As the fall season begins, we optimistically look forward to the continued uptick of activity in the New York City commercial real estate market. Much like the residential market experienced, the commercial sector has noted a rather unusually busy summer, with certain pockets performing very well and even some notable trends, leaving great anticipation for what fall will bring.
Even in light of a new round of economic distress, causing landlords to lose a bit of confidence and tenants to become overly cautious, the Manhattan market has certainly improved over the last year. Manhattan's availability rate continues to slowly decline. In fact, the vacancy rate dropped from last month and even from last year at this time. Additionally, overall asking rents are slightly higher than last month's and last year's rates.
Areas that have shown increased vitality include Midtown South, which had an availability rate of 9.5% in August, the lowest that area has experienced since December 2007. In this neighborhood we have seen a fairly healthy mix of small to mid-size office spaces being leased. Companies ranging from small start-ups to the world's most powerful blue-chip corporations continue to flock to this area as it is an affordable alternative to Midtown with a more comfortable feel because the buildings are a smaller scale. It also enjoys a mix of both residential and commercial occupants creating a positive street scene well into the evening. The area is also experiencing major revitalization to pedestrian plazas and sidewalks as well as long-overdue renovations to many storefronts.
Another area that has boasted significant commercial activity, and is quickly becoming a destination for tourists and residents, is the Flatiron District. This neighborhood is growing into an epicenter for arts, culture and dining with a huge influx of new business and organizations on the retail front. Of course there is Eataly, which has been a huge success and driver for the increased amount of pedestrian traffic, but other establishments are shaping up to be equally successful and influential.
On the nightlife scene, we helped Jay Z's 40/40 Club both extend its current lease and expand into additional space in which they will be creating a brand new multi-million dollar installation. This bar creates a more exciting night time destination and also brings many celebrities to the district. On the cultural and arts side, The People's Improvisational Theatre, a renowned improvisational school and theater founded by a former SNL writer, relocated to 121 E. 24th St. They expanded from a 2,000 s/f space to a 10,000 s/f performing arts center, which includes a new bar and coffee house. Adding to the cultural options in the area, in 2012 the Museum of Mathematics, the only museum solely dedicated to the exploration of math, will be moving into a 20,000 s/f space which faces both Madison Square Park and the Flatiron building.
Another notable trend we saw in this neighborhood over the past year, and will likely continue to see, is a large number of digital and creative firms taking space in the Flatiron District. These companies value the unique office space layouts, the active vibe of the neighborhood as well as its close proximity to Midtown. We brokered a number of deals with creative and tech firms such as Bluewolf, Demand Media, Tremor Media and Mashable. Those deals alone totaled 44,000 s/f of office space absorption. There is no doubt that the Flatiron District is a hotspot right now and will continue to be.
In light of all the positive changes, increased number of deals, and renewed interest we have seen over the year, we are in no way entirely out of the woods. Landlords must continue to be proactive in order to continue on the path of this escalated market activity.
Adams & Co. has experienced great success in keeping class B and class C buildings completely renovated and up-to-date, with all the modern amenities and conveniences that class A buildings are traditionally known for. Many landlords, including ourselves, are investing millions of dollars to spruce-up lobbies and facades. Because of this, high-profile tenants are taking notice and we are experiencing great demand for space in our buildings. Tenants ranging from top-tier fashion companies to high-level creative industries are moving in and it has created great cyclical demand. This allows us and other buildings the flexibility to attract only the best class of tenants all while keeping vacancy rates low.

The commercial industry is looking forward to a busy fall and we are working extremely hard to keep the momentum going for an even busier 2012. As always, it is important to remember that as tenant needs and the industry as a whole evolves; we must not only evolve with it, but stay one-step ahead through proactive and innovative practices.

James Buslik is principal of
Adams & Co. Real Estate, LLC, New York, N.Y. Tags: