Third-quarter 2013 statistics are out, and all of the commercial real estate firms are clamoring to tell you the state of the market. Burned out on it yet? Let’s hope not, because I’d like to visit this topic once again from a slightly different viewpoint.
The primary reason Newmark Grubb Knight Frank Research is not acting like lemmings this latest quarter is because we’ve added several new properties to our inventory. Otherwise, we probably would be reporting right along (more or less) with the rest of our brethren in New York City. That’s not to say we’re completely contrarian, however, as we do see some similar trends.
Let’s first go to Downtown Manhattan, as it got away without any new inventory added in the third quarter (just wait—it will get its turn with both 1 and 4 World Trade Center soon to be completed). The overall vacancy rate slid 100 basis points over the quarter to 15.1 percent, the lowest quarterly figure since the 14.8 percent in the first quarter of 2011.
Midtown South, meanwhile, managed to skirt any major collateral damage when 51 Astor Place was included in the third-quarter NGKF inventory. That new property added 363,000 square feet of availability in the Village. However, strong leasing in the Penn Station and Park Avenue South submarkets held the rate increase to 10 basis points, with vacancy closing at 10.5 percent.
Despite two buildings being added to inventory in the third quarter (55 West 46th Street and 250 West 55th Street with 755,000 square feet available between them), Midtown recorded a 10-basis-point drop in its overall availability rate to 13.1 percent. The new space did bump up both the Sixth Avenue/Rock Center and West Side/Times Square figures, but strong activity in the other four Midtown submarkets managed to neutralize an increase for all of Midtown.
Thus, for all of Manhattan, the third quarter ended up being, in the eyes of NGKF Research, about added inventory in Midtown and Midtown South, and Downtown showing that it’s still got it. This is a slightly different viewpoint that we believe puts the current state of the market in perspective.