If the economic recovery was running on fumes in 2018, it appears as though New York City’s commercial real estate market was using the high-octane stuff.
In the face of headwinds including predictions of a broader economic slowdown around the corner, segments of the commercial market got a second wind and, in some cases, climbed to new heights.
Manhattan’s office leasing market, for instance, had its strongest year since the turn of the 21st century. Megadeals such as Deutsche Bank’s 1.1-million-square-foot lease to relocate from Wall Street to the Time Warner Center — which will be renamed for the German lender — and Pfizer’s 800,000-square-foot deal at Tishman Speyer’s Spiral building in Hudson Yards helped push leasing activity to its highest level since 2000.
Tenants and landlords inked 32.4 million square feet worth of new leases and expansions (excluding renewals) in 2018, according to CBRE.
And it wasn’t all just a game of musical chairs, with shiny new buildings on the Far West Side and in Lower Manhattan luring tenants away from outmatched older buildings in Midtown. Absorption was positive at the end of the year at 1.76 million square feet, according to Colliers International.
Over on the investment sales front, 2018 was the year the market put an end to a two-year slide in deal volume that began back in 2015.
Deals like Google’s $2.4 billion purchase of the Chelsea Market building and Silverstein Properties’ $1.2 billion buy of ABC’s Upper West Side campus helped turned the tide on the downward trend in Manhattan investment sales.
Manhattan dollar volume totaled $33 billion last year — an increase of 30 percent over 2017, per Colliers’ figures. It should be noted, however, that 2018’s sales volume was still almost half of what the market recorded in 2015.
On the financing side, the dollar volume of the top 10 loans of 2018 stood at $11.64 billion, up about 4 percent from a year earlier. Meanwhile, retail continued to face challenges, with the volume of the 10 most valuable leases of 2018 totaling $61.8 million, down about 13 percent from the year before.
As the market churned in 2018, so too did the commercial brokerage business. Notably, Eastern Consolidated called it quits over the summer after nearly 40 years in business, shaking up the network of brokers who put together one deal after another throughout the year.
Newmark Knight Frank finalized its spinoff from parent company BGC Partners in 2018, and Cushman & Wakefield held its long-awaited initial public offering. The latter also saw key players from the legendary brokerage Massey Knakal Realty Services — which Cushman bought in 2015 for $100 million — depart for new pastures. James Nelson headed over to Avison Young to jump-start the Canadian brokerage’s investment sales practice; Paul Massey started his own brokerage, B6 Real Estate Advisors; and after taking a few months off over the summer, Bob Knakal landed at JLL.