Lease Transaction Friday

I have been working on a Q4 2009 Midtown South summary report, which will be going out to everyone on my e-mail list in the next week or so (e-mail me at wayne.vanaken@grubb-ellis.com to be added to the list). The big 4th quarter news is that some big 4th quarter leases were signed. And that trend has continued into the new year.

Why is this important to you, the 2,000, 5,000, 10,000 or 20,000 SF tenant? Simply put, the longer large blocks of space (40,000 RSF and up) remain on the market in great supply in Midtown South, the longer it will be before Midtown South rents begin to climb. As it stands today, I am seeing an uptick in deal activity for leases up to 15,000 RSF, and thus far in January, new space availability is slowing in comparison to the average for 2009. So if we see a slowdown in new space and an increase in smaller deals, the last frontier to conquer before whole scale market improvement occurs (and rental rates begin to rise) is the leasing of large blocks of space, which will drive the availability rate down.

I could prolong this post by going into some detail about availability vs. vacancy and how each of these transactions that follow actually impact the availability rate, but I will save that for another day. Another day that is not Friday afternoon. At 4:30 pm. Have a good weekend.

One of the biggest lease transaction in all of Manhattan during the past 12 months is the 415,000 RSF renewal of New York Life at 63 Madison Avenue. The renewal came at a very opportune time for owner George Comfort & Sons, which according to an October 2009 article in The New York Observer, had a $60 million payment due on the building on January 1, 2010; Google leased an additional 57,000 RSF at 111 Eighth Avenue; JLA Home expanded and renewed its lease at 11 East 26th Street, where asking rents were in the low to mid $30s PRSF, committing to a total of 36,200 RSF; J.Crew expanded at 770 Broadway by 59,598 RSF, leasing a portion of the 10th floor for 10 years; Broadridge Financial Solutions renewed its 52,000 RSF lease at 1 Park Avenue for a 3-year term, with a reported option for an additional 5 years; engineering, architectural, planning, environmental and construction management service firm STV expanded and renewed at 225/233 Park Avenue South for approximately 117,000 RSF.