Manhattan office market showing signs of life, says GVA Williams.
"Having positive absorption for two consecutive months is a leading indicator of the resumption of leasing activity, and that we've passed the bottom of the real estate market," said Robert L. Freedman, vice chairman of GVA Williams.
"Rents appear to have bottomed out, and we don't anticipate they will fall further. However, prior to rents trending up in the sequence of market recovery, we anticipate concession packages will be skinnied out."
In both July and August, the amount of space leased, subleased or removed from the market exceeded the amount of new space placed on the market, according to GVA Williams. In July, 2.4 million square feet was absorbed, surpassing the 2.3 million that was added to the market.
In August, 2.1 million feet was leased or subleased, outpacing the 1.8 million that was added.
"For nearly a year and a half now, companies have been deferring leasing decisions in anticipation of further rent and occupancy declines," Freedman said.
"Many saw little reason to sign leasing contracts if they could write a better deal by waiting a few months. We think it's bottomed out and we're starting to see a modest uptick," he said.
Sublease space as a percentage of total square feet available continues to represent a significant portion of the marketplace: 36.6% of the available space Downtown, 36.5% of the available space in Midtown North and 29.3% of the space in Midtown South.
"This is significant in the percentage of direct space available has never climbed above 10 percent, meaning a fundamental precondition of the recovery has, in large part, already been met, Freedman said.
"Once the percentage of sublease space drops under 20%, and Wall Street begins to hire again, the recovery will be on, net effective rents will begin to rise, and concession packages will shrink and ultimately face rents will rise."
Editor's Note: In the Oct. 15 issue of REW, it has been announced that Scott. J. Klau has been appointed as president and Paul V. Ippolito as executive vice president of Newmark. In fact, the new title for both Klau and Ippolito is executive vice president and principal.
Market-by-Market Snapshot Availability 3rd Quarter 2003 2nd Quarter 2003 Midtown North 12.5% 12.8% Midtown South 12.4% 13.1% Downtown 14.0% 15.3% Overall 14.0% 14.5% Asking rents (approximate) Midtown North $48.95 $41.14 Midtown South $30.83 $31.84 Downtown $33.37 $34.06 Overall $40.01 $41.42