CBRE’s Patrick Murphy and Darcy StacomEven as Manhattan had its best year of leasing since 2006, the likelihood that rents Downtown could
fall further is causing some tenants to hold off closing deals, top CB Richard Ellis leasing broker Patrick Murphy said.
Such companies are concerned there could be significant additional drops in rents in Lower Manhattan,
at the same time as asking rents are creeping up in Midtown and Midtown South. Instead, they are
sitting on the sidelines and monitoring the situation.
“Because nobody wants to be the firm that signs the 15-year lease and then finds that the pricing comes
down another $4 or $5 or $6 or $10 per foot,” Murphy said.
Average asking rents Downtown were $38
per square foot, but asking rents in the Financial District submarket were $55.24 per square foot, CBRE
Murphy, a company vice chairman, was speaking at the firm’s quarterly media briefing today at CBRE’s
The company reported that the availability rate for Manhattan was 12.6 percent, down from the peak
of 15.4 percent in 2009, and that asking rents overall had risen to $48.32 per square foot, up from the
low point in July 2010 of $47.57 per square foot. Asking rents for Midtown were $55.98 per square foot,
while asking rents for Midtown South were $43.64 per square foot.
At the same media briefing, investment sales broker Darcy Stacom, a company vice chairman, said she
expected investment sales volume for 2011 to be on the same level as 2010, when there was $11.3
billion in sales of Manhattan properties greater than $20 million. There was $3.3 billion in sales in 2009
and $49.1 billion at the peak in 2007.
“I think it will be a similar volume. It could be slightly higher, because the [commercial mortgage-backed
securities] market is back,” she said. But she noted that renewed lending activity could also depress
sales, because it would let owners work out their distressed deals.
For example, she recently did an evaluation of a property for an owner, and said her value for the
property was $150 million, but the owner got a competing valuation: “‘I have a CMBS quote at $160
[million],’” she recalled the owner saying.
William Shanahan, CBRE vice chairman in investment sales, added at the briefing that foreign buyers
were taking a closer look at Class B properties.
“They like the price per foot and the diversification of the tenants,” Stacom added.