Cushman sees signs of recovery in market

By Adam Pincus | July 07, 2010 01:30PM

Joseph Harbert

Segments of the commercial leasing market improved sharply in Manhattan in the second quarter of 2010,
led by large office deals such as 11 Times Square and New York City’s
largest retail lease ever at 666 Fifth Avenue, Cushman & Wakefield
executives said this morning.

New office leasing volume in Manhattan topped 12.6 million square feet
in the first half of the year compared to 6.4 million square feet
leased by the same period last year, Joseph Harbert, COO of the New
York metro region, said this morning at the quarterly media briefing in
Midtown.

“If things continue at this rate we would be on pace for about
a 25-million-square-foot year, Harbert said. “It would put us at about
2005 levels. If memory serves, that was a pretty good year.”

But he said he expects rents to continue to slide a bit more.

“It is the second half of the year, [when] we think we will hit the bottom,” Harbert said.

Average asking rents continued to fall in Manhattan’s office properties
and retail vacancies rose in the city’s most expensive shopping
corridor on Fifth Avenue, Harbert said.

The office vacancy rate for Manhattan fell by .8 points to 10.8 percent
in the second quarter compared with the first quarter, but was still
higher than in the second quarter of 2009, when it was 10.5 percent,
Cushman figures show.

The number of blocks available to large tenants for spaces of 250,000 square feet or greater fell in the second quarter of 2010 to nine from 12 in the first quarter of 2009, Cushman figures show.

Proskauer Rose, the law firm, took a large block with more than 406,000 square feet at 11 Times Square in May.

Average asking rents continued a downward trend. In the second quarter,
rents fell to $54.31 per square foot, down $1.07 per square foot from
the first quarter and off more than $5 from the same period last year,
the company reported.

For the retail sector, the vacancy rate on Fifth Avenue between 42nd
and 49th streets fell steeply to 6.2 percent in the  second
quarter, from 15.4 percent in the same period last year. But just north
of that, on Fifth Avenue from 49th to 60th streets, the vacancy rate
nearly doubled to 6.6 percent from 3.3 percent, Cushman reported.

Harbert said the company believes the 90,000-square-foot deal by Uniqlo at 666 Fifth Avenue is the largest retail deal by price — the Japanese retailer is paying  roughly $20 million per year for the lease — ever for New York City.