Market Updates & Info Articles

Earlier this year, Manhattan experienced a game of real estate musical chairs among the available large blocks of space surrounding Grand Central Terminal.  The players included some of the city’s biggest and best known tenants: Bloomberg, Citigroup, Hartford Insurance, JPMorganChase, Meredith Corporation, Pfizer, Tishman Construction and Wells Fargo.  When the dust cleared, several million square feet of leases had been signed and the vacancy rates in Grand Central had dropped significantly.  Furthermore, this shakeout at the top of the market would have a “trickle-down” ramification for midsize and smaller tenants throughout this submarket.

Manhattan’s office market is likely to face a range of challenges in 2012.  The economy has yet to settle into a steady pace of sustainable recovery.  Some uncertainty is likely to surface in 2012 until the results of the presidential election suggest a probable direction.  In the meantime, employers continue to adapt to doing more with less.  New businesses are coming of age and will start to hire more and take more space.

The city’s economy stabilized during  Q3 but it is already bracing itself for a new round of layoffs on Wall Street.  Although NYC’s employment level dropped minimally for the quarter, it is 54,000 jobs ahead of a year ago and an 8.6% unemployment rate remains well below the National average.  For the quarter, total employment dropped by 4,800 jobs. In contrast to the rest of the nation, the government sector added 11,100 jobs over the quarter, while the private sector shed 15,900 jobs.  By industry, Business Services added 9,700 new jobs and Financial Activities employment grew by 5,300 jobs.  In contrast, Information shrank by 8,100 jobs.

Tenant's Viewpoint In this landlords' market, tenants should expect to see a continuing rise in overall occupancy costs

The reality of triple digit rental rates should cause alarm for service industry providers that want to be positioned in "Class A" Midtown properties, as costs become prohibitively high. Low margin businesses will feel the greatest impact if real estate prices continue to escalate at 10% - 15% per annum.