A PRESENTATION OF CUSHMAN & WAKEFIELD ALTERNATE INVESTMENT SERVICES OFFICE SPACE MARKET UPDATE NEW YORK AUGUST 2012

Transcription

1 A PRESENTATION OF OFFICE SPACE MARKET UPDATE NEW YORK AUGUST 2012

2 AGENDA OVERVIEW AVAILABILITIES MARKET TRENDS & CONDITIONS MARKET CHARTS & ANALYSIS 1

3 OVERVIEW In trophy class A buildings, net effective rents declines slightly between 1 st and 2 nd quarter. However, discerning asset management companies continue to gravitate towards the top end of the market with numerous deals signed at over $100 per square foot. The Manhattan overall vacancy rate held steady in July at 9.1%. Although there was a noticeable increase in sublease space, direct available space continued to steadily decline, falling to its lowest level in more than three years. July leasing was particularly strong, with nearly 2.5 million square feet (msf) leased, the highest level of monthly activity this year. Although overall asking rents increased 5.3% over the past year, they have remained stable since the start of VACANCY Third Point Management signed a renewal and expansion paying over $140 per square foot at 390 Park Avenue By the end of the July, more than 6.1 msf of sublease space was on the market, the first time since March 2011 sublease space had exceeded 6.0 msf. Midtown sublease space increased more than 7.0% during the month, primarily driven by nearly 232,000 square feet (sf) of new space added at 666 Fifth Avenue. The Midtown South vacancy rate edged slightly lower driven by an exceptionally strong leasing month, The Downtown vacancy rate was stable at 9.1% and has not gone above 10.0% in more than a year. LEASING & RENTAL RATES The second half of the year started out strong with July being the most active leasing month this year. Midtown South and Downtown generated the four largest leases this month, each totaling more than 100,000 sf. While renewal activity has been especially strong this year, July was the first month where the largest transactions consisted entirely of new leasing activity. Midtown South s overall asking rents slightly declined in July as a result of higher than average priced class A space that was leased at 101 Avenue of the Americas. Despite the monthly decline, class A asking rents in this submarket currently measure $64.41 psf and are 22.9% higher year-over-year. Downtown asking rents register $40.01 psf, up from $39.16 psf one year ago. MARKET SNAPSHOT MANHATTAN CLASS A STATISTICAL SUMMARY (THROUGH JULY 2012) Market Direct Vacancy Rate Sublease Vacancy Rate Total Vacancy Rate Y-o-Y % Change Total Avg. Rental Rate (psf) Y-o-Y % Change Midtown 8.6% 2.2% 10.8% +0.3% $ % Midtown South 4.6% 0.7% 4.0% --6.5% $ % Downtown 7.5% 1.8% 9.3% -1.2% $ % Totals 8.1% 2% 10.1% -0.4% $ % 2

4 New High End Leasing Activity Tenant Address SF Length of Term Cohen & Steers 280 Park Avenue 87, Years Rothschild Group 1251 Avenue of the Amercias 70, Years Angelo Gordon 245 Park Avenue 70, Years/1 Month MacKay Shields 1345 Avenue of the Americas 53, Years/9 Months Epoch Investments 399 Park Avenue 49, Years First Manhattan Securities 399 Park Avenue 47, Years Third Point 390 Park Avenue 32, Years Citadel (The Blackstone Group) 601 Lexington Avenue 30,529 5 Years Riverstone Holdings 712 Fifth Avenue 25, Years Centerview Partners 31 West 52nd Street 17,749 6 Years/9 Months Loeb Enterprises 712 Fifth Avenue 12,930 5 Years MCF, Inc 135 East 57th Street 12, Years Knighthead Capital 1140 Avenue of the Americas 12,750 8 Years Waterfall Asset Management 1140 Avenue of the Americas 12, Years Shufro, Rose & Company 745 Fifth Avenue 10,321 5 Years Hammond Hanlon Camp LLC 623 Fifth Avenue 9,955 7 Years American Industrial Partners 330 Madison Avenue 9, Years/5 Months Barrett Associates, Inc. 90 Park Avenue 9, Years Falcon Group 660 Madison Avenue 9,249 N/A Aberdeen Holdings 712 Fifth Avenue 9, Years Peter B Cannell 545 Madison Avenue 8, Years Capital Properties Investments LLC 717 Fifth Avenue 8,001 4 Years/3 Months Slate Path Capital 717 Fifth Avenue 8,001 4 Years/6 Months Casimir Capital Group 888 Seventh Avenue 7, Years TriOaks Capital Management One Bryant Park 7,169 6 Years/4 Months Intermediate Capital Group (ICG) 600 Lexington Avenue 6, Years Pennant Capital 888 Seventh Avenue 6,669 5 Years Highmont Capital 12 East 49th Street 6, Years Arcadia Securities 720 Fifth Avenue 5,712 5 Years Red Kite Management 1211 Avenue of the Americas 5,488 5 Years Meredith Whitney Advisors, LLC 444 Madison Avenue 5,455 7 Years/3 Months Wesley Capital Management, LLC 717 Fifth Avenue 4,677 4 Years/5 Months Atraeus Capital 599 Lexington Avenue 4,315 5 Years/5 Months Lionstone Capital 152 West 57th Street 4,117 3 Years Stonehenge Capital 152 West 57th Street 4,000 5 Years/3 Months Fundamental Advisors 745 Fifth Avenue 3, Years CIMB Group 540 Madison Avenue 3,650 5 Years Valor Capital Management Group, LLC 712 Fifth Avenue 3,345 3 Years/3 Months Qantedge Capital 510 Madison Avenue 2,866 3 Years 3

5 New sublease availabilities Building Photo Building Address 120 W 45th St 601 Lexington Ave Building Location Between Sixth Avenue & Broadway Between Third & Lexington Avenues Building Name Tower Lexington Avenue Number Of Stories Owner Name SL Green Realty Corp. Boston Properties, Inc. Floor / Square Feet P16-4,585 rsf P51-10,550 rsf Term Thru Jan 2020 Thru November 2015 Sublandlord Schrodinger JAT Capital Built space with recent installation featuring an Recently built space featuring a stone floor in the office intensive installation. Furniture and reception area, two interior conference rooms, one phones can be made available. Space is built with windowed conference room with unobstructed views 10 offices and a conference room. of Central Park, 15 offices including an executive sized corner office, six person trading desk, 18 workstations, pantry, IT room and storage/copy/mail room Comments Floor Plan 4

6 New sublease availabilities Building Photo Building Address 122 E 42nd St E 52nd St Building Location Between Lexington & Park Avenues Between Third & Lexington Avenues Building Name Chanin Building Tower 52 Number Of Stories Owner Name Stahl Real Estate Company Princeton International Properties Corp Floor / Square Feet P4-21,619 rsf P20-5,138 rsf Term Thru Mar 2017 Thru Oct 2015 Sublandlord Freddie Mac Fortis Bank Aggressively priced high end installation with Fortis will make an aggressive deal. Space features double door entry directly off the elevator. glass fronts and furniture. Built with perimeter offices, Furniture can be made available. Built with 17 conference rooms, trading desk, and double door glass offices, 4 conference rooms, 58 cubicles, pantry, entry. and mailroom. Supplemental A/C available. Comments Floor Plan 5

7 New sublease availabilities Building Photo Building Address Avenue of the Americas 623 Fifth Ave Building Location Between 52nd & 53rd Streets Between 49th & 50th Streets Building Name Credit Agricole Building Number Of Stories Owner Name Paramount Group, Inc. Cohen Brothers Realty Corporation Floor / Square Feet E43-30,081 rsf P24-7,680 rsf Term Thru May Years Sublandlord Commerzbank Royal Capital Management Comments Built space that is move-in ready. It features excellent views, and extensive infrastructure including supplemental AC and emergency power. Furniture can be made available. Installation is built with perimeter offices and support stations. Installation features with glass panel inserts and full height wood doors and a full pantry. Furniture and phones can be made available. Floor Plan 6

8 New sublease availabilities Building Photo Building Address 666 Fifth Ave 540 Madison Ave Building Location Between 52nd & 53rd Streets S/W/C East 55th Street Building Name Number Of Stories Owner Name Kushner Companies Boston Properties, Inc. Floor / Square Feet P15-9,692 rsf P34-4,200 rsf Term Thru Dec 2015 Thru Jun 2016 Sublandlord Investec Sonterra Comments Built with a high end installation featuring 2 glass conference rooms, open layout can accommodate up to 50 trading positions. Space also features a terrace with city views. Trading space with above standard installation in move-in condition. Ideal for hedge fund startup built with 4 offices, 12 trading desks, 1 reception desk, 1 large conference room, 1 break-out room, pantry, IT room and work room. Furniture can be made available. Floor Plan 7

9 New sublease availabilities Building Photo Building Address 50 Rockefeller Plaza 152 W 57th St Building Location Between 50th & 51st Streets Between Sixth & Seventh Avenues Building Name The Bank of America Building Carnegie Hall Tower Number Of Stories Owner Name Tishman Speyer TF Cornerstone Inc. Floor / Square Feet E13 and 14-18,284 rsf each P14-4,400 rsf Term Thru Jan 2020 Thru Dec 2013 Sublandlord Bank of America Meadowvale Capital Management Comments New installation and furniture with some offices never used. Built with perimeter offices and furniture. Two floors can be made available for a total of 36,568 square feet. High end hedge fund space fully wired and furnished. Built with 2 private offices, 2 conference rooms, 17 workstations and pantry. Stone and wood glass finishes. Floor Plan 8

10 New sublease availabilities Building Photo Building Address 545 Madison Ave 950 Third Ave Building Location S/E/C East 55th Street S/W/C East 57th Street Building Name Number Of Stories Owner Name Marx - Realty & Improvement Co., Inc. ANA Real Estate LLC Floor / Square Feet P8-5,100 rsf P4-5,133 rsf Term Thru Mar 2015 Thru Dec 2017 Sublandlord Siemens Enterprise Communications TPR Holdings Comments Short term sublease with full height glass front offices. Open area, ideal for trading and support functions. Glass front conference rooms and full pantry with high-end appliances and furniture available Quality built space in move-in condition. Seven offices, open area with 14 cubicles, reception, conference room, large pantry. Some furniture available with excellent elevator presence. Floor Plan 9

11 Charts and Analysis Number of $100 Transactions by Building: # of $100 Transactions Of the 343 transactions since 2004 that achieved base taking rents at or above $100 psf, 40% of the deals were done in 6 buildings. Of the buildings that have had $100 deals since 2004, 52 buildings had less than 7 deals, or 2.0% of the sample While net effective rents in trophy properties have increased considerably from the bottom, up 31.7% from second quarter 2009, trophy rents dropped 9.9% between first and second quarters of this year. $/SF $125 $115 $105 $95 $85 $75 $74.57 Net effective rents in nontrophy Midtown class A properties also declined this quarter, lower by 2.9% from first quarter $65 $55 $45 $35 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 Midtown-A 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Trophy $

12 Trends Tenants Greater then 100,000 square feet 2012 Technology/Media There are 60 tenants in the market looking for at least 100,000 sf, totaling more than 15.7 msf. 2.5% 2.5% 3.2% 3.9% 7.0% 2.1% 1.5% 1.4% 35.9% Financial Services Legal Services Educational Services Other Government Manufacturing 16.8% of the tenants in the market are financial service companies compared with 2010 when they were looking for more than twice as much space. Technology/Media, which only accounted for 10.8% of the tenants looking for space in 2010, currently represents the largest percentage of 100,000 sf tenants in the market. 7.1% Advertising Agencies 15.9% 16.8% Insurance Apparel/Textile Health Services Research & Testing Firms 2010 Financial Services Legal Services 4.2% 2.7% 3.0% 1.9% Technology/Media Educational Services 4.5% Health Services 4.7% 4.8% 4.8% 9.4% 34.5% Accounting Firms Other Government Advertising 10.8% 14.7% Manufacturing Printing & Publishing Insurance 11

13 Market Charts and Analysis Highlights NYC is one of only three cities to surpass pre-recession payroll employment. Continued employment growth put downward pressure on Vacancy. Businesses are still cautious and the renewal activity in NYC this year has been higher then normal levels indicating a desire to preserve capital. July s activity had Hedge fund and private equity tenants continue to gravitate towards the top end of the market. The market for small to midsize deals continues to be healthy and vibrant with approximately 66% of all year-to-date transactions less than 25,000 square feet. Rents in trophy assets continue to soar and we are seeing more transactions at greater than $100 per rsf. Payroll Employment US Compared with NYC 135,000 3,800 Thousands of Persons 130, , , , , ,000 3,700 3,600 3,500 3,400 3, , , National Recessions US Employment NYC Employment 12

14 MARKET CHARTS AND ANALYSIS Payroll Employment US Compared with NYC 3.85 Millions of Persons Previous Revised Manhattan Office Using Employment Vs. Vacancy Thousands of Persons 1,260 1,240 1,220 1,200 1,180 1,160 1,140 1, % 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 1, % Office Using Employment Vacancy Rate 13

15 JONATHAN LUTTWAK Cushman & Wakefield, Inc Avenue of the Americas New York, NY LOUIS D AVANZO Cushman & Wakefield, Inc Avenue of the Americas New York, NY louis.davanzo@cushwake.com