By Konrad Putzier
New York’s financial sector could make its long-awaited comeback in 2014, according to Cushman & Wakefield’s chief economist Ken McCarthy.
“There will be a positive absorption from the financial industry this year,” McCarthy said at the presentation of Cushman &Wakefield’s fourth-quarter report. “It may not be a boom, but there will be growth.”
McCarthy noted that the financial industry has come a long way since the crisis of 2008, and that several banks recently announced substantial profits.
Moreover, he argued that an improvement in the Eurozone’s debt crisis would lead to a stronger performance from European banks, which play a large role in Manhattan’s office market.
As McCarthy made his prediction, the New York Post reported that Swiss bank Credit Suisse is signing a 20-year lease to stay at 11 Madison Avenue, where it will occupy 1.2 million s/f. According to the Post, this will be less than what the bank currently occupies – although it has an expansion option.
New York has consistently outperformed the national labor market in recent years, but employment in the financial sector has been weak. Between October 2012 and October 2013, financial firms added a mere 300 net jobs in New York City, compared to a net gain of 48,000 in healthcare and education and 27,400 in professional and business services.
On the back of a stronger financial sector and a growing economy, McCarthy expects a good year for office leasing and construction. “My prediction for 2014 is that we will see the first $100 rent outside of Midtown Manhattan,” he added.
McCarthy’s outlook was in line with the general optimism at Cushman & Wakefield’s presentation of fourth-quarter data. “We had a very strong fourth quarter and expect the momentum to carry over into 2014,” said Ron Lo Russo, C&W’s President for the New York Tri-state Region.
According to Cushman & Wakefield, 7.2 million s/f of commercial space were leased in the fourth quarter, the highest quarterly leasing level since the second quarter of 2011. The year closed with a total of 25.6 million s/f leased and a vacancy rate of 11 percent – driven by growth in both office and retail.
The overall average asking rent in Manhattan increased 6.5 percent year-over-year to $63.40 per s/f from $59.54 per s/f and the Manhattan class-A average asking rent increased 1.4 percent to $68.90 per s/f.
Investment sales in 2013 totaled $37 billion – a five-percent growth year-over-year and the highest level since 2007.
