C&W: ‘A Very Good 2013′ Rolls on for Manhattan
- Oct 03, 2013
As 2013 enters the home stretch, the nation’s biggest real estate market continues to show healthy momentum on most fronts, Cushman & Wakefield Inc.’s New York City team reported on Thursday morning. “It’s a very robust, busy leasing market right now,” said Ron Lo Russo, president of the firm’s New York Tri-State Region, at a third-quarter briefing. “By all measures, we’re on track to have a very good 2013.”
By the end of next year, leases will expire for 71 tenants occupying more than 10,000 square feet—adding up to some 3.2 million square feet of demand, Lo Russo added. Leasing volume is up almost 10 percent compared to 2012. High-end pricing is also on the rise; so far this year, Manhattan landlords have wrapped 48 leases valued at $100 per square foot or more, topping the total for all of 2012.
Recent high-profile leases in Midtown Manhattan include Capital One’s deal for 250,000 square feet at 299 Park Ave. and NBC’s 95,000-square-foot expansion at 1221 Avenue of the Americas. The latter deal increases NBC’s footprint at that trophy tower to 350,000 square feet.
“If Washington gets its act together, we think the fourth quarter is going to outpace the third quarter,” said David Rosenbloom, a Cushman & Wakefield executive director.
In a first, Class A asking rents in the Midtown South submarket eclipsed Midtown Manhattan’s Class A prices, reaching nearly $75 per square foot. At the same time, Midtown South also showed the city’s biggest price jump in asking rents—23 percent year over year to $60.34 per square foot. David Rosenbloom, a Cushman & Wakefield executive director, observed that the increase occurred despite slower leasing activity. And even though Midtown South’s office vacancy has risen slightly in the past year, to 7.6 percent, it remains the nation’s tightest central business district. Recent Midtown South deals of note include Facebook’s 98,000-square-foot lease at 770 Broadway.
On the investment sales side, Manhattan continues to show promising growth. The volume of deals closed and under contract rose 39 percent year over year through the third quarter, reported Steven Kohn, president of Cushman & Wakefield’s equity, debt and structured finance business. In every major property category except for hospitality, sales volume registered an increase. Topping the list, Class A office transactions have more than doubled to $12.6 billion a year ago. The trend toward big deals continued as well. Sixteen trades valued at more than $400 million have been completed to date, the most for the first three quarters since 2007.
Another trend noted by Kohn points to a strong development pipeline. “I’ve seen lots of land trades—lots of buildings being converted or torn down, mostly for multi-family,” he said. Development and redevelopment deals totaled $5.4 billion through the third quarter, a 56 percent jump since 2012.