Real Estate Market Augurs Rebound in Financial Services

In a sign that financial services firms appear to be rebounding to their pre-September 11 days, Manhattan’s commercial real estate market saw a sharp decline in the number of large blocks of space available for rent in September.A report, which is expected to be released later this week by real estate brokerage firm Colliers ABR, found that the number of blocks of available space that are 500,000 square feet or more stood at six in September, down from 10 at the end of 2004. Three of those six spaces are in buildings currently under construction: 7 World Trade Center, 1 Bryant Park (Bank of America Tower), and 620 Eighth Ave. (the New York Times Tower).The biggest downtick came in downtown Manhattan.“A somewhat striking fact is that downtown, which had been almost written off as a viable commercial market not that long ago, has only two blocks available that are 500,000 square feet or greater,” the director of research at Colliers, Robert Sammons, said.The results mark the biggest decline in large blocks of available class A space in Manhattan since the late 1990s, Mr. Sammons said. “It’s kind of shocking that suddenly there’s the realization that – Oh my God, there isn’t as much space left as we might have thought there was,” Mr. Sammons said.Financial-services firms appear to be driving the tighter market conditions, which is different from late 2003 and 2004, when law firms were the major force in the leasing market.“Financial-services firms are the hot ticket again,” said Mr. Sammons, who noted that they’ve been most active in the market – either leasing new space or withdrawing space that they had previously placed on the market.Mr. Sammons cited JPMorgan Chase and Citigroup as companies that have been particularly active. JPMorgan Chase pulled two blocks, encompassing about 850,000 feet of space, off the market while Citigroup has signed or is in negotiations to sign leases amounting to about a million square feet of space, he said.This is a big change from the past few years when financial-services firms were consolidating, laying off workers, and placing some of their existing space on the market. This is an indication that they’re getting ready to hire again.“A lot of these deals appear to be taking space ahead of hiring,” Mr. Sammons said. “They seem to be jumping into the market and taking space before prices increase too much.”Mr. Sammons sees the surge in leasing activity as a good sign – but not a definitive one. “My only problem is that they haven’t actually hired all the people to fill up the space yet,” he said. “But I think a lot of this hiring will take place.”The vacancy rate for class A space in Manhattan fell to 9% in September from 9.4% in August and 10.1% a year ago. In Midtown, the vacancy rate was 8.8% in September, down from 9.3% both in August and a year earlier. The vacancy rate in Midtown South slipped to 6.4% from 6.8% in August and 7.8% a year ago, while the rate in downtown Manhattan dropped to 10.2% from 10.4% in August and 13.2% a year earlier.

Real Estate Market Augurs Rebound in Financial Services

Real Estate Market Augurs Rebound in Financial Services

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