Research Relocations Dominate Leasing in November

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Research Relocations Dominate Leasing in November Research MANHATTAN MONTHLY SNAPSHOT NOVEMBER 2015 Relocations dominate Current Conditions leasing in November • Tenant relocations comprised 74% of total leasing activity in November, including the two largest deals signed. Manhattan leasing velocity held stable in November, with 2.8 million square feet of activity bringing the year-to-date total to 32.3 million square feet. • Manhattan asking rents increased to $73.81/SF and Tenant relocations accounted for 74% of the total square footage leased, finished up 12% year-over-year. including three of the five biggest transactions completed this month. Several • Three blocks of space came online in Midtown, holding large blocks coming online in Midtown held overall availability flat at 11.3%. the overall availability rate flat at 11.3%. Manhattan asking rents rose to $73.81/SF in November, up 12.0% from $65.92/SF one year ago. • WeWork continued to expand its presence in Midtown, taking 110,000 SF at 300 Park Avenue. The month’s largest deal involved financial services giant Morgan Stanley relocating from 1221 Avenue of the Americas to 1633 Broadway, downsizing Market Analysis its footprint by 32% to 260,000 square feet. Two high-profile TAMI (tech, Asking Rent and Availability advertising, media and information) tenants committed to relocate and expand this month. Employment search engine Indeed leased 126,000 $73 13% square feet at 1120 Avenue of the Americas, doubling its previous footprint at $70 12% 125 West 55th Street. Sports broadcasting network SportsNet New York leased 83,000 square feet at 4 World Trade Center, expanding from its prior $67 11% Midtown occupancy at 1271 Avenue of the Americas. $64 10% $61 9% WeWork continued to broaden its operations in Midtown, subleasing 110,000 square feet at 300 Park Avenue in November. The deal established $58 8% WeWork’s third location in Midtown and expanded the co-working space Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 provider’s Midtown footprint to 276,033 square feet. Midtown currently Average Asking Rent (Price/SF) Availability (%) represents a sliver of WeWork’s Manhattan portfolio, which encompasses 1.9 million square feet across 21 locations, the majority of which are concentrated in Midtown South and Downtown. Net Absorption Square Feet, Millions Midtown Midtown availability inched up to 12.1% from 11.9% in October, largely due to 2 three large blocks hitting the market this month. A total of 382,567 square 1 feet was made available at 485 Lexington Avenue, as a result of impending 0 lease expirations from Xerox and Citigroup. ING Group’s block of 171,697 square feet came online at 1325 Avenue of the Americas, as the insurance -1 giant has a lease out at 1133 Avenue of the Americas. Additionally, a block of -2 128,708 square feet reached the market at 1301 Avenue of the Americas. -3 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Midtown South Leasing was relatively quiet in Midtown South, with mid-sized tenant renewals and subleases comprising much of the month’s activity. Architecture firm Market Summary Perkins Eastman signed the largest deal, renewing its 77,000 square feet of space at 115 Fifth Avenue, while advertising tech firm SimulMedia subleased Current Prior Year Ago 12 Month 21,100 square feet at 401 Park Avenue South. Asking rents jumped to Month Month Period Forecast $63.72/SF in November from $57.92/SF one year ago, a 10% increase. Total Inventory 446.8MSF 446.5MSF 446.4MSF Downtown Availability Rate 11.3% 11.3% 10.8% Downtown leasing was marked by media tenants migrating from Midtown and Monthly Net Absorption -161,323 -338,924 -215,198 Midtown South and tech tenants expanding within their buildings. In addition to the aforementioned SportsNet New York deal, Cambridge University Press Average Asking Rent $73.81 $72.80 $66.04 committed to moving Downtown, taking 40,000 square feet at 1 Liberty Plaza. Under Construction 9.3MSF 9.3MSF 8.4MSF Mobile advertising firm xAd doubled its footprint at 1 World Trade Center, taking an additional 43,849 square feet in the building. The heightened demand for space Downtown pushed asking rents over the $60/SF threshold for the first time ever, reaching $60.54/SF in November. Research MANHATTAN MONTHLY SNAPSHOT NOVEMBER 2015 Significant Lease Transactions Tenant Address Market/Submarket Type Square Feet Morgan Stanley 1633 Broadway Midtown, Westside New 260,000 Financial services giant leased 260,000 square feet at 1633 Broadway and will relocate from 1221 Avenue of the Americas next year. Indeed 1120 Avenue Of The Americas Midtown, Sixth Ave/ Rock Ctr New 126,000 Employment search engine signed 126,000 square feet at 1120 Avenue of the Americas, doubling its previous occupancy at 125 West 55th Street. WeWork 300 Park Avenue Midtown, Park Avenue New 110,000 Co-working space provider established its third Midtown location, subleasing 110,000 square feet on floors 12 through 14 at 300 Park Avenue. L3 Communications 600 Third Avenue Midtown, Grand Central Renewal 100,000 Telecommunications firm renewed its 100,000-square-foot lease at 600 Third Avenue. SportsNet New York 4 World Trade Center Downtown, WTC New 83,000 Sports broadcasting network leased 83,000 square feet at 4 World Trade Center, relocating from 1271 Avenue of the Americas. Market Statistics Total Monthly Net YTD Net Nov-15 Total Oct-15 Total Nov-14 Total Nov-15 Avg. Oct-15 Avg. Nov-14 Avg. Inventory Absorption Absorption Availability Availability Availability Asking Rent Asking Rent Asking Rent (SF) (SF) (SF) Rate Rate Rate (Price/SF) (Price/SF) (Price/SF) Midtown - A 192,344,683 -481,165 -1,989,588 12.4% 12.1% 11.6% $86.63 $87.70 $79.53 Overall 212,655,851 -435,032 -2,566,477 12.1% 11.9% 11.3% $84.87 $85.64 $78.25 Midtown South - A 38,197,859 56,954 -709,441 7.3% 7.6% 6.7% $73.12 $70.50 $62.99 Overall 138,189,531 214,131 -1,270,457 9.2% 9.2% 8.9% $63.69 $62.60 $57.92 Downtown - A 72,827,711 50,219 -411,812 13.6% 14.4% 13.3% $61.71 $60.41 $54.71 Overall 95,985,135 59,578 -82,493 12.5% 13.0% 12.5% $60.54 $58.50 $53.34 Manhattan - A 303,370,253 -373,992 -3,110,841 12.0% 12.1% 11.4% $78.51 $77.80 $69.85 Overall 446,830,517 -161,323 -3,919,427 11.3% 11.3% 10.8% $73.81 $72.80 $65.89 Data through November 30, 2015 New York City HEADQUARTERS 125 Park Avenue New York, NY 10017 212.372.2000 Jonathan Mazur Stephanie Jennings David Chase Managing Director, Research Tri-State Director, Research Senior Research Analyst 212.372.2154 212.372.2099 212.372.2261 [email protected] [email protected] [email protected] Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents. Newmark Grubb Knight Frank Research Reports are available at www.ngkf.com/research All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Grubb Knight Frank (NGKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NGKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient’s choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains. 2 .
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