Commercial Scorecard – Manhattan Office Leasing
Midtown office leasing rose by 26% in September from the prior month. Tenants signed leases for 1.9 million square feet, which pushed the area’s availability rate down to 11.6%. Asking rents rose by $0.17 per square foot to $80.54 per square foot. Midtown South leasing activity cooled in September, with 370,000 square feet in deals signed, down from 510,000 the month prior. The average asking rent fell by $0.28 per foot to $71.90 per foot. Lower Manhattan leasing activity pulled back in September, falling to 500,000 square feet from 730,000 square feet a month earlier. The average asking rent rose to $61.95 per foot, up $0.53 per foot from August.
Ernst & Young Relocation
Global professional services company Ernst & Young LLP is heading to Manhattan's far West Side. The company said it plans to move its U.S. headquarters from 5 Times Square to One Manhattan West, where it has signed a lease to take 600,000 square feet on 17 floors. EY, which has been expanding its presence in the metropolitan area, is part of a wave of big tenants, including Amazon.com Inc., that have committed to taking office space at the eight-acre development where One Manhattan West is now rising. The company liked Manhattan West's location near Penn Station and subway lines as well as the modern construction and building systems offered by the eight-acre Manhattan West complex. Another major factor was the tax incentive package that the state of New York is offering. The state will provide EY with up to $12 million in tax credits if it creates 1,152 jobs in New York City over the next seven years.
Commercial Brokerage IPOs
An emerging trend shows a public market with a rapidly growing appetite for real estate service firms, as evidenced by the recent news that Newmark Knight Frank will go public. Newmark Group, as the new company is known, will trade under the ticker symbol NMRK and is looking to raise up to $100 million through the IPO. But even as the big get bigger, there’s plenty of room for large brokerage firms to grow without overlap. Newmark and the five other top firms, including Cushman & Wakefield, hold a roughly 15% share of the $200 billion global commercial brokerage market. Newmark has yet to disclose how many shares it will offer and at what price, but it is clear that it will have 157 founding partners, who will hold a combined 12.7 million shares. Those equity units will be traded on a one-to- one basis for Newmark common stock, but the value will depend on how much total stock is issued and at what price.
Retail Vacancies in SoHo
Investors who spent more than $940 million to buy retail-focused buildings and condominium and cooperative units in SoHo over the past six years are today sitting with their spaces vacant. As the retail market struggles citywide, landlords are under pressure to occupy the space, even if they’re not able to achieve the rent they anticipated when they closed the sale. Soho saw average asking rents double from 2008 to 2014, hitting $890 per square foot that year. While those numbers have declined, reaching $812 in May, many tenants still aren’t signing up. If they are, it’s for short-term deals as they struggle with an unpredictable economy and the rise of online retail.
This news update is brought to you by David Reich, a New York-based Corporate Real Estate Advisor whose team has over 40 years of experience representing tenants in New York City for all their office space needs. To learn more, visit www.leaseofficesnyc.com