A Numerologist’s View of the New York City Commercial Real Estate Industry
Richard Persichetti Jan. 17, 2013, 7:45 a.m.
Every year for the past 116 years, the Real Estate Board of New York has hosted its annual banquet. This year, the 117th banquet will take place on 1-17, which either is a coincidence or the REBNY Board has a secret numerologist among its ranks.
As we are unable to look back at commercial real estate statistics from 1896 due to a non-functioning flux capacitor, a time-travel-less comparison over the past 17 years proves that 2012 was a typical year of ups and downs for the market.
The overall Manhattan vacancy rate dipped 70 basis points to 10.2 percent in 2012, closing in on market equilibrium and the 9.9 percent 17-year-average vacancy rate from 1996 to 2012. At $69.18 per square foot, Manhattan Class A asking rents were up 8 percent year-over-year. But compare that with the last 17 years, and 2012 asking rents rank sixth on an inflation-adjusted basis, well behind the inflation-adjusted high of $95.15 per square foot back in 2007.
Although vacancy and rents were moving in the right direction last year, demand slowed and leasing volume reached only 27.7 million square feet. Over the 17-year period, 2012 leasing activity ranks a dreadful 16th, better than only 2008, when 26.9 million square feet was transacted. Even with the mixed signs, the most recent REBNY Broker Confidence Index increased at the end of 2012, showing restored confidence in both the residential and commercial markets after a decline in November following the aftermath of Hurricane Sandy. Confidence in the commercial market’s performance over the coming six months was high as well.
So, whether you believe in numerology, have a time-traveling DeLorean or have a finger on the pulse on the market like real estate brokers do, you can expect an improving market in 2013 and can enjoy the banquet.
Richard Persichetti is the vice president of research, marketing and consulting at Cassidy Turley, with 14 years of NYC research experience.