The Real Deal New York

Stagnant Manhattan leasing environment frustrates commercial industry

Silverstein expects things to improve once the presidential election is decided
March 13, 2012 10:00AM

The slow pace of Manhattan leasing is “shocking,” Jones Lang LaSalle Tri-State President Peter Riguardi told the New York Post, as leasing activity through February was down 40 percent from the same two months in 2011.

Commercial landlords and real estate brokers alike are becoming frustrated with the lack of activity and the negative absorption since the final three months of 2011, the Post said.

Granted, part of this year’s 40 percent decline in activity is due to a rare confluence of giant deals early in 2011. This year’s activity is actually just 20 percent off the 10-year average and Manhattan’s vacancy rate remains a healthy 9.3 percent.

One source of demand for space could come from law firms, who are taking a larger role in the growing regulatory financial environment. In fact, law, accounting and consulting firms added 32,000 jobs in the city last year.

However many of these firms are taking their time expanding to new spaces. Chadbourne Park, for example, still hasn’t officially signed a lease for 1 World Trade Center.

Speaking of the World Trade Center site, Silverstein Properties President Larry Silverstein said he believes the leasing environment will improve once a new president is elected.

“People look at the landscape with a sense of determination and purposefulness once uncertainty’s gone,” he said. “Therefore, it’s much easier for major companies to make decisions.”

Silverstein also said he foresees changes in Dodd-Frank legislation down the road that would make life easier for financial firms.

In the meantime, Microsoft is one of the few large tenants with a sense of urgency for finding new space. Its lease at 1290 Sixth Avenue expires in 2014 and needs at least 200,000 square feet. [Post 1st item, 2nd item]