Jones Lang LaSalle
Despite Slow Quarter, Big Needs Await Manhattan Office, C&W Exec Says
May 11, 2006
By Paul Rosta, Senior Associate Editor
Despite weak first-quarter leasing activity, the Manhattan office market is poised for an historic period, but the lack of new product in the pipeline could seriously constrict future growth. That was the prediction of Joseph Harbert, COO of Cushman & Wakefield Inc.’s New York City metropolitan region, during the firm’s annual forum in Manhattan this morning.
Last month’s watershed agreement allowing construction at the World Trade Center to start will greatly influence the market, Harbert said. Still, the amount of new product in the pipeline--less than 20 million square feet--pales in comparison to the 56 million square feet built in the 1980s, which followed upwards of 50 million square feet built in the 1970s. "You can’t fill buildings that don’t exist when the market turns," Harbert argued.
Manhattan leasing activity dropped 19 percent from first quarter 2005 to 5.4 million square feet--a figure barely above recession levels, Harbert pointed out. Of the city’s three major office submarkets, only Midtown South showed positive absorption in the first quarter, with a 400,000-square-foot gain. Yet only seven blocks of space 250,000 square feet and larger are available in Manhattan today--none of them in the Midtown South submarket.
That will drive rates up even faster for large blocks than the significant appreciation expected across Manhattan. Based on projections from what Harbert called the comparable period of 1995-2000, average Midtown asking rents could rise from $47.71 at the end of last year to as much as $54.84. Downtown could see rents increase from $35.73 to $38.19 by the end of the year. "I’m predicting that $20 rents will disappear from Manhattan entirely in 2006," Harbert said.
In his keynote address following Harbert’s presentation, former Walt Disney Co. chairman & CEO Michael Eisner discussed the impact of the Internet on the world of entertainment and beyond. "The world has become a single dot as everyone finds themselves occupying the same time and the same space," Eisner noted. Yet the importance of bricks and mortar remains undiminished: "We will still need to be anchored in places in the real world to access all the infinite places in the ether world," he said.
Despite Slow Quarter, Big Needs Await Manhattan Office, C&W Exec Says
May 11, 2006
By Paul Rosta, Senior Associate Editor
Despite weak first-quarter leasing activity, the Manhattan office market is poised for an historic period, but the lack of new product in the pipeline could seriously constrict future growth. That was the prediction of Joseph Harbert, COO of Cushman & Wakefield Inc.’s New York City metropolitan region, during the firm’s annual forum in Manhattan this morning.
Last month’s watershed agreement allowing construction at the World Trade Center to start will greatly influence the market, Harbert said. Still, the amount of new product in the pipeline--less than 20 million square feet--pales in comparison to the 56 million square feet built in the 1980s, which followed upwards of 50 million square feet built in the 1970s. "You can’t fill buildings that don’t exist when the market turns," Harbert argued.
Manhattan leasing activity dropped 19 percent from first quarter 2005 to 5.4 million square feet--a figure barely above recession levels, Harbert pointed out. Of the city’s three major office submarkets, only Midtown South showed positive absorption in the first quarter, with a 400,000-square-foot gain. Yet only seven blocks of space 250,000 square feet and larger are available in Manhattan today--none of them in the Midtown South submarket.
That will drive rates up even faster for large blocks than the significant appreciation expected across Manhattan. Based on projections from what Harbert called the comparable period of 1995-2000, average Midtown asking rents could rise from $47.71 at the end of last year to as much as $54.84. Downtown could see rents increase from $35.73 to $38.19 by the end of the year. "I’m predicting that $20 rents will disappear from Manhattan entirely in 2006," Harbert said.
In his keynote address following Harbert’s presentation, former Walt Disney Co. chairman & CEO Michael Eisner discussed the impact of the Internet on the world of entertainment and beyond. "The world has become a single dot as everyone finds themselves occupying the same time and the same space," Eisner noted. Yet the importance of bricks and mortar remains undiminished: "We will still need to be anchored in places in the real world to access all the infinite places in the ether world," he said.
posted by Jones Lang LaSalle NJ News Blog at 10:34 AM
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