| February, 2021 The Manhattan office market weakened considerably in the fourth quarter of 2020. A rapid addition of both direct and sublease space pushed overall market availability up to 15.1%, a 400-basis point increase over the prior year according to market sources. There is an estimated 68.4 million square feet of office space currently available. Market-wide Manhattan asking rents fell by 8.4% over the prior year to $77.63 per square foot. Taking rents were approximately 9.2% lower at $70.46 per square foot. Only 4.6 million square feet of space was leased in the fourth quarter of 2020. This is less than half of the market’s 20-year quarterly average of 10.0 million square feet. Hope abounds as the vaccine rollout continues in New York State for those in the 1a and 1b groups. There have been nationwide delays in the Moderna and Pfizer vaccine rollouts. Recent shipments of inoculation from Washington were delayed forcing 23,000 New York City residents to reschedule their appointments. Moreover, there are now three new known COVID variants which could lead to additional cases. Armano Real Estate expects that asking rents will continue to decline in the first half of 2021 resulting from further increases in supply of direct and sublet space. We expect that absorption rates will increase in the third and fourth quarter of 2021 as workers return to the office. Thus, the office market should come back into balance in the second half of next year. We believe it may take until 2022 to see a significant recovery in occupancy rates and rents led by new hiring in addition to the full return of the workforce. This recovery will likely be dampened as we expect a 10-15% or more decrease in structural demand for office space resulting from the continuity of work from home trends. New proposed legislation could potentially help the office market recover through reductions in inventory. The legislation would create a five-year period during which owners of office buildings and hotels in midtown Manhattan could convert them for residential use — an idea backed by both the Real Estate Board of New York and the NYC Hotel Association. See below link: Cuomo: Turn empty hotels, office buildings into apartments (nypost.com) The current market weakness presents an excellent opportunity for certain tenants to leverage their real estate position for future success. Accordingly, Armano Real Estate is modifying leases for tenants and implementing space planning and design strategies to reflect new workplace and economic realities. We have been achieving occupancy cost savings in the 18% to over 80% range, depending on the case and type of strategy. Safely re-occupying office space and re-positioning real estate based on future workplace trends and business prospects is of utmost concern to employers. Thus, we are providing financial lease analyses and preliminary space programs for tenants at no-fee. This allows tenants to gain a better understanding of their current situation and to help formulate the best possible corporate real estate strategy and vision in a changing market. Please feel free to contact us regarding your future space plan and vision. We will help you evaluate all options and make the best possible corporate real estate decision. Recent Success – In the News Joseph Armano, CEO of Armano Real Estate, arranged an 8,039 square foot lease for Mid-City Gym at 345 West 42nd Street. Mid-City Gym is a one-stop shop for everything fitness offering one on one personal training, semi-private training and an open gym. “Mid-City Gym is the longest running gym in New York City,†said Armano. “We are pleased to have created and facilitated a lease solution allowing the company to survive in a challenging environment and positioning it for future growth and success.†“It was so important to get help from a professional to restructure lease terms,†said Vince Consalvo, owner of Mid-City Gym. “We look forward to serving the residents of New York City for many years to come.†|
Please see the below link for recent news announcements and our newsletters: In the News and Newsletter Please see the below links for NYS Guidelines: eopening New York Please see the below links for NYC recovery index: NYC Economic Recovery Index Please see the below links for NYC COVID results: Positive COVID-19 Results by Region Please see the following link regarding HealthCheck360 COVID-19 Workplace Solutions: HealthCheck360 COVID-19 Workplace Solutions |
