Q3 2016 New York City Office MarketView Highlights
New York, NY – (October 14, 2016) – CBRE Group, Inc., reported on new development across New York City with a focus on the “flight to new construction” among tenants. Mary Ann Tighe, CEO of CBRE’s Tri-State Region, moderated the panel discussion during CBRE’s Q3 2016 Research and Media Event. Held at 4 World Trade Center, the event was in tandem with the release of CBRE’s third-quarter Office MarketView reports for Manhattan and Brooklyn.“The rumors of New York City having an oversupply of new office space are wrong,” says Tighe. “In today’s tech-transformed business environment, infrastructure needs and cultural imperatives are feeding the appetite for new or ‘like new’ buildings.” This points to developments such as Hudson Yards, the World Trade Center complex, One Vanderbilt and Cornell Tech—each with distinctive characteristics that speak to the evolving needs of occupiers.
In assessing Manhattan’s overall office market, Paul Myers, executive vice president, notes, “For the past five years, the city has seen strong, steady leasing activity, driven by the hot markets of Midtown South and Downtown—with comparatively modest but solid growth in Midtown. As they say, a rising tide lifts all boats.” Myers continues, “However, the market we are in today is much more nuanced than in past years.”
On the Brooklyn front, Travis Yuengst, sales director, says, “Brooklyn continues to see strong activity. Three of the borough’s four largest deals so far this year occurred in the past quarter. To date, we’re at about 950,000 sq. ft. in leasing activity—on pace to reach 1.27 million sq. ft. for the year and on par with last year’s total.”
CBRE Third Quarter 2016 Office MarketView Highlights:
Midtown – Leasing activity totaled 3.96 million sq. ft. in Q3 2016, 3% above its five-year quarterly average. The largest transaction was Coach, Inc.’s sale-leaseback for 694,000 sq. ft. at 10 Hudson Yards. Quarterly leasing activity is up 9% compared to Q3 2015. The availability rate rose 40 basis points (bps) from Q2 2016 and 160 bps from one year ago. Quarterly net absorption registered negative 857,000 sq. ft. The average asking rent was virtually unchanged quarter-over-quarter and up 4% year-over-year.
Midtown South – Leasing activity totaled 701,000 sq. ft. in Q3 2016, 45% below its five-year quarterly average. Quarterly leasing activity was down 53% compared to Q3 2015. The availability rate increased 60 bps over the past three months and 110 bps from one year ago. Quarterly net absorption registered negative 444,000 sq. ft., bringing the year-to-date total to negative 1.1 million sq. ft. The average asking rent fell 2% year-over-year and was virtually unchanged from last quarter.
Downtown – Leasing activity totaled 846,000 sq. ft. in Q3 2016, 34% below its five-year quarterly average. Downtown experienced a 39% drop in leasing activity compared to Q3 2015, and a 21% decline from last quarter. The availability rate fell 20 bps from one year ago, ending the quarter at 11.7%. Of the three Manhattan markets, Downtown was the only one with positive year-to-date net absorption, at 451,000 sq. ft. Downtown’s average asking rent, at $57.50, was essentially unchanged quarter-over-quarter.
Brooklyn – Leasing activity totaled 470,000 sq. ft. in Q3 2016, the most active quarter of the year thus far. The availability rate fell 70 bps quarter-over-quarter to 16.8%. The average asking rent currently stands at $38.14 per sq. ft., slightly above last quarter’s, and a sizable 32% gain from Q3 2015’s $28.84 per sq. ft. The quarter’s largest transaction was in Downtown Brooklyn—the New York City Fire Department has renewed its 320,000-sq.-ft. lease for ten years at 9 MetroTech Center.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
