Cushman & Wakefield executives recently announced a mixed outlook on New York's commercial real estate market in 2016.
According to the global firm's executives, the macroeconomic strength is expected to continue driving market fundamentals but they are still uncertain over the fate of the market's current cycle.
They noted positive market trends such as the continued job growth in New York. According to Cushman Principal Economist Ken McCarthy, about 46,000 jobs were added in the city during the last quarter of 2015. As a result, office asking rents surged in the Downtown and Midtown South submarkets.
Likewise, the financial services sector has also shown significant growth. In 2015, the industry took over the TAMI sector accounting for 29 percent of all new office leases.
Cushman Vice Chair Gus Field also cited three emerging office markets which showed healthy activity in 2015. He pointed out that Brooklyn, Long Island City and Hudson Yards have attracted more tenants and landlords last year.
Cushman data showed that new leasing activity in 2015 totaled to 28.2 million square feet, the third-highest total in the past 10 years. Overall Manhattan office vacancy rate also dropped to 8.5 percent which is the lowest it has been since 2008's 8.1 percent.
However, Cushman's executives predicted that 2016 will not be as fruitful as the two previous years. Cushman's Chair of New York Investment Sales Bob Knakal stated that there are "some cracks emerging" after that "unprecedented run of activity" for New York's commercial real estate market.
Knakal said that over the past several months, land prices have decreased. He related that sites that they expected to sell for $750 to $800 a square foot were being bought for only more than $600 per square foot.
He also predicted that the number of properties sold will drop in 2016 and that there will be "significantly lower" dollar volume in the city's investment sales this year.
