Commercial Market

The biggest Manhattan office lease in January was the 550,000-square-foot one taken by advertising giant Ogilvy & Mather at 636 11th Avenue. The company, a subsidiary of WPP, will take the entire building, owned by the Hakimian Organization. More of the month's major leases are listed in a new report from brokerage Colliers ABR.

Developers will complete only 20,000 square feet of new office space this year, compared to 165,000 feet in 2006, according to a report out today from investment-sales brokerage Marcus & Millichap. This partly explains the borough's declining office vacancy rate, whci dropped from 9.9 percent at the end of 2006 to 8.3 percent right now.  read more »

The publisher of The American Lawyer and The National Law Journal will move its headquarters from midtown south to Larry Silverstein's 120 Broadway in lower Manhattan. ALM will occupy the fifth and sixth floors, totaling about 90,000 square feet, according to Silverstein Properties. The lease is for 10 years.

The Observer earlier covered non-financial services firms moving to lower Manhattan. And we covered a major lease renewal at 120 Broadway.

Roger Silverstein represented Silverstein Properties in the ALM lease. And Michael Cohen and Leon Manoff of GVA Williams represented the tenant.

The downtown Manhattan office vacancy rate dropped from 8.37 percent in the second quarter of 2007 to 7.76 percent at the end of the third quarter, which ended Sunday, according to a new report from brokerage Jones Lang LaSalle. The vacancy rate for top-flight, Class A space in downtown dropped from 7.08 percent in the second quarter to 6.09 percent in the third.

That was the case in Manhattan's other two main commercial markets, midtown and midtown south. In midtown, the Class A rate was down from 7.32 percent to 7.11 percent, and the overall rate was down to 7.28 percent, also from 7.32 percent. In midtown south, the Class A rate had dropped to a remarkably low 2.11 percent, from 2.78 percent in the second quarter; and the overall rate was down to 3.89 percent from just over 4 percent.

But it's downtown that the continued vacancy rate drops are most notable. It's downtown, after all, that has traditionally--and especially, since September 11--lagged the other markets in office leasing. The market has clawed its way back from 2001, to tangible gains for office landlords and for the economy down there as a whole. Office rents are up--the average Class A rents rose 2.97 percent from the second to the third quarter to $50.64 a square foot, according to Jones Lang LaSalle, still a bargain by midtown prices (those averages are in the $60's a foot), but well above what most would've expected only three or four years ago.

Cravath is staying right at home in their Death Star.

The white shoe law firm Cravath, Swaine & Moore has signed a 15-year renewal at the Worldwide Plaza at 825 Eighth Avenue that will cost the firm $900 million, Bloomberg News reports.

That would make the deal one of the most expensive real estate committments in history. MetLife agreed last December to pay about $850 million over 21 years when it leased 410,000 square feet at 1095 Avenue of the Americas.  read more »

Harry and Billy won't get all eight buildings from Blackstone, after all.

The Wall Street Journal reports (subscription) that the Macklowes will not acquire 717 Fifth Avenue from Blackstone. Apparently, SL Green and retail developer Jeff Sutton had dibs on the building and the right of first refusal to purchase the office portion if it changed hands.

Billy Macklowe told the Journal the process was tied up in negotiations and it got to the point where it wasn't worth it.

For shame. The Journal does not say whether this will affect the $7 billion price tag the Macklowes put down for the eight buildings, including the $1.73 billion they paid for 825 Eighth Avenue. All other seven building sales have closed.  read more »

Construction spending in New York City should hit a record $25.6 billion in 2007, according to a new report from the New York Building Congress. Total construction spending in the city reached $24.6 billion in 2006--yes, a record--up 18 percent from 2005. The amounts, including the 2007 projection, take account of both publicly funded and privately funded construction. So, you have everyting from roads and tunnels to luxury condos and top-flight office space factored in here.

Non-residential construction has been especially hot as of late. Spending on it rose from $4.1 billion in 2005 to $7.9 billion in 2006, according to the Building Congress, an increase of 93 percent. That amount should be $8.6 billion in 2007.

The hearty spending projections shouldn't surprise anyone familiar with the commercial and residential markets in the city. Residential sales remain strong, and demand for office space remains high. Also, the city, the state, the federal government, and hybrids of any and all of them (such as the Port Authority), are spending a lot lately on construction and maintenance projects. The Building Congress expects public construction spending will reach $12.3 billion in 2007, up from $11.9 billion in 2006.

Full release after the jump.

 

 

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Middle-Eastern investors snatched up $3.14 billion in Manhattan real estate in 2006, according to a new report from brokerage Jones Lang LaSalle. Not too shabby for the Big Apple as the total Middle-East investment in U.S. real estate during last year was just north of $7 billion.

One name dominated the headlines, though.

Istithmar, the Dubai-based investment house, seemed to be involved in every major deal involving office space in the city. In April 2006, it acquired Six Times Square for $300 million. Two months later, it purchased 280 Park Avenue for $1.2 billion from Boston Properties. It capped off the summer of 2006 by purchasing 450 Lexington Avenue in August for $600 million.  read more »

In a City Hall address on Thursday afternoon to unveil a new budget, Mayor Bloomberg noted Manhattan’s office market as a barometer of the city’s overall economic health:  read more »