Despite the financial crisis and the recession which has followed it, big banks still account for over a quarter of office rentals in Manhattan, experts at the Reuters Global Real Estate and Infrastructure Summit said recently.
Marc Holliday, CEO of SL Green Realty Corp told the summit that strict new capital requirements from the US have diluted the negative aspects of financial services tenants. This factor, combined with recent high profits has boosted the appeal of banker tenants.
“For those reasons, we look at our financial sector-based tenants today as being in very good shape,” Holliday stated.
He added that banks and financial services have created approximately 15,000 jobs for the Manhattan job market since the financial crisis occurred.
“That’s good but not as much as we would have expected given the level of profits in that sector,” he continued. “I think in part that’s just due to the reservation of companies to make big investments in people or in new acquisitions until the regulatory landscape clears up a bit more.”
As well as banks, the other area that is taking up office space in Manhattan recently is the media industry, Holliday said.
Recently, media giant Conde Nast arranged to rent one million square feet of office space in One World Trade Center, construction of which is still ongoing.
While financial services companies and others may be recovering, the outlook is still grim for the US economy as a whole.
Recently Federal Reserve Chairman Ben Bernanke called the recovery of the labour market “frustratingly slow”. The poor state of the labour market is to continue well into next year he predicted.
Editor’s notes: In Q1 2023, vacancy rates in Downtown Manhattan stood at 22.6 per cent and in Midtown Manhattan they stood at 21.2 per cent.
The average vacancy rate across all locations in the U.S. stood at 20.2 per cent.
In the same quarter, the largest new office space deal was investment company, KKR’s, acquisition of 240,100 square feet at 30 Hudsons Yards.
In November 2022, it was reported that the professional and business services sector occupies 46.7 per cent of the rented office space in New York, the finance and real estate sector occupies 30.5 per cent of let office space, the information and technology sector occupies 13.9 per cent of office space, and the government occupies 8.9 per cent of office space that is rented in New York.