# Report: Office shortage may hit Manhattan by '08



## krull (Oct 8, 2005)

*Manhattan to run out of office space: report*

*Report: Office shortage may hit Manhattan by '08*


By Tom Acitelli 
March 8, 2006

Manhattan could face an acute shortage of high-quality office space as early as 2008, according to a report out Wednesday by brokerage CB Richard Ellis. The borough's office market continues to tighten as vacancy rates decline on the heels of fresh leases spurred by a generally healthy economy -- and landlords are the main beneficiaries, as the dropping vacancy rates are coming in tandem with higher asking rents. 

The CB Richard Ellis report analyzed different variables of the Manhattan office market, including future demand for high-end space, overall employment growth, the rising population of office-based workers, the quality of existing available space, and the cost of new construction. Based on a projection of a 1.4 percent annual increase in the number of office-based employees and projected office inventory, *the report stated, Manhattan vacancy rates will drop below 5 percent by 2008 and below 3 percent in 2009.* The current vacancy rate, the brokerage reported, is 6.82 percent. 

And, if past correlations between vacancy rates and asking rents hold, *asking rents could trump $90 a square foot in Manhattan by the end of this decade.* The current asking rent for office space is just over $45 a square foot, according to CB Richard Ellis. 


Copyright © 2003-2005 The Real Deal.


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## krull (Oct 8, 2005)

*Manhattan to run out of office space: report*


by Julie Satow 
March 08, 2006 

Demand for Manhattan office space will outstrip the existing and projected supply in seven years, *making development in Lower Manhattan and on the west side necessary*, according to a report by CB Richard Ellis. 

With office employment estimated to grow by 1.4% a year, the brokerage firm projects that vacancy rates will decline to below 5% by 2008 and to below 3% by 2009. This supply constraint will push up rents, with average asking rents reaching as high as $90 a square foot by 2010. The projections do not consider economic factors such as inflation and interest rates. 

“With vacancy rates declining, rents increasing and few new construction projects on the horizon, our ability to keep pace with future business growth in the city is threatened,” said Mary Ann Tighe, the chief executive of CB Richard Ellis for the New York Tri-State region. 

The brokerage said the office shortage makes development of the World Trade Center site and at the Hudson Yards on Manhattan’s west side necessary. The Ground Zero project is bogged down by the rift between leaseholder Larry Silverstein and the Port Authority of New York and New Jersey, which owns the site. Commercial development on the west side awaits transportation improvements. 

*In Midtown, an average of 9.1 million square feet of office leases is expected to expire annually over the next 10 years*, the report released Wednesday says. That means that about 500 tenants will face expiring leases and new rents that are as much as 60% higher than they currently pay. *Tenants could be forced to leave New York to find cheaper office space.* 

The market “is strong, but that very strength could portend challenges to retaining its office employee base,” said Ms. Tighe. 

While demand is expected to increase, office construction has fallen in the past six years. *While an average of 4.2 million square feet was constructed every year since 1950, since 1990 that number has dropped to only 1.2 million square feet a year.* The rising cost of construction materials and labor, as well as a dearth of construction sites in Midtown means the trend will continue, the report says. 

Excluding the World Trade Center, there are only 8 sites in Manhattan large enough to allow as-of-right construction of a one-million-square-foot office building, according to CB Richard Ellis. Considering that some of those buildings will be residential and that only two are near transportation hubs -- the Farley Post Office and Penn Plaza -- and the number of developable plots is even scarcer, the report says. 


©2006 Crain Communications Inc.


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## krull (Oct 8, 2005)

On a side note...


*New York City added more jobs last year*


by Tom Fredrickson 
March 08, 2006

*The New York City economy created 49,000 jobs last year*, nearly 50% more than previously released figures, and job growth has accelerated in early 2006. 

The new numbers, an annual monthly average, reflect the state Department of Labor’s major annual revision released Wednesday. Previous numbers indicated the economy had gained about 35,000 jobs in 2005. 

Separately, the Labor Department reported that the city’s seasonally adjusted *unemployment rate stood at 5.6% in January, down from the 5.8% rate in December.* 

While upward revisions of jobs figures are normal during times economic growth due to the undercounting of hiring at small firms, the changes came in at the high side of expectations, said James Brown, an economist with the state Department of Labor. 

*The increases may boost demand for office space, especially benefiting the city’s real estate industry.* 

“It will certainly encourage people to push forward with various office projects,” Mr. Brown said. “This is perfect news for them -- job growth is stronger than we thought and it’s concentrated in the office industries of professional services and finance.” 

Several job categories saw big seasonally adjusted revisions, according to Barbara Byrne Denham, economist with Jones Lang LaSalle. Accounting saw an increase of 4,000 accountants compared to the zero change previously reported. Social services gained 5,200, compared to a 2,800 gain. Commercial banking gained 2,600 versus a previously reported drop of 900. 

The gains picked up steam in January 2006, when the city added 25,000 jobs on a seasonally adjusted basis, Ms. Denham said. The unusually large gain is somewhat distorted because of the relative weakness in the December job numbers and by increases from unseasonably warm weather in January. Still, the two-month average gain of 15,000 jobs was quite strong, she said. 


©2006 Crain Communications Inc.


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## krull (Oct 8, 2005)

This is great news for developers of office towers! Hopefully they will create 1,000 footers on the west side of Manhattan. Plus those 1,000 Footers mention to be built at the WTC site. Also I think Brooklyn and Queens need to create more cheaper office space aswell or lots of companies will go somewhere outside the city.

All of these Residential construction needs to give way to more Office and Hotel projects. Construction cost must come down aswell.


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## krull (Oct 8, 2005)

I am not sure why downtown has problems... maybe is that big whole in ground zero, less desirable for class 'A' space? I think class 'B' has been doing better in downtown. 

Anyway... here is what I found about how much office space is in the Manahttan market.


*Manhattan Overall Office Space Market:*


*Midtown:* 251 million square feet of office space, *Vacancy Rate:* 6.5 percent, *Average Asking Rent:* $50.24

*Midtown South:* 98 million square feet of office space, *Vacancy Rate:* 8.2 percent, *Average Asking Rent:* $32.65

*Downtown:* 89 million square feet of office space, *Vacancy Rate:* 13.2 percent, *Average Asking Rent:* $39.62


No other city can't beat that amount of office space... How much more square feet of office space can the city grow? Amazing!


http://www.therealdeal.net/issues/MARCH_2006/1141252356.php


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## krull (Oct 8, 2005)

*OFFICE SPACE RACE TO DOUBLE MANHATTAN RENTS *


By LOIS WEISS 
March 9, 2006

Think Manhattan office space is pricey now? Well, it could double in the next few years, according to a new report. 

Job creation combined with a lack of new top-quality office space are the main culprits, and office tenants at the end of their lease terms are already facing rent increases of 60 percent, according to the report done by real-estate giant CB Richard Ellis. 

*Mary Ann Tighe, CEO of the tri-state region for CBRE, said tenants have begun to ask, "Should we keep everyone in Midtown or split operations?" *

Downtown rents are still lower than Midtown. 

Tighe represents Larry Silverstein's 1.67 million-foot 7 World Trade Center, which so far is not even one-third full. 

Tighe called for accelerating the development of the office buildings at the World Trade Center site, as well as at the newly rezoned Hudson Yards, which she agrees needs to be kick-started with residential. 

"The faster we can fill up lower Manhattan and use up the capacity we have built, the faster other areas will grow," Deputy Mayor Dan Doctoroff said. 

*Yet the competition for sites by high-paying residential developers is holding up office development in Midtown.* 

"Many of us would like to develop office buildings in Midtown, but every site is being taken up by residential," said developer Rob Speyer of Tishman Speyer. 

Tighe said the city "has to stop fighting downtown and move it along. You can build a successful residential building in all sizes, but there are very few pieces of land to build an office building of reasonable size." 

While a vacancy rate of 6.82 percent is now joined to average asking rents of $45.03 a foot, as firms expand and job growth continues, the report says vacancies will decline to problem levels. 

They project availabilities below 5 percent by 2008 and below 3 percent by 2009, pressuring asking rates to climb to $90 by 2010 - and that's if tenants remain in the city and don't flee to cheaper spots such as New Jersey. 


Copyright 2006 NYP Holdings, Inc.


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## krull (Oct 8, 2005)

*Downtown picks up, despite flap
Helped by tight midtown market, landlords raise rents as large leases loom *


By Julie Satow 
Published on March 20, 2006 

While turmoil plagues rebuilding efforts at the World Trade Center, the commercial office market in lower Manhattan is on the upswing. 

In a revival that has been overshadowed by the politicking at Ground Zero, landlords are quietly raising their asking rents, the pace of leasing is quickening and several deals are in the works for large blocks of space. 

Driving the activity is the midtown market, where rents have soared to historic highs and contiguous space is at a premium. 

"Notwithstanding what is going on across the street at the World Trade Center, lower Manhattan rises and falls with the fate of midtown, and midtown rents are spiking," says Ric Clark, the chief executive of Brookfield Properties, which owns the World Financial Center, across West Street from Ground Zero.

Still, higher asking rents do not necessarily translate into higher actual rents. "We don't have a sense yet that taking rents have started to spike up--only asking rents," says Bruce Surry, executive vice president CB Richard Ellis. 

Rent for Class A office space in midtown averaged $54.41 a square foot in the fourth quarter, while rent for space downtown averaged $35.02 a square foot, according to data from Cushman & Wakefield Inc. The number of midtown leases signed at $70 a square foot or more surged 65% last year from 2004, to 79. 

Though last year was one of the strongest markets in several years in Manhattan, only 3.4 million square feet was leased downtown, making it the worst year there since 1992. 

Since January, however, there has been a noticeable increase in deal flow. 


*Properties undervalued *

"The phones are ringing off the hook, and there's clearly more activity now than there has been in the past several quarters," says Andy Peretz, an executive director at Cushman & Wakefield. Tenants are finally realizing that downtown is undervalued, he says.

Due to growing demand for space in lower Manhattan, the World Financial Center has raised asking rents by about $5 a square foot, to about $43, brokers say. *Brookfield is negotiating to lease the remaining space at 3 World Financial Center--a contiguous parcel of nearly 300,000 square feet--and has turned away other interested parties that had hoped to view the offices*, say brokers representing these clients. Mr. Clark declined to name the potential tenant with whom his firm is negotiating. 

*Other mega-deals that are under way, but not yet closed, include leases for more than 400,000 square feet at 55 Water St. by the New York City Department of Transportation and for 280,000 square feet at 1 Seaport Plaza by the city's Office of the Comptroller.* 

Though the downtown office market may be tightening, the growing drama at Ground Zero is a serious drag. 

"The worst thing for business is uncertainty," says developer Larry Silverstein, speaking at a press conference last week after talks with the Port Authority of New York & New Jersey broke down. "Does this help? Of course not."

Mr. Silverstein, the leaseholder at Ground Zero, spoke at 7 World Trade Center, where only 15% of the 1.7 million square feet has been leased. 


*Disappearing act *

The stalemate "is destructive to the marketplace," says Kent Swig of Swig Equities, one of the largest landlords downtown. Despite the chaos, though, demand is such that Swig has raised asking rents in its properties by about $3, to between $29 and $31 a square foot for lower floors. 

*"I predict that by the end of the second quarter, several large blocks of space downtown will be gone,"* Mr. Swig says. "The tightening in the market will be reflected not only in the rents we are asking for, but in the rents we are getting."


©2006 Crain Communications Inc.


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## krull (Oct 8, 2005)

*Commercial Office Development Returns to the City*


By MICHAEL STOLER
May 4, 2006

The metropolitan region is finally seeing a return of commercial office development. *Within six years, more than 10 million square feet of office space is expected to be completed in Lower Manhattan.* On May 23, Silverstein Properties will officially open the 1.7 million-square-foot 7 World Trade Center. Construction is under way for the 43-story, 1.9 million-square-foot new world headquarters of Goldman Sachs on site 26 in Battery Park City. Goldman is the first company to build headquarters in Lower Manhattan since JPMorgan constructed its Wall Street home in 1988.

*Zoning has been approved for 4.5 million square feet of office space as part of the Downtown Brooklyn Plan. An additional 1.9 million square feet is expected to be built by Forest City Ratner at the Atlantic Yards, the proposed home of the Nets. Tishman Speyer Properties plans to build 3.5 million square feet in Gotham Center in Long Island City. Other developers are planning offices in Long Island City, Jamaica, and the Bronx.* For the first time in more than two decades, office buildings are planned for Westchester. The New Jersey waterfront, to which many companies from Lower Manhattan and Midtown relocated, has at least 18 million square feet of space and more planned.

Can New York City absorb all the office space that is proposed to be built over the next decade?

A number of leaders in the industry and business weighed in on the viability of office space in the city. The president of Swig Equities, Kent Swig, whose firm owns 4.1 million square feet of office space in Lower Manhattan, said, "The amount of space we are adding over the next 15 years is not much more than the addition to the historic office supply. I do not think buildings in Lower Manhattan will be built without pre-leasing.

"Downtown needs huge, modern office space to attract and accommodate large tenants. Today, the city has a major problem: Rents in Midtown are skyrocketing, and there is a need for alternative spaces to retain companies in New York. How many businesses think they can spend $80 to $90 a square foot in Midtown? Lower Manhattan offers lower price with great incentives."

***

The president of the real estate division of Parish of Trinity Church, Carl Weisbrod - whose church is one of Lower Manhattan's largest owners of real estate - is the immediate past president of the Alliance for Downtown. He said, "I believe the agreement to move forward on the WTC site resolves the major market uncertainty that has made commercial tenants reluctant to commit to large blocks of space in Lower Manhattan. In view of the historic rental price disparity now between Midtown and downtown, together with the available downtown incentives, I believe space in Lower Manhattan will be absorbed as quickly as it becomes available, assuming the economy in New York and in the nation remains strong."

The chairman of the executive committee of GVA Williams, Michael Cohen, said, "I don't believe there is any doubt that 7 World Trade Center will lease successfully. Because of shortage of space in the city, the building should be absorbed during this current market cycle. Tenants will perceive it to be a bargain compared with comparable Midtown buildings. This has been Larry Silverstein's strategy all along, and he's going to be proved right."

The president of the Brooklyn Chamber of Commerce, Kenneth Adams, said, "Midtown is corporate headquarters, downtown Brooklyn is the home of essential functions for banking and insurance, and Lower Manhattan is Wall Street and a construction site. Incentives, like REAP, help business districts such as downtown Brooklyn, Lower Manhattan, and Long Island City to better compete for tenants against New Jersey and Connecticut. The challenge is to create incentives that attract new taxpayers to the city and the state; to continue to drain more from the existing tax base is untenable. Locally, a healthy competition between NYC submarkets is generally a good thing. When that leads to new businesses coming to any one of these districts, the entire city wins."

***

As may be expected, not all industry leaders are optimistic. The co-chairman of the real estate securities portfolio manager Cohen & Steers, Marty Cohen, is cautious about Lower Manhattan. He said, "Initially, this is a very scary since oversupply is the perennial killer. Sometime in the next few years, we could very well have an economic downturn. If oversupply is the killer, then reduced demand is the undertaker. Though it is tempting to believe, I don't believe the real estate cycle has been repealed."

A principal at Koeppel Companies, Caleb Koeppel, whose family has owned the landmark 26 Broadway for more than 50 years, said, "It is history repeated. They're going to throw a ton of space on the market and destroy an already weak market."

The president of Mack-Cali Realty Corporation, Mitchell Hersh, said, "Prior to recent announcements, the only real competitive Lower Manhattan building in the market is 7 WTC. This building has had substantial difficulty in leasing space due to a variety of issues, including uncertainty as to the shape of Lower Manhattan redevelopment, infrastructure issues, and the concern among the corporate community relative to future threats of terrorism - and the impact this could have on their businesses and business continuity.

"Jersey City is clearly a preferred market and is being considered by a number of Midtown companies. It has a proven track record, cost of occupancy advantages, as of right incentive programs, a very diverse and wide labor pool, a wealth of affordable housing, great transportation infrastructure, great amenities, and a lot less congestion than New York City."

***

Many real estate leaders are bullish on commercial development in downtown Brooklyn and Long Island City. The president of Shalom Zuckerbrot Realty and a principal at Octagon Properties, Frank Zuckerbrot, said, "Downtown Brooklyn is a mature office market, although it still lacks the real liquidity in terms of leasing velocity. It has excellent mass transportation infrastructure and established retail businesses. The area is in demand and should be able to absorb new office space".

The president of Brause Realty and chairman of the Long Island City Business Improvement District, David Brause, said he is encouraged that Midtown tenants are receptive to the savings offered in new space located a subway stop away from Manhattan.

Mr. Brause said that the effective rents for Long Island City are in the low $20s per square foot, while similar space at the Bank of America Tower across from Bryant Park is projected to lease for $100 a square foot.

"If a major tenant plans to lease one million square feet, the annual savings for leasing in LIC is $75 million per year and over $1.5 billion over a 20-year term," he said.

Mr. Zuckerbrot, said, that Long Island City - while being the city's targeted area for major office development - will have a difficult time competing with downtown because it is not yet an established office market complete with amenities.

"Initially, the city was going to provide incentive for companies to relocate to this new central business district," Mr. Zuckerbrot said, "however, with the same incentives being offered for downtown, this area will have difficult time competing for those occupants. In addition, should city, state, and federal government agencies move to downtown Manhattan, this will be a blow to the LIC redevelopment process which would have benefited from some of these tenancies."

I agree with the executive director at Cushman & Wakefield, Glenn Markman, when he says, "Current estimates are that, with modest job growth over the next 10 years, *New York City could see demand for new office space reach 28 million square feet by 2016. To meet this demand, office space has to be developed all over the city.* Midtown firms that require large blocks of space will have to be more open-minded regarding alternative locations like downtown Manhattan, Brooklyn, and Long Island City."


© 2006 The New York Sun, One SL, LLC.


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## krull (Oct 8, 2005)

Also on the news....


*NYC could face high shortage of workers: report*


by Tom Fredrickson
May 04, 2006 

Because of retiring baby boomers, New York City faces a significant shortage of workers in more than a half dozen industries in coming years, according to a new study. 

*The shortages will begin in the next few years and could extend for two decades*, says the report, Chance of a Lifetime, issued by the Center for an Urban Future. 

*Health care, construction, automotive maintenance, commercial driving, science & technology, aviation and manufacturing are the leading industries facing the most acute shortages*, according to the survey. 

As of 2000, nearly three of 10 registered nurses in New York City were 50 or over, and for licensed practical nurses, the figure was about one in three. The health care sector is expected to generate 20,000 new job openings through 2012. 

The departing baby boomers are vacating many jobs that pay relatively high wages. For example, more than 1,000 openings per year through 2012 are expected for auto mechanics, a job that pays as much as $80,000 per year. 

On the upside, the projected openings represent an unprecedented opportunity to get the 150,000 to 250,000 16-to-24-year-olds who are neither working nor in school into the work force, the report says. 

The center called for creating and strengthening public, community and business initiatives aimed at preparing young people for jobs. 


©2006 Crain Communications Inc.


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## Skybean (Jun 16, 2004)

The Empire State Building is vacant.


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## krull (Oct 8, 2005)

^ No it is only 17% vacant. It was only 8% vacant before 911. I think people got scared after that. But people are begining to have confidence in the city (and hopefully in tall towers.) I am sure the Empire will find more tenants.


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## ggmm (Jan 8, 2006)

More skyscrapers to come!!!


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## i_am_hydrogen (Dec 9, 2004)

^Not necessarily. If rents for new and existing properties rise too high, it could force some companies to locate their businesses in other parts of the city or metropolitan area rather than Manhattan.


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## krull (Oct 8, 2005)

*Demand for Midtown Office Space Pushes Prices Up *










*Midtown Manhattan looking north from the Empire State Building. At least 19 leases with annual rents exceeding 
$100 a square foot have been signed this year, compared with 16 for all of 2005, brokers say.*


By TERRY PRISTIN
June 28, 2006

THE Midtown Manhattan office market is so robust these days that sometimes it is the landlords who are writing the checks — and making them out to their tenants.

Less than two years after it signed a nine-year sublease for the two top floors of Lever House, the glassy Park Avenue landmark, Cyrus Capital Partners, a New York hedge fund, was encouraged to move again when the landlord, RFR Realty, sensed an opportunity to double the annual rent of $70 a square foot.

Aby Rosen, a partner in RFR, acknowledged that he paid Cyrus to nudge it out the door. The maneuver succeeded. Mr. Rosen, who has taken similar aggressive measures to assemble sizable blocs of space at the Seagram Building, another trophy property on Park Avenue, said he had already leased one of Cyrus's floors for $150 a square foot. 

In recent weeks, rents in Midtown, roughly bounded by 40th Street to the south and Central Park to the north, have been rising to levels that evoke comparisons with the heady days of the dot-com boom. Much of the increase has come in the current quarter and has not yet been reflected in research data, according to brokers and landlords.

"Right now, there is so much pent-up demand from financial and legal tenants," Mitchell Konsker, an executive vice president at Cushman & Wakefield, said. "Those two industries are driving a lot of the upward pricing. It's not just the Class A buildings. It's across the board."

The average annual asking rent for prime buildings in Midtown has climbed to $85 a square foot, said Benjamin L. Friedland, a first vice president at CB Richard Ellis. At two premier towers that are prized by hedge funds because they offer sweeping views of Central Park — the General Motors Building at 767 Fifth Avenue and 9 West 57th Street — the asking rent has reached $175 a square foot, Mr. Friedland said.

*At least 19 leases with annual rents exceeding $100 a square foot have been signed this year, compared with 16 for all of 2005, brokers say.*

At the end of 2005, average annual net rents, which are calculated by subtracting the cost of higher property taxes, operating expenses and electrical rates, *were still significantly below peak levels during the dot-com era — $48 a square foot, compared with $54 a square foot in 2001 — but are catching up fast*, said Steven Coutts, a senior vice president of national research services at Studley, a brokerage firm that represents tenants. He said the average net rent in 2004 was about $40 a square foot.

As Midtown has become increasingly competitive, companies seeking a large chunk of space have had few choices, particularly since new construction has slowed. Last week, such space became even scarcer as Morgan Stanley signed a lease for all of 522 Fifth Avenue, a 23-story building at 44th Street that used to belong to J. P. Morgan. Morgan Stanley will move its investment management and private wealth management divisions to its new quarters early next year, but will hang on to its 42-floor headquarters building at 1585 Broadway, near Times Square, as well as about 400,000 square feet across the street from its headquarters at 750 Seventh Avenue.

The proliferation of hedge funds is causing some landlords to say goodbye to longtime tenants whose pockets are less deep. The Reckson Associates Realty Corporation recently declined to renew the lease of a group of 47 men's apparel companies that had banded together a decade ago to move into offices at 1340 Avenue of Americas, where the rent was about $35 a square foot, said Scott Rechler, the chief executive. "We think we can get over $30 more a square foot from a new tenant," he said.

Tenants being squeezed out of the most desirable areas are being forced to venture into new neighborhoods. Most members of the men's wear group, now only about a third of its original size, will move to 641 Lexington Avenue, paying $40 a square foot, though they would have preferred to remain on the Avenue of the Americas, said their broker, David Rosenbloom, a senior director at Cushman & Wakefield. "This is new territory for them," he said.

Seven years after the Condé Nast building moved Midtown's western frontier to Times Square, the market's boundary is pushing farther west. Forest City Ratner, which is developing a new office tower on Eighth Avenue with The New York Times Company, recently signed leases with two national law firms, Seyfarth Shaw and Covington & Burling, and is about to announce that it has acquired a third tenant, Osler, Hoskin & Harcourt, a Canadian law firm. 

*"What I'm finding very interesting is that many clients are choosing new construction in that part of town, rather than older construction on Park Avenue," said Mitchell S. Steir, the chief executive of Studley, which represented Covington & Burling.*

While the vacancy rate in Midtown over all is said to be about 8 percent, space is even tighter in the so-called Plaza submarket, from the Avenue of the Americas to the East River and 51st Street to 63rd Street. According to Colliers ABR, another brokerage firm, the vacancy rate for top buildings in the Plaza area has fallen to 6 percent last month, from 8.7 percent a year ago.

Rents are escalating so fast that landlords feel free to raise the rent if negotiations take too long. Dechert, a law firm with 17 offices around the world, was negotiating for space at two different buildings — the New York Times building and 1095 Avenue of the Americas — but lost out both times because it did not move quickly enough, several real estate specialists said. (Dechert's managing partner did not return several phone calls.) 

Mr. Rosen says he now give prospective tenants two weeks to make up their mind. "In today's environment, with rents changing dramatically, the price you quoted two months ago is a stale price," he said.

Despite the intense activity, tenants are still getting concessions from landlords, but the terms are less generous than they used to be. Steven M. Durels, an executive vice president at S. L. Green Realty who has signed 125 leases so far this year, said tenants who might have received as many as 10 months of free rent a year ago for a long-term lease were now receiving as few as six months. They are getting $40 to $45 a square foot from landlords to remodel their space, $10 or $15 less than they would have gotten in 2005.

Even in a highly competitive market, landlords provide concessions so that they can push up rents, said Dale Anne Reiss, who directs the global real estate practice at Ernst & Young. "When you go to sell the building down the road," she said, "you'll be selling it on the basis of the income stream."

And many owners have been selling to capitalize on an investment market that remains strong, just as sales elsewhere are cooling slightly. So far this year, $6.6 billion worth of Midtown buildings have sold or are under contract to sell, said Robert M. White Jr., the president of Real Capital Analytics, a New York research firm that tracked $7.5 billion worth of sales for all of 2005. 

*The average selling price this year of $565 a square foot is about 40 percent higher than last year's, Mr. White said. The recent sale by Boston Properties of 280 Park Avenue to Istithmar, an investment company in Dubai, for $1.2 billion marked the first billion-dollar building to trade for more than $1,000 a square foot, Mr. White said.*

"The market is really screaming," he said.


Copyright 2006 The New York Times Company


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## FM 2258 (Jan 24, 2004)

Some 1500+ footers would help.


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## krull (Oct 8, 2005)

*Downtown Lease Market Picking Up, Brokers Say*


BY DAVID LOMBINO - Staff Reporter of the Sun
June 29, 2006

Even as architect David Childs released the latest designs yesterday for the Freedom Tower, questions linger about whether any business will want to rent space there five or six years from now, when the building is completed.

Commercial real estate brokers say that if yesterday's event were a ribbon-cutting, instead of a design showcase, the Freedom Tower could fill up relatively fast with tenants at market rates. The downtown office space market is hot. Unfortunately, they say, the 2.6 million square feet of office space will not come online until at least 2011, and no one will dare to predict what the typically unpredictable market for commercial space in New York will be like at that time.

The potential of the Freedom Tower to be a financial liability was detailed during negotiations this spring between the Port Authority, which owns the former World Trade Center site, developer Larry Silverstein, the state, and the city. It was widely accepted that the tower would be the least desirable of the three office towers planned for the site. Critics said it was a likely terrorist target, too far from transportation, and that the two office buildings planned to the east along Church Street had the bigger floor plates that are more suited for today's demand.

If the three buildings roll out at the same time around 2011 or 2012, and that roll out coincides with a down market for commercial space, experts say they could sit as empty steel husks for some time.

As part of the negotiations this spring, the task of leasing the Freedom Tower was transferred from Mr. Silverstein to the Port Authority. Governor Pataki agreed to find government tenants for 1 million square feet of space in the Freedom Tower, or roughly 30 of the building's 69 floors. The concession is seen as a way to limit the Port Authority's risk in having to fill up the building.

Still, commercial brokers said that a recent acceleration of downtown leases bodes well for the Freedom Tower's prospects.

An executive director with Cushman and Wakefield, Andrew Peretz, said the companies now signing leases downtown are "not bottom-fishers or government agencies."

"I don't know how much longer there will be a perception of a white elephant," Mr. Peretz said. "Downtown is hot right now."

"But who knows what five, six years will bring?" he added.

*Recently, 7 World Trade Center, Mr. Silverstein's building that is just steps from the Freedom Tower site and the only office tower rebuilt that was totally destroyed in the terrorist attacks, signed an agreement with Moody's to rent 600,000 square feet of space. Silverstein Properties began marketing the building last fall, and now 7 World Trade Center has commitments for about 50% of its 1.7 million square feet.

World Financial Center, the large office complex owned by Brookfield Properties across West Street from ground zero, has had several recent lease signings and is said to have several big-name signings in the pipeline. Brokers say that it is basically full.*

The chairman of GVA Williams, a commercial brokerage, Michael Cohen, said that in today's market, more than 8 million square feet of office space planned for the former World Trade Center site would be a welcome addition.

"New York is rapidly running out of class A office space. Downtown is undergoing a renaissance. The complex being built down there will lease," Mr. Cohen said.

Some real estate experts have questioned whether a white-shoe law firm, or a major corporate tenant, will want to share space in the Freedom Tower with public sector tenants, who could include the FBI, Homeland Security, or the U.S. Customs House.

Mr. Cohen said that the presence of federal neighbors is unlikely to affect demand for Freedom Tower space.

"The World Trade Center used to have millions of square feet of government offices, and they happily coexisted with Fortune 500 companies and nobody cared," Mr. Cohen said.

"There is no predisposition against cohabitating with the government, providing it is not the department of parole," he said.

Construction on the foundations of the Freedom Tower started in April 2006 and some changes are now visible from above. The building is estimated to cost $1.7 billion.

Mr. Pataki said yesterday that the new designs represent an improvement.

"We were all concerned that security issues involving the base could have resulted in something that didn't have the grandeur and the flowing sense you need to have in something as large as the Freedom Tower," Mr. Pataki said. "But David managed to accomplish that in a way that I think is just spectacular."


© 2006 The New York Sun, One SL, LLC.


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## hkskyline (Sep 13, 2002)

Won't this push more development on the New Jersey side or areas outside the expensive Manhattan areas?


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## krull (Oct 8, 2005)

^ it is already... Jersey City is experiencing interest again (much like it did before and right after 9/11)

In the other boroughs like Long Island City and Downtown Brooklyn, developers have some propose projects in the works. Although right now they are too busy building condominiums. Since it is a way of making more cash in the long run.


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## Tom_Green (Sep 4, 2004)

New York needs more skyscrapers !!!


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## Toronto06 (Jun 2, 2006)

im sure that new york can either compromise with companies or just get rid of some useless and smaller buildings to make larger office towers.......

New York = greatest city on planet earth


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## I-275westcoastfl (Feb 15, 2005)

It can be a good thing like more skyscrapers but also companies could move to the burbs or relocate entirely to other cities.


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## polako (Apr 7, 2005)

Is anybody home? Manhattan still has plenty of space to develop offices. The whole island of Manhattan can handle 1 billion sq. ft of office space. If one drives around Midtown and Downtown they'll notice many lowrise buildings(5 story) and what's worse there are many blocks sitting empty. How could they even publish an article like that?


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## krull (Oct 8, 2005)

There are many reasons why there is no development of more new Office towers right now (except for the few already under construction)... like construction and Land costs, there are Zonings all over the place that restricts height or commercial use, also remember that alot of those low rises have already used their air rights for adjacent towers. Add the fact that developers want to built Condo towers, hence they get their money back faster.

But hopefully new towers will pop up around the Penn station area. That is the next area to take off. I believe the zoning was change to encourage commercial development and developers might get some tax breaks but I am not too sure if it happened after the stadium deal was killed.


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## Æsahættr (Jul 9, 2004)

More scrapers!


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## Xusein (Sep 27, 2005)

One solutions...more skyscrapers!!!

There's lots of room to build up between Lower Manhattan and Midtown.


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## LMCA1990 (Jun 18, 2005)

^^ :yes:


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## krull (Oct 8, 2005)

rotten777 said:


> One solutions...more skyscrapers!!!
> 
> There's lots of room to build up between Lower Manhattan and Midtown.



You can't built on that room between Lower Manhattan and Midtown Manhattan. Most of that is Zone for residential and Height is very restricted aswell. Demolishing a new building for a new modern one has lots of hassles. If not, then there are the NIMBYs to worry about... It is a very complicated city to built something.

Like I said the only area left for big development is around to Penn Station or the outter boroughs. Ofcourse there is always Jersey City.


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## hkskyline (Sep 13, 2002)

I thought the bedrock was too deep in the area between Midtown and Lower Manhattan so skyscraper-buildings have to dig a huge and expensive foundation to anchor the structure, hence no big buildings are in that zone.


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## PhillyPhilly90 (Aug 12, 2005)

Wow...New York has hundreds of office buildings and so much business...and now they say New York needs more office space? Wow...it's impressive to see New York get even more business coming to it.


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## Xusein (Sep 27, 2005)

krull said:


> You can't built on that room between Lower Manhattan and Midtown Manhattan. Most of that is Zone for residential and Height is very restricted aswell. Demolishing a new building for a new modern one has lots of hassles. If not, then there are the NIMBYs to worry about... It is a very complicated city to built something.
> 
> Like I said the only area left for big development is around to Penn Station or the outter boroughs. Ofcourse there is always Jersey City.


Thanks for the reply...so that is why they don't build...

Plenty of industrial land in Brooklyn and Queens though...


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## krull (Oct 8, 2005)

*Once Again, the Boss Is In at the New York Office *  












By PATRICK McGEEHAN
July 3, 2006

For the last half of the 20th century, New York City's status as the national capital of business steadily eroded as companies fled to the suburbs and to other cities where costs were lower and the streets safer.

But in the last several years, New York has regained its magnetic force and is re-establishing its claim as the city of big bosses. If decision-making were an industry, it would be one of the main engines driving New York's economy.

*The number of corporate headquarters and subsidiaries in Manhattan has more than doubled since 1990, according to the federal Department of Labor. In the last few years, the number of Fortune 500 companies based in the city has been inching upward, reversing a long, steep decline that accelerated during the financial crisis of the early 1970's.*

*But those new arrivals are not the monolithic corporate headquarters of the past, packed with thousands of middle managers and supporting personnel. They have been pared to hold only those people whose presence in the high-priced corridors of New York is considered essential. 

That evolution has been made possible by technological advances that allow corporate generals to stay in touch with their troops from afar. The bosses can network face to face with their peers in the hub of the financial, legal and communications industries, while keeping the rank and file in less expensive quarters in suburbs or other cities.*

The trend is a turnabout from the urban exodus that the sociologist William H. Whyte denounced in 1976 when he railed against the "move-outs" by dozens of companies, including General Electric and PepsiCo. The chief executives of Alcoa, Federated Department Stores and CIT Group have all set up offices for themselves in Manhattan in the past few years, while leaving the bulk of their administrative operations elsewhere. 

More corporate leaders have come to believe that "they need to be in a global city," said Kathryn S. Wylde, the chief executive of the New York City Partnership, a business consortium.

"They can't afford to be in the boondocks," she said. 

And with the pay of senior executives rising rapidly, they can afford to pay New York rents, restaurant tabs and private-school tuitions.

Indeed, the city's surveys have shown that the personal preference of the chief executive is one of the most important factors in determining whether a company moves to or from New York, according to Daniel L. Doctoroff, the deputy mayor for economic development and rebuilding.

The Bloomberg administration has courted chief executives to move to the city, in the hope that they will eventually bring large numbers of jobs with them, Mr. Doctoroff said. But luring chief executives no longer guarantees big additions to local payrolls and tax revenues. Some of the new arrivals came without receiving any tax incentives, which are usually reserved for attracting or retaining large numbers of jobs.

In contrast, when Goldman Sachs threatened last year to cancel plans to build a new headquarters in Lower Manhattan to house 9,000 employees, the city and state promised at least $150 million in tax breaks to persuade it to stay.

"We are a headquarters city," Mr. Doctoroff said, adding that the city had not lost the headquarters of any big corporations in five years. "Our ability to continue to make that claim is dependent on forward movement and success in attracting more C.E.O.'s."

Michael L. Dolfman, the regional commissioner of labor statistics, said that the number of company head offices in Manhattan has risen at a fast pace since the last major recession in New York.

*The category of corporate, subsidiary and regional managing offices, which Mr. Dolfman said comprised stand-alone bases of operations for corporate enterprises, grew to 602 last year from 274 in 1990, adding more than 12,000 jobs. * 

In New York, he said, corporate management is an industry unto itself — and a lucrative one.

The average annual salary of the people working in those head offices jumped during the past 15 years, to about $160,000 from about $64,000, Mr. Dolfman said. But the average number of jobs in those head offices declined to 78 from 127.

*"You don't see a great increase in the number of jobs," Ms. Wylde said. "You see a great increase in the average salary." * 

Alcoa, the giant aluminum producer, and Federated, which owns the Macy's and Bloomingdale's retail chains, are prime examples of the new form of disembodied head offices, economic development officials said. In each case, the establishment of headquarters in New York was somewhat stealthy, in part because of the political sensitivities and threats to morale that surround any corporation's move from its historical hometown. 

Alain J. P. Belda set up his office on Park Avenue shortly after he became Alcoa's chairman and chief executive in 2001. He and about 50 other executives and their assistants operate from space in the Lever House building, where their presence is unmarked: no Alcoa signs or logos are visible outside the building. 

Back in Pittsburgh, about 2,000 people work in the Alcoa Corporate Center, a six-story landmark that was completed in 1998. Many Alcoa shareholders may well have believed that the building was the company's headquarters; only in the spring of this year did the company acknowledge for the first time in its annual report that the head office had moved to New York after a half-century in Pittsburgh. 

"In some sense, it's almost a relic to talk about the corporate headquarters," said Jake Siewert, a vice president at Alcoa. He said that the company's senior executives were frequently on the move and "do deals all over the world."

Mr. Belda, the chief executive, could not be reached for comment for this article. But in a speech to the New York City Business Summit, he explained the benefits of having the company's top-ranking executives in close proximity to their peers.

"We need access to the best and the brightest," Mr. Belda said. "We need it when we need it, not a week from today when they can lose a whole day to come and meet with us in Pittsburgh. We need them for breakfast meetings, for just a five-minute break, when the idea or the need comes. We need it every day."

Alcoa appeared on the Fortune 500 list as a New York-based company for the first time this year, as did CIT Group, a financial company that was based in Livingston, N.J., before it built a flashy high-rise on Fifth Avenue at 42nd Street.

Jeffrey M. Peek, who has been CIT's chief executive for two years, lives on Park Avenue and is treasurer of the New York City Ballet. Mr. Peek declined to comment for this article, but when CIT opened its new building in late April, he said, "The opening of our global headquarters in the financial capital of the world will establish a global footprint from which CIT can better serve our clients." The company kept its Livingston campus, which it calls its "corporate center." 

The Fortune list, by definition, captures activity only among the very largest corporations — and not even all of those. Because Federated puts a Cincinnati address first on its financial reports, the magazine still lists it among Ohio-based companies, even though its chief executive, Terry J. Lundgren, has his office in the Macy's building on Herald Square.

*Even without credit for Federated, New York dominates the list compiled by Fortune, which ranks the biggest American companies by revenues. This year, the magazine said that 44 of them had headquarters in New York City, up from a recent low of 40 in 2002. (Houston, with 23, ranked second as a home for the Fortune 500.)* 

Among the recent immigrants that escaped Fortune's attention is Weight Watchers International. The company moved its headquarters to the Flatiron district from Woodbury on Long Island last summer, to be closer to the firms that provide professional services to it, and "to draw from a wider pool of talent," said Meredith Shepherd, a senior vice president.

"It just makes for closer relationships and more synergy," Ms. Shepherd said. She added that the company "has benefited from the energy and the pace the city has to offer."

Linda Huett, the chief executive of Weight Watchers International, also changed her residence to Manhattan, a company spokeswoman said. 

Peter J. Solomon, a veteran investment banker who was the city's deputy mayor for economic policy and development in the late 1970's, cited several reasons for New York's renewed appeal to chief executives.

"One is it's fun," he said. "People enjoy being here. It's totally different than the 1970's."

Mr. Solomon recalled those days when city officials spent much of their time fretting over the prospect of another company announcing a move to White Plains or Greenwich, Conn. "We were desperately worried about losing brand names," he said. 

Felix G. Rohatyn, another financier who worked to keep the city solvent back then, recalled how Paul Moore Jr., the Episcopal bishop of New York, stood in the pulpit of the Cathedral Church of St. John the Divine "pleading with C.E.O.'s not to leave the city."

During the Giuliani and Bloomberg administrations, Mr. Rohatyn said, "the reputation of the city and city government has really improved so dramatically" with business leaders.

"There's kind of a fraternity of C.E.O.'s," he said, "who think of themselves rightly or wrongly as the keepers of fiscal sanity."

Mr. Rohatyn and Mr. Solomon said the comings and goings of chief executives and their corporate offices did not carry the weight they once did because the economy was so much healthier now and because the rank and file of many companies no longer went with the chief executive.

"What would be awful would be if Goldman Sachs decided to put their headquarters in New Jersey," and shift hundreds or thousands of highly paid investment bankers and traders out of the city, Mr. Solomon said.










*C.E.O.'s now in Manhattan include 
Linda Huett of Weight Watchers 
International, top, and Jeffrey M. 
Peek of CIT Group. *  










*Alain J. P. Belda of Alcoa, top, 
and Terry J. Lundgren of 
Federated Department Stores are 
also located in Manhattan. *  


Copyright 2006 The New York Times Company


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## krull (Oct 8, 2005)

rotten777 said:


> Plenty of industrial land in Brooklyn and Queens though...


This year, besides the Freedom Tower, this one is the second tallest office tower to have just recently started construction. And it is in Queens. And there are more to come in this area...


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## krull (Oct 8, 2005)

*Office Investment Remains Strong*


By Barbara Jarvie
July 5, 2006

NEW YORK CITY-With 1211 Ave. of the Americas trading more than $800 per sf and 55 Broadway going for $82 million, the investment climate here is strong. According to Trammell Crow, over the past six months, the Manhattan office market has seen very strong investment sales activity with $8.7 billion traded through June. This represents nearly 50% more than the typical volume. 

Beacon Capital teamed with Lehman Bros to take the 1.9-million-sf asset out of Jamestown’s portfolio. Douglas Harmon of Eastdil was the exclusive broker for the sale. 

Trammell Crow estimates that office rents have been gradually increasing as vacancy rates slowly decline and now interest rates have extended the current real estate cycle by driving yields. *For investor groups, returns on real estate have continued to outperform alternative investments, such as the stock and bond markets. Until the contrary occurs, and an upward swing in interest rates could exacerbate such a shift, capital from these groups will continue to pour into real estate and drive activity. Offshore investors --mostly Australian, German, Middle Eastern and Israeli–-continue to invest here.* 

According to a source, the sale of 1211 Ave. of the Americas represents a longer-term play for the new ownership. Though two anchor tenants have more than one million sf sealed up until 2020 at the earliest, more than 600,000 sf of existing space can turn over in the next six years. Also, with multiple investors showing interest in the site, buyer demand here has not diminished. 

In an off-market deal, Broad Street Development, an investor group led by Raymond Chalmé, and Crow Holdings Realty Partners IV, a Dallas-based private equity Fund acquired 55 Broadway for $82 million. The seller was China’s Bank of Communications. Located on the northeast corner of Broadway and Exchange Place, the 32-story class A office consists of approximately 336,000 sf of space in the Financial District. 

“This aggressive acquisition strategy was always our goal, and the purchase of 55 Broadway presented another ideal opportunity to further our firm’s mission of repositioning underserved assets,” says Chalmé. Current tenants include LeBranche & Co., Kellogg Capital Group and Bank of Communication. It is 85%-occupied. 

Michael Forrest of Marcus & Millichap negotiated the deal. Mike Tepedino and Steven Klein of Holliday Fenoglio Fowler LP’s arranged the equity financing with Crow Holdings and the debt financing with Cigna for the purchase of the asset. Eli D. Dweck of Wachtel & Masyr, LLP worked on behalf of Broad Street Development on all legal matters. 


Copyright © 2006 ALM Properties, Inc.


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## krull (Oct 8, 2005)

*Strong second quarter places Manhattan among world's priciest office markets*


July 11, 2006

Rents are so high and vacancy rates so low that some analysts wonder aloud now whether the pricing in the Manhattan commercial market has shifted fundamentally -- and permanently -- upward. 

*Second-quarter numbers released Tuesday morning by brokerage Cushman & Wakefield show the average asking rent for Manhattan commercial space at $43.46 a square foot for the three months ending June 30, up 26 cents over the average in the first quarter and the highest such rent level in nearly four years. The average asking rent for Class A space in Midtown -- the most desirable office space in the city -- hit more than $50 a foot in the second quarter, its highest amount since at least 2002.*

*Also, in the first six months of 2006, 20 leases were signed in Manhattan with asking rents of above $100 a foot; just 10 were signed in all of 2005.* 

These rising rent numbers help place Manhattan among the 10 most expensive cities worldwide in which to lease office space, according to an analysis by Cushman & Wakefield. Manhattan, *at number seven, was, in fact, the only city in the Western Hemisphere ranked among the priciest 10, a list topped by London, Hong Kong, and Tokyo, respectively.*

Manhattan, though, could move up the list, which ranked cities by net effective rents as of the start of 2006. Manhattan's economy shows no signs of slowing -- *the city's May unemployment rate was its lowest in 18 years -- and demand remains steady for commercial space, with the overall vacancy rate dipping to a five-year low of 7.8 percent in the second quarter. (The Midtown South vacancy rate stood at 6 percent by June 30, the lowest such rate of any commercial business district in the U.S., according to Cushman & Wakefield.)* 

If Manhattan, then, does soon cross a threshold where the current overall asking rent of $43.46 a foot is considered a deal, then tenants -- and their brokers -- could face a radically changed market. It's too soon, however, to tell if that's happening.

"We could be in a period where we have a fundamental problem rather than a temporary one," said Joseph Harbert, COO for Cushman & Wakefield's New York metro region. "Whether there's something deeper in the numbers, we don't know yet."

What is clear from the second-quarter numbers from brokerages is that Manhattan's commercial market remains at its healthiest since September 11. More than 7 million square feet of office space was leased in the second quarter, according to Cushman & Wakefield, the strongest second quarter leasing-wise in years. And, from January through June, $8.7 billion -- or, $583 a square foot -- in Manhattan office space was traded, according to brokerage Trammell Crow, nearly 50 percent more than the typical volume.


Copyright © 2003-2005 The Real Deal.


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## hkskyline (Sep 13, 2002)

*Manhattan office squeeze seen as boost to downtown *
By Ilaina Jonas 

NEW YORK, July 11 (Reuters) - Manhattan's office vacancy rate fell to a five-year low of 7.8 percent last quarter, and the large blocks of space big companies need were snapped up, leading some brokers to say the market is even hotter than the numbers indicate. 

The midtown area had only four blocks of at least 250,000 square feet and 14 between 100,000 and 249,000 square feet available, real estate firm Cushman & Wakefield said in its second-quarter report. Midtown south had only two blocks between 100,000 and 249,000 square feet, and nothing larger. 

"It's red hot in midtown," said Josh Kuriloff, a Cushman executive vice president. "The demand is growing, the supply side is absolutely shrinking with no new construction on the drawing board." 

Office property owners, including Equity Office Properties Trust , Brookfield Properties Corp. and Vornado Realty Trust all could benefit from a supply squeeze. 

"There are at least 15 or 16 deals looking out there for 250,000 square feet or more, and 45 looking for more than 100,000 square feet," said Joseph Harbert, Cushman's chief operating officer for the New York region. 

After the September 11, 2001, attacks destroyed the World Trade Center, many businesses shunned the financial district. But now growing businesses must head downtown or west to the northern New Jersey waterfront. 

Frank Cento, executive director in Cushman & Wakefield's downtown office, said: "The stigma of downtown is gone." 

The hunt for big blocks of space spurred demand for No. 7 World Trade Center, the first building to be rebuilt. 

Leases for about 1 million square feet at No. 7 are at the final stages of negotiation, even though developer Larry Silverstein raised rent on much of the 1.7-million-square-foot building by about 10 percent to between $55 and $60 per square foot, according to a source familiar with the situation. 

Though some officials fretted No. 7 would be hard to lease, Silverstein on Tuesday allowed Beijing Vantone to walk away after the Chinese company failed to secure a letter of credit for the five top floors, totaling 200,000 square feet. 

"You have a number of large deals circling in that area," Harbert said. 

The strong rental market has lured buyers. Investors bought $18.68 billion of office space in the first five months of 2006, at $729 per square foot, up from $490 a year earlier. Some 23 percent of the purchases came from foreign buyers, especially from Dubai. 

Manhattan saw average office asking rent hit a four-year high of $43.46 per square foot, up $2.50 from a year earlier. The number of leases with rents above $100 per square foot hit 20 in the first half, versus only 10 all of last year. 

Midtown vacancy fell to 6.9 percent from 7.8 percent at the end of the first quarter. Average asking rent surpassed $50 per square foot for the first time in four years, rising to $50.35 from $49.71 per square foot the previous quarter. 

In midtown south, vacancy fell to 6 percent at the quarter's end from 6.2 percent the prior quarter, while average asking rent rose to $35.78 from $34.33 per square foot. 

Downtown vacancy fell to 11.2 percent in the second quarter from 11.6 percent a quarter before, while the average asking rent rose to $35.18 from $34.97 per square foot in that time.


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## sharpie20 (Nov 5, 2005)

If developers are afraid of higher land prices, then they could build on nearby jersey city , queens or brooklyn, that seems like a very logical choice, espeically since Manhattan has had all this construction going on lately.


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## brisavoine (Mar 19, 2006)

krull said:


> *Manhattan Overall Office Space Market:*
> 
> 
> *Midtown:* 251 million square feet of office space, *Vacancy Rate:* 6.5 percent, *Average Asking Rent:* $50.24
> ...


Well, in Greater Paris there are no less than 527 million square feet of office space. The figure is forecasted to reach 581 million square feet by 2015.

Anyone knows how much office space there is in the whole of New York City (not just Manhattan)?


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## Taylorhoge (Feb 5, 2006)

Downtown BK theres already some commpanies here its less congested then Manhattan and all the major subway lines have stops here the views cant be beat two major bridges link it to Manhattan as well as the BQE connects to the LIE I think.Its closer to JFK then Manhattan,The only areas getting Condos is DUMBO.


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## krull (Oct 8, 2005)

brisavoine said:


> Well, in Greater Paris there are no less than 527 million square feet of office space. The figure is forecasted to reach 581 million square feet by 2015.
> 
> Anyone knows how much office space there is in the whole of New York City (not just Manhattan)?


What do you mean by Greater Paris? You mean Paris the city plus its suburbs?


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## krull (Oct 8, 2005)

*Midtown May Hit $200 Per SF by Year End*


NEW YORK CITY-Midtown Manhattan office vacancy has dropped below 7% and the rental market has, to the some extent, lurched to favor the landlord. But the most startling rent reality may be yet to come; and it may come sooner than expected.

Cushman & Wakefield earlier this week released second quarter statistics for the Manhattan office market showing Midtown vacancy rate dropping to 6.9% at midyear, down from 7.8% at the end of the first quarter. This decline brings the overall Midtown vacancy rate below the 7% to 9% range, which is typically described as equilibrium, for the first time in five years.

“A shortage of high-quality available space in Midtown and a lack of new product on the horizon have given landlords the upper hand,” says Joe Harbert, Cushman & Wakefield’s chief operating officer for the firm’s New York Metro Region.

*Year-to-date, vacancy rates are down across all three major Manhattan submarkets of Midtown, Midtown South and Downtown. The most significant decline over the last year occurred in Midtown South, which experienced its lowest vacancy rate since the first quarter of 2001. Availability dropped to 6% at midyear 2006, down 3% from midyear 2005.*

Harbert discussed the tightening Midtown and Midtown South markets. “The vacancy rate, as well as large blocks of available space, is shrinking in Midtown. This lack of space is contributing to fast-rising rents for the city’s best buildings. Pair that with Midtown South’s extremely low vacancy rates, and companies are going to want or need to explore their options Downtown.”

*Year-to-date, 20 leases have been signed with rents above $100 per sf, compared to just 10 in all of 2005. Twelve of the 20 were financial services tenants, which may be setting the bar for future sf prices.*

Where rents are going to settle is anyone’s guess. GlobeSt.com discussed rent levels with Harbert while he discoursed on what he deemed his theory. “And this is just my theory, but I think the New York market is searching for pricing right now,” Harbert told GlobeSt.com. “You put out at $92 and you your get $88. People are experimenting, whereas in the past they would have never thought of asking $92. Finding the price to ask today is a huge question.”

The statistics don’t show what it really happening when crunching numbers for the average Manhattan rate of $43.46, according to C&W. This is because there are places Downtown where the very low end of the rent spectrum skews the high-end in Midtown when everything is totaled.

“I think what happened is the market has become more open sharing information,” says Harbert. “Comparisons are more readily finding their way to the market. People are saying, ‘gee, if the guy down the street got this much for his house, then I can get this much for mine.”

Because of this and the dearth of office space in Midtown, enormous rental rates could be seen like never before in the heart to the city. “I wouldn’t be surprised if we see $200 rates by Dec. 30,” says Harbert.

He quickly reeled off numerous Park Avenue and 57th Street properties that are in negotiation or close to closing in the $100, $120 and even the $155 range. But remember, says Harbert, “technically Manhattan is a landlord’s market, but many things can derail that--a slow down in job growth, inflation.”


Copyright © 2006 ALM Properties, Inc.


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## AndySocks (Dec 8, 2005)

krull said:


> ^ it is already... Jersey City is experiencing interest again (much like it did before and right after 9/11)
> 
> In the other boroughs like Long Island City and Downtown Brooklyn, developers have some propose projects in the works. Although right now they are too busy building condominiums. Since it is a way of making more cash in the long run.


That sucks though. Aren't people sick of condos by now? I thought the purpose of Brooklyn and Queens was to live in houses and lower-scale apartments and have a little personal space and a more neighborhood-like atmosphere... but whatever. Funny how they first boomed from people fleeing the overcrowdedness of Manhattan, and now they're moving there because they can't afford that overcrowdedness... :: rolls eyes :: I hate people who say they move to Brooklyn because they "can't afford Manhattan". Then we don't want you, aight?

I suppose the Yuppies can be beneficial when they're not too busy being disasterous and/or idiotic (BoCoCa? What the **** is that? Wouldn't you rather live in a place called Caroll Gardens? What's next? BaBeGra for Bay Ridge/Bensonhurst/Gravesend? JaHe for Jackson Heights? I've seen WaHi for Washington Heights/Inwood, for Christ's sake)... but I just hate the attitude.

The CitiGroup building still looks awful lonely... and I won't rest until it has company.


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## treboy (Apr 14, 2006)

I assume office areas extend into other borough in demand, so other borough will have many buildings like Manhattan in the near future.


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## brisavoine (Mar 19, 2006)

krull said:


> What do you mean by Greater Paris? You mean Paris the city plus its suburbs?


Yeah, city proper and suburbs. The limits of the city proper haven't changed since 1860, and so its territory is pretty small, barely larger than the island of Manhattan. Most office develoments happen in the inner suburbs these days, but I don't know if the word "suburbs" accurately describe the situation in Paris. Some of these "suburbs" have a higher population density than the City of Paris or the borough of Manhattan... If you visit them and you are unaware of administrative borders, you'd think you're still in the city proper.

Asking my question again, does anyone know the total footage of offices in the whole of New York City (not just Manhattan)?


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## krull (Oct 8, 2005)

http://www.mrofficespace.com/

According to the website above just the New York City Metro has a total of 425,550,377 Sq. Ft.... Then if you add the suburbs and the cites (Like in New Jersey, Westchester, and places in Long Island) that are close by then there is alot more.


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## brisavoine (Mar 19, 2006)

krull said:


> http://www.mrofficespace.com/
> 
> According to the website above just the New York City Metro has a total of 425,550,377 Sq. Ft....


That figure can't be right. According to http://www.therealdeal.net/issues/MARCH_2006/1141252356.php, there are 439 million sq. ft of office space in Manhattan alone, so how can there be only 425 million sq. ft in the whole of NYC. Anyone can find better figures?


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## brisavoine (Mar 19, 2006)

Actually, it would be interesting to compare the amount of office space in the largest world cities, to see how they rank. I have data for Paris, London, and Chicago. It would be great to find data for Tokyo, Osaka, LA, and of course NYC.

Here are the data I have so far:
- Chicago metropolitan area: 218 million sq. ft (1st quarter 2006) (source)
- Paris metro area (Greater Paris): 527 million sq. ft (end of 2005) (source)
- Greater London: 307 million sq. ft (2005) (source)


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## polako (Apr 7, 2005)

krull said:


> This year, besides the Freedom Tower, this one is the second tallest office tower to have just recently started construction. And it is in Queens. And there are more to come in this area...


Long Island City is seriously starting to grow. By the end of this decade it will have a skyline.


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## polako (Apr 7, 2005)

Here is the one stop source for all the office space data: http://www.cushmanwakefield.com/cwglobal/jsp/publication.jsp

Downside: it costs E150


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## brisavoine (Mar 19, 2006)

Actually, I managed to find figures for New York from Cushman & Wakefield without buying their expensive publication. In the New York metro area (NYC + NJ + Long Island + Northern Suburbs in the states of NY and CN) there's a total of 662.8 million sq. ft of office space (62.5% of which, i.e. 414.6 million sq. ft, are in Manhattan proper). (source) These figures are from the second quarter of 2001, but they shouldn't have changed much since then (new office space built is more or less compensated by office space lost in the destruction of WTC).

I also found figures for office space in the 10 largest US metro areas: source. To my surprise, LA metro area with only about 175 million sq. ft of office space can't compare with the likes of NY or Paris. You wonder where they put the workers there! Perhaps a majority of LA workers are simply not office workers. So anyway, here is the list of world cities ranked by office space that we have so far. It would be great to find figures for Tokyo, Osaka-Kobe-Kyoto metro area, Seoul-Inchon, and HK.

Ranked in descending order:
- New York metro area: 662.8 million sq. ft (2nd quarter 2001)
- Paris metro area (Greater Paris): 527 million sq. ft (end of 2005)
- Greater London: 307 million sq. ft (2005)
- Washington DC metro area: ca. 230 million sq. ft (3rd quarter 2001)
- Chicago metro area: 218 million sq. ft (1st quarter 2006)

Should we create a dedicated thread?


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## krull (Oct 8, 2005)

^ Sure, thank you for figuring it out.


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## AndySocks (Dec 8, 2005)

krull said:


> This year, besides the Freedom Tower, this one is the second tallest office tower to have just recently started construction. And it is in Queens. And there are more to come in this area...


I missed this pic the first time I browsed this thread... anywho, looks decent. Somehow I managed to never see a picture of the new building on scale with the Citi building, so I thought it was a lot shorter, but now I'm actually satisfied with the height.

Any word on the complex Silvercup was hoping to build right south of the Queensboro? I thought that would be a really nice addition too.

As for the two other boroughs that seem to get largely ignored in this discusssion, I think if they ever do build up office space in the Bronx, it will be all the way north closer to Westchester. Of course, that's a huge IF EVER.

Staten Island doesn't have enough transit connections to cope with office space, in my opinion. People from the suburbs would have to take a train to Manhattan, take a subway to the ferry, then take the ferry to the island... and don't even think about driving. We all know how the traffic there is already...


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## AndySocks (Dec 8, 2005)

brisavoine said:


> I also found figures for office space in the 10 largest US metro areas: source.


I can't believe what a small percentage of Atlanta's office space is in it's CBD... it's almost a damn shame.

I knew NY pwned... but I didn't know it pwned that much, lol.


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## polako (Apr 7, 2005)

NYC Metro: http://www.nyc.gov/html/dcp/pdf/hyards/c&w-era-study.pdf


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## EtherealMist (Jul 26, 2005)

AndySocks said:


> I can't believe what a small percentage of Atlanta's office space is in it's CBD... it's almost a damn shame.
> 
> I knew NY pwned... but I didn't know it pwned that much, lol.



holy shit talk about pwnage, and so much is in the CBD.

Im suprised how much DC has.


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## EtherealMist (Jul 26, 2005)

rotten777 said:


> One solutions...more skyscrapers!!!
> 
> There's lots of room to build up between Lower Manhattan and Midtown.


Plus that area is pretty important to keep as it is. There are so many nice neighborhoods between Mid-town and lower Manhattan. There would be no more Soho or the village. Id rather see skyscrapers go up in Queens (and it looks like that happening.)


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## krull (Oct 8, 2005)

Here are some of the latest news about what will happen on the West side... 24 million square feet of Manhattan office space to be develop!



*Funding plan is set for Hudson Yards
$2B bond issue, tax breaks key to West Side development * 


By Julie Satow 
Published on July 17, 2006 

The Bloomberg administration is about to jump-start an ambitious plan to develop 24 million square feet of Manhattan office space.

*As early as this week, the city will release the first details of a $3 billion financing plan for developing the area on the far West Side known as Hudson Yards. It is expected to include $2 billion in bonds to fund the No. 7 subway line extension and tax abatements to spur commercial real estate projects. The city's Industrial Development Agency, which must approve the plan, has already scheduled a public hearing and could vote on it at its next meeting on Aug. 8.* 

"The far West Side is the last frontier of available land to build the large office buildings that will be critical to the city's future growth," says Daniel Doctoroff, deputy mayor of economic development. 

With office rents in midtown topping $125 a square foot and its vacancy rate at a historic low of 6.9%, the need for a westward expansion is especially pressing. The rezoning will create 24 million square feet of Class A office space, and extending the No. 7 line from Times Square to West 34th Street and 11th Avenue will upgrade midtown's transportation infrastructure.

The City Council voted to approve the rezoning of Hudson Yards--bounded by Eighth Avenue and the Hudson River Park between West 30th and West 43rd streets--in January 2005. 

Hudson Yards has largely been off the public agenda since last summer, when the city failed in its controversial bid to build a football stadium there. Since then, however, Bloomberg administration officials have been working behind the scenes to put together a broader development plan for the area.

*The subway extension's design will be finalized this month, and construction will be put out to bid later this summer. The city will pay for the project; the Metropolitan Transportation Authority will run it. The estimated completion date is 2012.*

The city will also unveil its planned commercial tax abatements, the first step in finalizing the financing, as early as Thursday. 


*Cracking the tax breaks *  


According to people with knowledge of the abatement proposal, tax breaks will amount to less than $10 a square foot and are likely to favor commercial development on the western reaches of Hudson Yards. *For instance, companies that build office towers west of 10th Avenue will get bigger abatements than those building closer to Eighth Avenue.* The city declined to disclose details of the program.

The details will be critical to real estate developers, who need to know the extent of possible savings before moving forward with Hudson Yards projects. 

The ratings agencies vetting the city's bonds also want to know the extent of potential tax breaks, as revenue from commercial real estate taxes generated by the development will pay down the $2 billion in bonds issued for the No. 7 extension. 


*2011 target date * 


The city estimates that the first commercial office tower will open by late 2011. Until then, it will finance the bonds from general reserves.

"We raised concerns that the commercial tax incentives not be too deep, because we didn't want to create a disadvantage for developers who are building elsewhere," says Steven Spinola, the president of the Real Estate Board of New York.

"The challenge in creating the tax abatement is to come up with a number that won't upset too many existing developers and owners and yet be enough of an incentive to spur development," he says.

A handful of firms have already begun buying commercial properties on the far West Side.

"There hasn't been much development yet, but Hudson Yards is becoming a glimmer in the eye of the major developers," says Eric Anton, a managing director at Eastern Consolidated Properties. 

Last December, the Moinian Group paid $54.8 million for a site at West 34th Street and 11th Avenue. It has been rezoned to allow a 1.54-million-square-foot office tower that will also house the last stop of the extended No. 7 line. 

The Extell Development Corp. and Brookfield Financial Properties also own commercial sites at Hudson Yards.

"We are taking the next step in a long march to give investors certainty about Hudson Yards," Mr. Doctoroff says. "By all signs, we are almost there."


©2006 Crain Communications Inc.


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## krull (Oct 8, 2005)

> According to people with knowledge of the abatement proposal, tax breaks will amount to less than $10 a square foot and are likely to favor commercial development on the western reaches of Hudson Yards. *For instance, companies that build office towers west of 10th Avenue will get bigger abatements than those building closer to Eighth Avenue.* The city declined to disclose details of the program.



as you can see... developers are waiting for those tax breaks to finalize to ease out on the construction costs.


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## krull (Oct 8, 2005)

*DOWNTOWN IS LOOKING UP
VACANCIES AT LEVELS NOT SEEN SINCE END OF 2001*


September 26, 2006

*FOR the first time since the end of 2001, more than 90 percent of downtown's office space is leased*, according to Cushman & Wakefield - a milestone that's been reached earlier than the most optimistic forecasts predicted. 

Confounding skeptics who claim companies don't want to be anywhere near Ground Zero,* the vacancy rate below Canal Street has fallen to a remarkably healthy 9.5 percent*, according to Cushman research honcho Jonathan Mazur. 

If that figure holds up when Cushman releases its definitive third-quarter report on Oct. 4, it would represent the first time downtown availability has fallen below 10 percent since December 2001. 

*Downtown's vacancies are higher than Midtown's 6.9 percent and Midtown South's 6.0 percent. 

But it has less space available on a percentage basis than all but a handful of other U.S. business districts. By comparison, vacancies are 16.3 percent in Los Angeles, 16.4 percent in Chicago and 19.6 percent in Houston.* 

The 9.5 figure "is our projected number for the next report," said Cushman's New York office head Joseph Harbert. "We're thinking it's pretty good, and we don't expect a lot of surprises between now and Friday." 

The data comes on the heels of a definitive agreement between the Port Authority and Larry Silverstein for rebuilding the World Trade Center site. 

Downtown Alliance President Eric Deutsch says the news "marks a significant turning point from recovery to full-blown economic growth" in the area. 

"It means we need more product and we need it fast," he said. 

The Wall Street area's vacancy rate has fluctuated mostly upward since early 2002, peaking at 13.7 percent in late 2004. Downtown bashers claimed the true numbers were even worse due to "shadow space" - the supposed availability of floors that companies preferred not to advertise as being on the market. 

But "shadow space" proved to be a hoax when a widely predicted exodus did not occur. Since late last year, signs of downtown's turnaround have been abundant. 

Emboldened by Silverstein's success at 7 World Trade Center, where he's getting more than $50 a square foot, other landlords have upped their "asks" too, with space in Brookfield's neighboring World Financial Center now commanding rents well into the $40s. 

What drove the vacancy rate down from 10.1 percent, according to Cushman, was the 600,000-square-foot lease Moody's Corp. signed this month with Silverstein at 7 WTC. 

That landmark deal, negotiated by teams led by Cushman's John Cefaly (for Moody's) and CB Richard Ellis' Stephen B. Siegel (for Silverstein), brought 7 WTC to 50 percent occupancy. 

Cushman's new data are a setback to those who continue to whine that new office construction downtown is a bad idea because supposedly no one wants to be there. 

Deutsch is bemused over wildly divergent reports on downtown's health. "People say to me, 'One story I read says it's going great, another one say's it's not.' " 

Mostly in the "not" category, for example, was a Sept. 6 Wall Street Journal article on Manhattan's recovery since 9/11, which characterized downtown as a "wild card" and made much of vacancies being higher than in Midtown. 

The head of one tenant-rep firm told the WSJ that "tenants are not flocking downtown," despite widely reported moves or returns there by Morgan Stanley, Aon, Royal Alliance Associates, BearingPoint Inc., media company Mansueto Ventures and, as The Post reported yesterday, law firm Harris Beach. 

*Downtown's office supply today is obviously smaller than it was before the terrorist attacks - 89 million square feet today compared with 108 million pre-9/11.* 

But those who have belittled downtown's commercial prospects - Mayor Bloomberg among them - have doubted its viability even with a shrunken inventory. 

Many brokers and landlords feared that the addition of 7 WTC's 1.6 million square feet would glut the market. The fact that Silverstein had not signed any tenants before the tower opened last spring was even used to justify stalling more downtown office replenishment. 

In fact, the market has become tighter since 7 WTC reclaimed a chunk of the missing skyline - but until now, no one realized just how much tighter.


Copyright 2006 NYP Holdings, Inc.


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## EtherealMist (Jul 26, 2005)

^^

what are the boundries of midtown and midtown south?


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## krull (Oct 8, 2005)

^ Here is the whole thing...

*North Manhattan * includes the area north of 110th Street. It includes the neighborhoods of Harlem, El Barrio, Morningside Heights, Inwood, Fort George, Hamilton Heights, and Washington Heights. 

*Midtown North * contains the areas south of 110th Street and north of 59th Street. It includes Central Park, the Upper East Side, the Upper West Side, Lenox Hill, Lincoln Square, and Yorksville. 

*Midtown* covers all the neighborhoods bounded by 59thStreet on the north and by 34th Street on the south. It includes Clinton, the Theater District, Times Square, Midtown Center, and Midtown East. 

*Midtown South * contains the neighborhoods south of 34th Street and north of 14thStreet. It includes Chelsea, the Garment District, Hell's Kitchen, the Flatiron District, Murray Hill, Stuyvesant Town, Tudor City, Grammercy Park, Kips Bay, and Midtown South Central. 

*The Village * contains the neighborhoods south of 14th Street and north of Houston Street. It includes the East Village, No Ho, Greenwich Village and the West Village. 

*Lower Manhattan * covers the area between Houston Street on the north and the New York Harbor. It includes So Ho, Little Italy, the Lower East Side, the Bowery, China Town, TriBeCa, the Civic Center, Two Bridges, Battery Park City, and the Financial District. 


http://www.citidex.com/425.htm


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