Ackman-Ziff: New York City’s Leasing Market Stabilizes Since 2015 Drops

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After two years of declines in office leasing, rents and sales around New York City, the market has started to stabilize in 2018, a new report provided exclusively to Commercial Observer found.

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Financial brokerage Ackman-Ziff found office leasing volume climbed 20 percent in the third quarter of 2018 compared to the same time period last year, according to their findings. The total sales volume in the city was also on the rise, increasing 21.4 percent from fourth-quarter 2017 to third-quarter 2018, its report says.

“Record low unemployment, increased wage growth, a surge in gross domestic product and favorable regulatory and tax policies have buoyed investor confidence,” Jason Meister, a managing director of Ackman-Ziff who worked on the report, told Commercial Observer in a statement. “After the 2015 selloff it took sellers a couple of years to fully acknowledge the reality of the market.”

After crashing from 2015 highs in 2016 and 2017, the metrics tracked by the Ackman-Ziff report for office, retail and multifamily properties have stabilized this year.

The average sales price per square foot for office space climbed 26 percent so far this year compared to 2017 to $484, but has not reached 2015 highs of $499. Average sales price for retail space also increased by 20 percent and multi-family buildings by 10 percent in the same period.

While average office rents have remained relatively flat from 2015 to 2018—currently $72.25 per square foot year-to-date—retail and multi-family rents have increased slightly after dropping in 2016 and 2017, the report found.

“Apartment and retail rents overheated and the tenant demand base pulled back sharply,” Ackman-Ziff’s Marion Jones, who worked on the report, said in a statement.

Average retail rents climbed 7 percent to $807 so-far in 2018 compared with last year while multifamily rents climbed 10 percent to $3,389 in that time period. The numbers still have not reached the 2015 highs of $958 for retail and $3,424 for multifamily.