According to year end data produced by Cushman & Wakefield, Midtown South, Midtown proper and Downtown boast three of the top four markets with the lowest vacancy rate in the country.
Midtown South, which starts at 34th St and includes areas such as the Garment District and Murray Hill extends up into the lower 40s, had a vacancy rate of just 6.4%, best in the nation and half of the national average which is 13.5%. Downtown (south of 23rd St), had a rate of 9.5% finishing in third place and Midtown proper (Times Sq up to 57th St) had a rate of 9.6% and finished in fourth place.
Other notable locations in the top ten include Portland (OR), San Francisco and Washington D.C.
Midtown proper has the highest average asking rent at $65.42 psf (increasing $1.35 from last quarter) which is almost $16 psf more than Washington D.C. which is the runner up in this category. The national average asking rent psf is $37.35.
Puts things in perspective depending on what market you focus on.
As most of you in the NYC area know, FreshDirect is a virtual grocery store that started over 10 years ago focusing its business in Manhattan. The idea was to capitalize on a market that relied heavily on delivery for so many things but especially food!
Though there were numerous grocery stores located throughout the city at the time, it was never particularly easy to do a full shopping anywhere without the help of a car or a cab, neither of which are good options in the City. And who wants to lug lots of shopping bags on the NYC subway and then walk five flights of stairs to their apartments?
FreshDirect quickly became the amazon.com of the grocery world and grew fast, extending into the rest of the boroughs, Long Island, Westchester and parts of New Jersey.
Currently located in Long Island City, Queens, FreshDirect is outgrowing its space quickly and is looking to move. In addition, they are also looking to expand into other markets such as Philadelphia, Chicago and Boston.
They are focusing their new headquarters in either NY or NJ, but the Harlem River Yards in the Bronx seems to be the frontrunner due to an old fashioned means of transportation…rail. Both states are aggressively going after their business, but it’s the use of rail that seems to be driving their decision. And NYC is throwing as much weight as it can to keep the NYC-born online grocer. Apparently, they are offering a package of cash and tax benefits worth up to $112MM keep FD in the boroughs.
The Harlem River Yards rail is a key component of why this location is a primary consideration for FD but its easy proximity and quick access to highways directly connecting to various states for future expansion and core markets of their current business model also make it an attractive spot.
A major British conglomerate, Wm Morrison Supermarkets, has invested $50MM in FD (10% stake in the co.) with the aim of expanding FD’s services. Philadelphia is currently being tested as the first major market for FD to offer their services outside of NYC.
The Bronx location is also key due to a lot of the local relationships with wholesale food markets and companies. Sounds like FD has zeroed in on the Harlem River Yards and are just hammering out the final details. We shall see…
OK, the Colts season didn’t exactly go as planned. Peyton Manning didn’t play one snap, the team faltered right out of the gate and a promising road to a “home game” in the Super Bowl has turned out to be anything but that. Peyton was missing in action and it proved how he could actually be the MVP of the league without even stepping on the field. That’s how important he is/was to the team.
As disappointing as Colts fans are, there is still major upside to hosting a Super Bowl for the first time and local residents can take some consolation in the opportunities that have arisen to help develop, rebuild and renovate all types of infrastructure for the city and the neighborhoods surrounding it.
The major property that was developed specifically for the Super Bowl is the new J.W. Marriott Hotel that will serve as the media headquarters for the game. Clad in Colts-blue glass, the J.W. Marriott is a landmark connected to the convention center where the NFL will host its NFL Experience Fan Festival. And starting on January 27th, Tailgate Town will take over a three block radius downtown offering a variety of interactive games for fans including a zip line that will hover over Capital Avenue. Further east, almost $12MM is being spent on improving Georgia Street, a promenade open to the public that will offer all types of food and live entertainment as fans make their way from the convention center to Bankers Life Fieldhouse arena.
Away from all the main action though is where the real opportunities begins with a major effort to invigorate the Near Eastside which is a 44-square block area east of downtown. When applying for the Super Bowl bid in 2008, the committee decided to make a strong effort to include this area as part of its plan to host the event. This is an area that had high crime rates and poverty as well as a very high foreclosure rate.
The centerpiece of the plan for the neighborhood called for a community center to be built which coincided perfectly with the Super Bowl. Since 1993, the NFL pledges $1MM to the host city to build a community center. The grant must be matched in by local participants and the financing was met with a great effort from multiple sources. Including the NFL’s grant, the overall value of the center will total almost $8MM and be called the Chase Near Eastside Legacy Center. It will be located on the grounds of the local high school and include fitness operations, a media studio, a mobile computer lab, an educational greenhouse and garden, an instructional kitchen and an art studio.
Over a dozen organizations will offer programs to 4,000-5,000 local students, as well as adults, in the 27,000 sf facility. In addition to this, plans are underway to rehabilitate housing, improve local infrastructure and add new retail components like grocery stores that will now be attracted to better locations.
Beyond the community center, plans to revitalize the Near Eastside include rehabilitating housing, improving the streetscape and diversifying the retail mix. By the time the Super Bowl has begun, 250 homes are expected to be renovated and ready for occupancy, a few new condos are in development and a senior living home has already opened. New stores, such as a 4,000 sf food coop, are opening up on streets with new sidewalks, lighting and storm sewers.
What started in 2008 as part of the Super Bowl bid has transformed into a major revival for a community that has hung tough and waited through a storm. So even though hosting the Super Bowl is a big deal, its only one game, and most of us won’t have any idea of what the short/long term benefits are for Indy, but the local residents will and that’s what matters.
Many of you showed a strong interest in the entry about the announcement the Jehovah’s Witnesses made regarding the sale of some of their properties in Brooklyn Heights so I thought I’d keep you updated as things progress.
50 Orange Street (click here to view), a five story building with 20 residential units, was sold by Massey Knakal to an all cash buyer. It sold for $7.1MM, slightly under its asking price of $7.4MM, but considering it was all cash I imagine the Jehovah’s Witnesses are happy with this type of start. This is the first building to go from eight buildings that were put on the market last year. The three represented by Massey Knakal are estimated to be worth in the neighborhood of a slim $18.45MM. Not too shabby!
The new owner has not been revealed yet (If it was me, I’d tell you, I promise), but it seems the building was delivered vacant and in great condition. Not surprising considering the Jehovah’s Witnesses are known for how well they take care of their properties.
183 Columbia Heights and 161 Columbia Heights are the two remaining properties still available for sale, but whispers out there suggest there are contracts out for review.
We’ll continue to keep you updated on these properties, but it would be better if one of you just bought some of them so we could help you convert the properties into great uses for the neighborhood!
511-523 Commack Road is an industrial flex building located on a primary road with great visibility in Deer Park, NY. Over the last five years the area has gone through a number of improvements making Commack Road an excellent destination point for all types of commercial opportunities.
In addition to the local improvements, Commack Road is a direct route to the L.I.E. giving you access to the highway within minutes. As a result of the location and its proximity to the highway, Commack Road receives a major amount of traffic which provides excellent exposure for various kinds of tenants.
Available space ranges from 9,600 to 22,800 square feet. All of the spaces are industrial flex suites with +/- 20’ ceiling heights, various loading options, gas heat, and are fully sprinklered. Typical column spacing is 30’ by 39’.
Contact Jay Silver at 516.294.9700 or firstname.lastname@example.org to schedule an appointment at the property.
After a strong start for office leasing in 2011, activity dropped off towards the end of this summer and into the fall. However, with the closing of several long awaited deals in the city, leasing activity has rebounded indicating that 2011 will produce a stronger showing in the office sector than 2010.
Last month’s activity hit approximately 3MM square feet, the highest level since June, basically insuring that leasing activity will be beyond last year’s total of just over 26 MM square feet. The major commercial real estate companies are predicting a total of approximately 30 MM square feet for 2011.
This is good news for the office sector overall which needed a strong finish to prepare for what may be a slower market in 2012. With all the question marks surrounding the global economy and European market chaos in particular, it’s possible that companies will hold off making any major decisions regarding expansion and/or opening any new locations.
It’s worth noting that average rents have begun to creep higher, jumping approximately 5% from last year’s average rate to just under $57 psf. This trend should be consistent into next year at the least which is a good sign. Though the market may be cautious heading into 2012, there are no new developments slated to open in 2013, and supply and demand should not be effected keeping rents trending higher over time as things progress.
An interesting trend developed in the last six months of this year as life insurance companies have come to play a bigger role in the commercial mortgage market.
I’m sure some of you have noticed that it has not been so easy these days to secure a commercial loan. It’s not surprising considering the lack of investor interest out there, skeptical lenders and stern messaging by ratings agencies regarding high risk opportunities or lack thereof. As a result of this insecurity, life insurance companies have stepped in and are building a large presence as major lenders in the CRE marketplace.
The NYT reported that “the life insurance industry underwrote $15.7 billion in new commercial mortgages — the largest volume on record since the American Council of Life Insurers began tracking the number in 1965.” That’s a pretty hefty number considering the unorthodox source.
Wall Street has been a bit occupied lately (yes, that’s a joke) and investment banks have been dormant paving the way for life insurers to step in and provide what the usual major lenders have not been able to do. Little competition in the marketplace allows for life insurance companies, who are primarily conservative with their offerings, to focus on issuing loans that meet their requirements with high quality borrowers and solid properties. Metlife is one of the major players right now. In the first three quarters of this year they have already matched the $8 billion they lent in 2010.
Applying for a commercial mortgage through a life insurance company can also offer advantages for borrowers. Most life insurers do not pool their loans into bonds, like many investment banks do, so they don’t have to satisfy weary bond purchasers offering high rates. As a result, life insurance companies can offer lower rates. In addition, life insurer’s mortgages perform pretty well overall. Simply based on their strict guidelines and active approach to managing the loans, it’s no surprise that almost 100% of their loans are in good standing.
It wouldn’t be surprising if life insurance companies start partnering with investment banks to get more involved in the bonds market as well. This could definitely broaden the commercial mortgage market offering more loan products which would provide more long term fixed financing.
This is definitely an interesting trend worth following into 2012. We’ll keep you posted.