Market enters '96 buoyed by attractive development - New York, New York office market - Annual Review and Forecast

New York's office market enters 1996 buoyed by stable rents, the availability of attractive space and the revitalization of Times Square.

Together with a number of recent major leases that indicate a stemming of the outgoing corporate tide from New York and several rather dramatic events in Midtown South, the outlook for Midtown is bright, after a year in which activity leveled off.

The rehabilitation of the New Victory Theater, the impact of the Disney projects and others along 42nd Street are turning Times Square into an attractive destination for visitors - and business.

The upgrading of Times Square has already exerted a breakthrough in commercial office development, with plans by the Durst Organization to break ground in 1996 for a major new building - the first such speculative project in the Times Square area in years.

The new Times Square also is having a positive impact on adjacent areas, as businesses now see 42nd Street as a soon-to-be top class entertainment center and visitor magnet. This is particularly true for the retail sector. Coffee bars, theme stores and family-oriented shops which previously shunned the neighborhood are bidding for space at 42nd Street and Seventh Avenue.

Further east, plans to redevelop the Pershing Square area below Grand Central Station hopefully will have an impact similar to that of the renovation of Bryant Park.

Together, these developments re-energize New York's premier position as the entertainment capital, encouraging additional entertainment companies to locate and open offices here.

The flood of visitors seen in New York in the past year will continue to grow, as the City and areas such as Times Square are recognized as better places to visit than their earlier reputations indicated.

In Midtown South, CS First Boston plans to move to one million square feet of space at 11 Madison Avenue will have major impact on the already reinvigorated Midtown South neighborhoods, spurring other corporate moves and an influx of service firms.

The opening of the Chelsea Piers Sports Complex on the Chelsea waterfront and the further upgrading of Union Square will sharpen activity in Midtown South, attracting new stores and restaurants.

Across Midtown, corporate tenants nearing the end of existing leases will find attractive space in desirable locations available to them. With rents stabilizing as landlords recognize the realities of the market, leasing activity will improve as companies take advantage of the existing values and trade up. The "flight to value" may characterize 1996.

The influx and growth of entertainment finns and excitement of technology-related businesses will be major factors in the absorption of office space throughout the City.

These developments further demonstrate New York's traditional attraction for companies that depend on what we might call "brain power" or the "content factor."

Overall, there is significant upside potential in the market and 1996 may well demonstrate the extent of this potential.

COPYRIGHT 1996 Hagedorn Publication
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