IREM Regional Vice Presidents Report 1999
Delaware, New Jersey, New York, Pennsylvania
Albany CBD market had improved to 13% by mid-1998, showing a 2% improvement over the preceding year. Declines in inventory are most evident in Class B. The decision by NY State government to move offices to the CBD should help the market, even if some of the proposed buildings are several years from completion. Rental rates rose slightly in the suburbs as available space declines and most new construction is heavily preleased.
New York City is enjoying a robust office market, with vacancies in 4.2% in Midtown in third quarter 1998 and downtown at 8.2% according to Julian Studley. Rents in Midtown are nearing $40 psf. Retail is also prospering, with some Fifth Ave. rents as high as $300 to $500 psf., while SoHo wins the contest as the hottest retail area. Stock-market uncertainty has hurt sale prices, however. Residential rentals are still in short supply, especially larger units.
Northern New Jersey has also experienced strong residential demand, with a new ferry service making commutes to Manhattan easier. Overall offices vacancies in Northern and Central New Jersey fell to 12.2% by mid-1998, according to Cushman and Wakefield. Rents in the north rose to $27 psf. Bergen County led the way. Class A vacancies in the central area were 6.5%, with the Mercer County area as the tightest submarket of the region. Industrial vacancies for the area were projected at 7.1% in early 1998 with rents declining slightly. Retail vacancies rose slightly in the first part of 1998, thanks to the recycling of numerous big boxes. The state's unemployment rate is at an eight-year low, and the state department of commerce projects a 5% personal income gain for 1998.
Delaware has experienced a decline in available class A space, although rental rates dropped slightly. B spaces was demanding $14.25 psf in early 1998.
Philadelphia experienced vacancies of 12.7% in early 1998, with the CBD topping 16%. Downsizing and relocations are bringing space back onto the market. Nevertheless, rents increased to $19 psf. Suburban markets faired better, with King of Prussia, Conshohocken, and the Main Line in single digits. Retail vacancies remain high, with Bucks County topping 33% in mid-1998 and total vacancy in all markets at over 20% Downtown has less new spaced, but faces substantial sublet activity.
Pittsburgh is excited about possible new stadium construction and the resurgence in the CBD it hopes will follow. CBD office occupancies are at their highest levels since 1981, according to Grubb & Ellis. Asking rents are inching up to $20.42 psf for class A, and demand is experiencing moderate growth. Suburban office submarkets have all seen new construction, with vacancies ranging from 17.6% in South Hills to 7.04% in Parkway West. The Waterfront, one of the largest multi-use developments in the country, is underway along two miles of the Monogahela River.
District of Columbia, Maryland, Virginia, West Virginia
The Washington/Baltimore regional economy was prospering in third-quarter 1998, with total unemployment of 3.2%, according to a study by Delta Associates and Carey Winston/ Transwestern. After years of controversy, the city has broken ground for a new convention center. However, worries over global finances may mar 1999. Baltimore's economy is slowing with unemployment at 5.5% and a decline in job creation. Regional net absorption throughout the Washington metro area was over 7 million square feet through third-quarter 1998. B space has been absorbed as A space is increasingly unavailable. Total vacancies fro the area are 5.7%, with Northern Virginia at only 4.3% and suburban Maryland at 7.8%. The first wave of new office buildings was delivered in later 1998, but 70% of the space was preleased. Mid-year retailing figures showed community center vacancies ranging from 3% to 4% with sales psf rising. …