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LEE NYC MANHATTAN TREND TRACKER 4Q2017 THE OFFICE MARKET REPORT
Transcript of LEE NYC - LEE & ASSOCIATES NYCleeassociatesnyc.com/wp...2017-Market-Office-Report...Lee & Associates...
LEE NYCMANHATTAN TREND TRACKER4Q2017
THE OFFICE MARKET REPORT
2
SUBMARKETS
LEE & ASSOCIATES NYC
HUDSONRIVER
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CHELSEACHELSEA
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PENN STATION | GARMENT DISTRICT
MIDTOWN
MIDTOWN SOUTH
DOWNTOWN
MANHATTAN TREND TRACKER 4TH QUARTER 2017
MarketInventory
(MSF)(Rnd.)
AvailableTotal(SF)
TotalVacancy
Rate(%)
TotalAvailability
Rate(%)
TotalNet
Absorption(SF)
UnderConstruction
(SF)
DirectAskingRent
($PSF)
Sublease AskingRent
($PSF)
Overall AskingRent
($PSF)Midtown 223 25,140,339 8.2% 11.3% 687,938 2,919,888 $84.02 $65.49 $79.53
Grand Central 72 8,280,203 9.1% 11.6% 605,330 1,732,955 $78.85 $49.68 $74.77 Midtown East 26 2,753,127 6.0% 10.7% (89,548) 290,505 $73.97 $64.89 $69.37 Midtown West 20 1,426,657 4.9% 7.0% 35,889 90,000 $86.04 $60.11 $82.42 Plaza District 38 5,375,306 11.4% 14.1% (297,990) 806,428 $117.76 $70.09 $112.27 Rockefeller Plaza 29 2,142,095 6.4% 7.5% 136,636 - $84.49 $68.07 $82.52 Times Square 38 5,162,951 8.1% 13.5% 297,621 - $75.70 $66.32 $74.77
Midtown South 154 16,431,276 7.0% 10.7% 662,019 9,621,814 $67.76 $50.19 $64.49 Chelsea 18 1,842,820 7.8% 10.0% 163,399 877,867 $69.20 $51.00 $64.56 Gramercy | Flatiron 31 2,523,241 4.4% 8.2% 96,508 73,323 $73.87 $62.69 $72.06 Hudson Square | Tribeca 22 3,183,569 9.4% 14.8% (6,437) 138,938 $81.73 $59.10 $78.78 Murray Hill 13 1,184,630 7.0% 8.9% 189,853 - $61.62 $43.57 $57.99 Penn Station-Garment 57 6,356,176 7.2% 11.2% 118,146 8,272,745 $58.37 $46.34 $55.59 SoHo | NoHo 13 1,340,840 6.9% 10.4% 100,550 258,941 $74.77 $62.48 $73.28
Downtown 105 11,724,262 9.1% 11.2% 93,267 2,861,402 $62.64 $42.33 $60.96 City Hall | Insurance Dist. 26 1,971,193 4.9% 7.5% 70,495 - $54.40 $38.00 $52.88 Financial District 43 5,433,577 9.1% 12.5% (114,255) - $59.95 $49.48 $57.35 World Trade Center 35 4,319,492 12.5% 12.7% 137,027 2,861,402 $65.19 $49.78 $64.69
Manhattan 482 53,295,877 8.0% 11.0% 1,443,224 15,403,104 $74.32 $59.28 $61.24
2017 | 4Q Manhattan Office
1. Arrows are an indication based on quarter-over-quarter movements.2. All rent figures are based on market and submarket weighted averages. Overall Asking Rents take Direct and Sublease rents into account.3. Under Construction only includes buildings with expected deliveries, with a primary office use and over 50,000 square feet. Buildings under construction that include office as a secondary or tertiary use are excluded. All proposed new construction buildings were excluded.
Commenced with report, 1Q 2015, Lee & Associates utilizes new metric methods from its prior reporting methods. Lee & Associates Office Metrics are based on office buildings with a minimum rentable building area of 100,000 square feet, with the exception in the submarket of Soho/Noho, which uses metrics based on office buildings with a minimum rentable building area of 50,000 square feet. Lee & Associates Office Metrics comprise data representing existing office buildings for Classes A, B and C. Since new metric methods have been applied, the correlation of data for this report (and all reports since 1Q 2015) will have no bearing over the reports previously published by Lee & Associates (prior to 1Q 2015).
Lee & Associates NYC accepts no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should beplaced on the information contained in this document.
MARKET SUMMARY
3 LEE & ASSOCIATES NYCMANHATTAN TREND TRACKER 4TH QUARTER 2017
Midtown overall asking rents gradually increased quarter-to-quarter to $79.53 from $79.09; and are down 2.4% or $1.97 year-over-year. Base rents increased
quarter-to-quarter to $77.22 from $69.55, by 11% or $7.67; and are up 4.3% or $3.20 year-over-year. Q4 had an average asking-to-base rent spread of 2.9%, compared to 12.1% in Q3 and 9.2% in 2016Q4. Concessional discounts increased to 6.9% from 6.5% quarter-to-quarter, and are up from 5% year-over-year; with net effective rents increasing 10.7% to $71.93, and are up 2.3% year-over-year. Leasing activity finished 2017 at 12,968,761 SF. Quarter-to-quarter leasing activity decreased 5%, with 2,435,252 SF leased in Q4 compared to 2,563,981 SF leased in Q3. 390 Madison leased the largest block of space this quarter. The availability rate decreased to 11.3% from 11.7% over the quarter; is down from 12% year-over-year and is 0.4% below its five-year average of 11.7%; with 399 Park Avenue leading the market in available space. 2017 experienced a negative net absorption of 87,865 SF; with the vacancy rate decreasing to 8.2% from 8.8% in Q3, down from 8.8% year-over-year and is 0.2% below its five-year average of 8.4%.
Grand Central overall asking rents decreased quarter-to-quarter to $74.77 from $75.13, by 0.5% or $0.36; and are up 2.1% or $1.52 year-over-year. Base rents remained stagnant quarter-to-quarter around $66, and are up 2.5% or $1.58 year-over-year. Q4 had an average asking-to-base rent spread of 11.6%, compared to 12% in Q3 and 2016Q4. Concessional discounts decreased to 6.7% from 8.2% quarter-to-quarter, and are up from 6.5% year-over-year; with net effective rents increasing 1.7% to $61.71, and are up 2.2% year-over-year. Leasing activity finished 2017 at 4,982,165 SF. Quarter-to-quarter leasing activity decreased 15.4% with 868,254 SF leased in Q4, compared to 1,026,449 SF in Q3. 390 Madison Avenue leased the largest block of space this quarter. The availability rate decreased to 11.6% from 11.8% over the quarter; is down from 13.2% year-over-year and is 2.1% below its five-year average of 13.7%; with 405 Lexington Avenue leading the submarket in available space. 2017 experienced a negative net absorption of 161,576 SF; with the vacancy rate decreasing to 9.1% from 9.9% in Q3, up from 9% year-over-year and is 0.8% below its five-year average of 9.9%. Notable Deal: Shiseido Americas Corporation signed a new 15-year lease for 230,042 SF at 390 Madison Avenue (15th to 22nd floors), with a base rent in the high $80s.
Midtown East overall asking rents increased quarter-to-quarter to $69.37 from $68.33, by 1.5% or $1.04; and are down 4.6% or $3.33 year-over-year. Base rents increased quarter-to-quarter to $62.98 from $59.23, by 6.3% or $3.75; and are down 6.8% or $4.60 year-over-year. Q4 had an average asking-to-base rent spread of 9.2%, compared to 13.3% in Q3 and 7% in 2016Q4. Concessional discounts increased to 2% from 1.8% quarter-to-quarter, and are down from 5.2% year-over-year; with net effective rents increasing 6.2% to $61.74, and are down 3.6% year-over-year. Leasing activity finished 2017 at 693,812 SF. Quarter-to-quarter leasing activity decreased 22.6% with 153,403 SF leased in Q4, compared to 198,268 SF leased in Q3. 570 Lexington Avenue leased the largest block of space this quarter. The availability rate increased to 10.7% from 8.8% over the quarter; is up from 9.2% year-over-year and is 2.7% above its five-year average of 8%; with 875 Third Avenue leading the submarket in available space. 2017 experienced a negative net absorption of 140,215 SF; with the vacancy rate increasing to 6% from 5.3% in Q3, up from 4.9% year-over-year and is 1% above its five-year average of 5%. Notable Deal: Cerberus Capital Management signed a new 5-year lease for 10,144 SF at 875 Third Avenue (36th floor), with a base rent in the high $50s.
Midtown West overall asking rents decreased quarter-to-quarter to $82.42 from $83.08, by 0.8% or $0.66; and are up 0.6% or $0.49 year-over-year. Base rents increased quarter-to-quarter to $81.50 from $70.83, by 15.1% or $10.67; and are up 12.3% or $8.90 year-over-year. Q4 had an average asking-to-base rent spread of 1.1%, compared to 14.8% in Q3 and 11.4% in 2016Q4. Concessional discounts decreased to 6.3% from 7.5% quarter-to-quarter, and are up from 3.2% year-over-year; with net effective rents increasing 16.5% to $76.36, and are up 8.7% year-over-year. Leasing activity finished 2017 at 1,622,380 SF. Quarter-to-quarter leasing activity has increased 87% with 218,654 SF leased in Q4, compared to 116,838
SF in Q3. 250 West 57th Street leased the largest block of space this quarter. The availability rate decreased to 7% from 7.5% over the quarter; is down from 7.1% year-over-year and is 1.4% below its five-year average of 8.4%; with 1345 Avenue of the Americas leading the submarket in available space. 2017 experienced a negative net absorption of 271,537 SF; with the vacancy rate decreasing to 4.9% from 5.2% in Q3, up from 3.7% year-over-year and is 1.4% below its five-year average of 6.3%. Notable Deal: ASCAP signed a new 15-year lease for 85,000 SF at 250 West 57th Street (12th to 14th and 20th floors), with a base rent in the low $60s.
Plaza District overall asking rents increased quarter-to-quarter to $112.27 from $109.83, by 2.2% or $2.44; and are up 2.7% or $2.90 year-over-year. Base rents increased quarter-to-quarter to $99.72 from $80.09, by 24.5% or $19.63; and are up 10.1% or $9.18 year-over-year. Q4 had an average asking-to-base rent spread of 11.2%, compared to 27.1% in Q3 and 17.2% in 2016Q4. Concessional discounts increased to 7% from 3.8% quarter-to-quarter, and are up from 6.3% year-over-year; with net effective rents increasing 20.4% to $92.73, and are up 9.3% year-over-year. Leasing activity finished 2017 at 1,977,775 SF. Quarter-to-quarter leasing activity has increased 33.9% with 512,980 SF leased in Q4, compared to 383,101 SF in Q3. 65 East 55th Street leased the largest block of space this quarter. The availability rate decreased to 14.1% from 16.3% over the quarter; is down from 15.4% year-over-year and is 1.5% above its five-year average of 12.6%; with 399 Park Avenue leading the submarket in available space. 2017 experienced a negative net absorption of 803,577 SF; with the vacancy rate decreasing to 11.4% from 12.5% in Q3, up from 11% year-over-year and is 2.7% above its five-year average of 8.7%. Notable Deal: The Raine Group signed a new 15-year lease for 33,253 SF at 65 East 55th Street (23rd to 24th floors).
Rockefeller Plaza overall asking rents increased quarter-to-quarter to $82.52 from $74.27, by 11% or $8.25; and are up 4.7% or $3.70 year-over-year. Base rents increased quarter-to-quarter to $81.36 from $72.80, by 11.8% or $8.56; and are up 14% or $9.96 year-over-year. Q4 had an average asking-to-base rent spread of 1.4%, compared to 2% in Q3 and 9.4% in 2016Q4. Concessional discounts increased to 8.4% from 8.1% quarter-to-quarter, and are up from 3% year-over-year; with net effective rents increasing 11.3% to $74.46, and are up 7.5% year-over-year. Leasing activity finished 2017 at 1,614,499 SF. Quarter-to-quarter leasing activity has increased 46.1% with 342,575 SF leased in Q4, compared to 234,538 SF in Q3. 1290 Avenue of the Americas leased the largest block of space this quarter. The availability rate decreased to 7.5% from 7.7% over the quarter; is down from 9.7% year-over-year and is 2.6% below its five-year average of 10.1%; with 75 Rockefeller Plaza leading the submarket in available space. 2017 experienced a positive net absorption of 806,723 SF; with the vacancy rate decreasing to 6.4% from 6.7% in Q3, down from 9.1% year-over-year and is 2.4% below its five-year average of 8.8%. Notable Deal: Bryan Cave LLP signed a 15-year renewal for 126,084 SF at 1290 Avenue of the Americas (31st, 33rd, 35th to 37th floors), with a base rent in the mid-$80s.
Times Square overall asking rents increased quarter-to-quarter to $74.77 from $73.15, by 2.2% or $1.62; and are down 3% or $2.27 year-over-year. Base rents increased quarter-to-quarter to $71.03 from $62.88, by 13% or $8.15; and are down 3.7% or $2.75 year-over-year. Q4 had an average asking-to-base rent spread of 5%, compared to 14% in Q3 and 4.2% in 2016Q4. Concessional discounts increased to 9.2% from 5.4% quarter-to-quarter, and are up from 5.8% year-over-year; with net effective rents increasing 8.5% to $64.51, and are down 7.1% year-over-year. Leasing activity finished 2017 at 2,078,130 SF. Quarter-to-quarter leasing activity has decreased 43.9% with 339,386 SF leased in Q4, compared to 604,787 SF in Q3. 1633 Broadway leased the largest block of space this quarter. The availability rate decreased to 13.5% from 14% over the quarter; is up from 12.7% year-over-year and is 1% above its five-year average of 12.5%; with 330 West 42nd Street leading the submarket in available space. 2017 experienced a positive net absorption of 402,389 SF; with the vacancy rate decreasing to 8.1% from 8.7% in Q3, down from 9.2% year-over-year and is 0.5% below its five-year average of 8.6%. Notable Deal: MongoDB signed a new 12-year lease for 106,230 SF at 1633 Broadway (37th to 38th floors).
MIDTOWN
4 LEE & ASSOCIATES NYCMANHATTAN TREND TRACKER 4TH QUARTER 2017
MIDTOWNMIDTOWN
5 LEE & ASSOCIATES NYCMANHATTAN TREND TRACKER 4TH QUARTER 2017
8.0%
11.9%
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Midtown Vacancy and Availability
Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.
Ten Year Average 4,415,611
- 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Midtown Leasing Activity
SF Leased 10Y Avg.Historical statistics are updated to reflect new ly released market information.
Great Recession
(2,500,000)
(2,000,000)
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
2,000,000
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Midtown Net Absorption
MIDTOWN SOUTH
M idtown South overall asking rents gradually increased quarter-to-quarter to $64.49 from $64.35; and are down 2.3% or $1.51 year-over-year. Base rents
increased quarter-to-quarter to $63.19 from $58.84, by 7.4% or $4.35; and are up 4.5% or $2.72 year-over-year. Q4 had an average asking-to-base rent spread of 2%, compared to 8.6% in Q3 and 8.4% in 2016Q4. Concessional discounts increased to 9.2% from 3.8% quarter-to-quarter, and are up from 4.3% year-over-year; with net effective rents increasing 1.4% to $57.39, and are down 0.9% year-over-year. Leasing activity finished 2017 at 10,957,975 SF. Quarter-to-quarter leasing activity decreased 24.4% with 2,116,416 SF leased in Q4, compared to 2,799,331 SF in Q3. 150 Fifth Avenue leased the largest block of space this quarter. The availability rate decreased to 10.7% from 10.9% over the quarter; is up from 10.1% year-over-year and is 1% above its five-year average of 9.7%; with 1250 Broadway leading the market in available space. 2017 experienced a negative net absorption of 89,718 SF; with the vacancy rate decreasing to 7% from 7.5% in Q3, up from 6.7% year-over-year and is 0.5% above its five-year average of 6.5%.
Chelsea’s overall asking rents increased quarter-to-quarter to $64.56 from $63.38, by 1.9% or $1.18; and are up 13.4% or $7.63 year-over-year. Base rents decreased quarter-to-quarter to $59.16 from $60.30, by 1.9% or $1.20; and are up 11.1% or $5.93 year-over-year. Q4 had an average asking-to-base rent spread of 8.4%, compared to 4.9% in Q3 and 6.5% in 2016Q4. Concessional discounts increased to 7.2% from 4.4% quarter-to-quarter, and are up from 3.7% year-over-year; with net effective rents decreasing 4.8% to $54.89, and are up 7.1% year-over-year. Leasing activity finished 2017 at 874,738 SF. Quarter-to-quarter leasing activity has decreased 24.3% with 186,074 SF leased in Q4, compared to 245,669 SF in Q3. 125 West 25th Street leased the largest block of space this quarter. The availability rate increased to 10% from 9.9% over the quarter; is up from 9.2% year-over-year and is 1.7% above its five-year average of 8.3%; with 601 West 26th Street leading the submarket in available space. 2017 experienced a negative net absorption of 348,632 SF; with the vacancy rate decreasing to 7.8% from 8.8% in Q3, up from 5.5% year-over-year and is 1.8% above its five-year average of 6%. Notable Deal: Scholastic Corporation signed a new 10-year sublease for 44,033 SF at 601 West 26th Street (10th floor), with a base rent in the high $40s.
Gramercy Park and Flatiron overall asking rents increased quarter-to-quarter to $72.06 from $70.90, by 1.6% or $1.16; and are up 0.8% or $0.59 year-over-year. Base rents increased quarter-to-quarter to $66.82 from $61.25, by 9.1% or $5.57; and are up 5.4% or $3.45 year-over-year. Q4 had an average asking-to-base rent spread of 7.3%, compared to 13.6% in Q3 and 11.3% in 2016Q4. Concessional discounts increased to 7.7% from 5.3% quarter-to-quarter, and are up from 5.2% year-over-year; with net effective rents increasing 6.2% to $61.65, and are up 2.6% year-over-year. Leasing activity finished 2017 at 1,733,371 SF. Quarter-to-quarter leasing activity has increased 17.8% with 520,09 SF leased in Q4, compared to 441,545 SF in Q3. 150 Fifth Avenue leased the largest block of space the quarter. The availability rate decreased to 8.2% from 8.9% over the quarter; is up from 6.2% year-over-year and is 0.2% above its five-year average of 8%; with 63 Madison Avenue leading the submarket in available space. 2017 experienced a negative net absorption of 27,375 SF; with the vacancy rate decreasing to 4.4% from 5% in Q3, up from 4.2% year-over-year and is 0.9% below its five-year average of 5.3%. Notable Deal: MasterCard signed a new 15-year lease for 212,500 SF at 150 Fifth Avenue (the entire building); with a base rent in the low $90s.
Hudson Square and Tribeca overall asking rents decreased quarter-to-quarter to $78.78 from $80.23, by 1.8% or $1.45; and are down 1.4% or $1.13 year-over-year. Base rents decreased quarter-to-quarter to $63.50 from $68.75, by 7.6% or $5.25; and are down 10.5% or $7.44 year-over-year. Q4 had an average asking-to-base rent spread of 19.4%, compared to 14.3% in Q3 and 11.2% in 2016Q4. Concessional discounts increased to 14.2% from 7% quarter-to-quarter, and are up from 1.4% year-over-year; with net effective rents decreasing 14.8% to $54.49, and are down 22.1% year-over-year. Leasing activity finished 2017 at 985,555 SF. Quarter-to-quarter leasing activity has decreased 53% with 108,082 SF leased in Q4, compared to 229,961 SF in Q3. 345 Hudson Street leased the largest
block of space this quarter. The availability rate increased to 14.8% from 14.5% over the quarter; is up from 13.4% year-over-year and is 2.1% above its five-year average of 12.7%; with 75 Varick Street leading the submarket in available space. 2017 experienced a positive net absorption of 250,207 SF; with the vacancy rate remaining stagnant at 9.4% quarter-to-quarter, down from 10.4% year-over-year and 0.4% above its five-year average of 9%. Notable Deal: Pepsi renewed for 39,176 SF at 350 Hudson Street (2nd floor), with a base rent in the low $70s (term of the lease is unconfirmed).
Murray Hill overall asking rents gradually increased quarter-to-quarter to $57.99 from $57.83; and are down 1.7% or $1.01 year-over-year. Base rents increased quarter-to-quarter to $55.60 from $54.30, by 2.4% or $1.30; and are approximately the same as they were a year ago. Q4 had an average asking-to-base rent spread of 4.1%, compared to 6.1% in Q3 and 5.5% in 2016Q4. Concessional discounts increased to 8.2% from 1.7% quarter-to-quarter, and are up from 5.7% year-over-year; with net effective rents decreasing 4.4% to $51.05, and are down 3% year-over-year. Leasing activity finished 2017 at 613,984 SF. Quarter-to-quarter leasing activity has increased 35.1% with 157,766 SF leased in Q4, compared to 116,809 SF in Q3. 135 Madison Avenue leased the largest block of space this quarter. The availability rate decreased to 8.9% from 10% over the quarter; is down from 9.8% year-over-year and is 0.1% above its five-year average of 8.8%; with 2 Park Avenue leading the submarket in available space. 2017 experienced a positive net absorption of 213,786 SF; with the vacancy rate decreasing to 7% from 9.6% in Q3, down from 8.8% year-over-year and is 0.3% above its five-year average of 6.7%. Notable Deal: WeWork Companies signed a new lease for 90,228 SF at 135 Madison Avenue (4th to 7th and 11th to 12th floors).
Penn Station-Garment overall asking rents decreased quarter-to-quarter to $55.59 from $59.75, by 7% or $4.16; and are down 9.8% or $6.06 year-over-year. Base rents decreased quarter-to-quarter to $53.92 from $54.70, by 1.4% or $0.78; and are down 10.5% or $6.32 year-over-year. Q4 had an average asking-to-base rent spread of 3%, compared to 8.5% in Q3 and 2.3% in 2016Q4. Concessional discounts increased to 6.9% from 2.3% quarter-to-quarter, and are up from 4.9% year-over-year; with net effective rents decreasing 6% to $50.22, and are down 12.4% year-over-year. Leasing activity finished 2017 at 5,940,794 SF. Quarter-to-quarter leasing activity has decreased 39.4% with 913,346 SF leased in Q4, compared to 1,507,382 SF in Q3. 500 Seventh Avenue leased the largest block of space this quarter. The availability rate increased to 11.2% from 11% over the quarter; is down from 11.3% year-over-year and is 1% above its five-year average of 10.2%; with 1250 Broadway leading the submarket in available space. 2017 experienced a negative net absorption of 84,088 SF; with the vacancy rate decreasing to 7.2% from 7.4% in Q3, up from 6.9% year-over-year and is 0.5% above its five-year average of 6.7%. Notable Deal: WeWork Companies signed a new 20-year lease for 280,000 SF at 500 Seventh Avenue, with a base rent in the mid-$50s.
SoHo and NoHo overall asking rents decreased quarter-to-quarter to $73.28 from $74.50, by 1.6% or $1.22; and are up 1% or $0.71 year-over-year. Base rents increased quarter-to-quarter to $70.70 from $66.46, by 6.4% or $4.24; and are up 14.7% or $9.05 year-over-year. Q4 had an average asking-to-base rent spread of 3.5%, compared to 10.8% in Q3 and 15.1% in 2016Q4. Concessional discounts increased to 5.3% from 4.5% quarter-to-quarter, and are up from 1.2% year-over-year; with net effective rents increasing 5.5% to $66.94, and are up 10% year-over-year. Leasing activity finished 2017 at 539,456 SF. Quarter-to-quarter leasing activity decreased 4% with 168,569 SF leased in Q4, compared to 175,485 SF in Q3. 575 Broadway leased the largest block of space this quarter. The availability rate decreased to 10.4% from 11.6% over the quarter; is up from 9.5% year-over-year and is 2.8% above its five-year average of 7.6%; with 100 Avenue of the Americas leading the submarket in available space. 2017 experienced a positive net absorption of 39,848 SF; with the vacancy rate increasing to 6.9% from 6.7% in Q3, up from 5.3% year-over-year and is 2.3% above its five-year average of 4.6%. Notable Deal: Codeacademy signed a new 5-year sublease for 20,987 SF at 575 Broadway (5th floor), with a base rent in the low $70s.
6 LEE & ASSOCIATES NYCMANHATTAN TREND TRACKER 4TH QUARTER 2017
MIDTOWN SOUTH
7 LEE & ASSOCIATES NYCMANHATTAN TREND TRACKER 4TH QUARTER 2017
6.6%
10.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Midtown South Vacancy and Availability
Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.
Ten Year Average 3,253,264
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Midtown South Leasing Activity
SF Leased 10Y Avg.
Great Recession
Historical statistics are updated to reflect new ly released market information.
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Midtown South Net Absorption
Net Absorption
DOWNTOWN
Downtown overall asking rents decreased quarter-to-quarter to $60.96 from $61.80, by 1.4% or $0.84; and are up 3.7% or $2.19 year-
over-year. Base rents increased quarter-to-quarter to $51.67 from $50.66, by 1.8% or $1.01; and are up 6.4% or $3.18 year-over-year. Q4 had an average asking-to-base rent spread of 15.2%, compared to 18% in Q3 and 17.5% in 2016Q4. Concessional discounts increased to 4.2% from 3.8% quarter-to-quarter, and are up from 3.1% year-over-year; with net effective rents increasing 1.6% to $49.50, and are up 5.4% year-over-year. Leasing activity finished 2017 at 5,730,181 SF. Quarter-to-quarter leasing activity has decreased 47.9% with 810,001 SF leased in Q4, compared to 1,554,225 SF in Q3. 77 Water Street leased the largest block of space this quarter. The availability rate increased to 11.2% from 11% over the quarter; is down from 12% year-over-year and is 1.9% below its five-year average of 13.1%; with 28 Liberty Street leading the market in available space. 2017 experienced a negative net absorption of 4,188,604 SF; with the vacancy rate remaining stagnant at 9.1% quarter-to-quarter, down from 9.4% year-over-year and is 1.4% below its five-year average of 10.5%.
City Hall and Insurance District overall asking rents decreased quarter-to-quarter to $52.88 from $53.04, by 0.3% or $0.16; and are up 5.7% or $2.87 year-over-year. Base rents decreased quarter-to-quarter to $48.02 from $51, by 5.8% or $2.98, and are approximately the same as they were a year ago. Q4 had an average asking-to-base rent spread of 9.2%, compared to 3.9% in Q3 and 3.7% in 2016Q4. Concessional discounts decreased to 1% from 1.2% quarter-to-quarter, and are down from 2.7% year-over-year; with net effective rents decreasing 5.5% to $47.58, and are up 1.6% year-over-year. Leasing activity finished 2017 at 803,511 SF. Quarter-to-quarter leasing activity has decreased 31.2% with 162,695 SF leased in Q4, compared to 236,404 SF in Q3. 123 William Street leased the largest block of space this quarter. The availability rate increased to 7.5% from 6.3% over the quarter; is up from 4.4% year-over-year and is 1% above its five-year average of 6.5%; with One Seaport Plaza leading the submarket in available space. 2017 experienced a negative net absorption of 107,279 SF; with the vacancy rate decreasing to 4.9% from 5.1% in Q3, up from 4.4% year-over-year and is 0.1% below its five-year average of 5%. Notable Deal: NYC Dept. of Youth & Community signed a new 20-year lease for 40,610 SF at 123 William Street (17th & 18th floors), with a base rent in the low $50s.
Financial District overall asking rents decreased quarter-to-quarter to $57.35 from $59.03, by 2.9% or $1.68; and have an approximate average asking rent year-over-year. Base rents increased quarter-to-quarter to
$51.04 from $48.88, by 4.4% or $2.16; and are up 3.2% or $1.59 year-over-year. Q4 had an average asking-to-base rent spread of 11%, compared to 17.2% in Q3 and 13.8% in 2016Q4. Concessional discounts increased to 4.6% from 3.9% quarter-to-quarter, and are up from 3.2% year-over-year; with net effective rents increasing 3.6% to $48.69, and are up 1.8% year-over-year. Leasing activity finished 2017 at 2,441,992 SF. Quarter-to-quarter leasing activity has decreased 58.3% with 371,572 SF leased in Q4, compared to 891,642 SF in Q3. 77 Water Street leased the largest block of space this quarter. The availability rate increased to 12.5% from 12.4% over the quarter; is down from 15.3% year-over-year and is 1.1% below its five-year average of 13.6%; with 28 Liberty Street leading the submarket in available space. 2017 experienced a positive net absorption of 476,767 SF; with the vacancy rate increasing to 9.1% from 8.8% in Q3, down from 10.5% year-over-year and is 1.3% below its five-year average of 10.4%. Notable Deal: Lewis Brisbois Bisgaard & Smith LLP signed a new 15-year lease for 100,952 SF at 77 Water Street (18th to 21st floors), with a base rent in the low $50s.
World Trade Center overall asking rents decreased slightly to $64.69 from $64.97, and are up 3.5% or $2.21 year-over-year. Base rents increased quarter-to-quarter to $57.44 from $54.90, by 4.6% or $2.54; and are up 32.9% or $14.22 year-over-year. Q4 had an average asking-to-base rent spread of 11.2%, compared to 15.5% in Q3 and 30.8% in 2016Q4. Concessional discounts increased to 5.7% from 5.1% quarter-to-quarter, and are up from 1.4% year-over-year; with net effective rents increasing 4% to $54.16, and are up 27.1% year-over-year. Leasing activity finished 2017 at 2,484,678 SF. Quarter-to-quarter leasing activity has decreased 35.3% with 275,734 SF leased in Q4, compared to 426,179 SF in Q3. One World Trade Center leased the largest block of space this quarter (3 World Trade Center had a larger pre-delivery deal signing). The availability rate decreased to 12.7% from 12.8% over the quarter; is down from 13.9% year-over-year and is 4.7% below its five-year average of 17.4%; with One World Trade Center leading the submarket in available space. 2017 experienced a negative net absorption of 245,033 SF; with the vacancy rate increasing to 12.5% from 12.4% in Q3, up from 11.9% year-over-year and is 2.5% below its five-year average of 15%. Notable Deal: McKinsey & Company signed a new 15-year lease for 184,389 SF at 3 World Trade Center (60th to 64th floors).
8 LEE & ASSOCIATES NYCMANHATTAN TREND TRACKER 4TH QUARTER 2017
DOWNTOWN
9 LEE & ASSOCIATES NYCMANHATTAN TREND TRACKER 4TH QUARTER 2017
9.2%
12.6%
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%18.0%
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Downtown Vacancy and Availability
Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.
Ten Year Average 1,571,900
- 500,000
1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Downtown Leasing Activity
SF Leased 10Y Avg.Historical statistics are updated to reflect new ly released market information.
Great Recession
(3,000,000)
(2,000,000)
(1,000,000)
0
1,000,000
2,000,000
3,000,000
4,000,000
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2015
2Q2016
1Q2017
4Q2017
Downtown Net Absorption
Developer Square Feet Class Est. DeliverySilverstein Properties 2,861,402 A 2018
Related Companies 2,600,000 A 2019
Brookfield Properties 2,216,609 A 2019
Moinian Group 1,900,000 A 2021
SL Green Realty Corp. 1,732,955 A 2020
Related Companies 1,556,136 A 2018
L&L Holding Company 670,000 A 2019
RXR Realty 263,835 A 2018
Boston Properties 200,000 A 2019Albanese Organization 174,222 A 2018
Aurora Capital Associates 167,170 A 2018LM Legacy Group 144,273 A 2018
William Gottlieb Real Estate 138,938 A 2019
Macklowe Properties 136,428 A 2018
Savanna 128,367 A 2018Yeung Real Estate Dev. 93,000 A 2018Joy Construction Corp. 90,505 B 2019
Savanna 90,000 A 2020Related Companies 83,000 A 2018
DLJ Real Estate Capital 82,941 B 2018Liberty Theaters Inc. 73,323 B 2018
Owner Square Feet Class CompletionClarion Partners 862,154 A 2018Olayan America 850,000 A 2019
Pershing Square Capital 470,000 B 2018United Overseas Bank Group 70,135 B 2019
ClearRock Properties 59,544 B 2018
Sponsor Square Feet Class Commencing
Related Companies 2,900,000 A 2019
Tishman Speyer 2,850,000 A N/A
Silverstein Properties 2,800,000 A 2019
Brookfield Properties 1,976,602 A N/A
Spitzer Enterprises 950,000 A 2018
JHG Holdings 186,562 A 2018
Only Properties with over 50,000 Square Feet are listed.
Grand Central
Penn Station-Garment
435 Tenth Avenue(66 Hudson Boulevard)
Penn Station-Garment
SoHo | NoHo
Submarket
2 Pike Street330 East 62nd Street Midtown East
Office Property
Gramercy | Flatiron44 Union Square East
550 Madison Avenue Plaza District
592 Fifth Avenue Rockefeller9 East 38th Street
Under Construction
Reconstruction (Major Renovation)
Office Property Submarket3 World Trade Center World Trade Center
One Vanderbilt Avenue Grand Central
512 West 22nd Street Chelsea61 Ninth Avenue Chelsea
57 Eleventh Avenue(Pier 57)
Chelsea
30 Hudson Yards(500 West 33rd Street)
Penn Station-Garment
123-131 West 23rd Street Chelsea
787 Eleventh Avenue Midtown West
390 Madison Avenue Grand Central
Pre-Construction
2 World Trade Center
511 West 35th Street Penn Station-Garment
Office Property Submarket
400 West 33rd Street(Two Manhattan West)
(South Tower)Penn Station-Garment
World Trade Center
415 Tenth Avenue(50 Hudson Yards)
Plaza District
104-106 West 56th Street Midtown West300 Lafayette Street SoHo | NoHo
9 Orchard Street SoHo | NoHo
412 West 15th Street
425 Park Avenue
Chelsea
540 West 26th Street
159 East 53rd Street Midtown East
36 East 57th Street(432 Park Ave Office)
Plaza District
Chelsea
40 Tenth Avenue Hudson Sq. | Tribeca
400 West 33rd Street(One Manhattan West)
(North Tower)Penn Station-Garment
3 Hudson Boulevard(555 West 34th Street)
Penn Station-Garment
55 Hudson Yards(550 West 34th Street)
Penn Station-Garment
CONSTRUCTION
10 LEE & ASSOCIATES NYCMANHATTAN TREND TRACKER 4TH QUARTER 2017
NOTABLE INVESTMENT SALES
11 LEE & ASSOCIATES NYC
Office Property Submarket Class SF Buyer Seller Price $PSF1515 BroadwayOne Astor Plaza
(Partial Interest: 43%)Times Sq. A 1,750,000 Allianz Real Estate SL Green Realty Corp. $1,950,000,000 $1,114
825 Eighth AvenueOne Worldwide Plaza
(Partial Interest: 48.7%)Times Sq. A 2,049,553
RXR RealtySL Green Realty Corp.
New York REIT $1,725,000,000 $842
165 BroadwayOne Liberty Plaza
(Partial Interest: 49%)World Trade A 2,346,000 Blackstone Brookfield Property Partners $1,515,000,000 $646
1440 Broadway Times Sq. B 740,000 CIM Group New York REIT $520,000,000 $703
685 Third Avenue Grand Central A 651,429 Unizo HoldingsFuture Fund
TIAA$467,500,000 $718
330 Hudson Street6 Hudson Square
(Pending Sale)(Leasehold)
Hudson Sq. A 466,000 AEW CapitalIvanhoe Cambridge
Callahan Capital Partners$385,000,000 $826
245-249 West 17th Street Chelsea B 281,294 Columbia Property Trust New York REIT $339,400,000 $1,207600 Lexington Avenue
Manhattan Tower(Pending Sale)
Midtown East A 303,515 (Unconfirmed) SL Green Realty Corp. $305,000,000 $1,005
333 West 34th Street(Pending Sale)
Penn/Garment B 338,409 Brookfield Property Partners New York REIT $255,000,000 $754
80 Broad Street(Partial Interest: 95%)
Financial Dist. B 423,403 Invesco RXR Realty $235,000,000 $555
19-25 West 44th StreetBerkeley Building
Grand Central B 292,000 Savanna Deka Immobilien $195,000,000 $668
216 West 18th Street Chelsea B 165,670 Columbia Property Trust New York REIT $174,700,000 $1,055300 Lafayette Street
(Pending Sale)(Leasehold)
SoHo A 80,000 Nightingale PropertiesRelated Companies
LargaVista$135,000,000 $1,688
880 Broadway(Condominium)
(Sale-Leaseback)Flatiron C 217,500 Normandy RE Partners ABC Carpet $133,000,000 $611
229 West 36th Street Penn/Garment C 140,747Brickman Associates
InvestcorpNew York REIT $93,000,000 $661
Properties are sorted by highest priced sale.Selective pending sales, bulk portfolio sales, leaseholds and condominium units are excluded.Pending sale prices are approximate and may be contingent on a rumor.
MANHATTAN TREND TRACKER 4TH QUARTER 2017
Lee & Associates NYC600 Madison Avenue, Third Floor
New York, NY 10022 | 212.776.1200www.leeassociatesnyc.com
James WachtPresident
Henry AbramovResearch Director
Carly FarkasResearch Associate
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