Office:
Manhattan office vacancy decreased, as office demand increases and office buildings are being converted to residential or warehoused.
650 Office building owners have expressed interest in converting to residential once the City of Yes has been approved. Manhattan office tenants signed deals for 23.1 million square feet in the third quarter, a 25.1% jump year-over-year. The vacancy rate dropped to 18.7% in the third quarter, the first time the quarterly rate fell below 19% since the first quarter of 2021.
Retail:
The availability rate for retail space was 14.7% for the third quarter of 2024 with 202 vacant shops. This was down from 15.3% availability rate and 210 vacant stores in the second quarter of the year. Largest leases were for schools, event spaces and retail stores.
Sales:
Many Class A and B office buildings that were overleveraged are coming back to lenders through UCC auctions and negotiated jingle mail.
Office:
Manhattan’s overall vacancy rate is at 23%, a historic high.
Retail:
Grocery stores, gyms and fashion were active in leasing last month. Increased office attendance will increase demand for retailers.
Sales:
New York commercial real estate sales volume is low. Companies are noncommittal on return-to-work policies. Banks are reluctant to foreclose.
Office:
There is an increase in demand for Class A and high floors in Class B buildings. The rest of the office market is not renting and will likely become residential, if a conversion is possible.
Retail:
Retail leasing has picked up, as more workers return three days a week to the office.
Gym, Pubs and stores were the largest leases signed last month.
Buildings Sale:
Manhattan building sales were quiet in August. Uniqlo bought their own space at 666 Fifth Avenue for 350 Million and a large apartment building at 20 Exchange Place sold for $370 Million. Everyone is waiting to see if and when interest rates will decline.
Office:
Financial firms fueled Class A Midtown office leasing, signing large lease extensions and expansions. Large blocks of high floor office space in Midtown and Plaza District, Class A vacancy are scarce.
Retail:
Sephora renegotiated a lease for 6,300 square feet on the ground floor at 520 Madison Avenue for another 18 months with a price reduction of two-thirds.
Building Sold:
A number of buildings listed are being foreclosed on which will make its way onto the sales market once the deed-in lieu of foreclosure is completed.
Office:
Office leasing volume increases meanwhile 64 office building owners have started looking into residential conversions.
Retail:
Retail leases continued at an increased rate, as new retail entrants to New York City enter or expand.
Sales:
Higher interest rates and cost of capital have lowered valuations of all property types. Office building owners are finding it better to cut their losses at a discount rather than play out a distress scenario.
Office:
The Manhattan office market showed increased leasing activity in Midtown, Midtown South and Downtown. Leasing demand grew to 2.75 million square feet. The availability rate held steady from last month at around 18%. Many A and B office buildings have announced conversion to residential which will suppress the availability rate going forward.
Retail:
Retail asking rents are increasing but are still 20 to 30% lower than before Covid. Demand for Top locations in Soho, Madison Avenue, Times Square, Upper Fifth Avenue and Midtown East have increased activity. Manhattan’s retail availability rate was 14.1%.
Sales:
Development sites and older office building conversions to residential lead demand. Landlords and their lenders are finally willing to move forward with building sales at substantial losses.
Office:
Manhattan’s office availability rate was 18.1% in March. That’s 0.1% better than the February number, but a record high for the end of a quarter.
Millions of square feet of Manhattan offices are earmarked for residential conversion. SL Green taking 750 Third off the market as it planned a conversion.
Retail:
New York City’s retail landscape grew tighter with average vacancy down to 15.4%.
Sales:
Landlords seek to return underwater office buildings back to their lenders. Some older office buildings are being sold at bargain prices in order to convert to residential.
Office:
Manhattan office vacancy hits a new all-time high. Leases are getting smaller and asking rents are falling. Competition is fierce for the highest-quality buildings. Overall, availability was at 20.1%.
The 6.8 million SF of deals in the first quarter was down 22.9% from the previous three months and a 6.6% dip from Q1 2023. It was also the slowest quarter in three years.
Retail:
Retail Stores, restaurants, gyms and medical signed leases last month.
Sales:
There were over 1,900 all-cash commercial sales worth $100,000 or more in New York City since the start of 2023 and the biggest was just shy of $1 billion. Luxury Retailers are buying the buildings they occupy on Fifth Avenue.
Retail:
Retail asking rents are on the rise in Manhattan, but still well below pre-pandemic levels. Sustained activity was a welcome development for the sector. Average asking rent is 20 to 30% lower than it was four years ago, hindered by office visitation numbers.
Manhattan Office:
The vacancy rate in Manhattan Office remained at a record-high of 17.9% in the fourth quarter.
The high end of the office market is doing well. The low and moderate range of the office market sector is suffering.
Building Sales:
Luxury retailers are buying Fifth avenue locations to house their brands. Prada bought 720 and 724 Fifth Avenue and LVMH is rumored to be in the market to buy the retail base at 745 Fifth Avenue.
Office:
Renewed demand for Manhattan Class A office space continues, as law firms and financial firms signed the largest office leases in December. Companies continue the flight to quality office space with amenities.
Retail:
Colleges, parking, gyms and grocery stores dominated the largest leases last month.
Building Sales:
Office building landlords continue to hand back the keys for their office buildings to their lenders.
High interest rates are dampening price expectations and until prices adjust, the sales market will remain quiet.
Manhattan Office:
Leasing activity was slow as only 2 million square feet was rented in November.
Manhattan Retail:
Prime Manhattan retail stores continue to be rented with Ground-floor retail availability dropping 16.5% in 2023. Increased tourism and demand for luxury products are helping retail sales.
Building Sales:
New York City office sales are down nearly 50% from last year. Some landlords have opted to return buildings to lenders rather than face discounted offloading that does not show up in comparable sales figures.
Office:
Manhattan available office space is at an all-time high of 19.4%. Davis, Polk and Wardwell signed a 710,000-square-foot extension and expansion at 450 Lexington Avenue and the New York City government leased 641,000 square feet at 110 William Street.
Retail:
Retail rents are inching higher as tourism increases and office workers slowly return.
Building Sales:
Buildings sales slowed as interest rates are near recent highs and banks lending on commercial properties is reduced or is in limited supply.
Office:
Leasing activity fell 25.6% year-over-year. Manhattan experienced a 10.5% drop in leasing activity from 2022 to 2023 with a vacancy rate of 17.8% and 96 million square feet of available space.
Companies leased 2.5 million square feet in Manhattan last month. 25% was from Davis Polk & Wardwell’s extension at 450 Lexington Avenue for 700,000 square feet of new space.
Retail:
Retail leasing is picking up where landlords can lower their rents to the current market pricing. On Third Avenue, a landlord signed an avenue lease for $100/SF.
Sales:
Manhattan building sales picked up, as sellers lowered prices to reflect the new reality of higher interest rates and lower rents.
Office:
The Manhattan office market continues to struggle in a post-pandemic world. In the second quarter, office availability reached a record-high 7.03 million square feet. The 19.7% vacancy rate was the highest since the onset of the pandemic.
As the office market continues to struggle, just 10% of office buildings account for the surge in vacancy rates. Office vacancy was 18.2% last quarter, the worst in 30 years, and is expected to continue creeping up.
Retail:
Manhattan retail remained busy with several new stores opening. Demand for retail space has increased with the return of tourists and an increased office occupancy.
Sales:
Rising interest rates and falling net rental rates for retail and office space will put downward price pressure on sellers. Some sellers will want to give back the keys to the Bank, if not they will have to pay the shortfall in sales proceeds at closing.
Office:
Office tenants are now asking to look at owners' books before signing leases.
Retail:
Increased tourism and lower asking retail rents are enticing tenants to sign leases.
Sales:
The sharp rise in interest rates has slowed transaction activity in markets across the nation and in New York. Investment sales in New York City dropped at least 36% year-over-year in the first half of 2023. Industrial sales down 63%, Special purpose down 52%,Office down 48%, multifamily down 41% and retail/hotels down 36%.
Office:
Manhattan Class A Landlords are offering up to 24% off of rent on concessions. Class B and C office landlords are offering a combined 16.8 to 21.3% of rent on concessions with terms of at least seven years.
Retail:
The Retail rental rate bottom has been established for Manhattan Retail. Prices are unlikely to improve substantially until full office occupancy and tourism return to previous levels.
Sales:
Building sales were slow. Underwater office landlords are negotiating, giving back the keys to their lenders.
Office:
New York City Mayor, Eric Adams, has proposed zoning changes and tax incentives to convert 136 million square feet of office space into residential units, potentially creating 20,000 new homes for 40,000 residents.
Retail:
The vast majority of retail leases signed last month were not chain retailers. These diverse retailers and users think the demand is there for them to come in or expand their store count in New York City.
Sales:
The sales market for office properties is at a virtual standstill. It’s a tough time to be selling offices. New York City office sales totaled just $470 million in the first quarter, down 85% from $3 billion a year ago.
The first quarter had just one office sale. It was priced at $650 per square foot, down from an average of $865 in the fourth quarter across seven deals. In the first quarter of last year, the average price was north of $1,160.
Office:
1.4 million sf of office leases were signed in Manhattan, a 43% decrease from a year ago. 17.0% of Manhattan offices are vacant. Asking rents remain high but Landlords have increased concessions so that tenants are getting a lower net price. Landlords are desperate to fill their vacant spaces.
Retail:
The apparel industry signed 27 leases for 243,000 square feet. LVMH took 43,000 square feet at 4 East 57th Street. Food and beverage companies had more than a dozen more deals than apparel, but for roughly 100,000 fewer square feet overall.
Sales:
Investors remained mostly on the sidelines for the quarter, totaling $980 million — an 85% year-over-year decline.
Office:
Office leasing was quiet. Meanwhile, new office buildings are being built which should put pressure on prices for new Class A offices. Class B and C office prices continue to decline.
Retail:
Retail tenants are finding better deals by relocating to new spaces as hungry landlords compete for tenants.
Sales:
Rising interest rates and mortgages coming due are forcing sellers to sell or give back the keys to the lenders, as property income has dropped and expenses have risen.
Office:
The health of Manhattan’s office market continued to decline in 2022, as return-to-office initiatives fizzled yet again and hybrid workplaces became the new normal.
Office leasing activity plunged year-over-year in the fourth quarter, ending 2022 more than 30% lower than in the last quarter of 2021.
Retail:
Retail was quiet. Retail tenants are relocating to get better deals.
Sales:
Office investment sales have plummeted. Manhattan saw $1 billion in sales volume in the fourth quarter, an 85% decline from 2021. It was the largest annual decrease in five years. The median sale price was $725 per square foot, down from $874 the previous year.
Office:
The Manhattan office market leasing plummeted 43% year over year in the fourth quarter, as tenants rented 4.9 million square feet in 2022, the lowest quarterly total since the second quarter of 2021.
76% of office occupants moved to another Class A property or upgraded to a Class A building.
There were 190 office leases for at least $100.00 per square foot last year. The record was 164 leases recorded in 2021, accounting for 6.1 million square feet
Retail:
Retail vacancies declined from 229 available spaces to 222 and retail rents improved modestly, up 1.2% from the third quarter and 2.9% year-over-year.
2.5 million square feet was leased in the last 12 months. 11.6% above 2021 levels but current quarter leasing volume was down 9.7%, from the previous quarter.
Sales:
Manhattan saw $1 billion in sales volume in the final three months of the year, an 85% dropoff from 2021, for the largest annual decline in five years. The median sale price was $725 per square foot, down from $874 the previous year.
Manhattan Office:
Only 6.1 million square feet was leased last quarter. 50% lower than the previous year's quarter. Many landlords are considering converting their office buildings to residential with possible help from the NYC government.
Manhattan Retail:
Manhattan retail rents remain stagnant, even as foot traffic returns. Tourism has picked up and a % of the office employees are back, but retailers are holding out for more aggressive pricing and terms from Landlords.
Building Sales:
Building sales were active, despite higher interest rates which seems to be counter intuitive. Time will tell if this continues but unlikely.
Office:
Manhattan Office leasing is down almost 50% in November versus November 2021. Some companies' leasing plans are on hold, until they see if the Federal Reserve interest rate hikes will cause a recession. Big tech firms are looking to sublet 30 million square feet across the country, up from 9.5 million square feet.
Retail:
Fifth Avenue retail stores are filling up again. Upper Fifth Avenue, from 49th Street to 60th Street, has reclaimed its No. 1 spot among the world’s most expensive retail districts.
Sales:
New York’s new developments used to be more than 350 deals a month. Now, developers reported 171 deals last month, down 20% from September and 36% from October 2019.
Office:
Uncertainty of rising interest rates combined with work from home trend is reducing future office demand.
Manhattan office availability rate dropped in the third quarter to 16.4% Availability shrank to 16.7%. Tenants leased 9.2 million square feet, up 26% from the previous quarter and 28% from the same period last year.
Retail:
Retail leasing has picked up dramatically, as landlords have lowered retail rents to levels tenants can afford and street traffic has picked up.
Sales:
Commercial property sales are falling. In the third quarter, investors purchased $172.2 billion of commercial property, down 21% year-over-year. Pension funds are cooling on commercial real estate loans, as borrowing rates rise which is limiting new investments in the sector.
Office:
New demand for office space in New York City dropped 23% compared to the prior month.
Existing companies are renewing their leases on expiration but renting new space that is 10-30% smaller.
67% more space is available than in March 2020. Some 3.4 million square feet of office space was leased in August, the most since January 2020, when the first Covid cases began to pop up in New York City.
Retail:
French department store Printemps is to open its first US store at 1 Wall Street and is renting 54,000 sf. Madison Avenue had 5 new store lease announcements. Street traffic has increased and landlords are being reasonable in pricing to get deals done.
Building Sales:
Opportunistic deals abound, as building sales had an active month. The market will need to reprice due to future and expected Federal Reserve interest rate hikes.
Office:
Office occupancy has been stuck at the 40% mark. Major tech companies have announced they are pulling back on plans to expand. Some are putting up space for sublease, demonstrating the sticking power of work-from-home arrangements.
Retail:
The top 10 retail leases accounted for more than 175,000 square feet.
Manhattan retail leasing saw a 23% increase year-over-year. Fashion brands and global food chains cashed in on the opportunity to occupy Manhattan’s retail space.
Building Sales:
Building sales are expected to decline due to higher interest rates, as buyers wait for lower pricing and lenders cease activity.
Investment sales in the first half reached a total volume of $21.6 billion. Volume slowed slightly in the second quarter, though, there was $9.8 billion transacted.
There were 554 transactions in the second quarter, involving 719 properties. Core property types averaged $582 per square foot in the trades, down from $604 per square foot in the first quarter.
Office:
Remote work and demand for office space have dampened demand, with net absorption of 530,000 square feet in the second quarter, and a negative 38.9 million square feet of absorption since Covid. The vacancy rate in Manhattan for the second quarter was 17.2%, down slightly from the previous quarter.
Retail:
Major retailers continue to look for new spaces, as retail traffic continues to increase in New York.
Building Sales:
Building sales that closed were active this month. The question is how quickly will sales prices react to higher interest rates and will buyers and sellers agree to the new market prices?
Office:
Office demand increases but tenants are renting smaller spaces/employee than before Covid. Office occupancy exceeded 40%, the highest level since the pandemic began. Hybrid work and remote work seem to be here to stay. This could be devastating to office building values.
Retail:
Retail asking rents show signs of recovery, along with increased foot traffic from tourism and returning office workers. Vacancy rates for retail space are declining but have a long way to go.
Sales:
A slowdown in investment sales could be on the horizon. as economic headwinds loom.
Office:
Availability rate hit a record high of 19% in the first quarter, as companies go with hybrid offices. About 90 million square feet were available to rent but leases for only 7.7 million square feet were signed.
In Manhattan, sublease space is near record highs of 20.2 million square feet available, down from 22 million square feet available a year ago, but well above the 13.6 million square feet prior to Covid.
Retail:
Manhattan retail rents tick up, as foot traffic from residential and tourism recover along 9 of 17 corridors. Major concessions and accommodations done during covid for retail tenants are severely diminished.
Harlem's retail traffic is down just 5%. SoHo is more than 60% below its prior retail traffic. Manhattan office district street traffic is still quiet, as office workers adopt a hybrid office model.
Sales
A building market slowdown is on the horizon, as rising interest rates drive up borrowers’ costs.
582 properties sold in the quarter, a year-over-year jump of 53% totaling $8.9 billion, a 320% increase from the first quarter of last year and roughly in line with the first quarter of 2019.
Office:
The hybrid work model for the foreseeable future will continue which will create office demand destruction. Only 37% of New York-area workers went into the office in late March.
The average asking rent for Manhattan office space stood at $68.65 per square foot, following eight consecutive quarterly declines.
Retail:
Street traffic has increased dramatically from tourism, residents returning and a portion of office workers returning. The increased foot traffic should create a bottom on the retail store pricing, as demand is picking up. Asking rents have fallen an additional 5% in the past year.
Hotel revenue from business travel will remain 23% below 2019 levels in 2022.
Sales:
Brookfield sold a 49% stake in One Manhattan West to Blackstone in a deal that valued the 67-story office tower at close to $3 billion.
Developers signed 461 residential contracts worth $1.1 billion. The median unit sold for $1.61 million, or $1,641 per square foot. The median unit price has risen 25% since March 2021. Prices are stabilizing as mortgage rates rise.
Manhattan Office - Overview:
Manhattan office vacancies soared to 19%. Demand seems to be bifurcated between Class A and High-End buildings. A strong demand exists and low demand for B and C Buildings. Downtown vacancy rates have increased to 25%.
Manhattan Retail - Overview:
Manhattan street traffic is up as visitors return to New York City and office occupancy levels rise. This bodes well for a slow return to retail leasing.
Buildings for Sale - Overview:
Building sales activity picks up as investors and sellers reprice to the new normal. Blackstone Real Estate bought a 49% stake in One Manhattan West, valuing the 67-story office tower at $2.85 billion. Residential remains active. Pricing for Class B and C office buildings decline.
Office:
Manhattan’s office market hit a vacancy rate of 17.3% at the end of 2021, up by one-fifth from 2020. Leasing activity accelerated during the year, rising 60% in the third quarter and finishing the year at more than twice the pace of 2020’s fourth quarter.
Retail:
Retailers on Fifth Avenue and Times Square have just begun to look for new locations.
Sales:
A preliminary NYC budget shows office properties have lost 7% of their value in the last two years, dropping from $172 billion to $160 billion. Retail properties have declined 11.9%, from $63.8 billion to $56.2 billion. $136 billion was spent on office portfolios and properties last year, compared to $87 billion in 2020. Commercial real estate investors spent $49 billion in New York.
Hotels estimated value declined 19.6%, from $32.7 billion to $26.3 billion.
Office:
New office construction continues to add new inventory into the Manhattan office market which will put downward pressure on Manhattan office rental rates. Last month, major office leases were announced from relocations and a few expansions. Meanwhile, small and midsize businesses are looking for short-term alternatives until covid abates.
Retail:
Manhattan’s retail is slowly making a comeback. Last quarter, leasing velocity increased to about 1.86 million square feet, up 17% from the prior quarter but still 14% below the prior year. Availability in the fourth quarter decreased to 266 spaces from the 282 recorded in the third quarter. On Broadway in SoHo, availability dropped 24% from 25 to 19 spaces.
Building Sales:
Forty-seven percent of new leases last year included rent hikes, with those rents rising by an average of 17% above 2019 levels. Another 28% saw decreases in rent, averaging 15%. Renewal rates were up compared with before the pandemic, with 64% of those who could renew doing so, up from 59% in 2019.
Office:
Omicron puts going back to the office plans on the back burner again. With record case numbers of COVID-19, companies are delaying office returns and sending workers home again.
Manhattan’s office market recovery continued and ended the year with its best quarter since 2019, but a flood of new office inventory means a return to pre-pandemic normalcy may still be far in the future.
Office tenants in Manhattan signed more than 3 million square feet of leases in November, the first month to exceed that mark since January 2020’s 3.6 million.
Manhattan’s monthly office leasing volume in 2019 was about 3.5 million square feet on average, while the 2020 monthly average was about 1.5 million.
Retail:
Omicron is waying on retailers both in terms of staffing and product availability. Retail demand is expected to be weak until Omicron is under control.
Sales:
New development contracts in 2021 totaled $1.54 billion, a 150% increase from last year and 77% jump from 2019.
This year, 898 new development contracts were signed. The average home signed was 1,220 square feet, a five-year-high, and price-per-square-foot climbed to $1,680, up 43% year over year.
Office:
Office tenants signed leases for 2.7 million square feet last month, up 10.8% from September and the highest amount monthly since January 2020’s of 3.6 million square feet.
Despite discussions over a hybrid working model that could lead to smaller offices, landlords in their third quarter earnings calls were largely optimistic about the future of demand for quality office space.
Retail:
Foot traffic picks up in Times Square and Soho as domestic tourists and office employees start to come back in increasing numbers to Manhattan. This increase in foot traffic will increase demand for retail stores.
Sales:
Strong demand for apartments of filled Class A office towers continues. Class B and C office buildings without full rent paying tenants lag, as the market decides what their current value is.
Sales:
Google is going to buy its 1.3-million-square-foot office building at 550 Washington Street for $2.1 billion. This affirms Manhattan’s office market viability for large corporate tenants.
Meanwhile, the market value for office buildings in New York City fell $28.6 billion last fiscal year, per the state comptroller; it was the first decline in value since at least 2000.
Office:
Over the past year and a half, net absorption remains negative at 36.6 million square feet. More office supply is scheduled to be available in the coming months.
Manhattan Office leasing volume last quarter jumped to 7.23 million square feet, up 58.8% from the second quarter. Net absorption was 0.86 million square feet.
Manhattan’s sublet availability shrank by 0.86 million square feet to 19.94 million square feet and accounts for 22 % of total availability. Sublease space is still about 2.5 times the pre-pandemic amount of 8 million square feet.
The average office asking rent for the quarter was $72.74 per square foot, down less than 0.1% from the second quarter
Retail:
Manhattan’s retail rents plunge by the largest amount in five years. Manhattan retail rents plunged again even as the city comes back from the pandemic. Average asking retail rents fell almost 12% across all major Manhattan shopping corridors. Herald Square saw a 27% decline in rents, as the priciest spaces were taken off market.
Office:
Manhattan Office leasing has picked up, and vacancy rates declined to 16.9% in August, down from 17.1% set in May and July. Office occupancy in Manhattan remains at 38% in New York City.
Workers’ return-to-office plans have been largely disrupted by an increase in COVID-19 cases driven by the Delta variant.
Buildings for sale:
Investment sales remain 2.2% below a year ago. Google’s purchase of St John terminal was a huge vote for the long-term demand of office space in NYC.
Hotel buildings have traded at a discount, as tourism and business travel are still slow.
Retail:
Retail demand is picking up as more tourists, office workers and residents come back to NYC. This retail demand will continue to increase, as more and more people get vaccinated.
Office:
The Delta variant has caused return to the office to be delayed for some firms until January. The Manhattan office vacancy rate in Manhattan last month was 17.1%, matching a record high set in May. The average asking rent was $72.72 per square foot, down 8% from a year ago and the lowest level since 2017.
Buildings for sale:
New York City investment sales doubled in dollar volume from a year ago, but was still well below 2019's second quarter, when nearly $10 billion were closed.
Retail:
Foot traffic has increased, but still lower than pre-COVID-19 levels. Madison Avenue is at 71% of regular foot traffic, Fifth Avenue is at 92% and Soho foot traffic is 110% of its 2019 levels.
Additional increases in retail traffic are expected as more office employees return to the office and business and tourist travel return to normal levels.
Office:
Manhattan’s office availability rate was 17% down 0.1 percentage than the record-high May figure of 17.1%. Only 21.4% of Manhattan office workers were going to their offices as of June 23.
Manhattan office leasing tours have increased dramatically to levels near before the Covid lockdowns as companies consider their options for the coming months.
Retail:
Statue of Liberty visits were up 22%, Museum of Modern Art increased by 65% over the last 11 weeks. This bodes well for retail demand as tourists return to NYC and office workers return to their New York apartments and jobs in September.
Building Sales:
Manhattan’s office investment sales had total sales for the second quarter of $1.6 billion, quadruple the record-low amount during the first quarter.
Office:
Manhattan’s office availability rate hit another all-time high of 17.1%. Overall, 1.53 million square feet of office space was leased, up 8.2% from a year ago. The average asking rent last month was $73.25 per square foot, a decrease of 7.5% from the same time last year.
Leasing volume was slightly lower than the 2020 monthly average of 1.58 million square feet and less than a half of the 2019 monthly average of 3.58 million square feet. Monthly absorption was negative at 3 million square feet.
The sublease decline was partly attributed to companies that decided to reoccupy spaces that they had once marketed for subleasing. It is too early to tell whether this is the beginning of the end of the sublease surge.
Retail:
Asking retail rents have plunged for vacant retail spaces among the 17 major shopping corridors in Manhattan. Since the meltdown in 2015, the average asking rent has declined between 50% and 68%.
Apparel sales are surging. Subway ridership is at a 15-month high. Lines of customers are forming at Midtown food shops during the lunch rush. New York City’s office workers are slowly returning to workplaces abandoned since Covid.
Building Sales:
Office buildings’ market value, not their real-world worth, but the metric used by the city’s Department of Finance dropped by 16% across the city. The value of some major skyscrapers was cut by more than $100 million.
The value of hotels and retail property fell by more than 20%. The lodging industry is especially struggling. The St. Regis and the Four Seasons saw their taxable value cut by 36%. The New York Midtown had a cut of 13% on the final tax roll.
Office:
Office availability rate in Manhattan climbed to 16.5%, the highest it’s ever been, up from 10.3% in April 2020. Leasing activity is increasing as companies are looking for and evaluating their space needs. About 980,000 square feet of leases were signed last month, down 46% from March and 27% from a year ago. Leasing volume was also a staggering 75% below the pre-pandemic monthly average in 2019.
Retail:
Retail has “all of a sudden become very active” as more people get comfortable with the idea of coming back to the office. Street traffic has risen dramatically and is now 25-30% precovid levels.
Sales:
New York City’s investment sales market hit a new low in the first quarter of 2021. The total dollar volume of deals recorded in the first quarter was $1.84 billion, down 75% compared from the same period last year, and down 67% from the fourth quarter of 2020. It is expected that sales activity will pick up as the covid cases decline.
Office:
The average term of leases signed in the first quarter was 5.8 years, with 6.9 months of free rent and a tenant improvement allowance of $61.90 per square foot.
About 17.3% of Manhattan office space is available for lease, the most in decades. Asking rents are at roughly $74 per square foot, down from $82 in early 2020. In April Office occupancy rate for Manhattan offices was about 13.5%. Only about 45% of employees will be back in offices by September. 56% of employers said that their employees will work remotely at least some of the time.
Retail:
There are 32 vacant storefronts along 17 blocks of Fifth Avenue in the Midtown area, which is some of the most expensive retail real estate in the world.
Retail leasing velocity in the first quarter of 2021 fell for the seventh consecutive quarter. Total leasing was down 26.3% from the previous quarter, and nearly 59% from a year prior, before Covid lockdowns took hold of the city.
Buildings Sales:
Office investment sales remained “largely halted” in the first quarter, with only $400 million in total sales. That’s a decrease of nearly 90% compared to the first quarter of 2020, when $3.8 billion in deals was recorded.
Office:
Office availability hit 15.5%, the worst on record. Tenants have been increasingly putting their offices up for sublet since June.
The rise in supply is outpacing demand. Manhattan’s office availability set another unfortunate record at 15.5%, up 0.6% points from January and 5.6 points from a year ago. Total space leased in February was 900,000 square feet, down by 51% from the volume in January and by 57% from a year ago. rebound.
Retail:
Retail rents continue to fall.
Sales:
Building sales were quiet this month.
Manhattan Office:
Manhattan office vacancies have surpassed 15% as subleases, new construction and expiring leases are not being renewed due to corporate downsizing. Expect office rents to fall in the foreseeable future.
Manhattan Retail:
Expect retail rents to fall as 30% of the remaining restaurants fail. Other retailers will be forced to turn over empty spaces when landlords are able to pursue evictions.
Manhattan Sales:
Expect sale prices to continue to fall as office, retail and residential rates continue to fall. Prices for Manhattan’s office condominium market showed a 32% drop in price per square foot, from $909 to $616 from the previous year.
Manhattan Office:
Manhattan’s office availability hit a record high of 14.3%. This is 16.3% higher than the third quarter vacancy rate and up 43% from a year ago. 24.2% was sublet inventory, which expanded by 6.45 million square feet in the past year.
Overall, the pandemic left a large scar on Manhattan’s office market in 2020, reducing annual leasing by 56% to 18.9 million square feet.
Manhattan Retail:
Manhattan retail saw average asking rents drop from 1 to 25% year over year. Soho, Fifth Avenue and Madison Avenue saw the lowest asking rents in at least a decade.
Available retail space is also on the rise, with 11 corridors seeing increases in availability ranging from 6 to 67%.
NYC Building Sold:
Market remains quiet as sellers have not yet adjusted sales prices to the buyers expectations due to lower expected rents and higher vacancy.
Manhattan Office:
Record Manhattan office vacancies, as existing office tenants either allow leases to expire or sublease their office space. New office construction continues and some hotels are being converted to office space.
Manhattan Retail:
Retail rents continue to fall as foot traffic in Manhattan’s most visited business districts has dropped off since the pandemic began, putting a strain on small businesses and retailers. The number of inactive storefronts has only increased, with more vacancies pending due to the eviction moratorium. Expect retail rents to continue to fall.
Manhattan Building Sales:
Sales of commercial properties are down 49% for the year. It has led to a crippling decline in revenue for New York City, which depends on real estate taxes to keep the lights on. Revenue was down 42% for the first 11 months of the year compared with the same period last year.
Office:
Manhattan Office rental prices are declining, as sublease space and new construction flood the market with more than 53 Million square feet of available office space. Availability is over 11% which means it is a Tenant Market.
Retail:
Manhattan retail prices continue to decline due to leases not being renewed and subleases flooding the market. Retail prices are unlikely to get better until the Covid vaccine and tourism rebounds.
Building Sales:
The building sales market is very quiet with the exception of a large long-term leased office building occupied by Amazon at 410 10th Avenue which sold for $952.5 million.
Office:
Manhattan office leasing is in the slowest leasing period within the past 20 years.
Retail:
Continued covid restrictions are causing increased retail distress among remaining retailers.
Building Sales:
Building sales remain slow. SL Green recently announced an agreement to sell 440 Tenth Avenue for $952.5 Million which is a good omen for the New York office sales market.
Manhattan Office:
Manhattan landlords are not letting viable tenants leave the table by offering increased free rent, more work allowance and better pricing. This trend will continue as more sublease space comes on the market.
Manhattan Retail:
National, regional and local stores continue to close due to Covid. More store closings are expected once the courts allow evictions for non paying commercial tenants in New York City. Even more restaurants are expected to close, as outdoor dining and 25% indoor capacity will only guarantee losses once the weather cools or rains.
Building Sales:
Covid has affected both building sale prices and sale volumes. Hotels and retail are expected to price 25% below pre covid prices. Office building values are lower by 10-20% depending on tenant lease term, rent and tenant credit.
Manhattan Office:
Manhattan office leasing was 2.39 million square feet last July , 1/2 of the leasing volume from July a last year ago. Additional sublease space is expected to be added to the market in the next few months...
Manhattan Retail:
Covid continues to decimate retail and restaurants as more national chains declare bankruptcy. Retail evictions were delayed another 30 days. Expect to see more retail vacancies once evictions are permitted..
Building Sales:
The number of sales has picked up as buyers anticipate the end of Covid and are able to buy now at depressed prices. Recent sales included 522 Fifth Avenue…
Manhattan Office:
Manhattan Office leasing was the slowest quarter since 2009.
Manhattan Retail:
Retail bankruptcy and retail closings flooded the Manhattan market.
Building Sales:
New York’s first-half investment sales volume declined 45 % to $9.65 billion. Manhattan had a 41% decline with just $5.6 billion in the first half of 2020.
Manhattan Office:
June had only 410,000 RSF of office leases signed in Manhattan.
Office leasing for the current quarter was the slowest since 2009....
Manhattan Retail:
The retail apocalypse continues with more chains announcing store closings. When the eviction moratorium lifts, expect to see vacancy. Target signed 2 Manhattan leases.
Building Sales:
The second quarter saw just 55 deals totalling $4.3 billion, down from 237 deals totalling $14.6 billion a year prior.
Manhattan Office:
Virtually no activity in office leasing, while new construction keeps getting built. The big questions are will companies diversify their offices outside of New York City and will companies need as much space as workers work remotely?
Retail:
Brick and mortar retail will not fully recover as it exists today. Months of unpaid rent during Covid and months more or partially being open will likely cause many existing brick and mortar retailers and restaurants to declare bankruptcy.
Building Sales:
All sales are on hold during Covid. Sellers are hoping for prices pre- covid and buyers are expecting a 20-30% discount, due to the uncertainty of rent collection of existing tenants, rental rates for new tenants and lease up period until full occupancy.
Office leasing in Manhattan virtually stopped when the outbreak in New Rochelle came to light. Many companies are waiting to see for some direction or date as to when businesses will reopen.
Retail:
Retail is off life support. None essential businesses were ordered to close. Only restaurants and quick serve are allowed to take out. Most restaurants cannot survive on this. Many chain and small retailers announced layoffs or many retailers will never return.
Building Sales:
A number of pending sales failed to happen when they could not get financing. Many others have put sales on hold until buyers can look at properties. Some industry experts say prices could fall 25% or more once Covid-19 abates
Manhattan Office:
Covid-19 will have a negative affect on Manhattan office leasing velocity. Office leasing plans will likely be on hold until the duration and severity of the coronavirus are revealed. Working from home and alternate work sites may push long-term office demand down, as more employees work remotely.
Manhattan Retail
The coronavirus will push down retail sales in physical stores and push even more sales on line. Gyms and restaurants recently saw activity in leasing, but will likely stop as people stay away from gyms and restaurants and other crowded locations.
Office:
Manhattan office leasing remains at an all time high, led by technology firms. There were 145 leases with rents starting at over $100/RSF.
Retail:
Manhattan retail leasing was off 9% from the previous month. With additional announcements of store closures, there will be increased pressure for Landlords to lower asking prices.
Building Sales:
Buildings sales volume dropped as residential rental sales were reduced by 2/3rds by the new law limiting rent increases. Now, an additional law was passed that residential landlords will now have to pay the brokerage fee.
Office:
Wework emergency rescue by Softbank stole the headlines as many
landlords are now preparing plan B with Wework being the largest
private office Tenant in New York City. Otherwise, leasing was quiet.
Retail:
Restaurants and gyms continue to be the largest consumer of retail.
Forever 21 bankruptcy proceeding is only going to add to the retail
vacancy inventory.
Building Sales:
Building sales are at a 2 year low of 995 million in sales last month.
Office Rents:
Average office rental rates continue to rise, as more of the older stock of office buildings are being demolished, upgraded or replaced with new construction. This is despite vacancy rates rising. Most of the office demand is coming from Technology and Co-working.
Retail Rents:
Retail rents are still falling as bankruptcy from national retailers continue and existing retailers are right sizing their locations to smaller and fewer locations.
Manhattan Office:
Manhattan office rents average continue to rise as more older office buildings come down and strong demand for coworking space does not let up.
Manhattan Retail:
Continued retail bankruptcies including Barneys puts pressure on rents. Forever 21 and other national retailers continue to face pressure from online sales and will likely reduce their physical footprints.
Manhattan Industrial.
Very limited supply puts upward pressure on the remaining industrial stock.
Despite strong office demand from Technology and Co-working/shared offices, new office construction was stronger and net space available increased by almost 4 million square feet.
Retail: New demand is coming from online retailers such as Casper and Warby Parker who need physical stores for consumers to try and buy their products. Retail prices continue to fall but at a much slower rate than in previous years.
Building Sales: Expect cap rates to rise as interest rates rise from the Federal reserve.
Manhattan Office:
Amazon coming to Long Island City and bringing 25,000 jobs which will increase office demand. Google and Facebook are also on the hunt for additional office space. New construction came online and vacancies fell slightly. The co-working/shared/executive offices are also on an expansion hunt so new office supply should be readily absorbed.
Manhattan Retail:
Retail continues to be quiet with main activity being renewals of existing tenants. Only a few nationals are expanding in New York City, Target. Prices still need to fall so that spaces will rent. The big question is when.
Building Sales:
Higher interest rates have had more of an affect on residential than commercial, although the question remains when will rates drive cap rates and therefore sales prices lower.
Manhattan Office
New construction and buildings being re-purposed from department stores and industrial to office use contributed to more available office space despite strong office demand. Total Manhattan Office Market vacancy increased from 36.46 million RSF to 37.14 million RSF. The biggest new use group is Flexible office space with a multitude of new providers and existing players expanding their footprint.
Manhattan Retail
Manhattan Retail continues to get worse. Not only are vacancy rates up but many of the leases signed are temporary, so the true vacancy figures are higher than stated. This will lead to pressure for landlords to lower retail rental prices.
Manhattan's office vacancy budget is up a little but given strong office leasing deliveries that is an impressive statistic, showing the strength of the office market.
Retail leasing was slower than usual with leasing down from the previous month due to a large lease from Toyota.
Manhattan Office
Demand for Manhattan office space was robust last month and ahead of 2018’s leasing total this point last year. Manhattan recorded 4.17 million square feet of new leases and renewals last month, almost 83% higher than in May of last year.
Manhattan Retail
The 10 biggest retail lease deals signed last month totaled just over 165,000 square feet, well below last month’s total of over 310,000 square feet.
Manhattan Office
Manhattan office leasing activity was up, but so were rental concessions, as future office deliveries are coming fast and furious.
Manhattan Retail
Retail prices continue to cool. Economics of internet delivery are continuing to erode retail demand and what tenants are prepared to pay.
Manhattan Office
Rental concessions rise as new office space is being delivered that surpasses demand. 5 Million square feet are being delivered this year and more the following year.
Manhattan Retail
Retail prices are off 20% from last year. This year prices are expected to be flat, as more retailers re-enter the market and pricing is more affordable
Manhattan Office
Manhattan office demand got off to a slow start this year. However, the market is tightening as JP Morgan Chase started signing new leases to replace their existing headquarters of 1,500,000 that they are planning to demolish and rebuild.
Manhattan Retail
Retail leases are getting signed now that retail rents have come down substantially. Continue to see more leases being signed now that they are economical.
Manhattan Office:
Manhattan office market facing some headwinds despite strong leasing demand, as 12.6 million square feet of office space is to be delivered in the next 24 months.
Manhattan Retail:
Retail leases continue to be signed as landlords adjust their rents to make leases economic for tenants.
New York Office:
Strong office demand pushes vacancy rates down, while office rental rates remain flat. Companies are flocking to New Construction in Hudson Yards leasing 8.3 million square feet there and Manhattan West. Leaving behind about 7 million square feet.
New York Retail:
With retail rents down 18-20%, retailers have resumed signing leases and the market is beginning to tighten in prime neighborhoods.
New York Office:
Despite strong office demand, new office construction deliveries increased vacancies by 500,000 RSF.
New York Retail:
Manhattan landlords have lowered prices enough that tenants are signing leases. Prices are 30% off the peak rents in Times Square and Soho. Non- prime retail prices are down 50% from peak.
Manhattan Office.
Office leasing demand is strong with net positive absorption in Downtown and Midtown. Office rental concession rise as landlords compete with fancier build-outs rather than cutting asking rents. Midtown South saw vacancies rise both direct and sublease.
Manhattan Retail.
With more than 200 stores vacant, landlords have been and continue to cut rental prices to attract new tenants. Retail rents are down 34% from the peak in 2014.
New York Office Market Overview.
Manhattan Office:
Despite strong office demand, vacancy increased in Downtown, Midtown South and Midtown as new office developments came on the market faster than office demand.
Manhattan Retail:
Landlords continue to cut rents as retailer’s balk at the historically high rental prices. Retail rents will likely continue their downward trend.
Manhattan Office:
Strong office demand created positive absorption in Midtown, Midtown South and Downtown. Businesses are making commitments despite the turbulence of the Trump presidency.
Manhattan Retail:
Stronger demand for retail downtown and Midtown South resulted in slightly less vacancy. Retail vacancy in Midtown increased as retail prices have not yet fallen enough for retailers to re-enter the market and be profitable.
Manhattan Office:
Available direct Manhattan office space declined in all 3 office markets. Subleases for Manhattan offices increased slightly in Midtown and Downtown.
Manhattan Retail:
Available Manhattan Retail space that was listed was down last month. This seems counter intuitive given how many storefronts remain vacant. Two possible theories: 1. Landlords have pulled spaces off the market or 2. Prices have come down enough that leases are getting done.
Manhattan Office:
Manhattan office direct vacancies declined in all sub-markets. Manhattan office sublease increased as more firms shed extra office space. Overall, the market is stable but landlords are continuing to increase concessions while trying to hold firm on pricing. ...
Manhattan Retail:
National retail closures continue to take their toll on the New York retail landscape putting additional pressure on landlords to lower pricing or increase incentives. This trend is likely to continue...
Manhattan Office:
Manhattan office leasing activity has been relatively slow. A handful of large renewals helped push the Manhattan market over 1 million square feet of space in the past 30 days... .
Manhattan Retail:
Storefronts across Manhattan continue to close, with nearly a 25% increase in the number of available spaces than three months prior. The increase in availability will continue to put pressure on asking rents....
Manhattan Office:
The Manhattan office market is strong with leasing activity nearly 40% higher year-over- year.
Leasing activity in Midtown was driven by two large deals at 1211 Sixth Avenue, where 21st Century Fox America took 767,885 square feet, and News Corp. took another 443,586.
Manhattan Retail:
Facing rising retail vacancies, Manhattan landlords are offering increased concessions rather than reducing asking rents. Incentives include paying for renovations and moving expenses…..
Manhattan Office:
Manhattan Office leasing started off strong in January with 4.5 million square feet of leases signed, an increase of around 70% from January last year....
Manhattan Retail:
Retail landlords are dropping asking rents along Third Avenue as much as 44% off of high asking rents. National chains continue to close stores and banks downsize location sizes which continue to suppress demand and increase supply...
Manhattan Office:
Manhattan office leasing picked up pace after the US election and companies went back to business. Prices remain firm while concession packages continue to increase marginally. News Corp. and Fox rented a combined 1.2M SF at 1211 Avenue of the Americas.
Manhattan Retail:
Manhattan Retail vacancies increased as stores claused due to rising landlord's rent aspirations. With Banks reducing their retail footprints and online retail causing reduced street sales, retail is likely to continue to suffer and retail prices will continue to fall.
Manhattan Office:
Manhattan office market slowed as Tenants await new fiscal policies from President Trump. Millions of square feet are coming on the market which will push prices down in older office stock.
Manhattan Retail:
Manhattan retail prices in non-prime areas are falling, as retailers ask if leases are economical and there is more online competition.
Manhattan Office:
Office pricing remains constant but free rent and work allowances are becoming more liberal in select markets.
Manhattan Retail:
Retail rents continue to decline as retailers insist that leases make economic sense.....
Manhattan office: Vacancies inched up as new construction comes online to a slower leasing market. If trend continues, office prices should start to fall.
Manhattan retail: Retail vacancies increased slightly in all markets as spaces come online from new construction. Prices appear to have stabilized but may continue to fall long term, as online retailing takes a larger % of sales.
Manhattan Office:
Manhattan had negative absorption of office space, resulting from many new office buildings coming online and a relatively slow leasing period. The availability rate also rose slightly to 11.2% from 10.6%.
Manhattan Retail:
The Manhattan retail market is experiencing a sudden burst in store leasing. Manhattan retailers inked 1,027 deals for a total of 2.9 million square feet...
Manhattan Office:
New office construction and quiet leasing environment bodes well for tenants as they get more rental concessions....
Manhattan Retail:
World Trade Center finally opens, although more than 40 out of 100 retailers have yet to open or occupy their stores...
Manhattan Office:
Slower Manhattan Office leasing volumes are causing landlords to increase concessions for free rent and work rather than cut asking rental prices.
Manhattan Retail:
Manhattan Retail rents have stopped increasing and many retailers are holding off as sales are down due to the recent appreciation in the US dollar.
New York City Office: Manhattan Office leasing continued to be quiet with the largest lease being a renewal for UBS.
New York City Retail: Retail leasing remains slow with new store closures so rents will likely decline over the next 6 to 12 months.
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.
Office Overview Net effective Manhattan office rents continue to fall as Landlords add additional work concessions for tenants moving or renewing. Projected year's rent for the coming year predicts a decline in effective rents. Manhattan office leasing continues to show steady volume for leases between $80 to $100 per square foot, while leasing volume above $100 per square foot has slowed. Retail. Manhattan Retail rents continue to fall as retailers wait for reduced rents. 2,500 retail locations are closing nationwide, including all Scoop locations in NYC.
Manhattan Office: Manhattan leasing market is brisk but pace of new construction is outpacing demand and rents are falling in older office buildings in Midtown. Retail Leasing: Retail prices in less desirable neighborhoods continue to fall. Prices will continue downwards until retail rents are deemed affordable by retailers.
The Stock market's steep losses last month made companies leary of making major decisions.
This caution affected both the office and retail rental markets as leasing volumes were quiet.
This month, the US stock market regained most of the losses from the previous month, and we expect normal leasing volumes in both office and retail to occur.
Manhattan Office
Manhattan office vacancy crept up marginally, as new office construction gets delivered a little faster than space can be absorbed.
Manhattan Retail
Fifth Avenue retail leases deals are back on. Coach just signed a lease at 685 Fifth Avenue for 23,400 square and Adidas signed a 15-year lease for 34,000-square-foot ground-floor space at 565 Fifth Avenue.
2016 is starting off with record Office and Retail rental rates in the premium buildings and locations in Manhattan. Record Retail rents in excess of $5,000 per square foot were achieved with the $16 million per annum lease for Bulgari at 730 Fifth Avenue. Meanwhile, retail rents 10 blocks away can be 50 times less. Record office rents of $300/RSF were reported with the Citadel lease at 425 Park Avenue. .....
Office
Even with a number of major office buildings under construction, vacancy rates went up only slightly meaning office demand remains strong.
Retail
A number of major new Fifth Avenue retail leases were announced.
Meanwhile, in secondary retail markets prices continue to decline as Tenants still wait for better deals.
Office
Manhattan Office space vacancies increased as new office construction progresses and office tenants are now considering Brooklyn offices desirable. Meanwhile, conversions and demolitions from office use to Condo and Hotel continue unabated.
Retail
Manhattan Retail leasing has been quiet as tenants balk at paying the new normal prices. More retail vacancies and longer vacant durations are causing Manhattan retail prices to drop. One can see this trend in Soho where a broker says reduced price 50% of last year’s rental rate.....
The prime New York Retail market is dead as tenants hold off to Landlord’s demands for record rents. Retail demand is strong in up-and-coming areas.
New York office leasing volume was nearly half the previous month's rate of 4 million square feet. Large lease signings are down year to date, though the number of office workers has been rising.
Manhattan Office: Manhattan office construction is at its highest level in 25 years, with 19 buildings containing 9.7 million square feet under construction by end of next year and 4.3 million square feet of new office construction this year. Even with all this new construction, Manhattan Office vacancy only went up slightly... Manhattan Retail: Retail pricing in Manhattan remains overly optimistic with relatively little new supply and tepid demand due to increased retail prices. Over time, retail prices should moderate until vacancies are absorbed. ...
Manhattan Office: Strong demand for Manhattan Class A office space caused vacancies to decrease month over month. Meanwhile, Class B and C office space vacancies increased slightly as prices were recently increased. Manhattan Retail: Continued strong demand for Manhattan retail pushed vacancies down, despite rising prices....
Manhattan Office: Manhattan office vacancies only increased by 400,000 RSF despite 11,652,00 RSF of new office construction underway in Hudson Yards and World Trade Center. New office rents in excess of $100/RSF will cause upward pricing increases in Class B and Class C office stock. Manhattan Retail: Total available vacant space decreased slightly. Rental activity remains brisk with prices near all time highs. Question is who are these tenants who can afford to pay these rents and still operate at a profit?
Office Manhattan Office vacancies declined in all markets except Midtown South. Subleases increased nominally due to strong office leasing activity. Retail New York Retail vacancies declined in all markets due to strong retail leasing activity.
Downtown office prices are rising due to the influx of TAMI tenants and continued conversions of office to Hotel and Residential use.
Midtown South remains extremely tight with the new construction, 100 % rented at 51 Astor Place.
Retail:
Retail Market remains strong with both National and International retailers opening additional locations in Manhattan.
New office construction that is coming onto the market, albeit at higher prices has caused vacancy rates to inch upwards. With continued cannibalization of the office stock, from office use to hotel or new residential construction, is putting upward pressure on Class B office stock.
Retail: Retail rents remain unabated with T mobile reported to have paid $2,000/SF in Times Square. These deals are causing Landlords to re-think their retail prices as being too low, while tenants say they cannot afford to pay those rents.
Strong Manhattan office demand resulted in 1.03 million RSF net absorption and decreased vacancies in all New York office markets, except Midtown South where a new building was recently completed. Manhattan retail leasing remains strong. Lower Manhattan retail is especially doing well with reopening of the Fulton Center subway hub. Major retailers are opening new locations nearby...
Manhattan Offices:
Manhattan office vacancies increased by almost 2 million square feet, as 1 World Trade Center opened and Conde Nast’s former space at 4 Times Square comes on the market. Also, almost 2 million square feet remains unspoken for at 3 World Trade Center. Additional office space will be added with the completion of 2 World Trade Center and two office buildings at Hudson Yards: 1 Manhattan West, 2,230,000 RSF and 3 Hudson Boulevard, 1,869,500 RSF.
Retail:
The 350,000 retail complex at World Trade Center is completely leased with fashion tenants and Eataly for the food component.
1 Wall Street (1.100,000 Square feet) is the latest large office building in Manhattan to be converted to residential. In the last few years, more than 10 million square feet of office/commercial space has been or is planned to be converted to residential or hotel use. This loss of office/commerical space in New York city is greater than the number of square feet created. As a result of constant office demand, with less office space supply, equals upward pressure on Manhattan office rents in the foreseeable future.
There was more new residential construction than commercial construction in New York. Commercial construction investment on pace to dip to $7.8 billion, rising residential spending of $10.9 billion from just $6.8 billion the previous year.
The Manhattan office market continued along an upward trend in the third quarter of 2014, as rising employment increased the number of office users in the borough.
Manhattan vacancies continue to decline with over a 1,340,000 RSF of net absorption last month. Developers are revisiting mothballed office building development sites. Vornado is reconsidering their plans to renovate the Hotel Pennsylvania and is now looking for office tenants for a proposed 3 million square foot development there.
Retail
Manhattan retail remains active, as foreign retailers continue to take additional locations and urgent care units continue to expand their footprint in New York City retail.
Manhattan commercial sales prices have reached all time highs. Prime development sites are asking $1,300/developable SF and prime Brooklyn sites are asking $400/per developable SF
Record high retail rents are also filling the record sales prices with prime 5th Avenue retail locations asking $3,500/SF and prime Times Square asking $2,500/SF
The Manhattan office and Manhattan retail markets are as hot as the temperature outside. There were declines in the amount of both office and retail spaces in all markets except for Midtown South. In Midtown South, a number of buildings previously off the market were added back to the available inventory of office space. New York is in desperate need of new office buildings. Buildings are planned and under construction but delivery dates are in the distant future. As a result office rents are rising!
Office Manhattan
Office leasing in Downtown Manhattan and Midtown South Manhattan remain strong with office vacancies continuing to decline.
Midtown Manhattan office remains soft with a small increase in available vacancies. Although, top office Plaza properties rents are near record high for office rents.
Retail Manhattan
Strong retail demand continues for top locations with pricing continuing at near record high levels. A recent lease on Union Square was an all time high for that neighborhood. Second tier retail locations pricing is coming down as landlords are tired of holding out for top dollar. Time and vacany cure landlords wish to hold out for top dollar rents.
Manhattan office, retail and high-end residential sales are red hot. These properties and obtaining record price per SF obtained both in sales prices and rental rates.
New York Residential developers are building as fast as they can to sell residential units at $2,000-10,000/SF and up.
Quality Manhattan Office and retail rents continue to rise in the best sub=markets. Sales prices of commercial properties are reflecting both the current rents and projected rents to justify the prices obtained.
Tenants are giving more value to new construction, and as a result a number of new leases have been signed. Hence, new construction has risen dramatically, as seen in the rise of a number of new buildings.
Top quality retail is still in high demand as many foreign retailers enter the New York Market.
Office
Manhattan office market continues to tighten and as a result rents continue to rise as the economy rebounds. There is a prediction that by 2017 all class B buildings in Manhattan will be full, which means office rents will rise to the cost of new construction which need a minimum rent of $80/RSF to get built.
Retail.
Times Square retail rents for prime locations are 2,500 per SF per year. Four years ago they were $1,000 per SF. Madison Avenue rents are $2,000 per SF in low 60’s. They had been as low as $1000 per SF. Fifth Avenue rents in the 50's are asking $3,000 per SF which pushes retailers ever further down Fifth Avenue towards 42nd Street.
Over 80 leases were signed last year for more than $100/RSF. Meanwhile predictions from the city’s Economic Development Corporation show that Class B and C buildings will be full by 2018. This means that office rents will go higher.
Retail: Rents continue to rise as many prime sites are rented.
Residential. Qatar just spent $100,000,000 for a townhouse at 9 East 64th Street. The big question is how many buyers are out there for new expensive condominiums that are being built?
Office:
Citibank signed a billion dollar long-term lease renewal at 388-390 Greenwich Street. Otherwise, office rent was relatively quiet last month with rents unchanged.
Retail:
Retail rents continue to escalate in the prime markets. Retailers are now considering alternate locations where they can make profits with lower rents.
New Manhattan Developments:
Brookfield Property Partners has made a $5.1 billion dollar offer to buy Brookfield Properties. .....
Legal, medical and education were the major office Tenants in the Manhattan market. These sectors picked up the weak demand from Banks and Investment Firms. Retail remains strong, as the number of tourists coming to NY surpasses 51 million.
Madison Avenue retail rents reach record high with the Hermes lease at 691 Madison at $1,700/SF and pending leases at 680 Madison Avenue for $2,200/ SF.
Office vacancies continue to decline as existing commercial buildings are converted to residential and hotels with limited new commercial construction being completed. .....
Office vacancies increase throughout Manhattan, as several new office buildings are being built. These buildings include: 7 Bryant Park, developed by Hines and Pacolet Milkin, containing 474,000 square feet of Class A Office.
150 Greenwich developed by Silverstein, near completion and containing 1,034,969 RSF of Class A Office. Leasing for the tower has reached 50%.
Hudson Yard South Office Tower, developed by Related and Oxford Group, containing 1.7 million-square-foot with 3 large leases in place. This is the first building of a 26 acre development, containing 18 million square feet of new construction.
Other new construction planned include:
3 Hudson Blvd, developed by Moinian, planned to contain 1,869,500 SF.
400 W 33rd St - North Tower, developed by Brookfield planned to contain 2,052,864 SF.
TAMI (technology, advertising, media, and information) tenants accounted for over a quarter of the top ten leasing deals in the second quarter of 2013, continuing the previous trend.
TAMI (Technology Advertising, Media and Information) continue to expand their Manhattan offices sizes. Office vacancies remain tight until new office construction at Hudson Yards and World Trade Center Site are completed . Other new major construction projects includes the Columbia University Expansion in West Harlem and the Cornell Technion Universities new campus on Roosevelt Island.
A billion dollar sale in New York is not what it used to be. Six transactions valued over a billion dollars have recently been concluded or are being offered.
Plaza District Class A office rents are back to 2008 highs. Two recent leases at the GM Boarding and 9 West 57th Street were at $200/RSF. There is a pocket in Midtown where rents have declined from their highs, this area is from 42nd to 47th Street Second Avenue to Sixth Avenue, where Tech and Media companies do not want to go to.
Prime retail rents on 5th Avenue, Madison Avenue and Times Square are at all time highs.
Coach, SAP and L’Oreal have agreed to occupy 80% of The South Tower in the Hudson Yards Development. When these companies relocate into their new ones, 1.5 million square feet of space will become available for other office tenants. Up until now, there has been limited amount of new office construction. The one exception to this is the buildings being developed at the World Trade Center site.
Retail leasing remains active thanks to foreign and national retailers continuing their Manhattan expansions.
Grand Central has the best office deals for tenants looking for more than 10,000 RSF. There are more than 50 midtown buildings that have vacant blocks of office space of at least 100,000 RSF. Grand Central has twice the number of available large blocks of office space than Times Square.
Office demand is strong in Midtown South in locations such as: Flatiron; Chelsea; Soho and Tribeca. These are the locations keenly sought after by Technology, education, advertising and media firms.
Manhattan office vacancies increased in February. Companies who had temporary relocated from Sandy's damage have returned. New construction is underway and large corporations are taking less space upon relocation as they are being more efficient in their space planning. The result is increased vacancies over the next few years. Expansions in Education and Technology firms will help reduce the new supply of office space.
Manhattan Class A office vacancies decrease, as firms resume leasing after the resolution of the fiscal cliff. While financial service firms demand is weak, technology, education and bio-technology firms are actively leasing space.
Retail vacancies also declined. Fifth Avenue and Madison Avenue prices are at or near all time high prices.
Building sales in December were very active, as sellers rushed to close before Capital gains rate increased. Office leasing in December was slow as tenants awaited the Fiscal cliff resolution, took vacations and dealt with Hurricane Sandy recovery. Office demand in the New Year should be stronger as the fiscal cliff has been resolved and as the economy slowly continues to mend.
Manhattan office vacancies increased marginally, despite Hurricane Sandy causing more than 10 million square feet of office space to be temporarily removed from the market. Prime retail continues to appreciate in asking price as few availabilities exist...
The pending federal election slowed down rental activity while companies waited to see the outcome. Now Hurricane Sandy has put a crimp on rental, as firms regroup while awaiting power and recovery from water damage. There is still limited power below 39th Street and east of 6th Avenue. The outage affects some 200 million square feet of residential, commercial and industrial properties.
Despite rising vacancies in the Plaza District, office rental rates of Class A offices hold steady. Financial firms have been adding space to the sublease market and downsizing....
Landlords are giving increased Free Rent and Base Landlord work as Manhattan Office vacancies continue to increase both direct space and sublease.
Retail demand remains strong and vacancies decline as both International and National retailers enter the market or expand
The City of New York rented almost 600,000 SF of Office space in July, otherwise few transactions occurred. With Tower 3, Tower 4 and One World Trade Center coming online in the next two years, vacancies are likely to increase putting pressure on Class A office pricing. Retail continues to be hot as international retailers and national retailers enter the New York market....
Large new retail leases for (Nordstrom, Burlington Coat Factory and Express) and Office renewals for Morgan Stanley and Citigroup were announced in June. Meanwhile a bankruptcy for Dewey & LeBoeuf and a few large subleases are on the market, increasing vacancies in available office space. Prices remain relatively firm for Class A office space, as technology and education expanded........
Dewey & LeBoeuf went bankrupt putting 500,000 sf of class A space back into the Midtown office market. Financial and Law firms remain cautious as the Euro and US Stock markets are volatile. Luckily for the New York office market and residential market Technology, Education and creative firms are expanding. Retail continues to be active as and national and foreign retailers expand into New York.
Two large leases kept the quarter out of the doldrums. Viacom, signed a 15-year renewal and expansion through 2031 which will ultimately give the company the entire 1.6 million-square-feet office portion at 1515 Broadway. Morgan Stanley signed the other major lease renewal-and-expansion at 1 New York Plaza for 1.1 million square feet.
These two deals significantly helped a slow three-month rental period in Manhattan which was still 1.2 million square feet less than normal for the quarter.
Small leases 1,000-5,000 RSF were very active. While Mid-size 6,000-50,000 RSF tenants remain cautious.
Last month's Manhattan office leasing volume was not even 25% of last years. Leasing volumes, to date, annualized for 2012 are about ½ of what they were in 2011. Incentives such as naming rights, terraces and bring your dog to work are now being offered by landlords to get tenants interested...
Tenants are continuing to be slow in making long term decisions, therefore leasing volumes have been quiet for the last few quarters. 6 million square feet of new office inventory wil be coming online this year. This will lead to interesting game of blink as to whether Landlords will lower their rents in order to get deals done.
Office building Developers were overly optimistic that they were going to sign millions of square feet of leases with New York corporations looking to consolidate. With the economy in flux, it is yet to happen.
The city’s low office vacancy rates and slowly rising rents are overshadowing a disturbing office leasing trend. Ground-up office projects have been unable to secure major tenants, which in turn have stifled development. News that Silverstein Properties might cap off 3 World Trade Center at seven stories because of its inability to land a tenant, is just the most recent example. Three World Trade Center is close to being topped off — 73 stories shorter than initially planned. Crain’s reported that if developer Larry Silverstein, president of Silverstein Properties, cannot find an office tenant for the planned 80-story tower by the end of the year, he’ll cap it off at seven stories and seek retail tenants to fill the structure. After talks with UBS broke off Silverstein has not come close to finding a tenant, Silverstein will resume construction as planned on 3 WTC with slight delays to the expected 2015 completion date
There are a limited number of tenants who will pay more than $100/RSF in today’s economic environment. While certain high-profile leases in 2011 might have made it seem as though office leasing had recovered fully. For instance, Kohlberg Kravis Roberts & Company signed a 64,000-square-foot lease at $147 per square foot for space at 9 West 57th. But in the third and fourth quarters office leasing numbers faltered. The message that the $100 deals are back is true, to a point "There are more deals than in 2010 or 2009, but it is still a 40 percent drop from the peak."
Predictions for Manhattan Real Estate - Year 2012
Retail
Prime retail rents will continue to rise but not as dramatic as previous years. Fringe retail rents will continue to fall 10-20%.
Office Space
Class A office rents depend upon the financial success of Banking and Investment Banks. It's a seesaw, if more layoffs, then rents in Class A Office Buildings could fall 10-20%. If neutral to hiring of employees, prices will continue to rise until it is economically viable to build new office buildings (which needs to be about $100/RSF rent).
Class B office rents will continue to rise because some Class B Office buildings are being converted to residential and hotels (therefore less inventory of Class B buildings).
Office rental volume tapered off from a strong start at the beginning of the year. This coincided with the recent market gyrations since August. Companies are starting to delay decisions until the stock market volatility lessens.
Prime retail property is full while secondary locations languish.
New Residential construction has restarted. Banks are now lending to experienced, well financed developers. As a result, the number of stalled projects has declined 8% from the previous year.
We have been talking about pending new construction for the last few newsletters. Now it has finally happened. Coach is buying a new building to be constructed as part of Related development on the West Side. Brookfield is also about to start constructing the $300 million deck above the rail tracks. This will dramatically change the neighborhood from fringe to potentially the next Rockefeller Center on the West Side.
Two trends have occurred this month. The 1st is the stock market has been fluctuating widely. The 2nd is office vacancies have started to increase in Midtown and Downtown though office rents have yet to decline. A number of high profile retail locations remain vacant as landlords continue to hold out for preferred tenants while secondary locations languish.
New construction for both office building and residential is occurring in Manhattan.
European and other foreign retailers continue to enter the Manhattan market and are outbidding American retailers.
Midtown office demand and rents are rising to the point that justifies new office construction. This is due to financial firms relocating to Midtown.
There was a lot of lateral movement in the Manhattan office market but no net absorption. Conde Nast signed a lease for 1,000,000 SF at 1 World Trade Center but will vacate an equivalent amount. Nomura Securities signed a lease for 800,000 SF at 825 Eighth Avenue vacating World Financial Center but again a lateral movement.
New construction about to start again in Midtown. Banks are funding as Midtown office rents exceed $100/RSF … Boston Properties will be the first to construct a $1.05 billion, one million-square-foot office with their anchor tenant Morrison & Foerster at 250 West 55th Street.
Quality office buildings in Midtown and Midtown South are attracting multiple offers. Landlords are taking advantage of this trend and are raising their asking prices on their A and B office buildings.
With the economy starting to grow and employment picking up, large and medium size businesses are finally signing long-term office leases, in record numbers.....
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
Downsizing has come to a halt. Companies are hunkering down as wall street, hedge funds and technology firms are back to business as usual.
This means that Manhattan office and retail vacancies will decline over time, as the economy improves.
Three major trends as we start 2011
Office vacancies decreased in all three markets in Manhattan.
Midtown, Midtown South and Downtown have seen companies lock in leases both large and small. Many companies waited as long as they could and had to sign leases, while others tried to time the bottom.
Now the question is, what else is there? Some say there is some hiring on Wall Street, but then again some firms are still laying off. New York City is doing layoffs and so is New York State. The job market remains bleak in Manhattan. Office demand remains flat for the time being.
Distressed real estate is here to stay for the next 12 to 24 months. Multiple panels of real estate experts concurred with this at a recently held distressed real estate conference in New York.
The number of distressed properties entering the system is expected to rise as mortgages come due and there is limited ability to refinance. There are some $1.4 trillion dollars of commercial real estate mortgages coming due and only about $200 million dollars of available financing sources. What happens to the rest is anyone guess!
Certain markets will heal faster than others. New York is leading the market in terms of leasing velocity. The ultimate return to normalcy is dependent on employment and liquidity. Both at this time are illusive and layoffs in financial services are underway yet again.
Major corporations are continuing to try to lock in historically low rental rates while they can. This accounts for the on going strong rental volume. The strong rental volume, has Landlords talking about raising base rental rates. One landlord has actually taken the plunge. SL Green, a major Midtown Landlord, has announced such a price increase.
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.
Retail activity is brisk as retailers finally take the plunge and commit to new spaces albeit at recent record low prices, especially in high end retail markets. The same came be said about Class A Plaza district office. The rest of the Office and retail Market remain stagnant. Office vacancies continue to climb slowly as corporations renewing leases are taking less space than previously. Landlord optimism from increased leasing activity is causing rental prices to firm and rise in selected Class A office markets in Midtown.
Leasing volume spikes, as firms lock in low rents. Office vacancy increases, as most firms are taking smaller spaces. Landlords are encouraged by the strong uptick in leasing volumes and are starting to think about raising prices or lowering concessions.
I just returned from the International Council of Shopping Centers Convention in Las Vegas. The big surprise is how dramatically improved the attitude is compared to a year ago when all was lost. Attendance was up over previous years. People were looking to buy distressed debt, only to find out it is still not readily available.
A Panel discussion on banking said many more community banks will fail as their Texas Ratio ( Non-performing assets + 90 day delinquent debt divided by their capital) is great than one, and a major money center bank Texas Ratio is 50%. Bankers are now back making conservative loans on existing properties and funding is still limited for new construction. With all this said, retailers are now more optimistic and are back expanding, as prices and concessions are the best they have been in years as there have been significant employment gains from the depths of the depression.
The best lease deals are being done now.
Manhattan Office and Retail rents are at the bottom.
Landlords are still offering generous concession packages to close leases, especially for larger users. This will not last.
This month has been a big yawn, in that while leasing volumes have increased it is due primarily to lease renewals that are shrinking and as such prices continue to moderate.
Landlords are being very aggressive to retain stable existing tenants, once the tenants have shown they are serious about moving. Tenants have also realized the need for a Tenant broker in these negotiations.
The dollar volume of office condominium sales in Manhattan slipped by nearly a third last year to its lowest level since 2005. The value of condos sold fell to $158 million in 2009, the weakest year since 2005 when just $49 million sold. The volume in 2008 was $233 million. The total amount of square feet sold fell by 42 percent to 220,000 last year from over 379,000 in 2008. As of the end of 2009, there were 8.2 million square feet of commercial condos in 76 buildings. The decline was representative of the broader sales market. The drop, however, was not as steep as the overall 72 percent fall in Manhattan building sales volume last year.
Residential Rents in New York City and Northern New Jersey saw their smallest annual increase since 1994, climbing just 1.6 percent between January 2010 and the same month a year earlier. Meanwhile, the unemployment rate was at 10 percent in the area over the same time period. Housing costs in the region have ramped up more rapidly than other living expenses for the last quarter century. Since the early 1980s, housing costs have increased by more than 300 percent, compared to food expenses which rose 125 percent and clothing, which rose less than 20 percent. Household energies on the other hand have decreased by 1.6 percent over the same time period.
Industry executives believe that we are at or near the bottom. The market 12 months ago felt like there was no bottom. Large building sales are starting to get done as sellers acknowledge the new market price. Loans are getting done although at substantially lower debt levels and at more stringent terms. There is still an overhang of zombie residential and commercial buildings where ownership does not have the money to fund build-outs and/or the properties owners have yet to cede ownership to the banks.
The amount of long-term sublease space from the financial service firms is being reduced which means that prices of office space will rise and or concessions will start to abate, as motivated sellers are removed from the market.
Retail will remain in a difficult period until people return to the stores and start buying. Retail prices should continue to moderately(fall) over the next 12 months. This is due to the operating struggling stores closing as they are not generating enough money to stay open and inventory increases.
Food for thought:
Will banks stop pretending and extending and take the losses now that they are profitable?
What will happen to the residential shadow inventory of zombie buildings?
What will happen to the former Goldman Sachs, AIG and Meryl Lynch space downtown?
Will there be more space added as firms restack buildings to consolidate their space holdings?
Long-term leases are now being signed by major corporations, as rents are being discounted 30% to 50% off the all time highs.
This is not true for smaller tenants, as downsizing has increased demand and there is less small office space in the market due to building conversions and former building repositioning for larger tenants.
There were extraordinary amounts of pop up (temporary) stores this holiday season, which means fewer long-term leases were being executed.
Over the past 30 days, retail vacancies have increased 18.67 % and office vacancies have increased 1.36%, this should trigger rents to continue to fall and landlord concessions to increase.
Manhattan leasing activity picks up for both Retail and Office.
Additional 500,000 RSF of office vacancies came on the market last month, but Tenants are snapping up office and retail spaces as rents are near a bottom and business prospects are more stable.
Manhattan office and retail markets have a Pulse!! Tenants are getting substantially lower rents and more favorable lease terms as landlords reach to make deals.
Activity has picked up in small and medium sized office and retail leases. Major corporations (Tenants) are still taking a wait and see attitude over the next few months until a clearer picture emerges on the economy before entering into long term leases. There still exists a large overhang of shadow office and retail space (space available but not listed as vacant), therefore there is a lot more vacant than the vacancy figures indicate.
The lowest rents in 13 years have caused office and retail tenants to enter back into the market and execute leases.
Manhattan commercial vacancy rate hits 13-year high.
While commercial leasing activity has picked up in the past few months, the city's Class A vacancy rate increased and average rents fell last month. The vacancy rate of Class A space in Manhattan reached 11.9 % in May, up from 11.3 % in April.
The New York City Office and Retail rental markets remains quiet though bargains abound. Great office space on Park Avenue that last year was $125-175 a square foot can now be rented for $60/SF asking. Same is true in retail where rental rates in many markets are 40-60% less than a year ago.
Leasing activity grinds to a near halt. The Midtown Class A vacancy rate is 12.2 percent since April of this year, the highest rate since August 1996. There is 7.8 million square feet of sublease space available in Class A buildings, the most since they started keeping records in 1991.
Office and retail leasing activities have dropped to new lows. Managing agents and landlords are now devoting a large percentage of their time working with existing tenants who are looking to downsize or renegotiate their rents. Last quarter, there was nearly 4 million square feet of negative absorption. Pending moves by Merrill Lynch and AIG, millions of additional feet of office space will be dumped back on the market.
Office rents are off 30% from their all time highs and will continue to fall as Securities firms and banks may give up to 8 million square feet of office space in Manhattan this year. JPMorgan Chase, Citigroup and Lehman Brothers have already vacated 6.4 million feet of city office space, and Merrill Lynch is likely to give up another 5 million square feet and Smith Barney millions more feet. The available office space may reach 15.5% by the end of 2009, and the New York office market may not improve until the end of 2012.
At a recent real estate conference, Vornado said that retail and high end office rents are having a negotiable factor of between 25 and 50% of asking prices.
In addition, SL Green said that office rents are projected to be down 25%. What this means to office and retail tenants is that there are deals/bargains to be had from motivated Landlords, provided that you are guided by an expert to help you get all these concessions.
Building Sales grinded to a virtual halt with only two sales over $50 million.
Office leasing was light as major corporations are taking a wait and see attitude as rents are expected to continue to fall. High end office rents should also deteriorate as fewer and fewer $100/RSF rents are achieved and more hedge fund space comes back on the market.
Retail rents should plummet as retail sales did over Christmas combined with the store closing of banks and national retailers who not only close stores but cancel or curtail new expansion as well.
Rents drop and Landlords are nervous as more than 3.5 million square feet came back on the market, with negative absorption of 1.8 million square feet. Rents are likely to continue to fall as additional continues to come back on the market in the coming months, from the recent layoffs in banks and former investment banks.
Office vacancies in Manhattan dramatically increased by 2.26 million square feet in October. Increased vacancies will continue resulting from announced layoffs that will result in future vacancies as floors are restacked and vacated. As a direct result, Landlords are much more negotiable than previous months in both asking rents and free rent and work contributions.
Last month, nine hundred thousand square feet came back on the market with millions of square feet to follow as Lehman Brothers, AIG, Merryl Lynch put additional back on the market. Asking rents are being reduced and landlord concession packages are increasing, yielding a 10 to 15% net effective rent reduction. Still major firms are putting off major lease decisions until they determine their future size and needs and holding out as long as they can to get the best price possible.
Midtown office rents soften as Midtown office vacancies increase. Space has increased from 650,000 square feet over the previous month to over 13,000,000 square feet. As a result landlords are being more flexible. They are trimming asking rents and being more negotiable in build out concessions.
Office vacancies continue to increase slowly, but will substantially increase due to the recent Wall Street and bank layoffs as the surplus of office comes back to the market. In addition, Bank of America is moving to its new headquarters and will release or sublease its former occupied space.
Last month, office vacancies increased in Midtown and Downtown due to the recent financial layoffs resulting in being given back, as either direct or sublease space. As a result, Landlords’ are starting to drop rents.
1
Manhattan rents continue to increase while vacancies throughout Manhattan decrease.
A number of major developers are planning new office buildings, as office rental rates justify new construction, and demand is there to fill the buildings. Retail vacancies increased slightly in Midtown and Midtown south.
