NEW YORK CITY—The Alliance for Downtown New York reports that the commercial office, retail and multifamily markets in Lower Manhattan are off to a strong start in 2014.
The alliance's report for the first quarter released today notes that commercial leasing in the first quarter was 18% higher year-over-year and 44% higher than the five-year average. The five largest commercial leases recorded in the first quarter were: Macmillan Science and Education's 176,121-square-foot relocation to 1 New York Plaza; Teach for America's 172,744-square-foot lease at 25 Broadway; Amerigroup Corp.'s lease renewal of 165,029 square feet at 14 Wall St.; Allied World Insurance Co.'s renewal and expansion into 142,000 square feet of space at 199 Water St., and the City of New York's lease renewal of 94,896 at 80 Maiden Lane, which barely bested Revlon's lease deal at 1 New York Plaza for 90,194 square feet.
Investment sales in the office sector were brisk, particularly along Broadway, the report states. The New Year started off with William Macklowe's purchase of 156 William St. for $62.5 million. Harbor Group later purchased 55 Broadway for $157 million and REX Realty has acquired 61 Broadway for $330 million.
The report states that Emmes Realty is in contract to acquire 160 Water St. for $160 million and Normandy Real Estate Partners, on behalf of Asian investors, has entered into negotiations to purchase the 350,000-square-foot 65 Broadway office building. The deal is estimated at a price north of $100 million, according to the Alliance report.
Other highlights from the report include the impressive performance of the retail market in Lower Manhattan. The average asking retail rent for the lower Broadway corridor saw the largest quarterly increase in the Manhattan retail market, rising 41% year-over-year. A significant amount of capital improvements to retail properties in the area are nearing completion, which will bring more than 1.55 million square feet of new or repositioned retail space to the market within the next two years.
Development activity is also evident in the hotel sector, with budget, luxury, boutique and extended stay properties in the pipeline. Lower Manhattan currently has 4% of the city's hotel room inventory, but has 20% of the city's pipeline of hotel rooms.
Residential construction is also robust in Lower Manhattan with 2,288 units in nine buildings currently under construction.
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