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Entries Tagged as 'New York Office Space'

Office Space Vacancy Rates in US CBDs Fall Slightly

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Bloomberg July 8, 2010 - Office space vacancies in U.S. central business areas fell in the second quarter from the prior three months, the first drop since 2007, as companies hired workers and took advantage of lower office space rents, Cushman & Wakefield said.

The average vacancy rate in central business districts fell to 14.8 percent from 15 percent at the end of the first quarter, the New York-based broker said today. Sixteen of the 31 cities tracked by Cushman had declines in vacancies, the company said.

“Markets throughout the U.S. continue to strengthen, as it becomes strongly apparent that the national vacancy rate for CBDs has peaked,” Maria Sicola, executive managing director and head of Americas research for Cushman, said in a statement.

Office vacancies in both central business districts and suburban areas rose to 17.4 percent in the second quarter, the highest since 1993, New York-based research company Reis Inc. said July 6. Cushman’s figures are for central business districts in cities including New York, Washington, D.C., Philadelphia, Boston and San Francisco.

Some office landlords cut their rents to fill space, Cushman said. The average rent fell to $36.49 a square foot from $36.88 in the first quarter. Nineteen of the 31 districts covered in the survey had quarterly declines in rates and 13 of those had drops of less than 3 percent, a smaller decline than in past quarters, Cushman said.

‘Nearing Bottom’

“While there is still substantial competition among landlords to offer the best deal to prospective tenants, rental rates are nearing a bottom in several markets,” Sicola said.

The U.S. has added 882,000 jobs since the beginning of the year, according to the Labor Department. The drop in office vacancies in the second quarter followed nine straight increases dating back to the last three months of 2007, when the rate bottomed out at 9.7 percent, Cushman said.

Manhattan’s three submarkets -- Midtown, Midtown South and Downtown -- had the lowest vacancy rates among the central business districts tracked by Cushman. Midtown South’s vacancy rate fell to 9.3 percent from 9.9 percent in the first quarter, Downtown’s rate was little changed at 9.9 percent and Midtown’s rate declined to 11.5 percent from 12.6 percent.

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Manhattan Office Space , New York Office Space , Office Rental , Office Space , Office Vacancy Rate

A GREAT Time to Renegotiate Your Office Space Lease

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With office space vacancy rates at recent time highs, office rental rates down as much as 30% in many office markets and no bottom found in the woes for office building owners, now is a great time to renegotiate your lease. Even if you have 2 or more years left on your current office lease you may be surprised at the willingness of landlords to renegotiate. It is not a market specific phenomena, but one that is nationwide. It doesn't matter if you lease office space in Manhattan, Chicago, Houston, Denver, Los Angeles or even small markets such as Fresno, Raleigh or Rochester. Every office space market has been affected.   Many office building owners are having financial difficulties not only on the occupancy side, but also on the mortgage side. If a landlord has a refinance coming due, you may find yourself in a great position to blend and extend.  What this means is that you would extend your office space lease for another 3 to 5 years at a lower rate in order for the landlord to show to their office building lender that they have long term office space tenants.  No office building owner will agree to reducing a financially strong tenant's rent, unless the restructured agreement provides them with some sort of economic benefit. In this case while you are paying less rent, it turns out to be a win-win situation since your new lease will help in the refinance process for the office building owner.

How do you get this process started?
The best way is to contact your Local OfficeFinder Office Tenant representative. Office Tenant Representative services won’t cost you anything and they are professionals at negotiating office leases. OfficeFinder Office Tenant Reps average over 12 years of experience and many have advance designations earned though demonstrating their skills and knowledge. It is a no lose proposition for you. Give them a try. There is no obligation.

Chicago Office Space , Denver Office Space , Los Angeles Office Space , Manhattan Office Space , New York Office Space , Office Leasing Tips , Office Rental , Office Space , Office Space Negotiations , Office Vacancy Rate , Tenant Representation

The Worlds Most Expensive Markets for Office Space for Lease

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Office space for rent costs worldwideLOS ANGELES, May 05, 2010 (BUSINESS WIRE) -- London's West End remains the world's most expensive office market, according to CB Richard Ellis Group, Inc. (CBRE) Global Research and Consulting's semi-annual Global Office Rents survey. Hong Kong's Central Business District (CBD) has risen to second place pushing Tokyo's Inner Central to third place. Mumbai is now in fourth position on the list while Moscow remains in fifth in the CBRE rankings, which tracks occupancy costs for prime office space in 176 cities around the globe.

Office occupancy costs measured in U.S. dollars are affected by changes in the dollar's value versus the respective local currency. Hence, office occupancy costs when converted into U.S. dollars are driven by both the local market dynamics of supply and demand, as well as currency changes.

"We have found that currency fluctuations play a big role with regard to where markets rank in the top 10 for office costs," said Dr. Raymond Torto, CBRE's Global Chief Economist. "However, the 'most expensive club' still includes the usual names -- London, Hong Kong and Tokyo."

The report also found that on a year-over-year basis, global occupancy costs are searching for a bottom, with the markets monitored revealing a collective drop of -4.6% worldwide over the 12-month period ending March 31, 2010. Larger markets experienced a slightly greater decline of -6.4%. The majority of markets (133) experienced a decline, with 33 of these markets registering double-digit percentage-point drops in office occupancy costs. 53 markets experienced annual increases in occupancy costs, generally smaller markets affected by quality shifts in key market assets...

... North America is led by Midtown New York, which posted an office occupancy cost of US$64.51 per sq. ft. While office occupancy costs in Midtown New York are high for North America, that market ranked just 26th globally.

North America saw a below-average decline of -3.3% (year-over-year), making the region the third weakest with falling occupancy costs in 51 out of 77 markets. The largest declines were in Calgary CBD (-24.9) and New York Downtown (-19%).

Top Ten Most Expensive Markets
-------------------------------------------------
(In US$ per SF per annum)              US$/SF/annum
  1.) London West End, United Kingdom     182.94
  2.) Hong Kong (Central CBD)             153.20
  3.) Tokyo, (Inner Central), Japan       143.99
  4.) Mumbai, India                       125.76
  5.) Moscow, Russian Federation          125.10
  6.) Tokyo (Outer Central), Japan        118.41
  7.) Paris Ile-de-France, France         113.23
  8.) London City, United Kingdom         110.07
  9.) Dubai, United Arab Emirates         108.92
  10.) Sao Paulo, Brazil                  100.00

More...

Bloggers note: It is interesting to see that the major US office space leasing markets are no where close to the top ten in office space rent costs. Midtown Manhattan is only just over 1/3 of the cost of number one London office space rental rates. The other interesting location in the top ten is Mumbai, India, still nearly double the cost of Midtown Manhattan.

 

London Office Space , Manhattan Office Space , New York Office Space , Office Rental , Office Space , UK Office Space

Goldman Sachs new palace - now with a bigger line between the 'haves' and 'have nots'

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NEW YORK—Goldman Sachs Group Inc.'s new headquarters in lower Manhattan has the kind of amenities befitting masters of Wall Street. The $2.1 billion steel-and-glass building has giant murals, opera-house ceiling heights, and a gym with overachiever fitness classes, like "Awesome Abs."

But a new class of haves and have-nots has emerged—even at Goldman where the notion of have-nots is relative. Outside offices are now reserved only for the firm's more than 300 elite partners. Managing directors, next down in the Goldman hierarchy, almost always get windowless inside offices.

By the Numbers

Key facts about the new headquarters building

 

$2.1 billion Cost of Goldman's new headquarters

$13.39 billion  Company's profit in 2009

7,500  Number of employees set to work in the building

Roughly 300  Partners with outside-view offices 
 

1.7 million  Pounds of ice made daily in the basement to cool the building

12  Classes in Goldman's gym starting at 8 a.m. or earlier, including "Martial Arts Boot Camp"
 

And vice presidents, many of whom had offices before the move, now sit at open-space workbenches that in an earlier era would have been called a typing pool. They aren't thrilled.

"I haven't had a desk like this since high school," said one employee who asked not to be named.

Even some managing directors are grousing. Vice presidents, they note, often get a window seat at their bullpen desks, a sort of consolation prize for having lost an office. "I used to have an office with a view," explained one managing director. "Now I need binoculars to see sunlight."

In many other ways, though, Goldman employees aren't feeling let down by the upgrade. Unlike their old digs on 85 Broad St., which was cramped and had an obstructed view of New Jersey, Goldman's new space at nearby 200 West St. is steps away from the Hudson River, offering a panorama that includes New York Harbor.

The company has been secretive about its new headquarters, especially as it tries to counter criticism that has hurt the company's sterling image. So far, 6,500 of the 7,500 employees that will work in the 43-story building have moved in. Chairman and Chief Executive Lloyd Blankfein arrived a few weeks ago.

Founded in 1869, Goldman has always been based in downtown New York. In 2004, Goldman decided it was time to trade up from its Broad Street headquarters. At the time, financial companies rattled by the 2001 terrorist attacks on the World Trade Center were threatening to leave downtown Manhattan. In 2005, Goldman received tax breaks and grants valued at more than $200 million toward the new building, which stands just across the street from Ground Zero.


 

The new place has a mural in the lobby (bottom, as seen through a window with reflections from street.)

 

Goldman broke ground in 2005. The construction was plagued with problems. In 2007, seven tons of steel fell off the 740-foot-tall building, paralyzing an architect on the ground. Then a sheet of steel plummeted from the 18th floor, landing in a baseball field where a Little League game was being played. There were no injuries.

The first employees arrived by November 2009. The building occupies 2.1 million square feet and features six massive trading floors, each larger than a football field and equipped with enough flat-screen monitors to stock a Best Buy. The basement houses 92 storage tanks that hold 1.7 million pounds of ice made each night when electricity rates are lower than during daytime hours. Air cooled by the melting ice circulates throughout the building.

One of the building's most notable features is the Sky Lobby on the 11th floor. Flooded with light from a glass ceiling, the area resembles a massive auditorium-like space that houses banks of conference rooms, a cafeteria and employee gym. Henry Cobb, a partner at Pei Cobb Freed & Partners, the building's lead architect, calls the Sky Lobby the "living room" of the building.

Baristas serve French Toast Baba pastries and lattes in the cafe, not to be confused with the Sky Lobby cafeteria that offers a deep panini lineup and deadly cupcakes, employees say. Considering the old building's cafeteria was in a windowless basement, one of the most welcome features of the new eatery is the light of day.

The 54,000-square foot gym, called the GS Wellness Exchange, has classes from 5:45 a.m. to 7:50 p.m. The new steam rooms for men and women are drawing mixed reviews. Some employees find the idea of "steaming" with co-workers objectionable. Others, not so much. "Once you have seen your colleagues naked in the locker room, steaming with them isn't that weird," says one employee.

The employee reading lounge features Goldman-approved books, including "On the Brink," the bestseller by former Goldman Chairman and CEO turned Treasury Secretary Henry Paulson Jr. Employees also can thumb through "The Psychology of Persuasion: How to Persuade Others to Your Way of Thinking" by Kevin Hogan and Mitch Albom's "Have a Little Faith: A True Story."

The reading room is too hushed and open for vice presidents evicted from their old offices to use for confidential phone calls. If they have sensitive issues to discuss, they can slip into private offices now reserved for visitors.

"If I had been at a bench my whole life, it would be fine," said one vice president, "but I used to have an office."

Source: WSJ

Manhattan Office Space , New York Office Space , Office Space , Office Space Design

Shedding the Light on Shadow Office Space and the True 19% US Office Vacancy Rate

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Shadow Office Space is office space that is currently under lease by a tenant, but which is not being used due to layoff of employees. It is also not listed for sublease or identified as available space. This could be space that a company is holding so that as the economy comes back they will have the space they need to get back to their “normal” workforce.  Most office leases are long term leases and shadow office space could be that space within a leased premise that is not being used, but is not suitable for sublease due to the layout and / or security concerns of a company.  It is also space that will be put on the market, but has not yet been offered.  This is space that is hidden from the vacancy rate statistics we hear about.  It can be compared to the unemployment figures that come out, but do not include the underemployed or those that have given up looking for a job. In other words, it should be added to the published vacancy rates in order to determine the true office vacancy rate.

Shadow office space will most likely the first space to be filled as the economy comes back. This will also distort the absorption rates. With no record of it being vacant, there will be no record of it being filled with new employees. When the office recovery finally does come, it will be under stated. 

How much is out there? This is a very tough question to answer without a large survey of businesses to determine their current space usage related to their leased space. Based upon our discussions with local OfficeFinder Tenant reps, the true vacancy rate, including shadow space would be 1% – 2% higher than the stated rate in any given market. That means that the Manhattan market would have in excess of 2.5 million square feet of shadow office space; not an insignificant amount of space.

From our recent post, US Office Vacancy Rate Hits 16-year High, the stated vacancy rate was 17.2%. Including a Shadow Space factor, the real US Vacancy Rate would be close to 19%.

What this means to tenants is that there are lots of great opportunities that they can take advantage of. One of the biggest problems for them is the ability to cull through the many options to find the right alternatives.  That’s where engaging a tenant representative comes in. They know the market. They know the landlords. They do this every day and can help tenants find and negotiate for the best options available. Best of all, tenants get representation at no cost to them. Listing agent fees are split to pay for their services.

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Lease Negotiations , Manhattan Office Space , New York Office Space , Office Rental , Office Space , Office Space Negotiations , Office Vacancy Rate , Sublease Office Space , Tenant Representation