NEW YORK CITY-Despite a slight decline from the previous quarter, the Manhattan office market is still showing strength, with new leasing activity accounting for 6.4 million square feet across the borough, Cushman & Wakefield officials said at a press briefing on Tuesday morning. A total of 24.1 million square feet of new leases were signed in the first nine months of 2011, with September marking the twelfth consecutive month of leasing activity exceeding two million square feet in Manhattan over the last three quarters.
“We’ve had the best year here on a quarterly basis back to about 11 years,” said Joseph R. Harbert, CEO of the New York Metro Region for C&W, explaining that Q3 was the best third quarter since 1998. Year-over-year, leasing activity went up 28% from the 18.8 million square feet signed in the first nine months of 2010. “We’ve done in nine months what an average year had been, and remember this includes an up market, a recession, another up market, another recession and now back to normal,” he added.
Across the city, the top leases of the quarter included a 271,247-square-foot lease to Pearson Plc at 330 Hudson St., a 267,647 square-foot lease to Oppenheimer & Co. at 85 Broad St., a 152,000-square-foot lease to Open Society Foundations at 1770 Broadway, a 125,811-square-foot lease to MSCI Inc. at Seven World Trade Center and a 112,941-square-foot renewal at 555 West 57th St. to Continuum Health Partners.
The previous quarter was defined by megadeals such as the one-million-square-foot Conde Nast lease One World Trade Center and a 900,000-square-foot lease inked by Nomura Holding Inc. at 825 Eighth Ave., totaling 10.3 million square feet altogether.
But Harbert explained that large deals alone aren’t the single-source of the recovery. In Q3, financial services accounted for 32.4% of all leasing year-to-date, followed by information/media at 27.5% and government, education and social services at 9.5%, which Harbert described as a return to a “healthy,” diverse market. “We are back to a normal market in terms of leasing velocity,” he said.
But while Manhattan saw robust activity in Q3, the city was also faced with increased volatility in the market, driven by sovereign debt issues in Europe and the US credit rating downgrade. “All of those things coming together, businesses have become more cautious,” said Kenneth J. McCarthy, senior economist and senior managing director of research at C&W. “No one is pulling back in the sense of cutting back dramatically,” he added, explaining that while another recession is unlikely, increased uncertainty can hinder the recovery.
“The economy won’t go into a double-dip, but I think it will grow relatively moderately over the next 12 months until we get more clarity on some of these important issues that are facing the business community, consumers and the country,” McCarthy said. “New York, despite its thus far ability to weather and come out even better, it will feel it. If the national economy slows down, New York will feel it.”
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