Dawn Over Commercial Manhattan?
Dana Rubinstein Oct. 5, 2009, 4:58 p.m.
Colliers ABR director of research Robert Sammons isn’t some sort of sunny-eyed optimist whose overly cheery outlook immediately transforms horrific markets into “challenging” ones, or plummeting rents into “competitive asking prices.”
So it’s kind of meaningful when Mr. Sammons puts out an optimistic report. Which is exactly what he’s done.
After leading his Manhattan Monthly with a pointed reminder that the market will not be truly peachy anytime soon — Class A vacancy rates climbed in September to 12 percent, their highest point since 1997, and some soon-to-be-completed construction will further bloat those numbers — Mr. Sammons writes that, “[T]here are glimmers of a recovery beginning to appear on the horizon.”
What are these so-called glimmers? Will the sun finally rise over the mournful and dark real estate market?
Well, first off, Class A sublease space has fallen for the fourth month running, from 11.5 million square feet in May to 10.7 million at the end of September. That’s good news for landlords, because sublease space — often marketed by struggling firms anxious to unload existing offices at any cost — tends to be priced lower than the direct space marketed by landlords.
Second, Class A asking rents are falling less quickly. (Yes, that is what passes for good news in the second half of 2009.) The average Manhattan Class A rent fell only .7 percent in September, from $64.36 to $63.90 a square foot.
Third, leasing activity has incontrovertibly picked up. And fourth, job losses in New York City are bad, but not as bad as originally expected. Mr. Sammons writes that since the beginning of the year, New York City’s private sector has lost about 23,000 jobs, year-to-date. Experts originally forecast 158,000 total lost private sector jobs in 2009.
In fact, some financial firms are even hiring! “I was at a conference last week, where there were a number of people from these financial services firms,” Mr. Sammons told The Observer. “They all pretty much commented that they were out there looking again and they were looking to hire again in the next six months or so.”
“There are some positives out there,” Mr. Sammons said. “Not everything is negative.”