The NYC Office Market Has Bottomed
By Doug Kass
RealMoney Silver Contributor
4/5/2010 12:15 PM EDT
Last week I spoke to some brokers at leading real-estate management/brokerage companies and to management at several publicly traded REITs in order to get a bead on the nonresidential New York City office market.
In terms of categories:
The "A" buildings have been able to raise rents by a reasonable amount.
The "A-" buildings are able to get slightly higher rents.
Meanwhile, "B," "C" and "D" buildings/locales are still problematic. (The older buildings in the Wall Street area are particularly weak, reflecting new space coming on stream and the fact that the older buildings are archaic and not up to date technologically.)
Several large leases at "A" buildings have recently been contracted in the GM Building ($115 per square foot) and Seagram Building ($105 per square foot).
Interestingly, hedge funds appear to be partly responsible for the uptick in commercial space. For example, Och-Ziff Capital Management (OZM - commentary - Trade Now), which is located at 9 West 57th Street, is taking an additional floor, and SAC is negotiating for a huge space (100,000 square feet) in the same building. I think the firm is currently at 540 Madison Avenue, where it has vertical space (several floors) but is now seeking a more horizontal (one floor) plan.
SL Green (SLG - commentary - Trade Now) has announced a 2% increase in new rental rates effective this Monday. My contacts in the management companies didn't have a sense as to whether this is achievable, but they all agreed that it was a sign that things had bottomed and/or stabilized.
Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here. |
