State of the Market
Manhattan boasts 450,000,000 s.f. of office space...
Not all space is created equal. After three years of unprecedented rent growth and leasing activity from 2012-2014, New York's office market began showing signs of a slowdown in 2015. Asking rents continued to surge to astronomical new highs -- as validated by Citadel's tower floor lease commitment at 425 Park Avenue starting at $300/SF -- but leasing activity declined by 23.4% from 2014-2015.
2016 was a year of political and economic uncertainty, which caused leasing activity in Manhattan to drop to the lowest level since 2009. SL Green, Manhattan's largest office landlord, predicted this in Q4 2015 and preemptively dropped asking rents on four top assets between 8-16%. While rents in the broader market largely stayed stagnant, concession packages increased markedly, driving net effective rents lower.
Tenants continue to flock to new product, as proven by the spur of leasing activity in Hudson Yards the World Trade Center (i.e. BlackRock, Milbank and Zurich American Insurance), but there is more than 17,000,000 SF of new product coming online between 2017-2021, adding 3.7% of inventory to an already behemoth market.
What does this all mean for your business? 2017 will be a tenant-friendly market. If your company needs to grow, contract or modify your workplace strategy, creative occupancy solutions can be used to reduce leasing costs and drive business value.
This past year, BlackRock trusted the JLL NYC team to make a $1.4 billion dollar business decision to move to 50 Hudson Yards.
This coming year, we want to learn more about YOUR business, and offer strategic ideas on how your corporate real estate could be used to solve broader organizational challenges.
