Monthly Market Update

Transcription

1 Monthly Market Update December 2015 New York City Office Outlook June 2016 M A N H A T T A N Class A Asking Rents M A N H A T T A N Class A Vacancy Rates $ May-14 May-15 May % May-14 May-15 May-16 $ % $60.00 $ % $ % $0.00 Manhattan Overall Midtown Midtown South Downtown 0.0% Manhattan Overall Midtown Midtown South Downtown MIDTOWN MIDTOWN SOUTH DOWNTOWN BROOKLYN Activity especially in Midtown has been concentrated in large renewals rather than new or expansion leases. Year-to-date, six of seven large-block renewals of 100,000 square feet and greater have been signed by financial and legal services tenants. Partly as a result of a tight market, moderate leasing activity continued into May. Alibaba committed to 860 Washington Street, the second tenant to ink a lease at the new Meatpacking District building. This will be the e-commerce retailer s first New York location as it looks to expand its U.S. presence. The World Trade Center attracted sizable tenants in the past month, reversing a recent trend of slow leasing activity at the top of the Downtown market. Class A asking rents, at $62.17 per square foot, dipped for the second consecutive month. Brooklyn Brewery made a major commitment to Building 77 at the Navy Yard. It will open a brewery on the ground floor, office space above and a beer garden on the roof. Thor Equities recently announced the development of a 623,000-square-foot mixed-use building in Red Hook. The Brooklyn office pipeline now totals 11.0 million square feet.

2 Vacancy rate 10.4% 10.3% 10.1% 9.9% 9.8% 10.2% 10.2% 10.4% 10.7% 10.9% 11.6% 11.2% 11.4% J u n e J L L L E A S I N G M A R K E T W R A P - UP MIDTOWN Large renewals from the traditional sectors (financial and legal services) claimed the top two leases of the month in Midtown. Swiss financial services company UBS signed an early renewal of 891,000 square feet at 1285 Avenue of the Americas ahead of its previous 2020 lease expiration. Law firm Alston & Bird renewed its 122,000-square-foot office at 90 Park Avenue. Year-to-date, six of seven large-block renewals of 100,000 square feet and greater have been signed by financial and legal services tenants. In the third-largest lease of the month in Midtown, Schroder Investment Management will relocate to 73,796 square feet at 7 Bryant Park from 875 Third Avenue in This marks the first leasing activity at the Bryant Park building, which was completed in the fourth quarter of last year. The building is now 76.6 percent committed with the Bank of China slated to occupy approximately 60 percent of the tower it purchased the leasehold interest from the joint venture of Hines, JPMorgan Asset Management and Pacolet Milliken Enterprises. Midtown Class A asking rents declined slightly by 0.5 percent month-over-month to $81.13 per square foot. Year-over-year, Midtown Class A asking rents were up 2.3 percent but varied widely among submarkets. The Grand Central Class A average asking rent is up 12.8 percent year-over-year mostly as a result of the addition of space at the under-construction 390 Madison Avenue earlier this year. At the other end of the spectrum, the Penn Plaza/Garment District average asking rent declined 8.3 percent year-over-year to $70.43 per square foot as higherpriced space at 10 Hudson Yards and 7 Bryant Park has been leased. Vacancy continues to rise in Midtown as spaces are returned to the market. The Midtown Class A vacancy rate increased to 11.4 percent from 11.2 percent in April. This brings the Class A vacancy rate to a full percentage point higher than the 10.4 percent recorded in May Overall vacancy remained flat at 10.2 percent month-over-month. M i d t o w n C l a s s A v a c a n c y h a s m o v e d h i g h e r s e v e n o f t h e l a s t e i g h t m o n t h s 12% 11% 10% 9%

3 J u n e J L L L E A S I N G M A R K E T W R A P - UP MIDTOWN SOUTH Partly as a result of a tight market, moderate leasing activity continued into May. Announced earlier this month, the Simons Foundation expanded its footprint in the Flatiron District by leasing the entire 125,000-square-foot office portion of 162 Fifth Avenue. Global information company Nielsen signed the second largest lease of the month at 675 Avenue of the Americas for 43,529 square feet. Additionally, Alibaba committed to high market rents at 860 Washington Street, representing the second tenant to ink a lease at the new construction building. This will be the e-commerce retailer s first New York location as it looks to expand its U.S. presence. Year-over-year, the Midtown South Class A vacancy rate has declined 1.2 percentage points to 5.3 percent as demand remains strong for high-quality space in the creative sector. At 6.9 percent, overall vacancy was relatively flat for the month and up 0.1 percentage points from this time last year. Class A average asking rent, Midtown South Class A rents increased by 2.1 percent from May The overall average asking rent rose 1.9 percent month-over-month to $70.22 per square foot. Related Companies and LargaVista broke ground on an office and retail building at a former gas station site in SoHo. Like most new developments in Midtown South, the project will do little to ease supply constraints. The seven-story building at 300 Lafayette Street will have approximately 30,000 square feet of retail on the lower floors and 50,000 square feet of office space on floors three to seven. Class A pricing increased slightly to $82.68 per square foot from $81.76 per square foot last month. On par with the Midtown 3.0 m.s.f. o f p l a n n e d o r p r o p o s e d n e w o f f i c e d e v e l o p m e n t s a r e s l a t e d f o r c o m p l e t i o n i n M i d t o w n S o u t h b y t h e e n d o f ; h o w e v e r, p e r c e n t i s a l r e a d y p r e - l e a s e d

4 J u n e J L L L E A S I N G M A R K E T W R A P - UP DOWNTOWN Activity rebounded in May with two significant leases at the World Trade Center. Hudson River Trading agreed to move from 32 Old Slip to 69,000 square feet at 4 World Trade Center, including the exclusive 5,000-square-foot terrace, and Ameriprise Financial leased the entire 78th floor at 1 World Trade Center for 37,708 square feet. Several additional leases are pending at the World Trade Center and other trophy-quality buildings, which should close by year-end. Yet with smaller blocks returning elsewhere, the Class A vacancy rate increased by 23 basis points during May to 11.7 percent. The Class B vacancy rate remained flat at 10.8 percent. availabilities at the lower-priced Water Street Corridor. Three Class B properties increased their direct rents in May, resulting in a slight overall increase in asking rents to $49.26 per square foot. Two high-profile office investment sales reportedly closed in Lower Manhattan in May. A 49.0-percent interest in 1 New York Plaza was purchased for $700 million by China Investment Corporation (CIC) and the Mack-Cali condominium at 125 Broad Street was purchased for $202 million by Sullivan & Cromwell LLP. Additional large-block availabilities appear to be on the horizon. Long-time Downtown law firm Milbank signed a letter of intent to move from 28 Liberty Street to 55 Hudson Yards, potentially freeing up a large block at the top of the tower. After rising markedly through the last two years, Downtown asking rents have begun to stabilize. Class A asking rents, at $62.17 per square foot, dipped for the second consecutive month on the heels of leasing activity at the World Trade Center and new 44.1% o f D o w n t o w n l e a s i n g a c t i v i t y t h i s q u a r t e r h a s o c c u r r e d a t t h e W o r l d T r a d e C e n t e r

5 N E W Y O R K O F F I C E O U T L O O K June 2016 SUBMARKET STATISTICS Midtown Inventory Class A Class B Overall Vacancy Rate Asking Rent (p.s.f.) Inventory Vacancy Rate Asking Rent (p.s.f.) Inventory Vacancy Rate Asking Rent (p.s.f.) Columbus Circle 17,370, % $ ,926, % $ ,296, % $72.18 Grand Central 39,504, % $ ,701, % $ ,205, % $69.17 Penn Plaza / Garment 18,095, % $ ,093, % $ ,189, % $62.60 Plaza District 85,911, % $ ,175, % $ ,086, % $85.63 Times Square 31,959, % $ ,262, % $ ,221, % $75.83 Total 192,840, % $ ,159, % $ ,999, % $75.02 Midtown South Chelsea 10,592, % $ ,825, % $ ,417, % $62.46 Gramercy Park 10,721, % $ ,260, % $ , % $70.57 Greenwich Village 1,915, % $ ,886, % $ ,801, % $73.94 Hudson Square 4,589, % $ ,057, % $ ,646, % $78.81 SoHo 964, % $ ,765, % $ ,730, % $73.41 Total 28,783, % $ ,795, % $ ,578, % $70.22 Downtown Financial District 14,246, % $ ,448, % $ ,695, % $52.82 Tribeca / City Hall 4,372, % $ ,348, % $ ,721, % $49.55 Water Street Corridor 20,942, % $ ,534, % $ ,475, % $51.91 World Trade Center 18,402, % $ % $ ,402, % $74.75 Total 57,963, % $ ,331, % $ ,294, % $57.31 Manhattan 279,587, % $ ,285, % $ ,872, % $70.14 CLOSED LEASING TRANSACTIONS Size (s.f.) Tenant Address Submarket Type 891,000 UBS 1285 Avenue of the Americas Plaza District Renewal 125,000 The Simons Foundation 162 Fifth Avenue Chelsea New 122,000 Alston & Bird 90 Park Avenue Grand Central Renewal 73,796 Schroder Investment Management 7 Bryant Park Penn Plaza / Garment New

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