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Report: NYC leasing active in March/April.

Leasing activity in Midtown Manhattan during the March/April reporting period was brisk, with 2,677,172 square feet leased in all buildings.

"While this represents an admirable 38 percent increase over the first two months of this year, the year-to-date total of 4,614,764 square feet leased is still 11.6 percent behind the S,223,854 square feet leased during the first quarter of 1991," noted Mitchell Steir, senior managing director and co-manager of the Midtown New York office of Julien J. Studley, Inc.

The inventory of available space has grown by nearly one million square feet since the last reporting period, with 52,133,477 currently available for lease. The subsequent increase in vacancy rates has been most dramatic in the Plaza I (54th to 60th streets, 5th to 2nd Avenues) and Plaza II (50th to 54th streets, 5th-2nd avenues) districts, which historically have experienced lower than average vacancies. This is due to the current availability of substantial blocks of space in 641 Lexington Avenue, 909 Third Avenue, 9SO Third Avenue and 399 Park Avenue. Consequently, the vacancy rate for the entire Plaza District has climbed 3 percent to a total of 18 percent. Average asKing rental rates declined to the lowest levels since 1988, with rates of $26.68 per square foot for previously-occupied space, and $43.61 per square foot for new space. This drop is a result of the continued softening of the market.

The level of activity at the end of 1991 and early-1992 clearly indicates that the market is active. "As evidenced by the major transactions completed during this period, law firms and other service industries continue to provide steady momentum to the Midtown market," said Steir. A number of major transactions are near completion, and it is anticipated that the next reporting period will once again reflect a positive increase in leasing activity. Record-low rental rates and very aggressive concession packages have mitigated the relative benefits of suburban relocations.

Major transactions completed in Midtown during the March/April reporting period include:

* Fish & Neave for 114,600 square feet at 1251 Avenue of the Americas

* Haythe & Curley for 110,800 square feet 237 Park Avenue

* AT&T for 91,800 square feet at 1301 Avenue of the Americas

* Fulbright & Jaworski for 66,600 square feet at 666 Fifth Avenue

* Moses & Singer for 47,300 square feet at 1301 Avenue of the Americas

* Gordon, Hurwitz, Butowsky, Weitzen Shalov & Wein for 42,700 square feet at 114 West 47th Street

"Downtown New York continued to experience steady activity, with 557,075 square feet leased during the March/April reporting period," noted George Martin, senior vice president and manager of Studley's Downtown New York office. This represents an increase over the January/February reporting period as well as an increase over March/April 1991. However, leasing activity in new space was drastically reduced. During March/April, only 20,501 square feet of new office space was leased in the downtown market.

The improved performance of the securities industry so far this year has given some hope that there will be an increase in employment, and as a result, an increase in space usage. "It is ironic that this industry, which was the harbinger of the downtown market's decline, could potentially signal its upswing," said Martin.

Another sign of activity in Downtown Manhattan is centered around building sales. "With prices at a very low point, several users are investigating equity positions, and there are a number of "cash buyers" examining the current inventory," noted Wayne Lagary, managing director in Studley's Downtown office.

Average asking rental rates have increased slightly since the January/February reporting period, with rentals in old buildings rising from $24.47 per square foot to $26.31 per square foot. Similarly, asking rates in new buildings have increased from $37.31 per square foot to $37.41 per square foot over the same period. However, despite this rise, overall rates are significantly lower than last year.

"Many lessors are structuring transactions with lower face rates, net of work and free rent, in order to reduce their risk," said Lagary. As a result, less financially stable tenants have been weeded out of the market, since they must rely on their own ability to borrow.

Major transactions completed in Downtown New York during this two-month period include:

* CNA for 43,000 square feet at Two World Trade Center

* Wm. Sadlier & Co. for 35,000 square feet at 14 Wall Street

* Lehman Ark Management for 40,000 square feet at 1 New York Plaza
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Title Annotation:New York, New York; 1992
Publication:Real Estate Weekly
Date:May 27, 1992
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