Midtown Office Update: June 2024 - Albany's centrist movement + a weak pipeline for class-A office space |
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June 2024

Has the chicken come home to roost in Albany?

 

Over the past fifteen years, New York’s real estate landscape has been characterized by an increasing amount of regulation. This trend, advanced by progressive members of the NY State Legislature, has kept real estate owners in the crosshairs of policymakers.

 

New rent laws in 2019 were a blow to residential property owners, costly building compliance regulations were a burden for office owners, and a spike in crime took a toll on retail operators as well, which some blame on the 2019 bail reform. While these are but a few of the politically imposed impediments dragging on real estate value creation, it’s all happening with the backdrop of decreased office occupancy post-COVID and ballooning interest rates for real estate debt.

 

All the above and more has contributed to a growing gap in City & State tax coffers respectively, leaving legislators scrambling for new sources of funding to address the deficit.

Congestion pricing was one such initiative that was designed to alleviate traffic congestion in Manhattan while providing a much-needed financial boost to the MTA for infrastructure upgrades.

 

However, after extreme resistance and growing dissatisfaction among moderate and centrist factions, Governor Kathy Hochul decided to halt the congestion pricing initiative at the last minute, citing the current fragility of NY’s economic recovery.

 

Some believe this could portend a pivot back to the center for New York politics. On the heels of a primary season that saw the displacement of Democratic congressional incumbent Jamaal Bowman, will the November election shed more light on the direction that we are heading and the types of candidates we'll see in office?

 

As in any market, political dynamics have significant implications for real estate. The dominance of the current legislature has driven policies many argue are unsustainable by disincentivizing property ownership and limiting the ability to create value.

 

As the political landscape evolves, there is cautious optimism that a more balanced approach to governance might take root with more centrist and pragmatic leadership. This could involve a reassessment of the current policies and a potential rollback of some of the more restrictive measures that have been put in place.

 

The hope is that with more sensible and pragmatic leaders, New York City will remain poised to defend its status as a thriving hub of growth, commerce and innovation.

 

Until next month,

Ben

Ben HS

Ben Blumenthal
Principal Broker | Noah & Co.

PS - some quick thoughts on the latest building to sell on Third Avenue

  

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The Best of June
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Led by the continued increase in law firm leasing activity, class A+ office visitation rates recently hit their highest levels since 2019, and with the demand for top-quality space set to outpace supply, tenants have remained busy locking in new deals.

So where's the latest action?

Fifth & Mad

- Accor now occupies ~ 23k SF at 711 Fifth Avenue
- 452 Fifth will soon be home to Brighton Park Capital
- Marx Realty welcomes Consonance Capital to 545 Madison
- Recruiter Madison-Davis doubling its space at 275 Madison
- Presentation Products signed a 7-year renewal at 171 Mad

Third Ave. Value

- TemPositions transitioned to a 20k SF, direct lease at 622 Third
- Durst inked AIB to a full-floor lease at 825 Third
- Law firm Ropers Majeski moving north to 800 Third Ave.

Best of the West

- Tech firm Grata moving to 15k SF at 1410 Broadway
- LB Pharmaceuticals heading across town to ~9k SF at Penn 1
- Skyline Developers reported several new deals at 1040 AoA
- 130k SF of space recently leased at The Spiral in Hudson Yards

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June 2024 Newsletter - Leasing Increase YOY

Manhattan office leasing activity jumps 70% year over year

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Pfizer's former HQ to become largest office-to-resi conversion 

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Plaza33: Vornado opens new Pedestrian walkaway in Midtown

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148 Madison the latest building purchased by an end-user

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June 2024 Newsletter- Bus stop

Drivers who block NYC bus stops now facing fines of $50+

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June 2024 Newsletter - Penn15

New renderings released for proposed Penn Plaza skyscraper

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