The commercial property markets in Manhattan continue to outperform many other cities in the US. Research published by Cushman & Wakefield revealed that vacancy rates were slightly higher in the third quarter of this year, than in the same three-month period in 2011, but that rental charges on space in Manhattan were also up. In addition, the level of leasing activity recorded across the area between July and September of 2012 was close to the ten-year quarterly average.
Overall, median rental charges for commercial space in Manhattan climbed by 4.8 per cent year-on-year to stand at USD 58.83 (GBP 36.54) per sq ft at the end of September. Leasing costs for class-A assets, meanwhile, increased by 3.7 per cent to reach USD 67.06 per sq ft. In addition to highlighting the headline rental rates in the US city, the firm also pointed out the continuing strength of the retail investment sector in the Downtown submarket. Cushman & Wakefield executive director Jim Downey said that tourism is an important driver for the retail industry in this part of the city.
Ken McCarthy, senior economist and senior managing director at the firm, noted that one of the reasons why New York's commercial property sector is performing well is due to good jobs creation, which has been fuelled by technology companies. This is a nationwide trend, he noted, commenting: "The cities that are heavy with technology and energy in the employment base have recovered the most jobs."
A report released recently by Jones Lang LaSalle looking at the state of the Manhattan office leasing market reached similar conclusions to those drawn by Cushman & Wakefield. The firm explained that a lack of activity among financial services firms has impacted the Midtown market, while in Midtown South, the majority of deals were for small to midsize premises. In the Downtown market, meanwhile, investors can expect to see a greater level of class-A space become available over the coming months, due to the introduction of 3 million sq ft of space at 2 and 4 World Financial Center. However, the supply of class-B offices in this part of the city has steadily become more constrained.