"Recently, space has been just going to the highest bidder and there wasn't a whole lot of negotiation going on," Boisi continues. "I think talent is going to come to the fore in 2001 in terms of negotiating transactions for owners and tenants."
Tenants and brokers alike should get ready to negotiate. Availability is up 0.4% in Midtown to 5.0% and in Downtown 0.2% to 5.1%. Midtown South is holding steady at 7.3% Midtown South's average asking rent, however, increased $0.70 to $48.03 per sf, while Midtown and Downtown's asking prices remained stable. Although the Review does mention that Midtown South leasing jumped 1.5 million sf, most of that is from a single transaction--Credit Suisse First Boston's 1.26 million sf lease at 11 Madison Avenue.
Negative net absorption continues to grow, and subleasing activity has been reported in all markets, most notably a 47,400-sf sublease from Lazard Freres & Co. at 600 Fifth Ave. in the Midtown market and a 56,460-sf sublease from Kozmo.com at 80 Broad St. in Downtown. These subleases, experts say, will ultimately add up.
"The sublet space is what's going to cause a substantial increase in vacancy rates. We're seeing several institutions considering putting a couple hundred thousand sf back on the market to at least two or three that are our clients. If you do that across the board, you'll be seeing a couple million square feet coming back on the market," says Boisi. For now, the submarkets are holding steady, and time will tell how much subleasing activity will take place in 2001.
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