Office market

Leading city office landlord SL Green announced today it had leased 121,441 square feet of its 100 Park Avenue to financial firm BDO Siedman. The lease, which starts in January, is for 15 years and brings the 825,815-square-foot tower at 40th Street to 80 percent occupancy, according to a Business Wire release (which touted the lease as the 15th biggest in Manhattan so far this year).

Howard Ecker of Howard Ecker & Company represented BDO Seidman in the deal, while Cushman & Wakefield’s Paul Glickman, Tara Stacom, Mitti Liebersohn, Alexander Chudnoff, Diana Biasotti and Jonathan Tootell repped SL Green.

For perhaps the first time, commercial brokerage giant Cushman & Wakefield predicted unequivocably that Manhattan office rents would drop, in its just released second quarter investment sales report.

Among the report's sobering conclusions:

■ Year-over-year sales activity through 2Q08 down 59 percent at $13.8 billion

■ Foreign investors have replaced previous high leverage buyers

■ Manhattan vacancy increased 1 percent to 7.1 percent in the last quarter, yet rising rents reached a record high of $71.59 a square foot, up 21 percent from a year ago

■ As financial sector layoffs materialize, rents will decrease

■ Development pipeline limited due to a lack of construction financing

For the full report, see attached.

Guess attorneys aren't the cockroaches of the corporate world after all, able to survive cataclysms while their more fallible colleagues in finance and real estate fall.

Cadwalader, Wickersham & Taft will lay off 96 attorneys from its New York and London offices thanks to a shortage of real estate finance and securities work, according to a Bloomberg report:

``We're in the process of talking to lawyers here,'' Cadwalader Chairman Chris White said in an interview. He declined to comment on whether fired attorneys will receive severance pay through the end of the year, as the Wall Street Journal reported.

At least a dozen law firms have cut lawyers and staff since the U.  read more »

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Commercial brokers call it equilibrium: when the Manhattan office market's vacancy rate ascends to the 7 to 9 percent range, and the negotiation advantage tips toward tenants.

Manhattan may be there now.

A new report on the second quarter from Colliers ABR pegs the Manhattan vacancy rate at 8.7 percent by the end of June, and likely rising fast. That's an increase from 7.8 percent in the first quarter. For top-shelf Class A office space, the quarterly vacancy rate increase was even steeper: 5.7 percent to 7 percent.

The reasons? Rising layoffs among office-based employees amid a generally stagnant economy. From the report:

At long last the official employment numbers are catching up with the anecdotal evidence flying out of New York securities firms.  read more »

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The souring real estate market hasn't caused brokerages to skimp on the food with which they lure reporters to quarterly breakfasts and luncheons.

At the Cushman & Wakefield breakfast at Michael's last week, the eggs were scrambled to the perfect fluffiness level; the crepes were nearly transparent; and the fruit salad didn't just include the cheap fruit -- there were blackberries and blueberries, too.

Meanwhile, at this afternoon's CB Richard Ellis second-quarter luncheon at the firm's MetLife building offices, the red meat, roasted asparagus and bowtie pasta were bountiful.

The good news was less so.

Howard Fiddle and David Maurer-Hollaender, both vice chairmen at CBRE, said that Manhattan leasing activity is down, but not by much.  read more »

The New York Post's Keith J. Kelly speculates aloud on what it means for a Conde Nast magazine to be moved from the headquarters at 4 Times Square to 485 Lexington Avenue, where the publishing empire has auxilary office space:

Last year, House & Garden was shut down just a year after moving its offices into that building. This week it was Golf for Women.

"If any magazine gets moved into here, it probably means they are getting ready to shut down," said one source.

One more title and it's an official trend!

Over $13.8 billion in Manhattan investment sales closed or went under contract in the first six months of 2008, a precipitous drop from the $34 billion in sales volume done in the first six months last year. Nearly half of this 2008 volume came via foreign investors.

The numbers come from brokerage Cushman & Wakefield's latest quarterly Manhattan market report, released this morning during a breakfast at Midtown power eatery Michael's.

The dismal investment sales numbers--which cover building, property and portfolio sales--aren't a surprise, really. Nor is the increase in the amount of foreign investment (it accounted for maybe 12 to 15 percent of investment sales in previous six-month periods).  read more »

Office market vacancy rates are up significantly over last spring in Manhattan, according to a new report from brokerage Colliers ABR. The increases seem, at first, incremental; but they're actually quite significant for a market that last year had gotten used to month after month and quarter after quarter of steady vacancy rate drops as tenants leased more space at ever higher rents.

The vacancy rate for Midtown, for instance, the borough's top office submarket, increased from 6.4 percent in June 2007 to 8.2 percent this June. The vacancy rate for top-shelf, Class A towers in Midtown increased to 7.4 percent in June from 5.  read more »

The publisher of relentlessly cheery Sunday magazine Parade signed a 10-year lease renewal for 89,413 square feet of space at SL Green's 711 Third Avenue. The publisher occupies the entire sixth floor and parts of the seventh and 15th floors in the 20-story building at 44th street. The asking rent, according to brokerage CB Richard Ellis, which represented Parade on the deal, was $65 a square foot, about average for the area.

Gregory Tosko, Mary Ann Tighe and Ramneek Rikhy of CBRE represented Parade. SL Green handled the renewal in-house.

Release below:

CB RICHARD ELLIS ARRANGES 89,413-SQUARE-FOOT

PARADE PUBLICATIONS LEASE RENEWAL

New York, NY – June 30, 2008 – CB Richard Ellis announced today that it arranged a 10-year, 89,413-square-foot lease renewal at 711 Third Avenue on behalf of Parade Publications, Inc.  read more »

... Look at real estate in other American cities. And what better cities for comparison than the nation's second and third largest?

Tribune Company potentate Sam Zell is considering selling the Chicago Tribune Tower and the Times Mirror Square complex, home of the Los Angeles Times. He could get as much as $150 million for the Tribune Tower and $235 million for the Times Mirror compex, The Wall Street Journal reports.

A little perspective: Were the 950,000-square-foot Tribune Tower in Manhattan, it would likely fetch as much as $1,000 a square foot, even in this current, rather bearish market. That means Mr. Zell could get nearly $1 billion from its sale. In Chicago, he's lucky if he gets 15 percent of that.

Just sayin'.

It's a trend! Pfizer wants to sublease 750,000 square feet of office space, according to a report today in Crain's New York Business, joining a growing set of firms seeking to shed excess space in the slumping economy:

"The Royal Bank of Scotland is marketing about 140,000 square feet at 7 World Trade Center that it inherited when it bought ABN Amro. J.P. Morgan Chase & Co.’s purchase of Bear Stearns Cos. is also expected to put hundreds of thousands of square feet on the market. In addition, sources say Lehman Brothers is also trying to unload 400,000 square feet of space.

"Meanwhile, Goldman Sachs is preparing to sublease about 500,000 square feet at 77 Water St.  read more »

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Over 414,200 square feet of office space opened up for lease in Midtown in May, according to a new report from brokerage Newmark Knight Frank. Total availability in Midtown, the city's top office market, is now almost 19.4 million square feet, up annually 3.4 million feet.  read more »

NBC visited 7 World Trade Center on June 2, the most recent of more than one visit to Larry Silverstein’s gleaming downtown tower, whose top 10 floors are still available for lease. Sources say NBC was considering housing its new business operations center there.

“NBC has been back to 7 World Trade Center a number of times, with executives and different division heads poring over the building,” said a real estate insider, who, on a recent visit to the building, saw NBC representatives looking like “cats who swallowed the canary.”

Those “executives” included Jeff Zucker, the president and CEO of NBC Universal, according to another source.

A Silverstein spokesman said he would “not comment on nor confirm discussions with potential tenants.” But another broker familiar with NBC’s plans said the media giant has since moved on from 7 World Trade, and is now looking at SJP Properties’ under-construction 11 Times Square and properties along Eighth Avenue.  read more »

More top Midtown office space opened up in May as the Class A vacancy rate there rose for monthly and annually. The rate increased from 6.5 percent in April to 7.1 percent, according to a new report from Colliers ABR.

The ongoing uncertainty amid the financial services sector drove the Class A vacancy increase, according to the report. JPMorgan Chase chose not to renew a lease for 291,000 square feet at 345 Park Avenue; and Bank of America plans to vacate 116,000 square feet at 9 West 57th Street in anticipation of its relocation to One Bryant Park.  read more »

One Bryant Park, the Durst Organization's sparkling new skyscraper on Sixth Avenue, has just leased 7,300 square feet to a tenant who is clearly what real estate types would call "price insensitive."

Apex Capital Management, a private investment firm based in Hong Kong and New York, agreed to pay more than $160 per square foot for the lease on the 37th floor.In so doing, the group snapped up one of the last remaining spaces in the 54-story, green building anchored by Bank of America.  read more »

Al Gore's Generation Investment Management has finalized its lease inside Douglas Durst's One Bryant Park, the new office tower in Midtown that's among the nation's most environmentally friendly commercial buildings. (My colleague Eliot Brown broke the news of the pending lease in November.)

Generation, of which Mr. Gore is chairman, will relocate from Washington, D.C., into 5,500 square feet under the 10-year lease.  read more »

Brokerage giant Cushman & Wakefield will relocate its headquarters to an enormous new space on Sixth Avenue.

C&W, which calls itself the “largest privately held commercial real estate services firm,” signed a 15-year lease for a whopping 156,282 square feet, the entire seventh floor and portions of the eighth and ninth floors at 1290 Avenue of the Americas, between 51st and 52nd streets. The 43-story Emery Roth & Sons-designed building is owned by Vornado Realty Trust.  read more »

We all know that increased concessions (like rent-free months) have been bringing down real Class A office rents for a while now, but for the first time since 2005, asking Class A rents have begun to creep downward.

The Real Deal has crunched the numbers from the first quarter Colliers ABR report and is reporting:  read more »

AOL, the user-friendly portal popular with baby boomers and their parents, officially opened its new corporate headquarters in New York City today.

Three hundred employees from AOL's Corporate and Programming branch, formerly based in Virginia, are moving today into the 105-year-old, Daniel Burnham-designed building at 770 Broadway, which once housed the Wanamaker Department Store. Mr. Burnham also designed the Flatiron Building.  read more »

“Wow, look at the mist,” murmured Sarah Craig, a Vassar College freshman, as she and 60 other students walked onto the 52nd floor of Seven World Trade Center, developer Larry Silverstein’s glamorous office skyscraper that, this rainy afternoon, pierced the clouds.

Thanks to the top 10 floors still being up for lease, the penthouse hosts a lot of visitors — Mr. Silverstein’s publicist and his staff lead four to five tours a week — and lots of glamorous parties.

On Feb. 12, the starkly gorgeous concrete-and-glass space hosted babealicious swimsuit models celebrating the release of the 2008 Sports Illustrated Swimsuit Issue (the models traded their bikinis for cocktail dresses for a party that Silverstein Properties spokesman Dara McQuillan said was fabulous).

Of course, the Vassar students weren’t there to chat about star-studded fetes. The three classes — Intro to Urban Studies, Urban Geography and Architecture of the Modern World — had bussed in from Poughkeepsie and spent the day touring Chase Plaza and the perimeter of Ground Zero.  read more »

The future of the Manhattan office market--and, for that matter, the Manhattan economy--could be divined by looking at the borough's Class B and C office space.

A new report shows an increase since early last year in the vacancy rates for Manhattan's lesser (read: cheaper) office space, though the reasons for the vacancies aren't entirely clear. The Class B vacancy rate increased from 9.3 percent in March 2007 to 10.4 percent in March 2008, according to brokerage Colliers ABR. The Class C vacancy rate increased during the same period from 5.4 percent to 9.1 percent.  read more »

As the speculation around Bear Stearns turns from when and if to how and by whom, the below excerpt from The Observer's John Koblin shows just how far the investment bank has tumbled in little over a year. The excerpt is from a story dated Jan. 21, 2007.

When it comes to the relentless pursuit of prime Manhattan real estate in the last six months, Bear Stearns is unmatched.  read more »

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Things will be good, not great, in the Manhattan office market this year, according to a new report from investment sales brokerage Marcus & Millichap. Key findings of the report:

• Citywide, employers are forecast to create 16,000 jobs in 2008, a 0.4 percent annual gain.
• An estimated 3 million square feet of office space will be brought online in 2008.
• Vacancy is forecast to end the year at 5.4 percent.
• Asking rents are projected to advance 8 percent to $57.51 per square.
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The vacancy rate for Manhattan's top-flight, Class A office towers increased for the second month in a row in February, according a report this week from brokerage Colliers ABR. The rate was up 5.8 percent from 5.6 percent in January. In midtown, specifically--where most of these Class A towers loom--the vacancy rate was up as well, from 6.2 percent in January to 6.4 percent last month.

I wrote yesterday that the Manhattan office market may face problems in 2008. But, in the worst-case scenarios, the Manhattan market would remain strong. One gauge of that strength comes from looking just beyond the borough's borders, at other office markets.

The Manhattan office market, should the borough lose 50,000 or so office-based jobs this year, would see a rise in the vacancy rate to about 10 percent, according to a recent report from brokerage Colliers ABR. That rate would still be below that of Jersey City, Fairfield County, Conn., and Westchester County.  read more »

Manhattan will likely lose between 25,000 and 50,000 office-based jobs in 2008, according to a new forecast from brokerage Colliers ABR. That, however, will not affect the overall health of the borough's already strong office market.

Here's why: If each layoff resulted in 250 square foot of office space returning to the market (roughly the amount one employee occupies), then a loss of 50,000 jobs would add about 12.5 million available square feet to the market. That would drive up the vacancy rate from its record lows of late, but still keep it in a range--10 percent or thereabouts--that other office markets should envy.  read more »

Rupert Murdoch, publisher of the Wall Street Journal, wants to move the newspaper's headquarters from the World Financial Center in Lower Manhattan to his News Corp. building at 1211 Avenue of the Americas.

The Observer's John Koblin broke the news of the pending move in our brother blog Media Mob. Mr. Murdoch wants to make the move before the end of the year.  read more »

Principal Financial Group has signed a lease to take a 19,000-square-foot space in Vornado Realty Trust’s 888 Seventh Avenue, according to CB Richard Ellis broker Paul Amrich, who handled the deal for Principal.

Principal, a Fortune 500 financial services firm, will take the entire 25th floor, moving from a space of about 10,000 feet on the 11th floor of the building.  read more »

Citigroup plans to cut 4,200 jobs, according to media reports this morning. The financial services giant reported a $9.83 billion loss for the fourth quarter of 2007, and one of the biggest reasons, according to CEO Vikram Pandit, were the "losses on our subprime direct exposures in fixed-income markets." Translation: We invested too much in subprime.  read more »

Office-leasing activity in Manhattan dropped in 2007, suggesting a slowdown in a once furiously fast-paced market. In the fourth quarter of 2007, companies leased slightly more than 5 million square feet of office space, less than in each of the previous three quarters, according to a report out today from brokerage Cushman & Wakfield. Leasing dropped 12.8 percent for the year from 2006.  read more »

Citigroup will not renew its lease of the third floor of 666 Fifth Avenue, a Citigroup spokeswoman confirmed today. The floor is listed as having about 77,000 square feet, according to the Web site MrOfficeSpace.com.

(Jared Kushner, publisher of The Observer, is a principal at the Kushner Companies, which owns 666 Fifth Avenue.)

We’ll have more in Wednesday’s print edition of The Observer.

Developers will complete only 20,000 square feet of new office space this year, compared to 165,000 feet in 2006, according to a report out today from investment-sales brokerage Marcus & Millichap. This partly explains the borough's declining office vacancy rate, whci dropped from 9.9 percent at the end of 2006 to 8.3 percent right now.  read more »

Midtown Manhattan is the 12th most expensive office market in the world, well behind the priciest, London's West End, where the cost of occupying office space averages $328.91 a square foot annually. In midtown, the average cost--which includes rent and taxes--is $100.79 a foot, according to a new report from brokerage CB Richard Ellis.

Midtown did top the list of the most expensive office markets in North and South America, well out ahead of the next most expensive, the Calgary Central Business District. Suburban Los Angeles was the third most expensive market in the Americas; and downtown Manhattan was fourth. They were the only other two American office markets besides midtown to make CBRE's top 50 most expensive markets worldwide.

The topmost expensive office markets were all in Europe and Asia. For instance, just ahead of midtown is Singapore with an average occupancy cost of $102.37 a foot annually.

Press release, including the top 50 list, after the jump.  read more »

Banking titan HSBC plans to put a big chunk of its New York headquarters up for lease, vacating more than 200,000 square feet at its 29-story building at 452 Fifth Avenue.

The bank, which occupies the tower in its entirety, is opening up floors 12 through 29, a spokeswoman confirmed on Wednesday evening, making available a big block of space one block south of Bryant Park.

“We’re always looking to maximize whatever real estate we’ve got. This is certainly a prime property,” HSBC spokeswoman Linda Recupero said.  read more »

We reported earlier today on the October rise in Manhattan's office vacancy rate because of big spaces spilled onto the market and up for lease. These included the old New York Times building at 229 West 43rd Street.  read more »

An market report out today by brokerage Colliers ABR puts the Manhattan Class A office vacancy rate at 5.5 percent for October, up from 5.3 percent in September and 5.1 percent in August, when the rate hit its nadir.

So is the credit crunch – the loyal punching bag for all things negative in the New York City real estate world now – to blame?  read more »

The Manhattan office market left the summer behind as healthy as ever, with vacancy rates low and rents rising to record-high averages. Still, one has to wonder: With the credit market crises continuing, was the third quarter of 2007 a swan song?

The overall office rent for Manhattan was $62.91 a square foot in the third quarter, which ended Sunday, according to a new report from brokerage Cushman & Wakefield. That's an increase of more than $3 over the second-quarter average and a nearly $10 increase over the first quarter's average. In midtown, where the the choicest office space abounds, rents hit a record high of $74.47 a foot; they averaged nearly $50 a foot a year ago.

But the borough's vacancy rates perhaps foreshadow rockier times to come. The vacancy rate rose in midtown and midtown south from the second quarter to the third, and in Manhattan overall. Still, the increases were mild; in midtown, for instance, it rose from 5.3 percent to 5.6 percent. And all the vacancy rates were lower than they were a year ago.

The Observer's John Koblin will have more on the office market numbers in tomorrow's paper.

The downtown Manhattan office vacancy rate dropped from 8.37 percent in the second quarter of 2007 to 7.76 percent at the end of the third quarter, which ended Sunday, according to a new report from brokerage Jones Lang LaSalle. The vacancy rate for top-flight, Class A space in downtown dropped from 7.08 percent in the second quarter to 6.09 percent in the third.

That was the case in Manhattan's other two main commercial markets, midtown and midtown south. In midtown, the Class A rate was down from 7.32 percent to 7.11 percent, and the overall rate was down to 7.28 percent, also from 7.32 percent. In midtown south, the Class A rate had dropped to a remarkably low 2.11 percent, from 2.78 percent in the second quarter; and the overall rate was down to 3.89 percent from just over 4 percent.

But it's downtown that the continued vacancy rate drops are most notable. It's downtown, after all, that has traditionally--and especially, since September 11--lagged the other markets in office leasing. The market has clawed its way back from 2001, to tangible gains for office landlords and for the economy down there as a whole. Office rents are up--the average Class A rents rose 2.97 percent from the second to the third quarter to $50.64 a square foot, according to Jones Lang LaSalle, still a bargain by midtown prices (those averages are in the $60's a foot), but well above what most would've expected only three or four years ago.

Manhattan’s highest office floors cost more than ever now. And you can thank—or blame—hedge funds and their ilk.  read more »

Manhattan is not the only city on the verge of hanging up a “No Vacancy” sign when it comes to office space.

Charlotte, N.C., had the lowest downtown office vacancy rate in the country for the second straight quarter, according to CB Richard Ellis’ latest United States National Office Vacancy Index. The report for the second quarter of 2007 noted that Charlotte led the way with a 3.1 percent vacancy rate, followed by midtown Manhattan at 4.8 percent, and downtown Manhattan with a 7 percent vacancy rate. Rounding out the top five were Boston at 7.1 percent, and Las Vegas with an 8.5 percent.  read more »

Bloomberg News reports that two Israeli companies, Tao Tsuot and Financial Levers, have purchased 70 percent of the Phillip Johnson-designed Lipstick Building at 885 Third Avenue.

For those scoring at home, Haim Revah's Metropolitan Real Estate is still a buyer in the building, as has been reported. He just found a little extra investment help.  read more »

“Today is a happy day for me,” said Bill Clinton after lunchtime this afternoon at the Hilton in midtown. He was speaking to clients and brokers for the commercial brokerage firm Cushman & Wakefield.

The reason he’s happy is because tonight he’ll be joining Michael Bloomberg in a joint effort to convince major cities all around the world to become a little bit greener.

Mr. Clinton praised Mayor Bloomberg’s greening plan for the city and discussed its most charged component, the $8 fee that it could cost to drive into midtown during rush hours.  read more »

It’s been a sleepy year so far in the Manhattan office-leasing world, which is to be expected. Vacancy rates are at a huge low and average rents are at an all-time high.

But brokers are quietly saying it’s going to be a very busy summer and, indeed, things are picking up. Take midtown recently: In April, leasing activity there nearly tripled what it was in March, according to stats from brokerage CB Richard Ellis; companies leased 1.84 million square feet of office space versus 660,000 square feet in March.  read more »

It’s the biggest sale in downtown history.

The Paramount Group has purchased 60 Wall Street from Deutsche Bank for $1.2 billion. The 47-story, 1.6-million-square-foot building sold for a jaw-dropping $750 per square foot, by far and away a new benchmark for lower Manhattan. The sale price is nearly double the $610 million Deutsche Bank paid for the building in 2001.  read more »