Summertime and the City Is Buzzing
I walk through Times Square s twice a day on my commute to the office and home again. Though we had 54,300,000 visitors in our city in 2013, I would not be surprised if we broke the record again. I think we will surpass 55,000,000 visitors. Walk through Times Square and see if you agree with me.
After a long winter, it is a pleasure to see so many people out parading on the streets again, tourists everywhere. Increasing tourism was the hallmark and legacy of the Bloomberg administration and with it business continues to improve.
The commercial office market has seen a remarkable amount of activity as vacancy rates continue to recede and rents continue to climb. Rents from one district to the next are beginning to meld together just as retail continues to string neighborhoods together as separate but adjacent markets become more similar.
A survey of available office space on Fifth Avenue from 14th Street to 23rd Street from 2,000 square feet to 10,000 square feet informs us that there are just nine spaces available direct from a landlord.
In addition, a survey of available office space on Park Avenue South from 23rd Street to 32nd Street from 2,000 square feet to 10,000 square feet shows that there are just 15 spaces available direct from a landlord.
Not only is there a shortage of office space available on these 20 blocks of prime midtown south commercial space but pricing has risen considerably. Five years ago per the above Fifth Avenue statistic, MHP was concluding transactions in the upper $30’s per square foot, three years later MHP finished office transactions in the $50’s and now it is quite ordinary to see deals closing north of $60 per square foot, MHP having closed several just a short while ago. Further, two recent transactions where MHP represented the landlord on a side street off Fifth Avenue, both on lower floors started at $55 a foot.
I had a discussion with one of our brokers about the state of the garment center and how so many tenants are having difficulty remaining in their buildings as rents continue to increase. Our discussion centered on “where would they be going? Would this be a case of “drop the rock in the pond and watch as the rings move in all directions” or would tenants just keep moving further west, crossing to Eighth and Ninth Avenues and beyond? Perhaps ten years ago, this concept of tenants just sliding further west down the street to accommodate their rent needs would be fine but now we have an entire swath of land being developed in the Hudson Yards area that makes the lower rent requirements more difficult to accommodate.
Forty years ago, New York was in dire straits, heading towards bankruptcy as the US Government and various pundits and economists were weighing in on whether a financial aid package would stave off bankruptcy. It was Oct. 30, 1975 when the Daily News ran a cover that read “Ford to City: Drop Dead.” At the time there were many neighborhoods that one might not want to venture into by themselves. Nowadays, it’s pretty difficult to think of a bad neighborhood in NYC. New York continues to evolve and improve because people from all over the world want to live and work here. The heart of this city is its people.