Through May of this year, “The Big Three” industry groups—professional services, financial services and TAMI—accounted for 73.8 percent of the leasing activity. It just so happens that this year’s NBA finals are being played between two successful franchises with big threes of their own—the Miami Heat and the San Antonio Spurs. Gone are the days when the Manhattan office market is interdependent on the financial services industry and when an NBA team can win a championship with just one star player, as the New York Knicks have shown.
The professional services industry is in the lead this year, accounting for 25.5 percent of total leasing, an improvement from 2012, a down year when this industry only leased 18.7 percent. From 2008 to 2011, the professional services sector picked up the slack and accounted for 26 percent of the leasing activity. Within this sector, law firms account for 50.7 percent of the activity.
So far this year, the financial services industry accounts for 24.5 percent of the leasing activity, a slight increase from 2012’s 23.2 percent. But don’t call it a comeback; financial firms are far off from their period of dominance, when they accounted for 30 to 35 percent of the activity in any given year. Of the 3.5 million square feet leased this year by financial firms, 49.4 percent were renewals, over 8 percent higher than the market average.
Rounding out the big three is TAMI, the hot industry sector of 2012, and although activity is down percentagewise—23.8 percent compared with 29.7 percent last year—the strong growth in this industry continues.
Although New York City may rival London as the financial capital of the world, it has experienced industry diversification in recent years, and without “The Big Three,” it will be difficult for the market to thrive. So unless the New York Knicks surround #7 with two more stars, it may be a long time before New Yorkers see another NBA champion.