Don’t let the big deals fool you: Some commercial brokers are worried about climbing availability in the city and the increasing number of tenants who are scaling back on space.
According to CBRE, Manhattan office availability hit 11.7 percent in the first quarter of 2017, jumping from 10.6 percent during the same time last year. Another 11.7 million square feet of new commercial space is expected to become available in 2020, and only half of it has been leased, according to JLL. Brokers told the New York Post that they fear a “lack of depth” in the commercial market despite a slew of recent and ongoing headline-grabbing deals.
For instance, Shiseido Cosmetics is considering taking 200,000 square feet at L&L Holding Co.’s 390 Madison Avenue. This would be a considerable size upgrade from the company’s current 76,000-square-foot digs at 900 Third Avenue. Pfizer, which is planning to Sell Its Headquarters On East 42nd Street by the end of the year, is in talks for 600,000 square feet at Brookfield’s Manhattan West.
SL Green Realty’s One Vanderbilt, a 1.7 million-square-foot office tower planned for Midtown East, began its vertical ascent last week with the installation of the project’s first steal beam. But the developer has announced only one office tenant so far: TD Bank, which will be taking 200,000 square feet. Brokers are also reportedly worried about the lack of deals in the 30,000- to 100,000-square-foot range.
“There have been a lot of rumors about some banks wanting a million square feet, but nothing concrete,” one broker told the Post. “For all the activity we see involving household-name tenants, it’s a relatively thin market.” [NYP] — Kathryn Brenzel
(To view 2017’s office leasing transactions, click here)