By Dan Orlando
CBRE yesterday (Tuesday) reported a Manhattan-wide improvement in the office market with leasing up in two-thirds of the city’s districts.
“We are seeing a remarkable and broad-based improvement in the Manhattan market,” said Peter Turchin, vice chairman, CBRE. “This improvement is no longer isolated to just Midtown South, but is equally strong in Midtown and Downtown.”
CBRE’s analysis of Manhattan’s 18 submarkets showed that 13 of 18 had positive absorption year-to-date, with the three negative-absorption submarkets solely due to the addition of new blocks of space.
Leasing activity is up, especially in Midtown which saw 12.64 million sf leased as compared to 11 million at this time last year. Midtown South hit 5.16 million s/f of activity as compared to 2013’s 3.06. Downtown saw a climb from last year’s 3.99 million s/f to 5.15 million.
Absorption rates responded accordingly, improving to 1.46 million s/f, 0.51 million s/f, and 0.98 million s/f respectively. Asking rent climbed in each of the territories.
“We’re really looking at what’s shaping up to be the year of the larger location said executive managing director Kyle Schoppmann. “If we look at deals done and transactions completed year-to-date, 25 of them have been relocations over 100,000 s/f. If you look at that compared to last year, we had 12 relocations of that size.”
The panel, which featured CBRE executive vice president Richard B. Hodos, executive vice president Amira Yunis and vice chairman Andrew Goldgberg, also discussed how a new wave of retail tenants will be drawn to southern areas of Manhattan.
“Everything is going to be changing,” said Goldberg while discussing the retail climate of areas like the Financial District.
Goldberg said that new tenants like One World Trade Center’s Conde’ Nast will “definitely change the customer profile” in the area. Goldberg also noted: “Luxury department stores are demonstrating new confidence in Manhattan.
“This is reflected in the recent announcement by Neiman Marcus that it will open its first New York City store at Hudson Yards, Nordstrom’s purchase of store space at 225 West 57th Street and the opening of a Saks Fifth Avenue Downtown.”
The opening of Ralph Lauren’s first Polo flagship store in Manhattan at 711 Fifth Avenue, “is an exciting initiative for an iconic global brand that wants to create an ‘experiential space’ in the middle of one of the world’s most exclusive shopping corridors,” said Hodos.
The group also discussed how stores like Macy’s and Target are combattin the rise of online shopping by running ad campaigns that urge customers to shop online but pick-up their orders in-store.
Amira Yunis, executive vice president, CBRE, added: “In part due to changes in City regulations allowing illuminated billboard signage below Times Square, the Midtown Broadway retail corridor is moving south of 42nd Street.
“As office buildings south of Times Square continue to be upgraded with ground-level glass facades that are more attractive to retailers, the Broadway retail corridor has the near-term potential to stretch uninterrupted from 42nd Street all the way to Union Square, something unthinkable even a couple of years ago.”