Q2 2022 Commercial Real Estate Market Report: New York, NY
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In the second quarter of 2022, average commercial real estate rents in New York City saw mixed action across different asset classes.
The average cost per square foot of Class A office space increased by about 5%; the average cost per square foot of retail space rose 6%.
The number of spaces available on the market fell by 5%, but developers are still working to build new spaces in order to keep up with demand from both small businesses and large corporations.
However, the slowing of capital markets and rising interest rates have negatively affected new CRE development.
Population Demographics of New York City
The population of New York City is estimated to be 18.8 million as of 2022.
This number has been growing steadily since 2010 when the population was 8,175,133.
The majority of the population is white (44%), followed by Hispanic or Latino (28%), black or African American (22%), and Asian (12%).
The median age in New York City is 36 years old.
Average Household Income in New York City
In the second quarter of 2022, the median household income in New York City was about $67,000.
The average cost of living in New York City is high but has remained stable for the past few quarters.
The average rent for a one-bedroom apartment in New York City is about $3,200 per month.
Q2 2022 New York City Commercial Occupancy Rates
The commercial occupancy rate in Q2 2022 was 92.3%, a 0.4% increase from Q1.
The vacancy rate for office space was 8%, a 0.5% decrease from Q1.
The retail sector had an occupancy rate of 97%, a 0.3% increase from Q1.
Notable Commercial Real Estate Acquisitions in NYC
Despite a pandemic-induced decrease in deal volume, NYC has seen some notable commercial real estate acquisitions in recent years.
The most expensive acquisition was SL Green Realty Corp’s purchase of a controlling stake in One Madison Avenue for $2.6 billion in 2015.
The property is a 1.1 million square foot office building located in Midtown Manhattan.
Other notable acquisitions include Vornado Realty Trust’s purchase of a 45% ownership stake in One Park Avenue from CPP Investments, increasing Vornado’s ownership interest to 100%.
Blackstone Backs Out of Manhattan Officer Tower Purchase
Blackstone, one of the world’s largest private equity firms, recently backed out of a deal to purchase an office tower in Manhattan.
The tower’s largest tenants, L Brands and law firm Davis & Gilbert, vacated their spaces well before their leases expired.
Blackstone originally purchased the tower for $605 million in 2014.
While it’s unclear why Blackstone pulled out of the deal, some experts believe that the firm is concerned about the future direction of the market and pre-pandemic pressures accelerated by COVID-19.
The State of NYC Industrial Real Estate
The industrial real estate market in New York is continuing to grow. The average cost per square foot for industrial real estate in New York is $32. This is a 4% increase from the previous quarter.
The industrial vacancy rate in New York City nudged slightly upwards from Q1 2022 and is now about 2.5%. This is still one of the lowest in NYC market history.
Demand for industrial property is high due to companies trying to diversify their supply chains and e-commerce presences needing storage space for inventory.
The State of NYC Multifamily Rents
After seeing considerable growth in 2021, NYC multifamily rents continued to grow in Q2 2022. This is the fifth consecutive quarter of growth following several years of steady growth.
In Q2 2022, the average asking rent per unit was about $3,900, an increase from Q1’s average of about $3,850.
As a ramification of rising interest rates, however, NYC landlords may have to drop or stall growth in rents to fill up spaces.
The State of NYC Office Rentals
The average cost per square foot of Class A office space in NYC in Q2 2022 was about $85, a 5% increase from the previous quarter.
Despite the continued growth in commercial rents, the number of new leasing deals decreased by 2%.
The State of NYC Retail Rents
In the second quarter of 2022, retail rents in NYC continued to grow.
The average asking rent for retail space in Manhattan’s retail corridors in Q2 2022 was about $600 per square foot, a 6% increase from the previous quarter.
The retail vacancy rate in NYC declined to about 3.0%, down from about 3.3% in the previous quarter.
Summary & Market Outlook
The second quarter of 2022 was a mixed bag for the commercial real estate market in New York, with rents growing in some sectors and declining in others.
Overall, the average cost per square foot of commercial real estate in New York increased slightly from the first quarter of the year.
Looking ahead to the rest of 2022, we expect commercial rents to continue to grow slowly as the economy continues to sluggishly recover.
Methodology
All figures presented in this article are based on MyEListing.com’s commercial real estate listing data in corroboration with other freely available data and information covering the commercial real estate industry.
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