Report: Manhattan office market hit five-year low before Sept. 11
CONTRARY TO POPULAR BELIEF, most of Manhattan's 2001 occupancy losses actually occurred prior to the Sept. 11 terrorist attacks, says a report by New York-based Plymouth Partners.
“For Manhattan real estate, 2001 was a perfect storm,” says James Meiskin, president of Plymouth Partners.
Following the boom of 1999 and 2000, during which net absorption of office space totaled 15 million sq. ft., the amount of leased space in Manhattan plunged 21 million sq. ft. by Sept. 10, the report says.
Following Sept. 11, 13.4 million sq. ft. was destroyed in the terrorist attacks and 2.7 million sq. ft. of additional space became vacant downtown.
Vacancy rates showed the same trend. Manhattan's overall vacancy rate — 5.1% in fourth-quarter 2000 — more than doubled to 10.9% by Sept. 10, 2001. By the end of 2001, the rate had climbed to 11.6%.
According to Plymouth Partners, corporate downsizing and the implosion of high-tech industries resulted in a massive increase in sublease space during early 2001. The terrorist attacks of Sept. 11 weakened the shaky market even more.
And the long-term outlook for the Manhattan office market is less than bright, according to the report. “While the national economy may improve during 2002,” the report notes, “the local demand for office space will lag far behind.”
RadioShack Corp. to build 1 million sq. ft. headquarters
Having outgrown its current headquarters at the Charles D. Tandy Center in Fort Worth, Texas, RadioShack Corp. has purchased land to construct a new 1 million sq. ft. headquarters, technology center and outlet mall in downtown Fort Worth. Addison, Texas-based The Staubach Co. represented the retailer in the transaction. The total project is reported to be worth upwards of $200 million.
The electronics retailer sold its existing headquarters and outlet mall in the Tandy Center to Dallas-based investor PNL Properties at the end of 2001. Tarrant County is under contract to purchase the remaining 300,000 sq. ft. Tandy Center Technology Square from RadioShack by April 30. RadioShack will lease office space back from both parties until it moves into its new facility in November 2004.
Shorenstein kicks off investment fund with purchase of Chicago trophy tower
SAN FRANCISCO-BASED SHORENSTEIN Co. LP has acquired the 950,000 sq. ft. 500 West Monroe St. in Chicago's West Loop with money from its sixth investment fund, SRI Six. The purchase, estimated at $250 million, was the first for the $610 million fund. Like the company's five prior funds, SRI Six was formed specifically to invest in high-quality office buildings in the United States.
The purchase is a testament to the fundamental attractiveness of Chicago to investors, according to Bruce Miller, managing director of Chicago-based Jones Lang LaSalle, which represented the owner in the sale. “Even in the current economic environment, the offering of 500 West Monroe generated a number of offers from highly qualified investors,” Miller said in a statement.
The Class-A building, completed in 1992, is 100% occupied and houses such blue-chip tenants as GE Capital Corp., GATX Corp., Marsh USA and the Federal Deposit Insurance Corp.