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Office rents going sky-high
Properties in short supply; Manhattan prices seen rising 20% by year-end
By Julie Satow
Published on April 10, 2006
New York's businesses had better get ready for skyrocketing rents.
The price of commercial office space in Manhattan will spike by as much as 20% by year-end, say market experts. Landlords inked 15 leases at $100 a square foot or more in the first quarter, compared with just 10 such deals in all of 2005, according to Cushman & Wakefield Inc.
Rents have reached $150 a square foot at the city's priciest properties, like the GM Building, at 767 Fifth Ave.
A lack of supply is driving the increases.
"Tenants are lucky if we can show them three or four viable alternatives, and once they set their parameters, that number shrinks to one or two," says Michael Liss, senior associate at Trammell Crow Co.
Space race
At the end of last year, 23 blocks of space of 200,000 square feet or more were available in Manhattan, down 18.5% from midyear. There are currently only four blocks of contiguous space of more than 250,000 square feet available in midtown.
"Rents will spike 10% to 20% by the fourth quarter or first quarter of 2007," says Michael Fascitelli, the president of Vornado Realty Trust.
The Grand Central and Times Square submarkets had the most dramatic increases in the first quarter of 2006. Asking rents rose 12.6% and 10.1%, respectively.
Buildings on the outskirts of midtown are also fetching higher rents. At 220 E. 42nd St., for example, landlord SL Green is asking $70 a square foot, despite the building's outlying location. Hungry tenants are circling whatever space is available.
"It is definitely a landlord's market, and without a lot of new office space coming online, it looks like this trend will continue," says Joseph Harbert, chief operating officer at Cushman & Wakefield.
Comments? JSatow@crain.com
Office rents going sky-high
Properties in short supply; Manhattan prices seen rising 20% by year-end
By Julie Satow
Published on April 10, 2006
New York's businesses had better get ready for skyrocketing rents.
The price of commercial office space in Manhattan will spike by as much as 20% by year-end, say market experts. Landlords inked 15 leases at $100 a square foot or more in the first quarter, compared with just 10 such deals in all of 2005, according to Cushman & Wakefield Inc.
Rents have reached $150 a square foot at the city's priciest properties, like the GM Building, at 767 Fifth Ave.
A lack of supply is driving the increases.
"Tenants are lucky if we can show them three or four viable alternatives, and once they set their parameters, that number shrinks to one or two," says Michael Liss, senior associate at Trammell Crow Co.
Space race
At the end of last year, 23 blocks of space of 200,000 square feet or more were available in Manhattan, down 18.5% from midyear. There are currently only four blocks of contiguous space of more than 250,000 square feet available in midtown.
"Rents will spike 10% to 20% by the fourth quarter or first quarter of 2007," says Michael Fascitelli, the president of Vornado Realty Trust.
The Grand Central and Times Square submarkets had the most dramatic increases in the first quarter of 2006. Asking rents rose 12.6% and 10.1%, respectively.
Buildings on the outskirts of midtown are also fetching higher rents. At 220 E. 42nd St., for example, landlord SL Green is asking $70 a square foot, despite the building's outlying location. Hungry tenants are circling whatever space is available.
"It is definitely a landlord's market, and without a lot of new office space coming online, it looks like this trend will continue," says Joseph Harbert, chief operating officer at Cushman & Wakefield.
Comments? JSatow@crain.com
posted by Jones Lang LaSalle NJ News Blog at 3:42 PM
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