Leasing recovery fragile

Real Estate Weekly, Jan 6, 1993

Net absorption of Manhattan office space was positive again --the first consecutive quarters of net occupancy gain since 1987, reported Joseph Hilton & Associates in their third quarter Market Monitoring Report. However, corporate downsizing and permanent white collar job loss pose a threat to the still fragile recovery.

JH&A reports that office leasing market is in disequilibrium-Class A buildings, such as the Americas Tower are renting well and the monetary value of concession packages has dropped. On the flip side, many older Class B and C buildings are at special risk for a variety of reasons, including lack of financial resources to modernize and the inability to compete against the reasonably priced, newer buildings. JH&A predicts that tenants will continue their flight to quality buildings over the next several years, as the differences within building stock become more apparent.

In its recommendations to clients, JH&A cautions that tenants carefully evaluate the ownership of a prospective building and its financial condition before signing on the dotted line.

The Marketing Monitoring Report is published quarterly and includes information from the Reis Reports, employment data from the New York State Department of Labor and Joseph Hilton & Associates analysis of current market trends.