Sustained, But Slow
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|Will these deals continue? We stopped by Colliers International’s Madison Avenue offices yesterday morning to find out. Executive chairman Bob Freedman, whom we snapped with chief economist Peter Kozel, says tenants are at risk if they defer decision-making for another two years—the market has hit bottom, and you don’t want to miss it. The market will get much tighter by 2014, Peter reports. Rental rates have already upped significantly since the trough, as high as 8%. Preliminary Q4 numbers are in, and Midtown North, Midtown South, and Downtown saw respective vacancy decreases to 12.5%, 10.8%, and 16.2%. Both Midtown markets saw a rise in rental rates to $60.56/SF and $42.53/SF. And those great sublease deals? They’re much harder to find now. “There’s clearly a change in tenor,” he says. (Speaking of, has anyone considered a Placido pop-up store for the holidays?)|
|The executives we met with, including COO Joseph Caridi and CEO Mark Jaccom, noted that economists predict we'll see sustained-but-slow growth versus a renewed recession or a true-potential market. For the US in ‘11, it means the unemployment rate remains above 9%, payroll employment is up 1%, 10-year Treasury interest rate remains below 3%, US dollar exchange rate declines to 5%, and the global economy grows 3.5% to 4.5%. NYC’s economy will continue to outperform the national average, while low interest rates buoy important business. The office is bullish enough that it’s expanding by another 25 brokers over the next six months, and expects its leasing and management portfolio to grow to 50M SF by summer, Mark says.|