New York City office
and retail Market Research

June 2016

June 2016 New York Commercial Real Estate Market Report

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NYC Office: Upcoming elections and Brexit are additional concerns for the New York City office market. Leasing has been lighter than usual with landlords reaching to make deals.
NYC Retail: Space sizes are growing past actual as landlords try to hide rental rate hikes. Retail rents continue to fall in off prime locations, as retailers balk at the new asking rents.

New York Market Overview

  • Total Manhattan Class A Office vacancies increased from 8.8 % vacant to 8.9 % vacant
  • Total New York City Office vacancy increased from 8.0 % vacant to 8.1 % vacant

There have been only nine Manhattan office leases greater than 100,000 square feet signed through the first four months of this year, compared to 21 such deals at this time last year.

The overall vacancy rate in Manhattan jumped 0.1% in April from the previous month, to 9.1%. Midtown's vacancy rate inched up to 9.4% for the month, while Midtown South vacancy dropped slightly to 6.1% and Downtown vacancy inched up to 10.5%.

New York City economy grew at a 3.4% clip in the first quarter. Office vacancy rates reached a post-financial crisis of 2008 to a low of 9% despite slowing new leasing activity.

The Manhattan office market remained steady with 2.3 million square feet of leases signed, although year-to-date leasing figures of nearly 9 million square feet represent a nearly 11% drop from the first four months of last year. Leasing figures were slightly above average for the year-to-date. The largest deal signed was NYU Langone Medical Center's 390,000-square-foot lease for 220 East 41st Street. Overall, Manhattan office asking rents of $72.48 per square foot were up nearly 4% year-on-year and only 49 cents lower than the pre-recession peak in 2008.

Midtown office leasing totaled 1.5 million square feet, the strongest month in 2016, Midtown office leasing is down 21% year-on-year to date but above the historical average. Midtown, asking office rents are up nearly 3% since beginning of the year, to $78.79 per square foot. Midtown South office asking rents climbed more than 7% from April 2015, to $68.19 per square foot.

Downtown office asking rents are up 2% year to $58.86 per square foot. Manhattan office leasing remained down overall through the first third of the year, with a big portion of that decrease attributed to a lack of megadeals. There were nearly 196,000 square feet of leases signed in the Downtown market, with 1.2 million square feet of deals total in the first four months of 2016 representing a 3.4% jump year-on-year.

Midtown South office vacancy rates dropped to 6.3% from 7% last year. (TAMI) tenants accounted for 37% of new leases of 10,000 square feet or more. In Midtown, financial services firms accounted for 33.2%.

The area that has the most activity seems to be the hub from 34th to 42nd streets concentrated between 10th and 11th avenues, which currently has 11.8 million square feet of new construction either underway or in the planning stages. The vast majority of the area is zoned for commercial development.


Retail Sales are falling and causing retail rental prices to fall. Manhattan Retail rents in 10 of Manhattan's top 12 retail areas dropped over the past year. Soho retail rents fell to $824 per square foot versus $977/SF in spring 2015. Average rents on West 34th Street between Fifth and Seventh Avenues fell by 11%, to $890 per square foot from $1,000. Average Madison Avenue retail rents between 57th and 72nd streets dropped 3%, to $1,644 per square foot. Lower Broadway, Battery Park and Chambers Street retail rents climbed 39% to $326 per square foot.

The total amount of available Madison Avenue retail space has been increasing as retailers pause from rising asking rents. Roughly 134,000 square feet of ground-floor retail space is up for grabs on a 33-block stretch. The largest chunk of available space is concentrated on Madison in the 60s, with nearly 50,000 square feet in play along those 10 blocks.

Manhattan retail asking rents in Manhattan have been softening, with only 10 of 17 corridors seeing a year-over-year increase.

New York City retail investors had sales totaling $10.6 billion in investment sales deals with $7.6 billion in Manhattan.

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