacancies
decreased as Total Direct
availability decreased
from 29.15 million RSF
to 28.89 million RSF while
Total Sublease Lease availability
decreased from 8.39 million
RSF to 8.15 million RSF.
- Total Direct Lease
availability decreased
from 29.15 million RSF
to 28.89 million RSF,
while Total Sublease vacancies
decreased to 8.15 million
RSF from 8.39 million
RSF.
- Total
Market vacancy decreased
as Midtown South availability
decreased from 6.69 million
RSF to 6.58 million RSF
even though Midtown availability
decreased from 20.96 million
to 20.60 million RSF.
Total Downtown Vacancy
rates decreased as well
from 9.89 million RSF
to 9.88 million RSF.
- Total
Vacant space in Midtown
decreased due to the decrease
in Total Sublease Lease
space availability from
5.21 million RSF to 4.92
million RSF, in spite
of Total Direct availability
decreasing from 15.75
million RSF to 15.67 million
RSF.
- Midtown South
Direct Lease availability
decreased from 5.71 million
RSF to 5.57 million RSF,
and Sublease vacancies
increased from 0.98 million
RSF to 1.00 million RSF.
- Total Downtown
vacancies decreased due
to decrease in Direct
space from 7.70 million
RSF to 7.65 million RSF,
even though Sublease availability
increased from 2.20 million
RSF to 2.23 million RSF.
|
|
RETAIL:
|
- Total
Retail availability fell
from 0.43 million RSF
and 0.42 million RSF.
In Downtown, availability
remained constant at 0.04
million RSF and in Midtown,
availability decreased
from 0.19 to 0.18. Total
Midtown South vacancy
rates remained at 0.21.
|
INDUSTRIAL: |
- Total
Industrial Vacant space
increased from 0.91 million
RSF to 0.92 million RSF
due to a decrease in Total
vacancies in Midtown South
remained the same at 0.36
million RSF, and Midtown
vacancies increasing to
0.53 million RSF from
0.54 million RSF. Downtown
vacancies remain unchanged
at 0.02 million RSF.
|
| |
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 |
10.21 |
4.09 |
14.30 |
9.70% |
-2.24% |
17.23 |
7.57 |
24.80 |
11.78% |
-3.10% |
| Midtown
South |
0.65 |
0.14 |
0.79 |
10.60% |
-7.58% |
1.43 |
0.28 |
1.72 |
12.14% |
-8.92% |
| Downtown
|
4.91
|
1.84 |
6.75 |
11.30% |
-1.32% |
8.99 |
2.73 |
11.73 |
16.16% |
4.48% |
| Total |
15.77
|
6.07 |
21.84 |
10.60% |
-2.15% |
27.66 |
10.58 |
38.24 |
12.87%
|
-1.04% |
|
| |
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 |
15.67 |
4.92 |
20.60 |
9.30% |
-1.74% |
24.13 |
9.17 |
33.30 |
11.10% |
-2.59% |
| Midtown
South |
5.57 |
1.00 |
6.58 |
9.10% |
-1.67% |
8.46 |
1.55 |
10.01 |
10.60% |
-1.34% |
| Downtown
|
7.65 |
2.23 |
9.88 |
11.30% |
-0.19% |
12.35
|
3.52 |
15.87 |
14.63% |
3.96% |
| Total |
28.89 |
8.15 |
37.05 |
10.10%
|
-1.32% |
44.96 |
14.25 |
59.18 |
11.78% |
-0.63% |
|
| |
| |
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 |
0.18 |
0.00 |
0.18 |
3.20% |
-5.08% |
0.33 |
0.05 |
0.38 |
5.80% |
5.04% |
| Midtown
South |
0.20
|
0.01 |
0.21 |
5.90%
|
0.00%
|
0.29 |
0.02 |
0.31 |
5.92% |
0.00% |
| Downtown
|
0.04 |
0.00 |
0.04 |
2.30% |
0.00% |
0.04 |
0.00 |
0.04 |
2.31% |
0.00% |
| Total |
0.41
|
0.01 |
0.42 |
4.90% |
-2.12% |
0.66
|
0.06 |
0.72 |
5.44% |
2.64% |
|
| |
| |
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 |
0.51
|
0.03 |
0.54 |
9.40% |
0.56% |
0.68 |
0.03 |
0.71 |
12.09% |
-9.85% |
| Midtown
South |
0.36
|
0.00 |
0.36 |
5.00% |
0.00% |
0.45 |
0.00 |
0.45 |
6.02% |
-1.56% |
| Downtown
|
0.02
|
0.00 |
0.02 |
3.60% |
0.00% |
0.02 |
0.00 |
0.02 |
3.44% |
0.00% |
| Total |
0.89 |
0.03 |
0.92 |
7.20% |
0.33% |
1.15 |
0.03 |
1.18 |
8.45% |
-6.51% |
|
|
|
| Total
Class A vacancies decreased from 22.31
million RSF to 21.84 million RSF, while
Total Market vacancies decreased as well
from 37.54 million RSF to 37.05 million
RSF. |
|
|
|
| Total
Market Vacancies decreased as Total Direct
availability decreased from 29.15 million
RSF to 28.89 million RSF while Total Sublease
Lease availability decreased from 8.39
million RSF to 8.15 million RSF. |
|
|
|
| Total
Direct Lease availability decreased from
29.15 million RSF to 28.89 million RSF,
while Total Sublease vacancies decreased
to 8.15 million RSF from 8.39 million
RSF. |
|
|
|
| Total
Market vacancy decreased as Midtown South
availability decreased from 6.69 million
RSF to 6.58 million RSF even though Midtown
availability decreased from 20.96 million
to 20.60 million RSF. Total Downtown Vacancy
rates decreased as well from 9.89 million
RSF to 9.88 million RSF. |
|
|
|
| Total
Vacant space in Midtown decreased due
to the decrease in Total Sublease Lease
space availability from 5.21 million RSF
to 4.92 million RSF, in spite of Total
Direct availability decreasing from 15.75
million RSF to 15.67 million RSF. |
|
|
|
Midtown
South Direct Lease availability decreased
from 5.71 million RSF to 5.57 million
RSF, and Sublease vacancies increased
from 0.98 million RSF to 1.00 million
RSF.
|
|
|
|
Total
Downtown vacancies decreased due to
decrease in Direct space from 7.70 million
RSF to 7.65 million RSF, even though
Sublease availability increased from
2.20 million RSF to 2.23 million RSF.
|
|
|
|
| Total
Retail availability fell from 0.43 million
RSF and 0.42 million RSF. In Downtown,
availability remained constant at 0.04
million RSF and in Midtown, availability
decreased from 0.19 to 0.18. Total Midtown
South vacancy rates remained at 0.21. |
|
|
|
| Total
Industrial Vacant space increased from
0.91 million RSF to 0.92 million RSF due
to a decrease in Total vacancies in Midtown
South remained the same at 0.36
million RSF, and Midtown vacancies increasing
to 0.53 million RSF from 0.54 million
RSF. Downtown vacancies remain unchanged
at 0.02 million RSF. |
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