Amidst a strong market, leasing activity slows in 1Q.Despite soaring soaring: see flight; glider. soaring or gliding Sport of flying a glider or sailplane. The craft is towed behind a powered airplane to an altitude of about 2,000 ft (600 m) and then released. asking rents, strong absorption and a robust investment market, demand for space in Manhattan slowed in the first quarter of 2007, with only 8.9 million square feet of lease transactions completed. The first quarter has typically been the most active one during the current rising real estate market, averaging 11.2 million square feet trans acted in each of the last three years. However, some tenants seem to have pulled back on leasing space in 2007 as a few factors have come into play this year. One issue is price increases. Landlords have been able to raise asking rents and push the threshold higher due to ongoing space restrictions throughout Manhattan, with average asking rents on all classes of space escalating 8.5% from the end of 2006 to $63.30 per square foot. The high asking rents could be the cause of tenants' hesitation to lease space at the same velocity as in previous years. Although transactions for high-end midtown mid·town n. A central portion of a city, between uptown and downtown. midtown Noun US & Canad the centre of a town space continue to close at prices $150 per square foot and higher, those deals only account for a small portion of the market, and involve mostly hedge fund hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" and capital investment market-type tenants. Unlike previous quarters, where tenants often made early recommitments to avoid "inevitable" price increases in the future, the current shortage of available space and high asking rents could have tenants re-evaluating their decisions based on the timeframe of their existing leases. Those with leases expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. in the next 18 to 24 months may have to act sooner, but tenants looking at three to four years remaining on their lease can take a "wait and see" approach and monitor which direction the real estate market moves. Another issue weighing in on tenants' decisions is the uncertainty in the U.S. and local economies. Although the Federal Reserve expects economic growth to remain moderate for 2007, doubts due to rising core inflation, higher oil prices, a slowing housing market and lower stock market returns may be affecting decision-making. Although the local economy is considered strong, a dip in the U.S. economy could cause the 2% growth rate witnessed for private sectors jobs over the last two years for New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. to slow, which in turn could further deter demand for office space. Despite the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in demand, market fundamentals remained strong throughout the first quarter, with little space returned to the market as available supply. The vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. rate for Manhattan dropped to 5.3% from 6.0% in the fourth quarter of 2006. Downtown experienced the largest decline, with vacancy dropping from 9.1% to 7.6%, as tenants who leased space throughout 2006 began to move into their new offices in Lower Manhattan Lower Manhattan is the southernmost part of the island of Manhattan, the main island and center of business and government of the City of New York. Lower Manhattan is generally defined as the area delineated on the north by Chambers Street, on the west by the Hudson River (North . Manhattan's office investment market maintained its healthy state with $19.8 billion in investments already in play. In just three months, the volume traded more than doubled the amount fo deals done through June of last year. Thus far in 2007, $13.7 billion has been shelled out by investors, and an additional $6.1 billion is in the pipeline for 15 buildings under contract. RICHARD PERSICHETTI, DIRECTOR OF MARKET RESEARCH GRUBB & ELLIS NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of |
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