We are back!

After a short hiatus we are back writing about the New York Office Market. Expect features like: “What would I do” if Iwere you and “Who’s Koolaid are you drinking” reflecting todays market conditions and trends in New York City Real Estate.

NYC Real Estate: Whose Kool-Aid Are You Drinking?

- The up-tick in leasing activity in December sent the talking heads of NYC real estate to proclaim that the worst is over, leading landlords to believe that they will be able to achieve the inflated rents needed to stay solvent.
- In contrast, Goldman Sachs put 1.5 million square feet of office space on the market; 1.1 million square feet still looms at 11 Times Square; and Ogilvy has left behind a block of 740,000sf.
- To add more confusion, enter Cushman & Wakefield’s latest appointed leader quoted in Crain’s Feb 2, 2010: “as the country emerges from the recession there will be ample opportunities for success.” He says that banks will eventually foreclose on buildings and they will need to be sold.

More than ever, securing the best space at the lowest price requires greater due diligence to reveal the hidden opportunities.

We understand the market and know where your best opportunities are.

Deals of Note
One very significant transaction of note is Hachette Fillipachi’s signing of a sublease for 132,000sf from Time, Inc at 1271 Avenue of Americas. They are downsizing from the 263,000sf at 1633 Broadway as well as paying a discounted sublease rent. The fact that it is from Time, Inc just proves that recessions make strange bedfellows.

Featured Sublet Spaces:

- 25,000sf on Broadway until 2015
- 4,500sf on Broadway until 2014
- 8,000sf on Hudson Street until 2017

Lance LLC completes $100M Credit Tenant Lease/Improvement Financing

Jonathan Rudes, Senior Vice President and Principal in Lance LLC announced that Lance LLC closed a transaction Friday involving a “AA-rated” credit tenant, with a Tri-state region Landlord. The transaction’s structure provided Credit Tenant Lease/Improvement financing of just more than $100 Million in proceeds and included financing more than $15 million of tenant improvement issues related to the transaction.

What would we do if we were you

We sat down this morning and discussed the best advice we could possibly give to a company considering their options for their New York office space. Here’s what we came up with:

1. We believe the market will start coming back by April of  2010.
2. We would go out and find the best deal we could and take it for as long as we could.
3. We would look for subleases from companies that are either desperate or need to get out. These companies may offer significant concessions, include furniture, equipment or have installations that you would never consider building for yourself.
4. Talk to your landlord, he may have lots of issues that you are not aware of that might motivate him to renegotiate your lease.
5. Of course use a professional. Times a wastin’ and you need to be efficient and thorough while the market is still in your favor.

Condé Nast Leases Space To The Economist

Wednesday, Aug 19

WWD Gets New Neighbors As Condé Nast Leases Space To The Economist

The Economist is on the move and will soon be sharing a cafeteria with the stylistas at WWD.

Yesterday, the Economist Group announced that it has leased nearly 62,000 square feet of space from Condé Nast-owned Advanced Magazine Publishers at 750 3rd Ave. The financial publication will be taking over the fifth and sixth floors at the Condé building currently occupied by Fairchild Publications titles including WWD, Footwear News, W and the Condé Nast bridal group.

Space has been opening up on 750 3rd Ave for a while as Condé has cut staff and expenses. When men’s wear trade DNR folded last year (disclosure: I used to work there) its second floor offices were cleared out and the few remaining staffers who transitioned to WWD were moved to an office off of FN‘s space on the eighth floor. It looks like there will be more movement in the building as they prepare for the new tenant.

The Economist Group is planning to relocate from its long-time home at 111 West 57th Street in the second quarter of next year.

 

Goldman Sachs Is City’s No. 1 Source of Sublease Office Space as Supply Mushrooms

 By Dana Rubinstein August 17, 2009 | 12:20 p.m

Should a businesswoman faced with declining revenue, an uncertain future, and enough vacant office space to host a U2 concert decide to put said empty space on the market, she’s bound to encounter a nasty truth: There’s stiff competition out there, a lot of it from Goldman Sachs. “There’s actually more sublease space on the market than during the last downturn,” said Jones Lang LaSalle vice president James Delmonte, referring to the 2001-2004 recession. “There’s more direct space as well.” To wit: New York City’s supply of sublease space has mushroomed a preposterous 139.2 percent since the second quarter of 2007, from 7,141,426 square feet to 17,083,224 square feet. During the height of the last recession, sublease space peaked at the much lower quantity of 14,366,608 square feet. By way of comparison—though, really, what American city’s office market can really compare to New York’s?—Washington’s sublease supply has grown 84.2 percent in the same time period; Los Angeles’, 70.1 percent; Chicago’s, 37.6 percent.

Most of New York City’s sublease space is coming from the devastated financial sector. The No. 1 source of sublease space—citywide and nationwide—is Goldman Sachs, with 597,000 square feet available at 77 Water Street. No 2: Barclays (Lehman Brothers), which has 456,842 square feet available at 277 Park Avenue. Perhaps needless to say, the surfeit of sublease space has sent rents marketwide plummeting. “When there’s more sublease space on the market, there’s more pressure on landlords to be competitive,” Mr. Delmonte said. In the third quarter of 2008, the average rent for a square foot of space in Manhattan was $73.14. In the second quarter of 2009: $59.36. drubinstein@observer.com

Subleasing Your Space in New York City

There are a lot of things to consider when you are thinking about subleasing your space. First we need to know how long is your lease, what you are paying in relation to market value, and how long a term you still have left. Then you want to review the legal issues relating to the sublease, are there any restrictions or are you even allowed to sublease according to your lease. Let’s look at the competition, the market and the potential clients. Would you like to know the costs of subleasing, how long it takes and what other “team” members you might need to help out. Happy to discuss it, confidentially, candidly and professionally.