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5.5M SF of Pre-Lease Will Burgeon NY Office Market

NEW YORK CITY-Manhattan has weathered the national real estate downturn this past year and stands to recover strongly as companies begin hiring again in 2003, according to the latest Grubb & Ellis report. A company spokesperson tells GlobeSt.com that a high pre-lease rate and diverse tenant base in the city will continue to ensure stability as the 5.5 million sf under construction comes online.

By Michael Gilliard | Updated on July 10, 2002

NEW YORK CITY-A low slippage rate and diverse tenant base have helped New York weather the national real estate slump of 2001-2002, evidenced by available sublease space having dropped 200,000 sf in May. The latest Grubb & Ellis office market trends report predicts the city will emerge strongly in 2003 as companies begin hiring to fill the 5.5 million sf slated to come online by then. A company spokesperson tells GlobeSt.com that, barring Arthur Anderson’s recent backing out of Times Square , all of this space is already pre-leased.

“A flight to quality is definitely happening right now,” the spokesperson tells GlobeSt.com. “Companies whose leases are up have made the move to a higher-class property, although at rates higher than what they were paying for class B or C space.” The report states that while asking rents overall in Manhattan have slumped 5.6% since Jan. 1, Downtown prices have fallen only 3% this year, offset in part by federal incentive packages to attract and retain corporate tenants in the area. Class A average rents sit at $60.96 for Midtown and at $55.72 for Downtown before subsides, according to the report.

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