New York Market Overview
- Total Manhattan Class A Office vacancies decreased from 10.4 % vacant to 9.9 % vacant
- Total New York City Office vacancy decreased from 8.7 % vacant to 8.4 % vacant
Increased availability of debt and an uptick in office rents drove demand for large Manhattan office towers in 2013. The top 10 priciest building sales of the year included nine office buildings — a threefold increase over the three office towers that cracked the top 10 list in 2012.
Sales volume for all New York City properties could reach a record $63 billion this year, soaring 68 percent from last year. The dollar volume of New York City investment property trades is up 35 percent since 2011
Sales are booming in buildings clustered around New York City’s public art destinations, as evidenced by the success of buildings near the Museum of Modern Art and the New Museum.
Rising retail rents are driving an ongoing acquisition frenzy in Soho.
Retailers looking to refinance in New York City could have a hard time doing so over the next few years, as many commercial mortgages are due to mature that lenders will need to refinance.
With record numbers of tourists coming to Manhattan and shopping, New York City retail rents have soared with asking rents on Fifth Avenue between 50-57th Street approaching $3,000 per square foot.
West Broadway, retail rents lagged behind its neighbors. Retail rental rates on Mercer Street between Prince and Houston streets have climb to around $500 per square foot on Mercer and Greene streets and over $1,000 on Prince and Spring Streets. As a result luxury brands are now eyeing West Broadway with interest.
European fashion houses and high-end newcomers remain undeterred by rising retail rents as a result retail rental rates are expected to continue their skyward climb in 2014.
Manhattan Office Overview
There were 80 Manhattan office leases for financial firms with rents starting at $100/RSF in 2013.
Asking rents for Class A office space in Midtown climbed to $80.03 /RSF the first time in five years. Class A office rates increased 8 %. Office rents exceded $70 per square foot in Midtown South and is forcing price sensitive tenants to consider Downtown. These price sensitive firm include TAMI. Tech companies leased about 234,000 square feet of Downtown space last year, up from about 93,000 square feet in 2012.
December office leasing in Manhattan was busy, with high-profile deals completed in all Midtown, Midtown South and Downtown. 9.1 million square feet of office space was leased in Manhattan in 2013’s 4th quarter. Citigroup’s 2.6 million-square-foot renewal lead the way along with a flurry of activity Downtown and Hudson Yards.
The city’s stock of Class B and Class C office space favored by the technology, media and advertising sectors as well as startups will be totally occupied by 2018, according to a report from the city’s Economic Development Corporation. By 2025, there will be a 6.3 million-square-foot shortage of this space.
Growth in the technology sector combined with low inventory sent New York City’s average office rents in the fourth quarter to the highest level seen since 2008. The average asking rent was $61.75 per square foot, a year-over-year increase of 4.2 percent and the highest number seen since the fourth quarter of 2008, when average asking rents werer $64.40 per square foot.