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NYCBizSpace Sept Market Marketstats

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NYC Biz Space team shares 3Q 2011 Manhattan Commercial Real Estate Market Indicators

NYC Biz Space team shares 3Q 2011 Manhattan Commercial Real Estate Market Indicators


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  • 1. Manhattan Commercial Real Estate Market Indicators October 2011
  • 2. Manhattan Real Estate Market Overview
    • Weakness in the national and global economy has impacted deal flow. Many companies have put transactions on hold until tenants get a better sense of where the market is headed. With the presidential election in 2012 it may be awhile before certainty returns to the market place.
    • In spite of this, New York continues to see pockets of deal flow with Midtown South being the hot new submarket, as many tech and digital media companies gravitate to Flatiron and Union Square. September put some wind back into our sails with better than five-year monthly leasing averages for all three Manhattan submarkets. Year-to-date we saw 21.76 million sq. ft. of activity, compared to 17.24 million sq. ft. last year.
    • Absorption is a key indicator of the market’s health because it measures how much net space has been either added, or subtracted from the city’s pool of vacant space. For Q3 2011 absorption was negative 840,000 for Midtown. We are seeing more sublease space being put on the market, as well as downward re pricing of existing space to lower base rents. I expect this trend to continue as the financial firms react to recent lay offs.
    • Availability for Manhattan overall is down to 11.2% from 13.3% for the same period last year. Midtown is a bit higher at 11.7%, Midtown South is considerably less at 9.5%, while Downtown’s availability was 11.0% for the month ended September 30, 2011.
    • Average asking rents rose slightly to $52.00 per sq. ft. for Manhattan. Midtown has the highest average asking rents which were relatively stable at $60.57. This is a bit misleading because rents rose due in part to higher priced space at 330 Madison being put on the market. Midtown South experienced a slight increase for similar reasons, while Downtown saw average asking rents drop by$0.39 to $38.97 per sq. ft.
    • In sum, the first six months were very strong then July and August came and it felt like someone had hit the “pause button”. September has brought activity back into the market place but there are reasons to remain cautious.. There are a number of troubling economic indicators that could put downward pressure on leasing activity and slow down the increase in average asking rents.. The lack of job growth and continued European uncertainty could dampen current activity.
    ©2010 CB Richard Ellis, Inc. CB Richard Ellis statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’ Corporate Communications Department or CB Richard Ellis’ research and econometric forecasting unit, CB Richard Ellis-Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.
  • 3. Midtown Market Snapshot
    • HOT TOPICS
    • Following two consecutive months of below-average leasing activity, Midtown topped its five-year monthly average of 1.18 million sq. ft. in September.
    • Midtown’s year-to-date leasing of 13.11 million sq. ft. outpaced 2010 activity by 12%.
    • The month’s strong leasing activity was offset by the addition of several large new availabilities to the market in September, fueling absorption of negative 840,00 sq. ft.
    • The overall availability rate ticked up 0.4 points to 11.7% in September, the largest monthly increase since May 2009.
    • The month’s $0.48-per-sq.ft.increase in average asking rent was due in part to higher-priced space at 330 Madison Avenue being brought to market.
    • LARGE NEW SPACE AVAILABILITIES::
      • 480,000 sq. ft. of direct space at 229 West 43 rd Street
      • 263,000 sq. ft. of direct space at 280 Park Avenue
      • 184,000 sq. ft. of direct space at 330 Madison Avenue
      • 150,000 sq. ft. of direct space at 685 Third Avenue
      • 114,000 sq. ft. of Cerberus Capital Management, Inc. sublease space at 299 Park Avenue
    ©2010 CB Richard Ellis, Inc. CB Richard Ellis statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’ Corporate Communications Department or CB Richard Ellis’ research and econometric forecasting unit, CB Richard Ellis-Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis .
    • THERE WERE 6 BIG BLOCKS OF CONTIGUOUS SPACE
    • > 250,000 Sq. Ft.
    • 11 Times Square (2) 633,469 rsf
    • 685 Third Avenue 417,309 rsf
    • 3 Columbus Circle 629,903 rsf
    • 350 Fifth Avenue 278,249 rsf
    • 205 E. 42 nd Street 289,116 rsf
    2010 2011 2011 YTD YTD MAY JUNE JULY AUG SEPT Comments Leasing (MSF) 11.71 13.11 1.92 2.42 2.42 1.00 1.30 Increased velocity Absorption (MSF) 4.02 0.63 0.28 1.05 0.20 0.56 (0.84) Negative net absorption Availability Rate 13.0% 11.7% 12.1% 11.7% 11.6% 11.3% 11.7% Trending higher Sublet Availability Rate 3.3% 2.8% 2.9% 2.9% 2.9% 2.8% 2.8% Up slightly # of Large Blocks (>100K rsf) 39 31 34 31 31 31 31 Stable Average Asking Rent $55.27 $60.57 $59.84 $60.75 $60.81 $60.09 $60.57 Slight increase in average asking rents
  • 4. Midtown South Market Snapshot
    • HOT TOPICS
    • Midtown South recorded robust leasing activity of 580,000 sq. ft. in September, nearly double the five-year monthly average of 300,000 sq. ft.
    • Year-to-date 2011’s 3.85 million sq. ft. of leasing activity was 21% ahead of the year-earlier period.
    • Strong leasing just offset the handful of mid-size new availabilities that came online during the month, driving 50,000 sq. ft. of positive absorption in September.
    • The overall availability rate inched down 0.1 point to 9.5%-its lowest level since December 2007.
    • Midtown South’s asking rent rose $0.22 in September to $44.66 per sq. ft., due to the addition of higher-priced space to the market.
    • LARGE NEW SPACE AVAILABILITIES :
      • 60,000 sq. ft. of direct space at 3 Park Avenue
      • 25,000 sq. ft. of direct space at 531 West 25 th Street
      • 23,0000 sq. ft. of direct space at 826 Broadway
    ©2010 CB Richard Ellis, Inc. CB Richard Ellis statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’ Corporate Communications Department or CB Richard Ellis’ research and econometric forecasting unit, CB Richard Ellis-Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.
    • THERE WERE 2 BIG BLOCKS OF CONTIGUOUS SPACE > 250,000 Sq. Ft.
    • 550 Washington Street 782,086 rsf
    • 28 W. 23 rd Street 257,650 rsf
    1. 2010 2011 2011 YTD YTD MAY JUN JULY AUG SEPT Comments Leasing (MSF) 3.17 3.85 0.48 0.42 0.44 0.28 0.58 Increased velocity Absorption (MSF) 1.23 1.66 0.42 0.17 0.40 0.04 0.05 Slight positive absorption Availability Rate 13.1% 9.5% 10.5% 10.3% 9.7% 9.6% 9.5% Decrease in availability rate Sublet Availability Rate 2.4% 1.4% 1.5% 1.6% 1.4% 1.4% 1.4% Low yet stable sublet availability # of Large Blocks (>100K rsf) 14 9 11 10 9 9 9 Stable Average Asking Rent $42.93 $44.66 $43.87 $43.94 $43.99 $44.44 $44.66 Slight increase in average asking rents stable
  • 5. Downtown Market Snapshot
    • HOT TOPICS
    • Downtown’s leasing activity of 460,000 sq. ft. in September topped the five-year monthly average of 330,000 sq. ft. by 39%.
    • Downtown’s year-to-date 2011 leasing of 4.80 million sq. ft. was more than double 2010’s 2.36 million sq. ft.
    • The handful of mid-size new availabilities added to the market offset the month’s strong leasing, pushing Downtown’s absorption into negative territory for the month. However, year-to-date absorption was positive 2.13 million sq. ft.- a reversal from 2010’s negative 2.50 million sq. ft.
    • The overall availability rate inched up 0.1 to 11.0% in September, while the sublease availability rate was static at 1.6%.
    • Following a $0.34 increase in August to $39.69 per sq. ft., the average asking rent fel $0.39 to $38.97 per sq. ft. in September due to the leasing of high quality space above the average.
    • LARGE NEW SPACE AVAILABILITIES:
    • − 188,000 sq. ft. of direct space at 55 Water Street
    • 131,000 sq. ft. of direct space at 125 Broad Street, which was already on the market, but fell within 12 months of tenant possession in September and was therefore reflected in availability statistics
    • 50,000 sq. ft. of direct space at 14 Wall Street
    • 20,000 sq. ft. of PKF Consulting USA sublease space at 29 Broadway
    • 17,000 sq. ft of Cadwalder, Wickersham & Taft LLP sublease space at 1 World Financial Center
    ©2010 CB Richard Ellis, Inc. CB Richard Ellis statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’ Corporate Communications Department or CB Richard Ellis’ research and econometric forecasting unit, CB Richard Ellis-Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.
    • THERE WERE 2 BIG BLOCKS OF CONTIGUOUS SPACE
    • >250,000 Sq. Ft.
    • 85 Broad Street, 651,501 rsf
    • 1 NY Plaza, 551,825 rsf
    2010 2011 2011 YTD YTD MAY JUNE JULY AUG SEPT Comments Leasing (MSF) 2.36 4.80 0.44 1.43 0.86 0.26 0.46 Increased velocity Absorption (MSF) (2.50) 2.13 0.20 1.23 0.24 0.09 (0.05) Negative absorption Availability Rate 14.3% 11.0% 12.8% 11.3% 11.0% 10.9% 11.0% Slight increase in availability Sublet Availability Rate 2.9% 1.6% 2.0% 1.8% 1.6% 1.6% 1.6% Stable sublet availability # of Large Blocks (>100K rsf) 15 10 10 9 10 10 10 Stable #big blocks Average Asking Rent $38.20 $38.97 $38.78 $39.11 $38.68 $39.36 $38.97 Slight decrease in average asking rents
  • 6. “ Feet on the Street”
    • Top Lease Transactions: for the month ended September 30, 2011:
    • Open Society Institute signed a 163,100 sq. ft. deal at 224 West 57 th Street.
    • Swiss Re renewed 93,189 sq. ft. at 55 East 52 nd Street.
    • Marks Paneth & Shron LLP inked a deal for 85,460 sq. ft. at 685 Third Avenue.
    • Societe Generale took 2 floors of expansion space, or 72,332 sq. ft at 245 Park Avenue.
    • Endurance Capital Management signed a 56,065 sq. ft. deal at 750 Third Avenue.
    • Pearson PLC took 274,247 sq. ft. at 330 Hudson Street.
    • Two Sigma Investments, LLC took 74,443 sq. ft. of expansion space at 100 Avenue of the Americas.
    • NYU Langone Medical Center expanded 52,225 sq. ft. at 1 Park Avenue.
    • Apple’s mobile advertising group added 37,299 sq. ft. at 100 & 104 Fifth Avenue.
    • Mancini Duffy Associates renewed and expanded 25,397 sq. ft. at 275 Seventh Avenue.
    • MSCI Barra, Inc. signed a 125,811 sq. ft. deal at 7 World Trade Center.
    • New York City Health & Hospitals Corporation expanded 43,000 sq. ft. at 160 Water Street.
    • Juvenile Diabetes Research Foundation International expanded 28,812 sq. ft. at 26 Broadway.
    • Huron Consulting Group inked a new deal at 40 Wall Street for 28,812 sq. ft.
    • Portware, LLC renewed and expanded 28,098 sq. ft. at 233 Broadway.
    ©2010 CB Richard Ellis, Inc. CB Richard Ellis statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’ Corporate Communications Department or CB Richard Ellis’ research and econometric forecasting unit, CB Richard Ellis-Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.