Speculative development limited by wary financers that requireat least 50% of a new venture to be pre-leased before committing aloan, vacancies are historic lows, rents are at historic highs andthe economy is slowing. The national market has become unusual, tosay the least, and the New York market particularly so. This may bewhat aids it in the end, though.

|

"Midtown vacancy should begin to increase in 2001. This increaseis not a reflection of a softening market but represents africtional increase--as tenants move to larger quarters atdevelopment projects, they leave behind significant blocks ofspace," the report explains in its outlook predictions for Midtown.These vacancies will "likely be leased before they are officiallyvacated," but as C&W predicts some will hit the market asvacancies, it predicts the rate here could hit more than 4% in2002. The researchers also speculated that the construction of anOlympic stadium for 2012 games "could spur further West Sidedevelopment and "transform Midtown."

|

The slight loosening of the Midtown South market ischaracterized as "actually good news for the overheated" submarket.Rents there have doubled in the last two years and the researcherssuggest that a "more stable demand pattern should allow forhealthier market practices." They predict, "Rental growth is likelyto continue to be extremely strong... with average asking rentslikely to break $50 per sf by the end of 2001 and surpass $54 persf by the end of 2002." The researchers warn that this area couldbe hit hard in economic bad times because the tenants in the areaare not "best-credit" tenants.

|

Downtown rents are climbing to new highs, approaching those inMidtown South, and vacancies are at record lows. C&W forecaststhe rent rates will continue to rise and the vacancy rate willcontinue to fall, but that New Jersey and the outer boroughs coulddraw tenants from Downtown across the Hudson and East Rivers insearch of lower rents and tax incentives. "Goldman Sachs... has yetto open a major office in Manhattan outside of Downtown. But don'tlook for any space dispositions as a result of theiracquisition--the white-shoe firm has performed so incredibly wellthat even more than two million sf of Downtown expansion over thepast three years cannot quench its space needs."

|

For the Manhattan market as a whole the outlook is for cap ratesto "remain at or below 8% for most class A assets." Midtown salesprices for top properties are expected to remain at over $400 persf and $300 per sf Downtown. C&W points to the number oflandmark properties on the block now, including the World TradeCenter, Rockefeller Center, Chrysler Building, the GM Building,Citicorp Center and the Empire State Building. Research Servicesalso note that REITs are performing better and their stocks aretrading higher and could be expected to place "some winning bids"on significant properties.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.