According to a weekly market report published by The Real Deal, lower Manhattan saw the most relative growth in office leasing during the month of April 2017. Additionally, leasing activity in lower Manhattan looked promising in reports following the first quarter of 2017. Some people have cited the growth in downtown Manhattan to the diversification of businesses in the area. With continued interest in the downtown market, the area may continue to see growth during the second quarter of 2017.
A total of 257,000 square feet was leased during the month of April, which was 78 percent greater than the year before, according to CBRE. When compared to leasing activity in other parts of New York City this month, such as Midtown and Midtown South that are down 7 and 8 percent year over year, respectively, downtown looks like it’s coming out on top. However, it is important to note that lower Manhattan’s leasing activity is still down 40 percent from the five-year monthly leasing average of 427,000 square feet, according to The Real Deal.
According to a press release issued by Jones Lang LaSalle, Inc. (JLL), more than 2.3 million square feet in leasing activity was recorded downtown in the first quarter of 2017. More leasing transactions were completed in this area in the first quarter of this year compared to any quarter within the past two years. According to Tristen Abby, JLL’s vice president and director of New York research, leasing activity increased throughout the city following President Trump’s election and remained strong throughout February. Downtown Manhattan is currently in a period of exponential growth. According to Real Estate Weekly, 60,000 people live in downtown Manhattan, almost three times the population before the 9/11 terrorist attacks.
Downtown Manhattan has also attracted diverse businesses from other areas of the city. As many as 369 businesses packed up shop from Midtown and Midtown South and took up residence downtown. One of the most notable transactions was the relocation of Spotify’s headquarters from Midtown South to New York City’s 4 World Trade Center. In comparison to the first quarter of 2016, this year’s first quarter report revealed a significant change in new leasing activity by industry.
There was a significant increase in technology, advertising, media and information (TAMI) firm activity in the area, according to JLL. Since last year, TAMI activity rose from 19.4 percent to 26.2 percent of all leasing activity by industry in lower Manhattan. Another industry that has seen growth in the area is government entities, increasing from 13.8 percent to 19.8 percent year over year. Finance, insurance, and real estate (FIRE), which was once seen as the powerhouse private sector of entrepreneurial markets such as Silicon Valley and New York City, is now losing its foothold to the TAMI industries. FIRE, which held the largest share of overall leasing activity in April 2016 (26.1 percent) has now fallen behind TAMI with 25.1 percent. Other industries which had year-over-year losses in leasing activity include apparel and retail trade, education, health care, and nonprofit, and professional services.
As the leasing market continues to grow in lower Manhattan and other parts of New York City, it is imperative that tenants and landlords seek the guidance of an experienced commercial real estate lawyer who can represent their interests and protect their rights in transactions. The New York commercial real estate attorneys at Abrams, Garfinkel, Margolis and Bergson, LLP have extensive experience in representing clients in various commercial real estate transactions, including clients in restructurings, reviews and audits, in addition to real estate acquisitions, dispositions, construction contracts and due diligence advisory services. The firm’s attorneys represent both tenants and landlords in complex commercial real estate transactions and provide their clients with the power to make knowledgeable decisions concerning their business and individual needs. For more information or to schedule a consultation, contact our New York commercial real estate lawyers Neil Garfinkel at 212-201-1173 or Larry Haber at 212-993-8681.