The skyline isn’t falling, but it’s getting cheaper.
According to Jones Lang LaSalle’s quarterly “Skyline Review” of 72 pre-eminent Manhattan office towers, asking rents at “trophy” locations fell significantly last month compared with last fall and January 2012 — the first such drops since early 2010.
The survey doesn’t measure the city’s entire inventory, and taking rents can vary considerably from the asks. But the report is considered a meaningful market bellwether.
JLL says overall Manhattan asking rents were down 6.8 percent in January year over year — from $78.33 to $73.02. A huge-sounding 18.4 percent rise downtown was more than offset by a 4.7 percent drop in Midtown, which has a much larger inventory.
The asking-rent increase downtown was not due to demand, but to the addition of higher-priced space at the World Trade Center and the World Financial Center.
Also, JLL found, Manhattan trophy rents overall fell 7.3 percent to $73.02 in January from $78.80 in fall 2012.
JLL President of New York operations Peter Riguardi attributed what he called a “flattening” to little or no overall growth resulting from lack of hiring, especially in the financial sector.
He noted, “A number of large sublease offerings bring down the market” — especially along and near Sixth Avenue in Midtown.
Even so, Riguardi said, “There’s tons of activity, and nobody feels like it’s not a good time to make real estate decisions.”
He cited as an example a 400,000-square-foot sublease availability put on the market by AXA at 1290 Sixth Ave.
“The positive side is, there’s a lot of interest in that space already,” Riguardi said.
The JLL survey notes that over the short-term, large blocks of space will “continue to weigh on the market, keeping vacancy above equilibrium and diluting asking rents.”
***
PCB USA Real Estate has snagged another financial tenant for its repositioned 452 Fifth Ave., the 865,000-square-foot tower between East 39th and 40th streets.
Hedge fund KLS Diversified took 16,428 square feet, or the entire 22nd floor. The aggregate value of the 10-year lease is more than $13 million.
PBC USA Real Estate president Ehud Elizur said that leaves only a single, 2,500 square-foot pre-built space available for immediate occupancy in the tower.
In 2010, Elizur’s company bought the property from HSBC in a $330 million sale-leaseback. HSBC remains as a major tenant, but PBC has been attracting new tenants as it systematically upgrades the property.
Over the next few months, the owners will begin marketing three vacant penthouse floors following completion of new cooling towers and generators.
KLS Diversified was repped by Jones Lang LaSalle and Newmark Grubb Knight Frank; the landlord by Alicia Popper in-house and by CBRE.
***
BROAD Street Development, the firm founded by Raymond Chalmé and Daniel Blanco, has wrapped up 54,000 square feet of new leases and renewals at 55 and 61 Broadway, which it bought in 2004 and 2006, respectively.
Most of the deals were for new tenants, including three which left Sandy-damaged buildings downtown for 61 Broadway: MT2 Network and law firms Rosner Nocera & Ragone and Vincenti & Vincenti.
Chalmé said asking rents are in the $30s at No. 61 and close to $40 at 55.
“You read a lot about the bigger deals, but the smaller-tenant market’s alive and well,” Chalmé said.
Broad Street’s Broadway addresses, totaling about 1 million square feet, are more than 90 percent leased.
Among the improvements since Broad Street bought the buildings is a planned retail glass box at 55 Broadway, which required approval through the city’s ULURP process because it involved making over a poorly designed pedestrian “plaza.” It will offer up to 11,000 square feet and can be combined with 20,000 square feet more on the second floor.
***
The Real Estate Board of New York is reaching out to help the family of one of the city’s legendary, leading dealmakers, CBRE global brokerage chief Stephen B. Siegel. His wife, Wendy, is bravely battling leukemia and urgently needs a bone marrow transplant.
An exact match is needed, but one has yet to be found. Those interested in participating in a swift and painless compatibility test should contact the Gift of Life Bone Marrow Registry at info@giftoflife.org.
Eligible donors must be between ages 18-60.