opinion

New Columnists, More Opinions, Now!

If you hadn’t already noticed, The Commercial Observer late last night added seven new columnists to its already formidable roster of real estate thought leaders.

Indeed, along with veteran prognosticators Robert Knakal, Sam Chandan, Richard Persichetti and Robert Sammons (back from a short hiatus), we’re now happy to welcome David Greene, Christopher Havens, Barry LePatner, Kenneth McCarthy, J.D. Parker, Joshua Siegelman and Scott Spector. Find web-exclusive columns along the right rail of our website every week. Read More

The Year in Review

2012: The Year Tech Invaded NYC Real Estate

year tech broke

This past February, 10Gen, developer of the computer system database MongoDB, was in search of new office space, specifically in tech- and media-rich Midtown South.

The company needed a large open layout for its workers, with an option for more space to allow the firm to grow—plus an option to terminate. Unfortunately, the ultra-tight market Read More

Stat of the Week

New York City Nears Record-High Jobs Figure

AbsorptionAvBC.ai

New York City has been whipped around over the past couple of months, and though the number of jobs has declined since August, the naked city is still near a record-high figure of 3,887,100 jobs as of the end of October.

Health services remains the largest industry by employment, with 601,600 positions, or 16 percent of the total jobs. That just beats out trade, transport and utilities with 15 percent (thank those retail workers for that), and government (certain to remain in the top three despite all of the fiscal cliff talk) with 14 percent. The biggest gainer in terms of absolute numbers has been leisure and hospitality which has added more than 100,000 positions in the past 10 years alone. Read More

Stat of the Week

2012 Shaping Up To Be Worst Year For Absorption Since 2009

Manhattan Net Absorption.

Net absorption (net change in occupied space) wrapped up the first 10 months of 2012 at a little more than 1.6 million square feet.

It could be worse … but it could also be better.

This year, firms haven’t been expanding in or relocating to Manhattan at the same speed they did even in 2010 and 2011. And unless some growth explosion happens over November and December, this will be the worst year for absorption since the sharply negative 2009. Read More

Cover Story

We Are OK: New Technology and Existing Resources Are Allowing Sandy’s Victims to Avoid Subleasing

US-WEATHER-STORM-SANDY

On Thursday, Nov. 1, Virgo Business Centers made 27,321 square feet of temporary, furnished office space available at 14 Penn Plaza. Companies displaced by Hurricane Sandy filed in one by one, and by the following Thursday, the space was full.

“Typically, that process takes about a year,” said Pasha Erkin, director of sales at the company. “It’s all about readiness. You could literally bring me 40 people today, and I could have the space ready tomorrow. All you have to do is walk in, flip on a switch, plug in and start working.”

In that building alone, the company took on 177 employees from displaced companies like Coronet, amfAR, Linda Decorato, Ambrose and others located on the eastern tip of Downtown and other areas hit hard by the hurricane. Read More

Stat of the Week

Despite Sandy, Sublet Availability Up

Important dates in sublease history.

After easing in both of the previous two months from its 2012 high of 10.4 million square feet in July, overall sublet availability reversed course to close October at just over 9.8 million square feet. Interestingly, this is almost exactly the monthly average, going back nearly 21 years, of just under 9.9 million square feet.

Though there has been talk of Sandy-displaced Downtown firms taking at least some of the “plug-and-play” sublet space available in Midtown, it likely will not make much of a dent in the figure. At this point, many tenants with multiple offices are finding a way to desk-share at another location or work from home. Read More

Stat of the Week

Midtown Poised to Make Comeback

Midtown by the Numbers.

Will the Midtown light shine brighter (it has been rather dim lately) since it escaped much of the wrath of post-tropical storm Sandy?

The jury, of course, is still out, but let’s review the facts: flooding and power outage issues continue in the southern third of Manhattan, but I most definitely think this part of the borough will come back. Read More

Stat of the Week

Lower Manhattan Oozing With Big Blocks of Vacant Space

100,000 Square Feet or More.

The overall Downtown vacancy rate—as it stands today, right now, this very moment—is 10.3 percent. If one were to take that 10.3 percent (FYI: it topped 20 percent in the mid-1990s and 15 percent in the early 2000s), the judgment would likely be that Downtown is back and better than ever, given the more vibrant nature of its existence (more housing, retail, cultural venues, much-improved transportation, etc.).

But there is one humongous reality to face, and that would be some seriously large empty office space about to slide into the vacancy rate figure. This is not exactly a surprise, as much of it has been advertised for months now. By our calculation, there are 21 buildings with at least 100,000 square feet of current or future availability being marketed. Read More

Lower Manhattan

Lower Manhattan’s Growing Pains

Illustration by Joel Kimmel.

Gleaming new skyscrapers are rising, and more are planned. A cavernous retail complex that was once the highest-grossing shopping mall in the country is being reborn. The biggest and boldest investment in grand transit infrastructure in a generation is winding its way toward completion.

There’s no doubt that Lower Manhattan, with its blooming residential population, is not the office district it was a decade ago. During the recession, while other areas of the city like Midtown were wilting as tenants cast space onto the market and leasing activity plunged, the area, which experts were initially concerned would suffer the worst of the downturn, unexpectedly held its own.

Downtown’s sparkling newness, combined with its economy—space there comes at a substantial discount to Midtown North and South—has already drawn big tenants who believe it will be the city’s commercial district of the future.

Last year, Condé Nast signed a lease in excess of 1 million square feet at 1 World Trade Center, a deal that was perhaps even more beneficial to lower Manhattan than all its construction projects combined, thanks to what analysts describe as the company’s ability transform the area’s staid image. As exciting as all the progress is, lower Manhattan success stories, as they often do, come with caveats. Read More

Stat of the Week

Vacancy Rate Not So Shabby in 3Q12

ClassAVacancysubmarket

Given all the trauma going on globally, nationally and even locally, the third-quarter New York City metro-wide vacancy rate ended up not so bad.

The total figure (for all classes) closed September at 12.2 percent, down 20 basis points. That figure is based on a whopping 733.1 million square feet of inventory (with just over 89.3 million square feet of availability) across the Cassidy Turley local tracking area. Read More

Stat of the Week

Midtown Class A Rent Makes Leap

Print

The Midtown Class A average asking rent, defying a rather weak leasing market, jumped 2.4 percent in the third quarter to close at $76.75 per square foot and is now at its highest since attaining $80.70 per square foot in January 2009.

It has risen in each of the three quarters thus far in 2012 and is up 8.3 percent year-to-date. Furthermore, each of the five Midtown submarkets has seen a rise this year (some quite substantially). Read More

3Q12

3Q12 Data Reveals Lingering Uncertainty

3Q12 for web

There was a time when it seemed certain 11 Times Square would command some of the highest rents in city.

The building, which was developed by a venture between SJP Properties and its equity partner Prudential, was finished in 2010. As one of the newest buildings in Midtown, it is widely considered state-of-the-art, with many of the bells and whistles that tenants are supposed to be willing to pay a premium for, such as towering ceiling heights, LEED-certified efficient systems, a floor-to-ceiling glass façade that offers prodigious light and few structural columns to impede the efficiency of its spaces.

Entering the market at a tough juncture during the recession, SJP Properties nonetheless appeared to take a hard line on rents, and rightfully so: the building cost more than $1 billion to develop. According to several sources familiar with the property and its leasing history, the landlord held fast to projections it had set before the downturn—rents in the $80s per square foot and beyond. Read More

Stat of the Week

Private Sector Jobs Up In August

NYC Private Sector Jobs.

Before digging into the latest jobs numbers for New York City, let’s pause for a comment on the ongoing controversy regarding the unemployment rate in both the city and the state. Very briefly—the household survey, used to calculate the unemployment rate, is believed by a number of government officials and economists to be flawed.

This is primarily because it is a much smaller sample within a potentially inaccurate model, as opposed to the larger payroll survey derived from employers. It remains to be seen when this issue will be resolved, but for now, let’s talk more about the latest (and more reliable) payroll survey. Read More

Stat of the Week

Plaza Submarket Has Highest Vacancy Rate in Manhattan

Class A Vacancy Rates.

The Plaza Class A vacancy rate closed August at 13 percent–the highest vacancy rate of the 14 Manhattan submarkets. It climbed 120 basis points last month alone, thanks to a new 492,000-square-foot chunk of space now available on a direct basis at the Kushner Companies- and Vornado Realty Trust-owned 666 Fifth Avenue. Read More