market research

September 2010

September 2010 New York Commercial Real Estate Market Report

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New York is holding its own as city appeals both to start ups and foreigner businesses. Retail Flagship activity has picked up dramatically as major retailers are vying for spaces on Madison and Fifth Avenue. There are many new foreign entrants coming into New York looking for small spaces. There are still many large vacancies out there where landlords have yet to take the plunge and divide up the spaces. Office Why are vacancy rates not climbing if firms are taking smaller spaces upon renewing their leases? While velocity is up, few firms are expanding.

New York Market Overview

  • Total Manhattan Class A Office vacancies decreased from 9.6 % vacant to 9.5 % vacant
  • Total New York City Office vacancy increased from 8.4 % vacant to 8.5 % vacant
The vacancy rate for Downtown surpassed the vacancy rate for Midtown for the first time in two years, as several large blocks of space were returned to the market in Lower Manhattan. The vacancy rate for Downtown was 13.5 percent in July, compared to a rate of 12.8 percent for Midtown. A month earlier Midtown had a higher rate. The last time the Downtown rate was higher was in November 2008, when it had a vacancy rate of 10.1 percent while Midtown had a rate of 9.7 percent. It is the historical norm for Downtown to have a higher vacancy rate.

The tally of distressed properties in New York City grew last month along with the delinquency rate. Just under $4 billion worth of delinquent loans on 49 city properties made for a 5.8 percent delinquency rate in July, up from 5.6 percent, or $3.8 billion in delinquent loans citywide, the month before, Largely due to the massive, $3 billion loan balance on the foreclosed Stuyvesant Town and Peter Cooper Village on the East Side of Manhattan, New York State ranked second in the U.S. behind California and ahead of Florida for delinquent loan volume, with $6.1 billion of the country's $47.6 billion. New York City alone has a higher loan balance than 47 of the 50 states, including Texas, Nevada, and Arizona.

High-end construction, rooftop views of the High Line and even rents in the high $70s-per-square-foot range are luring office tenants to the Meatpacking District, where they are taking advantage of discounted prices as tenants are doing throughout Manhattan. For example, one tenant is reviewing a lease that's been drafted for the top floor of the rehabilitated 414 West 14th Street, where denim giant Levi's signed a retail lease earlier this year. The tenant is considering a lease for $77 per square foot, a high price for the Midtown South district, but far below the rents of $120 or more once expected at the building.
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