New York City office
and retail Market Research

April 2009

April 2009 New York Commercial Real Estate Market Report

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Office and retail leasing activities have dropped to new lows. Managing agents and landlords are now devoting a large percentage of their time working with existing tenants who are looking to downsize or renegotiate their rents. Last quarter, there was nearly 4 million square feet of negative absorption. Pending moves by Merrill Lynch and AIG, millions of additional feet of office space will be dumped back on the market.

New York Market Overview

  • Total Manhattan Class A Office vacancies increased from 7.3 % vacant to 7.4 % vacant
  • Total New York City Office vacancy stayed at 7.0 % vacant
In the last month, all aspects of office leasing in Manhattan continued to head in a negative direction. Leasing activity, vacancy rate and average asking rent all pointed to a weaker market. One bright spot was in absorption, the measure of the change in the amount of space occupied in the market, which improved. For all of Manhattan, leasing activity fell to 910,000 square feet, from 920,000 square feet the month before. The vacancy rate rose .4 points last month to 8.3 percent, and the average asking rent fell by $4.55 to $59.10 per foot.

Retail asking rents in New York will continue to drop this year. Asking rents are expected to drop for the second straight year to $68.73 per foot from $70.33 per foot in 2008 and$70.48 per foot in 2007.

Even though asking rents have not fallen dramatically taking rents have dropped dramatically as there are few tenants in the market and if the landlords wants to complete a lease they have to effectively lower the rents.
Luxury retailers are leaving Madison Avenue for less expensive locations. The Madison Avenue vacancy rate has risen to 13 percent from its existing 6-8 percent. Rents are likely to decline and new designers may take the opportunity to make names for themselves with a retail spot on Madison Avenue.

The rubber ruler grew as the economy and prosperity of New York grew. For instance, 530 Fifth Avenue, the sixth floor of the 26-story building had 24,400 square feet of space when the building was completed in 1957. Today, the sixth floor has 34,706 rentable square feet. Buildings may start to re-measure the space closer to the original measurements.
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