Local real estate executives say New York City’s commercial property market will recover in the wake of the devastating effects of Hurricane Sandy, just as it has from previous disasters.
Peter Hauspurg, the chairman and chief executive officer of investment sales brokerage Eastern Consolidated, has gone on the record to predict that the market will be “back to normal” in one year. He refers to the Big Apple as the “real estate Treasury bill of the world.”
Hurricane Sandy hit the US East Coast on October 29
Sandy was the biggest Atlantic storm in history, and displaced workers at a number of major companies, including Morgan Stanley and American International Group Inc. The storm hit on October 29 and the city was still feeling her effects on November 12. As of that date, approximately 29 per cent of lower Manhattan was still not operational and some problems still persist.
Brookfield Office Properties is planning to reopen 1 New York Plaza in Lower Manhattan soon. This is good news for Morgan Stanley, which leases more than 800,000 square feet of office space. The company also owns the World Financial Center located in the downtown core, which adds 8 million square feet of office space to the company’s holdings.
The New York office market was showing mixed numbers even before the storm hit. In midtown south, creative firms (technology, media and similar companies) have driven the vacancy rate to the lowest levels in the country. Demand for office space is sluggish in lower Manhattan and midtown, and financial companies have been reluctant to establish a professional presence in these areas.
Rents in Manhattan’s prime areas have dropped 7.1 per cent in the third quarter from the previous one. This figure represents the biggest drop in rental income for commercial property landlords in over three years, according to figures released by CompStak Inc. Cushman & Wakefield released figures showing the office vacancy rate rose to 9.6 per cent over the same period from 9 per cent.
Sandy has not dampened the interest of potential tenants interested in locating in the financial district, though. With its mass-transit connections making it accessible from other parts of the city and energy-efficient space for rent, many major companies are looking to locate in the downtown core.
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