market research

October 2017

October 2017 New York Commercial Real Estate Market Report

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Manhattan Office

Office demand was strong in Downtown and Midtown Manhattan with vacancies declining in excess of 800,000 SF. Only in Midtown South did vacancies increase. Most likely due to new inventory in the Hudson Yards coming online.

Manhattan Retail

Retail vacancies continued to increase. Manhattan landlords are continuing to decrease their prices until a new equilibrium is found.

New York Market Overview

  • Total Manhattan Class A Office vacancies increased from 8.9 % vacant to 9.2 % vacant
  • Total New York City Office vacancy increased from 8.3 % vacant to 8.4 % vacant
Average Manhattan office rents were $73.00 per rentable square feet (RSF) in August, down $70.00 year over year at .93 million square feet. Manhattan office availability rate was 11.7%, up from 10.6% the same time last year.

Office leasing activity picked up significantly. The top 10 biggest office lease deals in New York City made public totaled more than 1.5 million square feet, up about 350,000 square feet.

Manhattan and Brooklyn together will see 5.1 million square feet of office space delivered through the fall and winter of 2017, across 15 projects. The two biggest projects are the Brooklyn Navy Yard’s Building 77 and One Soho Square, at 940,000 and 740,000 square feet respectively. Over the next three years, more than 15 million square feet of new and redeveloped office space is expected to be completed in Manhattan.

Job growth in the financial services sector is one of the reasons for the uptick in office leasing. In the first four months of the year, financial firms added 8,300 jobs in the city, its best four-month period in history. Banks and financial services firms inked one-third of new leases in Manhattan during the first half 2017, up from their average of 24% between 2014 and 2016.

TAMI firms accounted for roughly 20% of new office leases signed in the borough, a decrease from their 29% average over the prior two years.

Asking rents in Midtown South closed the month of August at $74.22 per square foot. Class A asking rents saw a slight month-over-month increase from $81.66 per square foot in July to $82.19.

Downtown office asking rent fell slightly to $61.00 per square foot.

Midtown Manhattan Class A office rent averaged $153.50 in mid-2017.

Total Manhattan Class A Office vacancies increased from 8.9 % vacant to 9.2 % vacant
Retail:
Sky-high retail rents have stores in some of New York City’s prime shopping districts aggressively seeking some sort of relief. Retail stores are asking for rent reductions even for as much as 50% off. Asking rents have dropped between 25 and 50% over the past few years.

The 10 biggest retail lease deals signed last month totaled 185,153 square feet, down 34,789 square feet from July’s total of 219,942 square feet. The largest retail lease in August was in the Bronx.

Although Soho’s retail rents surged between 2013 and 2014, they have struggled more as of late, dropping nearly 14% to $478 per square foot in the second quarter.
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