New York City office
and retail Market Research

March 2011

March 2011 New York Commercial Real Estate Market Report

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Is the economy really improving? Warren Buffet believes so. So do the 29 large financial firms. They are all vying for the 24 large blocks spaces of 200,000 SF that exist. Other than that, the market is flat

New York Market Overview

  • Total Manhattan Class A Office vacancies increased from 8.9 % vacant to 9.1 % vacant
  • Total New York City Office vacancy increased from 7.9 % vacant to 8.0 % vacant
New York City does not have enough big chunks of office space to go around for all of the major tenants who are looking. There are 24 tenants currently on the hunt for at least 250,000 square feet in New York City and only 29 available blocks that fit the bill. Only 12 of those spaces are in the coveted Midtown area, the crunch is shifting the office leasing market in landlords' favor. At 120 Park Avenue, Wells Fargo was recently bumped despite a letter of intent to lease 280,000 square feet because Bloomberg LP swooped to take that space, plus 120,000 square feet more.

Manhattan office vacancy rate climbed in January. This 20-basis-point climb is due in part to two major chunks of office real estate to hit the market last month: a 612,000-square-foot space formerly occupied by Pfizer at 685 Third Avenue between 43rd and 44th streets, and a 250,000-square-foot space at 1745 Broadway on the corner of 56th Street. The average asking rent, however, saw a slight month-over-month increase, reaching $48.12 per square foot from $47.66.

Leasing and investment activity increased significantly in 2010, while vacancies began to decline from their peak. Leasing activity for the industrial market totaled 268.8 million square feet in 2010, up
16.5 percent from 2009. The fourth quarter was particularly strong, with 79 million square feet of leasing activity, an increase from an average of 63.2 million square feet leased during each of the three previous quarters. Twenty-three of the 34 U.S. industrial markets saw increases in leasing activity year-over-year.

With just 6.9 million square feet of office space, Long Island City is one of the smallest and most fragile commercial markets in the city, and was affected by the downturn. The market is starting to recover in terms of leasing activity. In 2010, average office rents dropped 1 percent. Things started to improve for the Queens neighborhood early last year, when JetBlue Airways leased more than 200,000 square feet at the MetLife building on the northern edge of the area.
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