A Resurgent FIRE Sector Leads the Way
CBRE today released a Market ViewPoint for the 2017 Manhattan Office Market.
The report shows that 2017 was Manhattan’s best year of office leasing activity since 2014. Activity totaled 28.43 million square feet in 2017, up from 22.90 million square feet in 2016, and 6% more than its five-year annual average.
“2017 was an exceptional year for office leasing, due to a vibrant economy that drove numerous large-block transactions,” said Nicole LaRusso, Director, Research and Analysis, CBRE Tri-State. “With positive economic forces at work in the local, national and global economies, we expect 2018 to follow a similarly positive course.”
Of the year’s total leasing, the FIRE sector accounted for 38% of the total leasing activity. This sector led the way for leasing, due in part to its strong 2017 employment growth, which surpassed the high seen prior to the global financial crisis. Following the FIRE sector, the technology, advertising, media and information (TAMI) sector accounted for 22% of total leasing activity. Leasing by coworking and serviced office space providers also continued to be a big factor in the market, accounting for 1.10 million square feet of space last year.
The market’s strong leasing activity can be attributed to robust expansion in office employment, which reached a record high of 1.66 million, and to large relocation and expansion transactions of more than 100,000 square feet. These deals kept asking rents and availability stable, though the market did see a decline in both taking rents and average net effective rent. The average asking rent reached $72.91 at the end of 2017, while the availability rate, at 11.5%, remained unchanged year over year.
Looking ahead to 2018, economic conditions will be a driving factor in the market. In particular, the reduced corporate tax rate should provide a modest boost to employment, wages and investment, thus positively affecting office leasing. The federal policy toward relaxed financial regulations should also have a positive impact for the FIRE sector’s continued expansion in Manhattan.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
