Cresa's New York City Office tracks local real estate market statistics in the five boroughs of New York City: Manhattan, Brooklyn, Queens, the Bronx and Staten Island. The Office's primary focus is in the Manhattan submarkets of Midtown North, Midtown South and Downtown.
The City is home to perhaps the most broadly diversified array of companies operating within any of the world’s largest metropolitan areas. Manhattan remains the undisputed international hub for the financial services industry and, in addition, it is home to many of the world’s leading law firms and other professional services firms.
The City continues to attract an ever-widening range of creative services firms, including internet-based/technology companies, media organizations, publishing and communications entities. Such fast-growth organizations as Amazon, Google, Twitter, Gilt, Huffingtonpost.com and Facebook continue to expand here.
Cresa is active within the Manhattan office market on a daily basis and our professionals are knowledgeable about all significant current trends and market conditions. We offer unparalleled experience in addressing the needs of the business community - - whether finding the perfect space, negotiating favorable lease terms or arranging the optimal space layout, our team offers a range of invaluable resources to help tenants find the best solutions to their occupancy needs.
James A. Pirot
Senior Vice President, Project Management
Vice President, Project Management
Considering New York City’s pivotal position in the global economy, Manhattan’s office market performed quite well in the third quarter even as there was increased volatility and uncertainty in the global financial markets and growing concern about the pace of overall economic activity.
Despite these challenges, Manhattan’s office sector maintained its stride in the third quarter. The overall Class A office average asking rent increased, reaching $68.00/sf from $67.90/sf in the second quarter. Class B rents also moved ahead, rising to $55.82/sf from $54.60/sf. In fact, for the majority of Manhattan’s submarkets, asking rents increased in the third quarter.
For Manhattan as a whole, there was a slight uptick in the Class A availability rate, reaching 12.4 percent in the third quarter from 12.2 percent in the second quarter. This small increase resulted from the addition of new construction entering the market. The Class B availability rate was unchanged at 10.3 percent.
Leasing slowed in the third quarter, with 8.4 million square feet of deals completed, 27 percent below the level in the second quarter of 2014. During the last two years many large occupiers took advantage of plateauing rent levels in the Midtown North market and the ample availability of space options in the Downtown market to close deals that set their occupancy costs for many years into the future. The hesitation in leasing activity in the third quarter may just reflect the fact that some transactions were completed earlier than is customary.
Solid Business Trends
New York City’s economy sustained its strong growth pattern into the third quarter. In the third quarter, total employment in the City exceeded the previous peak level reached in 2008 by 6.9 percent. If employment growth for the U.S. as a whole had performed as well as it has in New York City, there would be 8,725,000 more jobs in the country now than actually exist.
Each Major Market Participated in Sturdy Performance
Midtown North’s Class A availability rate declined to 11.9 percent from 12.6 percent in the second quarter of 2014. Most of Midtown North’s major submarkets reported some reduction, with the Grand Central and Plaza District both recording the most significant declines. Midtown North’s Class A average asking rent increased in the third quarter, up to $74.81/sf from $74.51/sf in the second quarter.
Midtown South remains one of the most robust real estate markets in the United States; and its success has made it subject to a complex set of forces. The escalation in rent levels has generated changes in tenancies, with some existing tenants being priced out of the Midtown South market. Also, higher rent levels and market valuations prompted major renovations to existing buildings, creating new supply. In addition, millions of square feet of new development are underway. Consequently, the Class A availability rate increased to 10.6 percent in the third quarter from 9.1 percent in the second. This increase was driven by the inclusion in the inventory of available stock of two buildings under construction in the Penn Plaza submarket.
Asking rents for Class B space in Midtown South’s various submarkets pushed higher in the third quarter.
The inclusion of the new World Trade Center buildings in the total inventory along with the continued demand for space Downtown resulted in an increase in the average asking rent, with Class A space increasing to $57.50/sf from $55.57/sf in the second quarter.
Aside from the World Trade Center submarket, Class A availability rates trended down. The Insurance District submarket saw a decline to 6.8 percent from 8.1 percent in the second quarter; and the Financial District fell to 11.8 percent from 12.5 percent. City Hall remained at 12.5 percent. Excluding WTC buildings 1, 3, & 4, the WTC Submarket’s availability rate was 10.7%.
Even though obtained from sources deemed reliable, no warranty or representation, expressed or implied, is made as to the accuracy of the information herein.