Sep 6, 2019
New York Real Estate Market Updates
Here we dig into the latest data and trends to find out what is really happening in the local Office market to help landlords, real estate investors, and developers make the smartest financial moves.
So, what’s new in New York Real Estate? Let’s take a look at the numbers…
Although more new construction inventory appears to be hitting the market, creating more available office space, asking rents just keep going up. Big players like Microsoft, JP Morgan Chase and WeWork continue to be bullish on NYC real estate and office space in the Big Apple.
Among the most notable stats, this quarter is a 45% jump in new leasing in Midtown South, while Downtown Manhattan leasing fell 29% from Q1 2019. Financial West’s vacancy rates have swollen to over 22%, while Class B rents have risen to a new all-time high of $57.40 per square foot.
Total inventory rose to 453M square feet
Percentage available for lease is up to 9.7%
Absorption was negative by over 1.6 million square feet
Asking rents are up to $76.57 per foot
Over 16.9M square feet of office space is under construction
The highest asking rents were found in the Far West Side at $118.73 per square foot.
The lowest asking rents were just $52.67 in the East Village
Notable leasing activity included:
Over 320,000 feet taken by AIG at the Rockefeller Center
Almost 213,000 square feet taken by WeWork in Chelsea
And Time Warner’s sale and leaseback of 1.5M square feet at 30 Hudson Yards
Total inventory rose to 35.4M square feet
Percentage available for lease rose to 17.4%
The absorption rate is up
Asking rents are up to $40.45 per square foot on average
Office space under construction rose to 4.6M square feet
Notable leasing activity included Rent The Runway’s move from Manhattan to 10 Jay Street in Brooklyn, with 83,000 square feet of space leased.
Notable construction and renovation projects include:
Deliver of new construction is expected to decline through 2022, providing more balance to the market, and potentially more fuel to raise asking rents.
In Terms of Market Factors & Economic Indicators
NYC employment stood steady at 4.6M in Q2 2019
Unemployment rose slightly to 4.3%, above the national average
Vacancy rates rose to 10.5%
Over 9M square feet of new office space is coming online this year. 84% of it is already reportedly pre-leased. With construction delivery expected to taper off over the next two years, landlords could find more support for even higher rents and availability tapers off.
Overall this quarter’s data show a strong first half of the year for New York City office markets.
It’s perhaps in far better shape than retail. Notable global corporations continue to prize prime property here. Many are expanding their footprints, with more expanding into or relocating Brooklyn, where rents are cheaper, and more space is available.
While we should keep an eye on subleasing data, the strength of renewals, new and pre-leases suggest good balance in the market, and not much to fear from new developments coming to market. There appears to be no lack of appetite for great properties in new locations.
While a surge in new deliveries of newly built and redeveloped properties may show up as historically high vacancy rates in the data, a tapering off of this activity through 2022 should bring balance again. New buildings continue to support higher asking rents per square footage. A trend likely to be further fueled as less square footage comes online.
With unemployment so low, upcoming job numbers may seem lean, though there isn’t much more of the population to employ. How much more office space we will need and be able to absorb may depend on recruiting more residents to the state and continuing to make sure housing is affordable.
Be sure to check out our multifamily reports for the latest data on the Brooklyn rental market. As well as BK Lofts for over 1,000 available creative lofts, private offices and art studio spaces.
Find out more about the current market, competing listings, and where to get the best help in leasing or finding the space you need by contacting The Ratner Team.
Make sure you check out our vendor section for all the best resources you need for renovating, financing, managing and protecting your real estate assets in New York. Plus, don’t miss our new report on Manhattan and Brooklyn Piers. Including where to go, how innovation is reinventing them as exciting places to hang out, workout and live.
Well, that’s this quarterly NYC office market update.
Leave us a comment and let us know what you are experiencing in the market, and what you’d like more detail on in the next report…
Thanks for tuning in!