Technology boom resonates in the New York City commercial leasing market

The New York commercial leasing market continues to improve incrementally. The market remains segmented as some submarkets such as the Flatiron district and the red hot Park Ave. South district continue to operate with very little vacancy at all, a sign that the general midtown south market is healthier than it has been in some time. A recent purchase of 304 Park Ave. South by the REIT, SL Green just above the $625 per s/f mark is a sure sign of a strong market. Murray Hill Properties owns, leases and manages more than 6½ million s/f in New York, half of which is third party representation. MHP represents the building 461 Park Ave. South, where we have one remaining unit with a lease in negotiation. A survey of available office space between 2,000 s/f and 10,000 s/f located between 14th and 32nd Sts., 19 full blocks along Park Ave. South, reveals that there are just 30 spaces available from a landlord. On Fifth Ave. in the Flatiron district, we represent 101 Fifth Ave.located at 17th St. where we have one unit remaining and we have two offers. We also represent 155 Fifth Ave. located at 21st St. and we have zero vacancy. A space survey of 2,000 s/f to 10,000 s/f from 14th St. to 23rd St. on Fifth Ave. shows that there are just five available spaces from a landlord. The New York commercial property market is healthy and active. This is perhaps directly related to the tech boom that has been ongoing over the last several quarters here in New York. It didn't hurt, a year ago; when mayor Mike Bloomberg stated that New York would eventually surpass Silicon Valley in technology "start ups." He continues to be out front with incentives to make New York City a hot spot for science and engineering. "New York is currently the second largest recipient of venture capital funding for technology startups," (source-Eweek). The announcement of the partnership of Cornell University and New York City to build a new Applied Sciences campus on Roosevelt Island is a tremendous addition to New York. With the permanent campus to be completed by 2017, this will dramatically transform the city's economy and create tens of thousands of jobs. We have no doubt that New York will challenge Silicon Valley for supremacy. After all, where would a hot shot technology inventor/specialist/engineer/scientist prefer to be, in a suburb in California or in the center of the world, on the island of Manhattan? The midtown market remains positive but flat as several larger financial, pharmaceutical and law firms have placed sublet space on the market. Still, the core midtown market is withstanding what other U.S. markets are having great difficulty with. Our experienced brokers at Murray Hill Properties continue to cite the lack of new building inventory coming on line. Outside of 250 West 55th St. and the industry specific "Gem Tower" on West 46th St., there is little new inventory coming on line in the near future in midtown. This lack of inventory is continuing to help drive down the vacancy rate and slowly push up rental rates. Murray Hill Properties was pleased to see 245 brokers at its recent broker event showcasing the entire 8th floor of 23,165 rentable s/f at 1180 Avenue of the Americas at the northeast corner of west 46th St., tremendous interest in large space in a good midtown location, a very good sign. The Downtown market is a tale of two markets. One, encompassing well more than a thousand spaces available in the upper $20s to mid $30s per s/f. The other downtown market is the high end and/or newly built office market commanding $50s per s/f or more. Many people have proclaimed that a renaissance is now taking place downtown after the one million s/f transaction at One World Trade Center with Conde Nast. Several new office buildings consisting of millions of s/f are being built right now within the World Trade Center complex alone and will be available to the downtown market within the next four years. The Manhattan market is roughly 450 million s/f and with only two new buildings in midtown and the World Trade Center complex of buildings due in 2013-2016, the overall vacancy rate will continue to recede over the near term. David Greene is the president of brokerage services at Murray Hill Properties LLC, New York, N.Y.