Manhattan office market
According to a report from real estate services company Cushman &
Wakefield, the Manhattan office market stayed relatively flat this past
second quarter, with the vacancy rate of 9.2 percent unchanged,
and the average asking rent of $72.67 per square foot slightly higher
compared to second-quarter 2017. Net space absorption doubled over
the same period, however, to 4.2 million square feet, and there was
17 million square feet of office construction underway as of the past
Cushman & Wakefield expected slight increases in vacancy rates and
rental rates in Manhattan’s Midtown South submarket during the
latter half of 2018 as a portion of the Hudson Yards project comes online.
Construction of Three World Trade Center ended in the past second
quarter, pushing downtown Manhattan’s vacancy rate to 11. 3 percent,
the neighborhood’s first double-digit vacancy rate since 2016.
What the locals say
“The biggest of our consumers of office leases right now are
the co-working tenants. We Work now has become the largest
commercial office tenant in the city of New York, with almost
5. 5 million square feet of office space that they’ve leased, so
that’s very significant. … Certainly, internet sales have had a
major impact on retailers’ willingness to rent stores, so we’ve
seen a real slowdown in retail. We’ve seen landlords now are
cutting rents so, depending on the market, rents have gone
down anywhere from 20 to 40 percent. … There just might
be too much retail space in New York for the demand.”
By Neil Pierson
The Empire State is a big target for real estate investors.
As one of the original 13 American colonies, New York — also known as the
Empire State — has a long and storied history. With a population of 8. 6 million
people in 2017, according to the U.S. Census Bureau, New York City is the
nation’s largest city and is world-renowned for attractions like the Empire State
Building, the Statue of Liberty and Broadway.
New York was the most populous state until California surpassed it in the
1960s. Its current population of 19. 8 million ranks as the fourth-largest in the
U.S. among the states — behind California, Texas and Florida.
New York ranked squarely in the middle of the pack — 25th overall — on
the U.S. News & World Report 2018 “Best States” list. The Empire State was
judged better than average for health care, infrastructure, and crime and
corrections. It ranked among the bottom 10 states for opportunity, however,
because of high levels of poverty and income inequality as well as a high
cost of living.
New York is pursuing a plan to rebuild its infrastructure over the next few
years. Gov. Andrew Cuomo announced a $150 billion investment funded
by federal, state and local governments, as well as private sources. This
includes $66 billion for transportation projects, $32 billion for energy and
environmental investments, and $19 billion to construct and renovate public
schools. The plan is expected to create 675,000 jobs.
According to Empire State Development, New York has the second-highest
population of scientists and engineers among all states and, among Northeast states, produces the most college graduates in science, technology,
engineering and math (STEM) degree programs. Last year, the state created
the Excelsior Scholarship, which offers a tuition-free education at all
two-year and four-year state colleges and universities to students who
pledge to live and work in New York after graduation.
The first half of 2018 saw a 20 percent volume increase in sales of investment
properties in New York City, compared with the same period a year earlier,
according to the Real Estate Board of New York. Citywide, the $4.2 billion in
multifamily sales and the $2.2 billion in hotel sales more than doubled what
occurred in the first half of 2017.
Buffalo, the state’s second-largest city, experienced growth in its
multifamily market from 2015 through 2017, with average sales prices in the
metro area exceeding $50,000 per unit each year, CBRE reported. Buffalo’s
industrial sector saw a record-low 3. 5 percent vacancy rate in 2017, and
that figure was expected to remain low through 2018, driven in part by the
recent corporate-tax reforms at the federal level, CBRE said. n James Wacht
President, Lee & Associates NYC
Manhattan Office Market
Source: Cushman & Wakefield
Average asking rent
per square foot
Total vacancy rate