About Us > News & Articles

Market Beat - Cleveland Industrial ReportView PDF

Cushman & Wakefield I 3Q 2008

Economy
The Manhattan office market continued to tighten during the first half of 2007, extending strengths exhibited during the second half of 2006. Steady employment growth contributed to positive absorption of available space and rapidly escalating asking rents.

The New York City economy expanded at a healthy pace during the first six months of the year, led by strong gains in office-using employment. Data available through the end of May show that the City has added nearly 16,800 jobs in industries that are key to the commercial office market, with financial services and professional business services adding 7,400 and 5,500 jobs, respectively. This resulted in increased demand for office space in a market that was already the tightest it had been since the first quarter of 2001.

The year began with 26.1 million square feet available throughout Manhattan. By the end of June, available space had fallen precipitously to 20.8, a decline of 20.5%. This diminishing availability of space has been the story of the market; April 2007 was the only month in the past year that did not record a month-to-month decline of at least 122,000 square feet. As a result, Manhattan’s overall vacancy rate has tumbled to a six-year low, closing the mid-year
at 5.3%.

Overview
In this environment, it is no surprise that asking rates have skyrocketed. Up 36.2% from a year a Source: Moody’s | Economy.com Manhattan’s overall total average asking rent closed the first half of 2007 at another record-high: $59.17 per square foot. Thus far this year, rents have increased by an average of $1.44 each month since January, breaking the old record set back during the second and third quarters of 2000.

The rapid pace of rental rate growth has extended throughout Manhattan. In every submarket but one, overall rents have registered double-digit percentage increases from a year ago. Chelsea, up 4.2%, was the only exception. On a cautionary note, however, leasing activity throughout Manhattan was slower during the first two quarters, partially attributable to both significantly higher rents and lack of available space. With 11.8 leased year-to-date, 2007 activity trails last year’s total through June by 5.4%, with Midtown trailing by nearly 20.0%. This suggests that tenants are possibly beginning to search for lower-priced space in response to landlords hiking up rents throughout market inventory.

Outlook
This year’s leasing has been dominated by Manhattan’s leading industries. Financial services firms (36.4%) and legal services firms (11.7%) accounted for nearly one of every two square feet leased from January through June. In April, Lehman Brothers Hold

Read Full Article Here