The Latest News in New York City Commercial Real Estate
New York City commercial real estate sparks great interest among many people. Potential buyers scour ads for affordable retail space in Manhattan daily. Landlords are also very interested in the latest buzz in the market to see its effect on their investments. If you are considering buying or selling commercial real estate, these reports can provide you with valuable insight.
Huge Deal Completed for Office Space for Rent
Recently a 400,000-square-foot office space for rent became available on Park Avenue. Several companies scrambled to sign the lease for this prime property. Wells Fargo was the first to scout out the space but global business and finance company Bloomberg won the prize. The company signed a lease that became one of the biggest commercial leasing deals of the year.
Fluctuations in Midtown Office Space for Rent
In the first few months of 2008 commercial rent was just over $69 per square foot. By the end of the same year the cost was about $59 per square foot. Research conducted by a well known brokerage firm showed that by the beginning of 2010 the net effective rent, or dollar amount of the rent which includes incentives such as free rent and property improvements, was about $40 per square foot for office space in Manhattan. As of mid 2011, the cost per square footage was up by about $7.00.
Recent Incentives in Midtown Commercial Leasing
Incentives for commercial leasing are expected to continue due to fluctuations in vacancy rates. Among the most notable incentives offered recently are:
• One large investment management house procured a lease for 10 years on a 49,000 square foot office space for $88 a square foot. The deal included 10 months free rent and an additional $75 for working space. This inducement resulted in a net effective rent of less than $65 per square foot.
• A 20 year lease at a prime location on Eighth Avenue included 18 months free rent on a 900,000 square foot office space; netting a $21/square foot reduction in rent.
• Subletting Retail Space in Manhattan
• Commercial tenants that are undergoing financial trouble find creative ways to pay the remainder of their leases. A large number of midtown commercial leasing tenants sublease their spaces to complete their lease commitments. In fact, subleasing accounts for over 27 percent of office space in the Manhattan area.
So, what do all of these reports mean with regard to the commercial real estate market in Manhattan? Currently, fluctuations in the economy mean that some investors have had to provide incentives to renters. Money strapped renters are subleasing space like there is no tomorrow. Yet inevitably, commercial real estate will change in the blink of the eye; making it a good idea to keep a sharp eye on the latest developments.
Richards Realty Group, LLC is a full service real estate company with membership at the Building Owner and Managers Institute International and the Real Estate Board of New York. The realty office is conveniently located in the heart of midtown near Grand Central Station, Bryant Park, New York City Public Library, The Chrysler Building and The United Nations.
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