September
2003: Manhattan Office, Retail
and Industrial Space Update
Building Sales:
The Buildings for Sale Market
remains robust with no sign of
letting up in the short term.
Even though leasing prices remain
soft, fully leased properties
continue to command top dollar.
Harry Macklow is currently in
contract to buy the GM BUILDING
for $1.4 Billion ($800/Square
Foot), a new building sale price
record. The building was last
sold in 1998 for $878 million.
The previous record building sale
was Lehman Brothers purchase of
745 Fifth Avenue for $700 per
square foot, followed by Boston
Properties purchase of 399 Park
Avenue for $630 per square foot
($1.05 billion).
Other
recent sales around Manhattan
include Hines’ purchase
of 499 Park Avenue for $147.8
million and 425 Lexington Avenue
for what is believed to be $335
million. Also, the Paramount
Group is reported to have sold
a 49% interest in 900 Third
Avenue to the ING Office Fund
Australia. In Midtown South,
2 Park Avenue is reported in
contract for $292 million, and
in Downtown Manhattan 5 Hanover
Square recently sold $175 per
square foot.
Many
other major office buildings
are still available for sale
including properties in Midtown
and Downtown.
Leasing:
Corporate campuses maybe a thing
of the past. After 9/11 a number
of companies sought to diversify
their office locations with
respect to power grids, transportation
and telecommunication networks.
Now with the recent Northeast
blackout the need for existing
buildings to have backup power
is a must have item, especially
for financial services and securities
firms.
The
current market lull provides
an excellent opportunity to
reevaluate your firm’s
options. Now is a great time
to consider extending, expanding
or relocating to lock in prices
that have not been seen in the
last 10 years. As the economy
heats up commercial real estate
prices are likely to rise from
their recent lows.
Downtown:
The planned demolition of the
Deutsche Bank Tower at 130 Liberty
Street (1,415,086 sf) should
help the downtown market by
removing product that otherwise
would have been rehabilitated
and put back on the rental market.
Also, 7 World Trade Center recently
announced that 1.6 million square
feet will be available as of
December 2005. Space Downtown
in “B” buildings
can be rented directly from
the landlord for low to mid
$20’s on direct deals
and $20 on subleases.
Harlem:
The Harlem market remains active,
as many non-profit companies
continue to seek space in East,
Central and West Harlem and
Washington Heights. Recently
the New York Times reported
that Columbia University announced
plans to expand north of their
existing campus in Harlem. Given
the limited supply, the rental
prices in these areas are expected
to hold at prices higher than
SOHO, Tribeca and Chelsea.
|
MARKET
HIGHLIGHTS |
OFFICE: |
| +
Class A vacancies rose from
27.53 million RSF to 27.87
million RSF. |
| +
Total Market Vacancies rose
slightly as the increase
in Total Direct Lease availability
from 35.23 million RSF to
36.24 million RSF out weighed
the decline in Total Sublease
vacancies from 13.72 million
RSF to 12.80 million RSF. |
| +
Midtown vacancies increased
from 26.97 million RSF to
27.64 million RSF, while
both Midtown South and Downtown
Vacancy rates declined from
9.73 million RSF to 9.47
million RSF and from 12.26
million RSF to 11.94 million
RSF respectively. |
| +
Total Vacant Space in Midtown
rose as Total Direct Lease
space availability increased
from 18.47 million RSF to
19.70 million RSF while
Total Sublease availability
decreased from 8.50 million
RSF to 7.94 million RSF.
|
| +
Both Midtown South Direct
Lease and Sublease vacancies
declined from 7.22 million
RSF to 7.19 million RSF
and from 9.73 million RSF
to 9.47 million RSF respectively.
|
| +
Both Downtown Direct Lease
and Sublease vacancies declined
from 9.55 million RSF to
9.35 million RSF and from
2.71 million RSF to 2.59
million RSF respectively.
|
|
RETAIL: |
| +
Total Retail Vacancies remained
unchanged. |
| +
Midtown vacancies rose from
0.16 million RSF to 0.18
million RSF . |
| +
Midtown South availability
increased from 0.24 million
RSF to 0.25 million RSF. |
| +
Total Retail vacancy rates
Downtown fell from 0.06
million RSF to 0.03 million
RSF. |
INDUSTRIAL: |
| +
Total Industrial Vacant
space rose from 1.22 million
RSF to 1.47 million RSF. |
| +
Total
availability in Midtown
increased from 0.70 million
RSF to 0.73 million RSF. |
| +
Midtown South vacancies
rose from 0.51 million RSF
to 0.73 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 |
12.41
|
6.76
|
19.18
|
11.10% |
3.17% |
|
22.38
|
9.67
|
32.05
|
16.39% |
-1.46% |
| Midtown
South |
0.73
|
0.23
|
0.96
|
10.70% |
-6.20% |
|
1.16 |
0.48 |
1.64 |
16.25% |
0.06%
|
| Downtown
|
5.71 |
2.03 |
7.74 |
15.10% |
-2.71% |
|
8.61
|
2.44
|
11.05 |
19.34% |
-2.89% |
| Total |
18.85
|
9.02 |
27.87 |
12.00% |
1.21% |
|
32.16 |
12.59
|
44.75
|
17.03%
|
-1.75% |
|
| |
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 |
19.70
|
7.94
|
27.64 |
12.00%
|
2.42% |
|
30.70
|
11.63 |
42.33 |
16.58% |
-1.66% |
| Midtown
South |
7.19
|
2.28
|
9.47
|
15.80%
|
-2.81% |
|
8.87
|
2.79
|
11.66
|
18.67% |
-3.42% |
| Downtown
|
9.35
|
2.59
|
11.94 |
15.60% |
-2.63% |
|
12.85
|
3.63
|
16.48 |
19.74% |
-1.89%
|
| Total |
36.24 |
12.80
|
49.04 |
13.40%
|
0.18% |
|
52.42
|
18.05
|
70.47 |
17.56% |
-2.01% |
|
| |
|
|
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 |
0.18 |
0.00 |
0.18 |
21.90%
|
|
0.26 |
0.05 |
0.31 |
32.69% |
| Midtown
South |
0.22 |
0.04 |
0.26 |
29.90%
|
|
0.42 |
0.05 |
0.47 |
42.42% |
| Downtown
|
0.03 |
0.00 |
0.03 |
16.90% |
|
0.04 |
0.00 |
0.04 |
19.82% |
| Total |
0.43 |
0.04 |
0.47 |
25.00% |
|
0.72 |
0.10 |
0.82 |
36.20% |
|
| |
|
|
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 |
0.73 |
0.00 |
0.73 |
35.30%
|
|
0.93 |
0.00 |
0.93 |
41.05%
|
| Midtown
South |
0.73 |
0.00 |
0.73 |
35.30% |
|
0.93 |
0.00 |
0.93 |
41.05% |
| Downtown
|
0.00 |
0.01 |
0.01 |
99.80%
|
|
0.00 |
0.01 |
0.01 |
N/A
|
| Total |
1.46
|
0.01 |
1.47 |
25.60% |
|
1.86 |
0.01 |
1.87 |
36.27% |
|
|
|
| Total
Market vacancies rose from 48.95 million
RSF to 49.04 million RSF, while Class
A vacancies rose from 27.53 million RSF
to 27.87 million RSF. |
|
|
|
| Total
Market Vacancies rose slightly as the
increase in Total Direct Lease availability
from 35.23 million RSF to 36.24 million
RSF out weighed the decline in Total Sublease
vacancies from 13.72 million RSF to 12.80
million RSF. |
|
|
|
| Total
Direct Lease availability increased from
35.23 million RSF to 36.24 million RSF,
while Total Sublease vacancies decreased
from 13.72 million RSF to 12.80 million
RSF. |
|
|
|
Midtown
vacancies increased from 26.97 million
RSF to 27.64 million RSF, while both Midtown
South and Downtown Vacancy rates declined
from 9.73 million RSF to 9.47 million
RSF and from 12.26 million RSF to 11.94
million RSF respectively.
|
|
|
|
| Total
Vacant Space in Midtown rose as Total
Direct Lease space availability increased
from 18.47 million RSF to 19.70 million
RSF while Total Sublease availability
decreased from 8.50 million RSF to 7.94
million RSF. |
|
|
|
Both
Midtown South Direct Lease and Sublease
vacancies declined from 7.22 million RSF
to 7.19 million RSF and from 9.73 million
RSF to 9.47 million RSF respectively.
|
|
|
|
Both
Downtown Direct Lease and Sublease vacancies
declined from 9.55 million RSF to 9.35
million RSF and from 2.71 million RSF
to 2.59 million RSF respectively.
|
|
|
|
| Total
Retail Vacancies remained unchanged, as
the increased Midtown and Midtown South
vacancies from 0.16 million RSF to 0.18
million RSF and from 0.24 million RSF
to 0.25 million RSF, respectively were
balanced by decreased availability Downtown.
Total Retail vacancy rates Downtown fell
from 0.06 million RSF to 0.03 million
RSF. |
|
|
|
| Total
Industrial Vacant space rose from 1.22
million RSF to 1.47 million RSF, as total
availability in Midtown increased from
0.70 million RSF to 0.73 million RSF,
while vacancies in Midtown South rose
from 0.51 million RSF to 0.73 million
RSF. Downtown availability remained unchanged.
|
| |
|
