New York Market Overview
- Total Manhattan Class A Office vacancies increased from 9.1 % vacant to 9.9 % vacant
- Total New York City Office vacancy decreased from 8.3 % vacant to 7.8 % vacant
Manhattan Office:2018 was record-setting year for Manhattan’s office market. Leasing including new deals and expansions hit 32.2 million square feet. 17 million RSF of new office space will be hitting the market over the next few years, so new developments are in heated competition to land elite tenants.
Midtown office leasing rose 81% in December compared to November, totaling 3.15 million square feet and making 2018’s fourth quarter the submarket’s strongest quarter since 2001. The availability rate dropped by 0.4% points to 10.3%, while the average asking rent rose to $78.43 per square foot.
Leasing activity in Midtown South continued to rise, reaching 720,000 square feet, more than twice as much as December 2017. The availability rate fell to 9.7% from November’s 10.4%. The largest deal in this submarket was Google’s 280,026-square foot lease at 315 Hudson Street, part of its Hudson Square campus expansion.
Lower Manhattan office leasing bounced back, reaching 550,000 square feet, up 25% and more than twice the volume seen in December 2017. The availability rate dipped slightly to 13.2%. The largest deal in this submarket was Hudson River Trading’s relocation from 4 World Trade Center to 3 World Trade Center, taking up 135,921 square feet.
Downtown leasing activity totaled 2.12 million square feet, a 192% increase from the same period in 2017. Average Downtown asking rents were $60.23 per square foot, down 3% from 2017.
Financial services firms accounted for 28% of leasing activity. Co-working firms were 18% of the leasing activity last year.
Total Manhattan Class A Office vacancies increased from 9.1 % vacant to 9.9 % vacant
Manhattan RetailThe retail sector should improve, as property owners progress in re-leasing space following a string of retail bankruptcies. Many retailers are choosing to keep physical storefronts in addition to relying upon online sales.
FIfth Avenue has been hit hard by the retail slump. The average asking rent on the avenue between 42nd Street and 49th Street fell to $996 per square foot in the fourth quarter of 2018, 12.5% lower than a year earlier. The availability rate fell to 23.3% from about 34.5% a year earlier.
Fifth Avenue is in a liquidation mode when it comes to mega retailers. In the past six months, Versace, Lord & Taylor, Henri Bendel and the Gap have all closed shop on the stretch or announced plans to relocate. The availability rate is climbing to historically high levels and rents are falling. Fifth Avenue is getting hit hard by the retail slowdown due to its astronomically high rents.
Madison Avenue retail has struggled with vacancies rising following the financial crisis. The corridor saw its seventh straight year-over-year drop in asking rent to $1,160 a square foot, a 7% decline.
Buildings SalesManhattan investment sales ended 2018 on a high note, exceeding $4.4 billion in deals, nearly double the 12-month average. The top sale was for an 80% stake in five Manhattan properties. Property prices increased by 6.2% year over year and are now 30% above 2007 levels. The 10 biggest retail lease deals signed last month totaled 229,700 square feet, up 80,900 square feet from last month’s total of 148,800 square feet.
- LifeTime, a gym, signed a lease for 74,000 square feet of space at 1 Wall Street.
- Museum of the Dog, the American kennel Club’s museum, inked a lease for 60,000 square feet of space at 101 Park Avenue.
- Regal Cinemas signed a lease for 34,000 square feet of space, replacing Korea-based CJ CGV as the theater operator at 133-15 39th Avenue.
- Crunch Fitness signed a lease for 20,000 square feet of space at 166-10 Baisley Boulevard.
- Urbanspace signed a lease for 10,850 square feet of space at 787 Seventh Avenue,
- Tiny Steps, a daycare center, signed a 15-year lease for 9,000 square feet of space at 180 Livingston Street.
- Columbia Care, the company that brought the first marijuana dispensary in New York, inked a lease for 7,000 square feet of at 44 Court Street.
- Long’s Bedding & Interiors signed a lease for 6,165 square feet of space at 1220 Third Avenue.
- Hungry Angelina, a plant-based restaurant, signed a 10-year lease for 4,500 square feet of space at 117 Adams Street.
- A&Z Beauty Supply inked a lease for 4,200 square feet of space at 6002 Fort Hamilton Parkway.
January’s top office leases made up more square footage than December’s. The top 10 office lease deals totaled 1.5 million square feet, greater than December’s top 10 leases, which totaled 1.13 million square feet.
- NYC Health + Hospitals signed a 24-year lease for 527,000 square feet of space at 100 Pearl Street.
- Macy’s expanded its 20-year lease for 300,000 square feet of space at 28-07 Jackson Avenue.
- Hudson River Trading signed a lease for 135,000 square feet of space at 3 World Trade Center.
- Citadel expanded its lease for 124,000 square feet of space at 425 Park Avenue.
- Diageo signed a lease for 87,000 square feet of space at 3 World Trade Center.
- Spaces signed a 15-year lease for 83,840 square feet of space at 31 Penn Plaza.
- New Hope Fertility Clinic renewed and expanded its 15-year lease for 74,505 square feet of space at 4 Columbus Circle.
- Casper Sleep signed a 15-year lease for 70,000 square feet of space at 3 World Trade Center.
- Allianz renewed its lease for 70,000 square feet of space at 28 Liberty Street.
- National Cable Communications signed an 11-year lease for 65,000 square feet of space at 151 West 42nd Street.