The Real Deal New York

Leasing on track to be worst in decades: CBRE

July 15, 2009 11:34AM
By Adam Pincus

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Leasing activity in Manhattan this year will likely be the weakest in decades, top leasing brokers at CB Richard Ellis said at a quarterly-market briefing this morning.

“Our expectation is this is going to be the worst year since we have been keeping records on this” in the 1980s, said Paul Myers, CBRE executive vice president, and tenant-side broker, at the breakfast, held at the firm’s Midtown office. Peter Turchin, an executive vice president with the firm, also spoke.

There has only been 5.9 million square feet leased in Manhattan through July 1, and he expects leasing for the year to be worse than the most recent low of 14 million square feet in 1991.

Aggravating the slow activity was the dearth of leasing in Midtown’s trophy buildings, Myers said. There have only been nine leases signed this year by the end of the second quarter, down from 19 at the same point last year. The last time leasing was so slow was 2002, when just 7 leases were signed in Midtown buildings.

CBRE analyzed 34 trophy buildings in Midtown that it said comprised the top buildings in the city, all north of 42nd Street with a total of 40 million square feet.

Those buildings also saw net effective rents drop about 45 percent from the peak in mid-2008 of about $113 per square foot to about $62 per square foot by July.

Despite the dour projections, June was better than May, CBRE reported.

Leasing activity in June was 1.47 million square feet, up from 980,000 square feet in May, but the average asking rents continued to fall, hitting $53.35 per square foot, down from $54.63 per square foot in May, CBRE reported. Rent prices have fallen 25 percent from last June when they were $71.35 per square foot, the firm reported.

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