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Northeast
Aug 07, 2009
By: Tonie Auer, Southwest Correspondent
Asking rental rates for Manhattan’s trophy-quality buildings suffered in the first half of the year as the average asking rental rates dropped 18.7 percent, falling to $83.66 per square foot from $102.85 per square foot in fall 2008, according Jones Lang LaSalle’s 2009 Skyline Review.
While vacancy rates have risen throughout Manhattan every month for the past 15 months, average asking rents did not respond to the change in market conditions until late last fall, the review stated. At the height of the market in the spring of 2008, space at the city’s most desired addresses reached an unprecedented rental rate of $123 per square foot. High-paying hedge funds and other top financial firms were the primary drivers behind the need for trophy space, according to the Skyline information.
Asking rents for Midtown Class A office buildings will decline by approximately 40 percent from peak to trough, which 25 percent has already occurred, the director of research for Jones Lang LaSalle’s New York office forecast.
Under this scenario, the Midtown trophy rent average could fall to the low $70s per square foot by 2010, and the Downtown trophy average could fall below $50, according to the Jones Lang LaSalle information.
On May 28, CPN reported that real estate sales in Manhattan reached a 25-year low this year, illustrating the dramatic slowdown in sales activity, according to a Manhattan building sales report for the first quarter of 2009 prepared by Massey Knakal Realty Services.
“The No. 1 finding--that turnover in the first half is the lowest it has been in 25 years--is a major indicator of the market,” Massey Knakal managing director Kyle Mast told CPN. “Over the last 25 years, annual volume of sales was about 2.5 percent of total properties. That figure was at a high in 1998 with 3.9 percent. The lowest was 1.6 percent in 1992 and 2003. These are cyclical, but the first part of 2009 has 0.7 percent. I don’t expect that to get lower.”
Annualized sales figures suggest that 2009 will see a 59 percent decline in total dollar sales volume and a 68 percent decline in the number of sales, Mast said.
The report shows that multi-family properties continue to be a prized asset class, Mast said. Of the 13 apartment buildings that traded in the first quarter, three were elevator buildings. More than half of the sales were under $5 million, and all but two were under $10 million. One- to four-family buildings showed some surprising numbers, with seven out of the nine sales that took place in the first quarter of 2009 occurring at above $1,000 per square foot, with the high per square foot being $3,220.
By: Tonie Auer, Southwest Correspondent
Asking rental rates for Manhattan’s trophy-quality buildings suffered in the first half of the year as the average asking rental rates dropped 18.7 percent, falling to $83.66 per square foot from $102.85 per square foot in fall 2008, according Jones Lang LaSalle’s 2009 Skyline Review.
While vacancy rates have risen throughout Manhattan every month for the past 15 months, average asking rents did not respond to the change in market conditions until late last fall, the review stated. At the height of the market in the spring of 2008, space at the city’s most desired addresses reached an unprecedented rental rate of $123 per square foot. High-paying hedge funds and other top financial firms were the primary drivers behind the need for trophy space, according to the Skyline information.
Asking rents for Midtown Class A office buildings will decline by approximately 40 percent from peak to trough, which 25 percent has already occurred, the director of research for Jones Lang LaSalle’s New York office forecast.
Under this scenario, the Midtown trophy rent average could fall to the low $70s per square foot by 2010, and the Downtown trophy average could fall below $50, according to the Jones Lang LaSalle information.
On May 28, CPN reported that real estate sales in Manhattan reached a 25-year low this year, illustrating the dramatic slowdown in sales activity, according to a Manhattan building sales report for the first quarter of 2009 prepared by Massey Knakal Realty Services.
“The No. 1 finding--that turnover in the first half is the lowest it has been in 25 years--is a major indicator of the market,” Massey Knakal managing director Kyle Mast told CPN. “Over the last 25 years, annual volume of sales was about 2.5 percent of total properties. That figure was at a high in 1998 with 3.9 percent. The lowest was 1.6 percent in 1992 and 2003. These are cyclical, but the first part of 2009 has 0.7 percent. I don’t expect that to get lower.”
Annualized sales figures suggest that 2009 will see a 59 percent decline in total dollar sales volume and a 68 percent decline in the number of sales, Mast said.
The report shows that multi-family properties continue to be a prized asset class, Mast said. Of the 13 apartment buildings that traded in the first quarter, three were elevator buildings. More than half of the sales were under $5 million, and all but two were under $10 million. One- to four-family buildings showed some surprising numbers, with seven out of the nine sales that took place in the first quarter of 2009 occurring at above $1,000 per square foot, with the high per square foot being $3,220.
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