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The time is now to negotiate your new lease.

Big companies in Midtown Manhattan whose leases are due to expire within the next three years had better start negotiating new ones now, or risk being locked out of a market where available space is dwindling rapidly. There are only three contiguous blocks of available space larger than 100,000 square feet north of 42nd Street.

Bearing in mind that supply is becoming severely limited, corporations need to look beyond market data and statistics to identify future space opportunities. For example, at 919 Third Avenue, large users already are negotiating for space that will not be on the market until the early part of the next century. The same thing is occurring at 875 Third Avenue, where some of the larger leases will not materialize until 2002 and 2003.

Although being proactive is the most important step a corporation can take to ensure its future housing needs, it is not the only one. Of equal importance, is for prospective tenants to have back-up deals in place. In a market as tight as Midtown, even a 100,000 square-foot user is not guaranteed exclusivity and can easily be pushed aside by a larger tenant.

In the case of advertising agency Draft-Worldwide, we began planning for the company's 100,000 square-foot expansion just about two years prior to its lease expiration. After a broad review of the market, we made an in-depth audit of upcoming lease expirations that might open a hidden opportunity for the company. As a result, we were able to negotiate a favorable transaction for the agency at 919 Third Avenue. However, up to the last minute, we had at least another two acceptable options available to Draft Worldwide in case this transaction was not completed.

Although we did not have to consider new construction to find an excellent solution for Draft-Worldwide, the idea of new construction should almost always be added to the list of options. Sites in Times Square and at Rockefeller Center West are being considered by a number of users who acknowledge the lack of existing opportunities. Indeed, build-to-suit situations already are underway.
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Copyright 1998, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Supplement: Annual Review and Forecast, section 1
Author:Cabrera, Joseph
Publication:Real Estate Weekly
Date:Jan 28, 1998
Previous Article:NYC shifts from recovery to renaissance.
Next Article:Non-profits face unique leasing challenges.

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