‘Summer Breeze’ at CBRE Office Market Breakfast
These days, when he goes shopping, Matt Van Buren hunts for discounts. The executive managing director of CB Richard Ellis’ New York brokerage, Mr. Van Buren likes price cuts of at least 35 percent.
“Say I’m buying a hammock for my backyard,” he said Thursday morning on the 18th floor of the MetLife building, minutes before he would give a talk on the Manhattan commercial real estate market’s second quarter. “I think, what could go wrong? Screws could fall out, the netting could break. That’s not so bad. This 50 percent off looks great.”
He laughed wistfully. “I’m one of those people who’s totally changed my buying habits in this economy,” he said.
Like the speakers at Wednesday morning’s Cushman & Wakefield market recap, the executives who spoke at Thursday’s CBRE “Manhattan Market Research Media Breakfast” expressed confidence. But the CBRE officials were more cautious. We Acknowledge That Things Are Still Not Great, seemed to be the theme, But We Are Coping Extremely Well and Keeping Our Fingers Crossed. They were optimistic, but they qualified that optimism with ambivalent metaphors. A CBRE release, issued at the event, declares that the “leasing ‘summer breeze'” is “gently lifting.”
“I was asked not to use the words ‘bouncing along the bottom,'” Mr. Van Buren said, using those words. He was addressing the reporters in the room. “Because you’ve all written them so many times.”
Availability, to use Mr. Van Buren’s term, is “stuck” at 14 percent. It’s a small improvement over last year’s 14.2 percent, but slightly worse than the first quarter’s 13.9 percent. The actual vacancy is down only slightly, to 9.3 percent from last year’s 9.4 percent. The average Manhattan asking rents aren’t any rosier. While the current $47.61 a square foot is better than the previous quarter’s $47.58, what’s more important is that $47.61 is worse than last year’s $53.35. “‘Bouncing’ is actually the right word,” Mr. Van Buren said.
Relative to the country as a whole, New York City is doing well, CBRE officials said. Jim Costello, the CBRE director of investment strategy, compared the national job market to the market in New York as a way of indicating economic strength. “Mixed Signals with Office Jobs across U.S.,” reads the headline of a slide, which comes directly before “Signals with New York Office Jobs not as Mixed” in his presentation. Mr. Costello’s wording was cautious, with double negatives rather than outright positives, but his prediction for the coming years was anything but.
Barring a double dip, Mr. Costello said, the economy should be back to the pre-recession peak by 2013. And it’ll keep on climbing.
“We actually think New York will lead the market,” he said. “The national market, I mean.”
Like the Cushman people, CBRE executive vice president Peter Turchin talked about the dominance of top-end office space in current commercial deals, which he called a “flight to quality.” Since there’s now only an $11 difference between the average asking rents of midtown’s “top 20 percent of buildings” and buildings in the rest of Manhattan (compared to a $43 difference in the beginning of 2008), it’s definitely a buyer’s market.
The breakfast spread during the pre-lecture schmooze was nondescript and continental: pastries, fruit, bagels, cream cheese, coffee and orange juice. The cream cheese was flavored, an extravagance that perhaps indicated market optimism. Chatting before the official talk, though, Mr. Van Buren remained wary.
“People are concerned. Things have been good for the last three, four months, and now they’re not good,” he said, before quickly adding a qualifier. “They’re mixed.”