Manhattan office availability keeps on climbing
It was another record month for Manhattan’s office market — but not in the way landlords are hoping for. Manhattan’s office availability rate hit another all-time high of 17.1 percent in May, according to a recent report. Overall, 1.53 million square feet of office space was leased in May, up 8.2 percent from a year ago. The average asking rent last month was $73.26 per square foot, a decrease of 7.5 percent from the same time last year. Still, leasing volume was slightly lower than the 2020 monthly average of 1.58 million square feet and less than a half of the 2019 monthly average of 3.58 million square feet. Monthly absorption was negative at 3 million square feet. Supply outpaced demand partly because of millions of square feet of space that had been scheduled to come on the market even before the pandemic. On the bright side, net sublease availability decreased for the second consecutive month. Manhattan’s sublease inventory, which has increased by 75 percent since the onset of the pandemic, stood at 20.92 million square feet at the end of May. The sublease share in total availability in May was 22.8 percent, the lowest that’s been since July 2020.
Broker confidence rebounds in the new year
Broker confidence hit record lows at the height of the pandemic, but a year later, agents are feeling more hopeful about the future. During the first quarter, brokers’ overall confidence was 6.7 out of 10, a 53 percent jump from the fourth quarter of 2020 and a 79 percent year-over-year increase, according to the confidence index report from the Real Estate Board of New York. That confidence level is also the highest it’s been since the fourth quarter of 2019, indicating some return to normalcy. “This surge in broker confidence is happening alongside encouraging signs in our city, the overall economy, and particularly the real estate market, where commercial and residential market activity are exhibiting clear signs of momentum,” REBNY President James Whelan said in a statement to the publication.
Pandemic Hasn’t Produced Distressed Opportunities
Sam Zell, who made a fortune buying distressed commercial properties, isn’t finding many bargains these days. Instead, the storied real-estate investor is doing something he usually avoids: following the pack and spending big on something safer. His most notable real estate deal during the coronavirus pandemic period came last month, when one of his companies agreed to pay about $3.4 billion for Monmouth Real Estate Investment Corp. Far from a hobbled company in distress, Monmouth owns 120 industrial properties in 31 states. The sector is one of the most profitable because of high demand for fulfillment centers from e-commerce companies such as Amazon.com Inc.
New York City Commercial Rents Drop and Quirky Businesses Boom
When Ali Ahmed rented a storefront on Brooklyn’s Atlantic Avenue last December, he wasn’t sure what he’d do with it—the veteran restaurateur was simply snagging a bargain from among the retail strip’s many vacancies. “It was too good of a deal,” he says. A few weeks later, someone smashed into his parked BMW and left a note: “Sorry I hit your car. Call me and we’ll figure it out.” The author turned out to be a Brooklyn bookstore owner. The two got to talking and a new concept was born. The result? A combination bookstore and American comfort-food restaurant. Opened in March, A Novel Kitchen has a bustling brunch business and sells several thousand dollars in used books and vinyl records every week, says Mr. Ahmed. “When the rent comes down, that allows local people to take a space and earn a living,” says Peter Ripka, a co-founder of a real estate firm, “They aren’t fighting with chains”.