Manhattan Office Market Headed For Further Growth, CBRE Says
With the latest office markets reports showing that low unemployment and relentless growth in the TAMI sector have led to the high leasing volume in Manhattan since 2001, experts from CBRE are predicting the market will hold steady in the coming year. And they don’t think a recession or any other factor is going to change current trends drastically, either.
At a panel held at 200 Park Avenue by CBRE, “2020: The Year Ahead,” moderator Spencer Levy, chair of Americas research and senior economic advisor at the firm, discussed growing landlord and tenant confidence, along with speakers Nicole LaRusso, director, research and analysis; Darcy Stacom, chair and head of NYC capital markets; and Mary Ann Tighe, CEO of NYC region.
“Landlords are flexing their muscles,” said LaRusso. “There’s a flight to quality new assets, which we define as after 2000, as well as those with substantial renovations. An environment that helps retain workers and improve worker productivity.”
She added, “If Frank Sinatra Sinatra were here, he would say 2019 was a very good year.”
A 2019 year-in-review report by CBRE showed that asking rents had climbed to an all-time high, $80.43 psf over 2018’s $73.36. Once concessions were factored in, net effective rents in the borough averaged $52 psf. The largest leasers were tech titans like Facebook and Google as well as WeWork, which showed that the market was driven largely by companies looking for new as well as revitalized office space. Another factor was an increase in office-using employment. Along with very large (100,000 s/f and up) spaces, medium (25,000-100,000 s/f) also did well while demand for smaller spaces cooled. LaRusso attributed to this to a continued demand for flex space, while in the past those smaller spaces would have been leased directly. There was also a slowdown in leasing by flex space operators (18 percent to 12 percent year-over-year), but this was even before WeWork’s disastrous IPO pullout and restructuring efforts. Midtown was the leader in highest asking rents and overall, landlords were more confident asking for higher rents.
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