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Richard Persichetti

Stat of the Week

Stat of the Week: 34.9 Percent

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I cannot do yoga. I tried once a week for five months, but it is just not for me. So how do I deal with the stress of everyday work and life? I put my headphones on and listen to some of my favorite tunes, and I have certainly been doing that a lot lately. Like most things that inspire me—be it music or real estate—sometimes they intertwine. So on a recent commute home, there were some songs that reminded me of Manhattan real estate. Like Ace Frehley of Kiss sang in his solo debut in 1978, the office market is “back in the New York groove.”

The first song up on this playlist, “Tenth Avenue Freeze Out” by Bruce Springsteen, made me think of 10th Avenue (duh!), which has been dormant for my 16-plus year career. But with the Hudson Yards project in full force, 10th Avenue will soon be “…lined with the light of the living.” The potential 16.4-million-square-foot development project will surely change the face of the Far West Side. Read More

Stat of the Week

Stat of the Week: 81 Buildings

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During the last Manhattan real estate recovery cycle back in 2007, office buildings achieving $100 per square foot asking rents was all the rage.

Back then, 77 buildings reached or topped the $100 rent mark, all of which were located in Midtown. These buildings were in seven of the nine submarkets in Midtown, led by the Fifth/Madison submarket with 31 buildings, followed by Park Avenue with 21 and the Sixth Avenue/Rock Center submarket with 13. Read More

Stat of the Week

Stat of the Week: 82,290 Square Feet

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Through May 2015, the Midtown office market demonstrated its resiliency by bouncing back after a slow start to the year. Although the market still has a year-to-date net absorption of negative 82,290 square feet, the market has almost absorbed the 998,000 square feet of negative absorption that hit the market in the first two months of the year. Three consecutive months of positive absorption for Midtown has dropped the availability rate back to the level it was at the end of 2014. Despite jumping to 10.1 percent in February, availability is back down to 9.7 percent through May.

This year, five of the nine Midtown submarkets contributed to the positive absorption. The Park Avenue submarket recorded the most positive absorption in 2015, with over 438,000 square feet absorbed. The increase in demand along Park Avenue dropped availability to 8.2 percent, down from a recent high of 11.3 percent just 13 months ago. The East Side/UN submarket posted over 321,000 square feet of positive absorption this year, which has led to the lowest availability rate in Midtown at 5.7 percent. Read More

Stat of the Week

Stat of the Week: 74 Blocks

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Big blockbuster movies will continue to hit theaters all summer long as moviegoers try to get spooked by remakes of old classics like Poltergeist or the action-packed fifth installment in Terminator: Genisys. But no matter what your movie genre preference is, the Manhattan office market has its share of potential blockbusters this summer with 74 blocks of available space greater than 100,000 square feet. Although 74 seems like a large amount of supply, big-block availabilities have been on the decline over the past two years. After peaking at 83 in 2013, steady leasing activity for these spaces has chipped away at the supply, and with the market averaging 55 leases completed more than 100,000 square feet over the last three years and 22 such deals already signed this year, the market is on pace to drop the supply even further.

Midtown has had the most absorption of big blocks over the past year, as only 47 are currently available compared to 54 last May. Midtown leads all markets with seven of 11 blocks of available space in the 250,000 to 500,000-square-foot range. Rounding out the remaining Midtown availabilities, there is only one block greater than 500,000 square feet available, but many options in the 100,000- to 250,000-square-foot range, with 38 available. Read More

Stat of the Week

Stat of the Week: 13,000 Jobs

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ICSC RECon, the major national event for the International Council of Shopping Centers, is being held this week in Las Vegas. It is one of the largest annual conferences for real estate professionals and retailers from around the globe to meet to form business relationships. Since New York City is one of the biggest retail capitals of the world, let’s take a look at employment trends in the retail sector for this past year.

The retail sector added 13,000 jobs in New York City year over year through March, and improved on the historical high employment numbers for the city during this time of the year with total retail employees reaching 352,300. This year-over-year change is stronger than the prior year’s growth, with a 30 percent increase in job creation. The 13,000 retail jobs added also mark the second highest yearly gain in March over the past 10 years, second to only the 13,900 jobs added in 2012. Read More

Stat of the Week

Stat of the Week: 6.9 million square feet

Office Development 2015-01

The future of Manhattan office development is so bright, I gotta wear shades. With 6.9 million square feet under construction and the potential for an additional 22.3 million square feet through 2025, developers are hoping the demand for new office product is not a one-hit wonder like Timbuk3’s 1986 single. Of the 6.9 million square feet, 3.9 million square feet is in Midtown, 2.9 million square feet is Downtown, and Midtown South has a 114,000-square-foot building under construction at 860 Washington Street. And that’s not even counting the potential construction market—Midtown dominates the potential pipeline as well with another possible 16.9 million square feet, followed by Downtown with 4.6 million square feet and Midtown South with only 761,000 square feet.

Midtown construction is dominated by Far West Side development, led by the 1.7 million-square-foot building at 10 Hudson Yards, which is scheduled for completion in early 2016, and is 78 percent pre-leased. Also, 55 Hudson Boulevard, a 1.6 million-square-foot building, has an estimated completion date of mid-2017 and is still searching for an anchor tenant. But recently, two much smaller buildings have been stealing the headlines from these mega-towers, both of which are expected to complete construction before the end of this year. At 7 Bryant Park, the Bank of China committed to lease 40 percent of the 472,000-square-foot building. Also, just last week, Nike signed a lease for the entire office portion of 855 Avenue of the Americas, totaling 147,000 square feet. Currently, the only building under construction Downtown is Tower Three at the World Trade Center development site; however, the 2.9 million-square-foot tower has not signed a new tenant since Group M leased 31 percent of the building at the end of 2013. Read More

Stat of the Week

Stat of the Week: 14.7 Percent

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In keeping with the spirit of this week’s Power 100 issue, it is time once again for the third annual Power Five list, which focuses on the submarkets with the top leasing activity over the past 12 months. To make things fair across all 17 submarkets, the ranking is based on total leasing activity as a percentage of total submarket size. This year, the Power Five was dominated by Midtown submarkets. It has two newcomers on the list and one making its third appearance in a row.

5. World Trade Center – The only Downtown representative on the list makes the ranking for the second year in a row and stays in the number five spot with 7.7 percent of its inventory leased or renewed.  Read More

Stat of the Week

Stat of the Week: 12.2 Million Square Feet

Who is in the Market_VF-01

Throughout Manhattan there are more than 700 companies with current space requirements greater than 10,000 square feet. Then there’s another subset of companies competing for 39.4 million square feet of office space, led by 84 tenants with space requirements greater than 100,000 square feet. With the Manhattan office market off to a slow start in 2015, which industries are likely to make the biggest leasing impact over the next nine months?

Of these 700-plus firms, 190 of them are from the TAMI (technology, advertising, media and information services) sector. The financial services sector is not far behind with 175 companies in the market for office space. Rounding out the top three is the professional services sector with 123 companies looking for space, 52.8 percent of which are law firms. Combined, these three industries account for 69.6 percent of the current demand for office space in Manhattan. Read More

Stat of the Week

Stat of the Week: 190 Basis Points

Homeruns and strikeouts of real estate.

April is here, which means the start of spring, warmer weather, and one of my most favorite times of year—baseball season. As a New York Mets fan, it is tough to compete with the New York Yankees’ 27 championships, but with a 35-19 record on opening day, at least my Mets claim the best opening day winning percentage in the major leagues at .648.

At the start of the 2015 season, the real estate market might seem like it is in a slump with over 1.7 million square feet of available space added during the first quarter. This is not something new for the current recovery cycle, and despite the rough start, I expect the season to turn around like it has in previous years. Read More

Stat of the Week

Midtown Madness Part II – 14.8 Percent

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Last week we saw the Penn Plaza/Hudson Yards submarket score two major upsets to make it into the final four and the Fifth/Madison submarket start its path as a repeat Midtown Madness Champion. Let’s see which submarket has what it takes to be the winner this year.

As we move into the second round, the scoring criterion changes to the largest increase in overall average asking rent over the past 12 months. The West Region continues to be dominated by the “nobody believed in us, we are too small” Penn Plaza/Hudson Yards submarket. In its third upset of the tournament, Penn Plaza/Hudson Yards posted a 9.3 percent increase in overall asking rents to $60.44 per square foot. This submarket completely outmatched the Fashion District, which only posted a 1.8 percent increase to $53.13 per square foot. Read More

Stat of the Week

Midtown Madness Part I – 738,794 Square Feet

2015 Midtown Madness!

It’s time for the second annual Midtown Madness tournament! So for all of you out there who are already eliminated from your NCAA office pool, here’s a chance to see if you can guess which Midtown submarket will be victorious this year. Last year, the Fifth/Madison submarket stood tall at the end of the tournament; did this submarket perform well enough over the last 12 months to repeat as champion? Read More

Stat of the Week

Stat of the Week: 270 Basis Points

Availability around Madison Square dropped 270 basis points.

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

Stat of the Week

Stat of the Week: $48.25 per square foot

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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

Stat of the Week

Stat of the Week: 80 Basis Points

Manhattan Class B availability.

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

Stat of the Week

Stat of the Week: 3.3 Million Square Feet

More office space was leased downtown than in 2012 and 2013 combined.

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