Midtown South is the only market that maintained its positive momentum from 2014. In just the first two months of 2015, Midtown South’s availability rate dropped another 50 basis points to 6.5 percent and brought its year-over-year total decline to 120 basis points. With availability at its lowest in more than eight years, asking rents continue to reach new record highs. Average Class A asking rents are up 3.5 percent to $75.78 per square foot, as all five Midtown South submarkets averaged north of $70 per square foot for the first time in history. Class B average asking rents soared 11.4 percent from one year ago to $67.62 per square foot, shattering the previous high of $50.61 from 2008. Read More
By Richard Persichetti 3/19 3:28pm
With 53,064,463 square feet of commercial space, Downtown’s Financial submarket is the largest of the 17 submarkets tracked by DTZ. Despite accounting for 60 percent of the Downtown inventory, the Financial submarket always seems to take a back seat to the World Trade Center submarket—but not this week!
In 2014, the Financial submarket had a strong year, with more than 1.2 million square feet of positive absorption recorded and an availability-rate-drop of 240 basis points to 9.8 percent. Class A asking rents had a modest increase of 4.8 percent to $48.41 per square foot, while Class B asking rents skyrocketed 19.1 percent to $43.56 per square foot. Demand was strong throughout the year, with seven leases signed greater than 100,000 square feet. Read More
By Richard Persichetti 3/11 3:19pm
The avalanche of available space rolling onto the market continued in February. After the month of January had 11 buildings each dump 45,000 square feet or more of available space throughout Manhattan, February followed up with another 10 such buildings. This time the market was ready for the storm, and the availability rate dipped 10 basis points to 9.8 percent. This was due to leasing activity thawing out from January’s frozen state, as five transactions signed greater than 100,000 square feet were completed.
Most of the positive momentum occurred in Class A buildings, as the availability rate for Manhattan Class A dropped 30 basis points to 10.5 percent. All three major markets contributed to this decline in the available supply, as only two of the significant blocks of available space to hit the market in February were Class A spaces (one in Midtown and one Downtown). Class B space, however, was not so lucky. Read More
By Richard Persichetti 2/25 4:48pm
Despite a slight uptick in the available supply in January 2015, the Downtown office market has been in high demand. With Downtown demand at the highest it has been in over 15 years, more and more tenants from Midtown and Midtown South continue to relocate south. Although this trend really took off in 2012, the space leased by tenants migrating downtown in 2014 totaled more than 3.3 million square feet; this surpassed the amount leased in 2012 and 2013 combined. Over the last three years, there has been over 10.5 million square feet of new leases signed downtown, with over 6.5 million square feet, or 62.2 percent, coming from tenants new to the area, attracted to the value-oriented spaces.
It is not just the aggregate square footage that is increasing; each year the number of tenants relocating to Lower Manhattan and the average size of each transaction is growing as well. In 2014, 78 companies migrated downtown, a 52.9 percent increase from 2012. More tenants with larger requirements are moving out of Midtown and Midtown South and into Lower Manhattan compared to 2012. In 2014, the average lease signed by Midtown tenants migrating downtown was 61,787 square feet—almost three times the size of those signed in 2012. The average lease size for migrating Midtown South tenants was up as well, from 21,696 square feet in 2012 to 25,322 square feet in 2014. Read More
By Richard Persichetti 2/20 8:48am
The month of January brought a blizzard of space to the Manhattan office market, but thankfully, the city dodged an actual blizzard of snow that was predicted. An additional 2.3 million square feet of available space blanketed Manhattan with 11 buildings adding at least 45,000 square feet. Midtown South managed to avoid the avalanche of available space, but Midtown and Downtown were not so lucky. Manhattan has not seen this much space hit the market since February 2013.
Downtown was hit the hardest in the month of January as available space jumped to over 11 million square feet with almost 1.5 million square feet added to the market. Although availability increased 200 basis points to 12.4 percent, Downtown was prepared for this flurry of space. Even at 12.4 percent, availability is lower than the recent market high of 14.6 percent in June 2013. It may seem like Downtown is in need of a snowplow to dig out of this blizzard, but with Class A average asking rents still significantly discounted compared with Midtown and Midtown South, expect this space to be absorbed throughout the year. Read More
By Richard Persichetti 2/11 10:09am
The Manhattan office investment market had another stellar year in 2014, with 119 office buildings sold, 35 of which were partial-interest sales. Sales volume totaled over $19.3 billion, marking the second year in a row that investment dollars fell just shy of $20 billion. Also for the second consecutive year, Midtown South had the most properties traded, with 56 in 2014. Leasing demand and low available supply in recent years has made this a sought-after market for investors. Only three buildings traded for over $1 billion compared with four in 2013, as there was a lack of prime buildings in Midtown offered for sale. This lack of prime sales supply dropped the average price per square foot in 2014 to $736 per square foot versus $803 per square foot in 2013.
Lack of Class A quality sale offerings kept the Midtown office investment sales market at a modest pace in 2014. Only 44 properties changed hands totaling $11.8 billion, down from the 48 buildings sold in 2013, totaling over $14.4 billion. Midtown was the only one of the three major markets in Manhattan where the average sales price per square foot dropped, dipping 4.6 percent to $918 per square foot in 2014 from 2013. Midtown did have three billion-dollar sales as 5 Times Square sold for $1.5 billion, 60 Columbus Circle traded for $1.3 billion and 1345 Avenue of the Americas had a partial interest sale worth $1.2 billion. Read More
By Richard Persichetti 2/04 8:34am
To renew, or not to renew, that is the question. And if Hamlet were alive today, and leasing space in Manhattan, he would join the list of tenants who face a decision: Should we stay in place and keep our old, tired looking office, or move to new digs? In 2014, more tenants chose to relocate compared with previous years, as the percentage of lease renewals was down. Only 28.8 percent of the square footage leased throughout Manhattan was renewals, down from the 38.1 percent average from 2013.
Downtown benefited the most from this trend, as only 14.2 percent of its square footage leased was renewals. The increase in new leasing activity has a direct correlation with more and more tenants migrating Downtown from Midtown and Midtown South. Also, with an overall average asking rent of $55.38 per square foot, Downtown still remains a value-option compared with the other two markets where asking rents average 20 to 40 percent higher. Midtown had the most square footage renewed in 2014, with 33.4 percent of the leasing activity remaining in place; and Midtown South was not far behind with a 31.1 percent renewal rate. Read More
By Richard Persichetti 1/28 2:30pm
As the weather gets colder and the footballs get deflated, we know it’s once again time for the second biggest eating day of the year, Super Bowl Sunday. And what better way to prepare for the big game then by hosting the second annual Super Bowl Stat of the Week. Just as the Seattle Seahawks are trying to repeat as NFL champions, so is Class B office space trying to repeat as Stat of the Week Super Bowl Champion. So let’s see whether Class A or B had higher asking rental increases and larger decreases in the available supply in 2014.
The first half of our comparison equation is based on average asking rental increases for 2014. Manhattan Class A asking rents jumped out to an early lead with a 7.1 percent increase last year to $77.25 per square foot—a six-year high. But Class B asking rents came ready to play, posting a 7.4 percent year-over-year increase to $59.24 per square foot, ending the first half winning again by the slimmest of margins. Read More
By Richard Persichetti 1/21 5:00pm
Unlike Meghan Trainor, the Plaza District isn’t all about the base—it’s about the tower. In 2014, the Plaza District picked up the pace as availability dropped 110 basis points in 12 months, down to 11.1 percent. The majority of demand for space in the area was for tower floors (20th floor and above), as 63.3 percent of the square footage leased last year was in the upper portions of buildings. This is a major change from 2013, when only 18.5 percent of the space leased within the Plaza District was on tower floors. Read More
By Richard Persichetti 1/14 2:35pm
Ah January… single-digit temperatures, New Year’s resolutions and the annual REBNY gala. This year marks the 119th New York real estate event, and in honor of the gala and this year’s six honorees, it’s time to hand out awards. The Stat of the Week awards will go to the submarkets that kept their 2014 resolutions and shed the most basis points off availability. In a year where the Manhattan office availability rate dropped 160 basis points to 9.3 percent, 14 of the 17 submarkets tracked by DTZ had declines in the available supply. Out of these 14 submarkets, five had drops in availability of 300 basis points or more in 2014. They also averaged a combined $4.68 per square foot increase in overall average asking rents—49.6 percent higher than the other 12 submarkets combined. So let’s take a look at the “biggest losers” of 2014. Read More
By Richard Persichetti 1/07 9:30am
What better way to ring in the New Year than by seeing how busy the TAMI (technology, advertising, media and information services) sector was in 2014? TAMI tenants leased more than 11.5 million square feet last year, and accounted for almost 32.3 percent of the total leasing activity throughout Manhattan. TAMI went big last year, with an average deal size of 29,999 square feet—35 percent larger than the market average of 22,282 square feet. In addition, 22 out of the 49 signed leases signed greater than 100,000 square feet in 2014 were from the TAMI sector. Read More
By Richard Persichetti 12/17/14 8:31am
As we all sit around dreaming of the large gifts on our holiday wish-list, what better way to wrap up the year than by looking at the big leases for Manhattan – the large gifts of the real estate world. There have been 49 leases greater than 100,000 square feet signed throughout Manhattan so far this year. Although this is slightly off the pace of the 56 large leases signed in 2013, I expect a few more big deals to be signed before the end of the year, having 2014 approach those stellar 2013 numbers.
This year’s 49 leases total over 12.3 million square feet, with an average deal size over 252,000 square feet. Despite the fact that in 2014 there were 12 leases signed over 350,000 square feet —four more than all of 2013—the average deal size is down from the 2013 average of 263,000 square feet. Of the 49 leases signed, two-thirds of them were completed by Manhattan’s “big three” industries; the financial services, TAMI and professional services sectors took down 11 big blocks of space each. Read More
By Richard Persichetti 12/12/14 10:36am
By the end of August this year, Manhattan’s available sublease supply reached a recent low of 6.7 million square feet, accounting for only 16.2 percent of the total available supply. During this value-driven real estate cycle, sublease space has been in high demand, and the market actually shed 10 million square feet of sublease space since 2009. But over the last three months, available sublease space has been on the rise, as over 630,000 square feet was added to the market. A total of 18 blocks of space greater than 35,000 square feet hit the market since August, bringing the sublease supply back up to over 7.3 million square feet. This increase means that sublease space now accounts for 17.5 percent of the total available supply—right back to where it was at the end of 2013.
Midtown’s available supply has been affected the most by this influx of subleases, as 13 of the 18 large blocks ranging from 35,000 to 300,000 square feet are located there. These spaces have increased the sublease supply by more than 680,000 square feet to over 4.8 million square feet. Sublease space now accounts for 19.2 percent of Midtown’s available supply, up from a low of 16.3 percent earlier this year. Read More
By Richard Persichetti 12/03/14 9:30am
Next week, the International Council of Shopping Centers (ICSC) kicks off its annual New York City convention, which will be held at the Jacob Javits Center for the first time. As retailers and real estate professionals meet to schmooze, discuss business and close deals, let’s take a look back over the past two years at Read More
By Richard Persichetti 11/26/14 11:17am
This week is one of my favorite weeks of the year. Thanksgiving kicks off the holiday season, it is a three-day workweek and it is time for the second annual Thanksgiving-dinner-themed stat of the week. Last week, the American Farm Bureau Federation (AFBF) released its annual price survey for a Thanksgiving dinner for a party of 10, and the results proved relatively stable. The price of a Thanksgiving meal has steadied at the $49 mark for the last four years, increasing only 37 cents from last year’s average of $49.04 to $49.41. Despite the average price of a 16-pound turkey dropping 11 cents this year, this was compensated by an increase in the price of potatoes and dairy products.
While the price of a Thanksgiving dinner has remained steady, net effective rents throughout Manhattan have been rising significantly this year compared to 2013. Despite overall Manhattan asking rents steadily increasing 7.1 percent year-over-year to $68.96 per square foot, net effective rents jumped 15.2 percent to $57.68 per square foot. In 2013, the starting rent for all classes of space throughout Manhattan averaged $56.99 per square foot, but is up 12.2 percent in 2014 to $63.97. Concessions throughout Manhattan have remained stable compared to last year. Read More