market research

June 2015

June 2015 New York Commercial Real Estate Market Report

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Office Manhattan Office vacancies declined in all markets except Midtown South. Subleases increased nominally due to strong office leasing activity. Retail New York Retail vacancies declined in all markets due to strong retail leasing activity.

New York Market Overview

  • Total Manhattan Class A Office vacancies decreased from 9.5 % vacant to 9.3 % vacant
  • Total New York City Office vacancy decreased from 8.0 % vacant to 7.9 % vacant
Retail
The average asking rent for Manhattan's most expensive retail corridor on Fifth Avenue between 49th and 59th streets rose 4 % from $3,420 in fall 2014 to $3,683 this spring. Asking rents for ground-floor retail space along East 57th Street between Fifth and Park avenues were up 60 % from fall 2014. Eight of Manhattan's major retail corridors saw moderate rent growth from the previous quarter. Five of Manhattan's hottest retail corridors saw asking rents get double-digit %age increases year-over-year, with two of them rising over 20 %.
Herald Square, 34th Street from Fifth to Seventh avenues, saw rents rise 22.4 % year-over-year to $988 per square foot, while Fifth Avenue from 42nd to 49th streets saw a 22.3 % to $1,338. Third Avenue from 60th to 72nd Streets asking rents rose 19 % to $333 per foot. Broadway retail rents from 72nd to 86th Streets on the Upper West Side were up 15 %to $375, and 14th Street in the Meatpacking District from Eighth to 11th avenues, up 11 % to $394.
Office
Rents along Prince and Spring streets in Soho, are higher than Broadway. Broadway rents averaged $853 per foot, Prince Street averaged $1,038 and Spring Street averaged $1,031. Wooster Street retail rents ranging from $200 to $600.

The Midtown office values exceeding 2007 peak levels. Property values increased 13 % over the last 12 months and is up 10 % since mid-2007.

The Midtown office in the first quarter of 2015, with effective rents for Class A space increasing 5.1 % over the previous quarter. Midtown South effective rents declined after three consecutive quarters of growth. The average effective rent - the rent paid adjusted for concessions such as free rent and tenant improvements - for Class A space in Midtown was $72.45 an increase of $3.68 per square foot in the first quarter.
The market for Class B Midtown office space drop $1.95 per square foot to about $50 per square foot. Average concessions ratios in the Midtown office market increased to 10 % of total lease value. The Midtown South office market cooled off, dipping to an effective rent of under $60 per square foot.

New leases comprised of more than 71 % of total Midtown South lease activity in the quarter, in Average concession values in the market were unchanged at 9 % of total lease values.

The Downtown office market average effective rents rose 3.7 % to $41.99 per square foot. The ratio of new leases to renewals for the Downtown market was 84 % of transactions.
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