Spotlight on Business in Manhattan
Overview of Business in Manhattan
For decades, Manhattan has been a global business hub of undisputed prestige. This New York borough is home to some of the world’s most successful businesses and to the largest stock exchange in the world. Manhattan has repeatedly topped the global lists of most powerful cities, staying ahead of other leading business hubs like London, Dubai, Hong Kong, or Shanghai. Due to its excellent infrastructure, world-class business environment, and valuable human capital, Manhattan is the world’s most desirable business location . The borough’s thriving business scene is a catalyst for economic growth, and this is reflected in the local employment levels. According to the NYCEDC, more than 310,000 jobs are based in this borough, tens of thousands of which have been created in the private sector since 2005.
The banking and financial sector is the key economic driver for the local economy. More than 300,000 people are employed in this industry, which according to the Federal Reserve generates more than 35 per cent of the city’s income. The service sector is another key industry in Manhattan, as it employs over 1 million people in areas like tourism (over 240,000 jobs), professional and business services (287,000 jobs), or healthcare and social assistance (208,000 jobs).
The number of technology, advertising, media, and information companies (TAMIs) has skyrocketed since 2009. Back then, TAMIs barely occupied 100,000 square feet of space in Manhattan, but at the end of 2014 that figure had increased to more than 1.6 million. A report published by the Downtown alliance estimates that this sector is comprised of over 800 firms that generate a combined annual output of $125 billion and that employ nearly 29,000 people. Likewise, Manhattan has recently been attracting a steady number of creative firms. According to an article published at the Wall Street Journal, the number of employees working in creative ventures in this part of Manhattan has increased by 71 per cent over the past five years.
Construction is another important economic activity in Manhattan. Growth is this sector is fuelled by the constant demand for office space, and it is estimated that there are more than 30,000 construction jobs in the borough.
Office Rental Statistics
According to a study carried out by the Downtown Alliance, there is approximately 86 million square feet of office space across Manhattan. The cheapest office space is located around Chambers Street, an area that attracts startups and newcomers. On the other hand, Manhattan is home to some of the world’s most expensive office space, especially in Midtown, where rental values can be as high as $114 / square foot.
Real estate firm Cresa has recently released a data set on the key Manhattan sub-markets, namely downtown Manhattan, Midtown North, and Midtown South. During the last quarter of 2014, class A office space in downtown Manhattan reached average rental values of $58.10 / sq ft. Absorption levels were also on the increase at 609,000 square feet. Nearly 90 million square feet were released in this area, and vacancy rates went down to 12 per cent. Class B space in downtown Manhattan remained stable in terms of new supply (29.1 million sq ft) and vacancy rates (6.1 per cent), although average lease rates increased to $46.69 / sq ft and the area experienced negative absorption levels.
Average rental values for Class A properties in Midtown North have remained unchanged and are currently set at $75.05 / sq ft. Although 195 million square feet of space were released during Q4 2014, no space was absorbed and vacancy rates rose to 8.1 per cent. Similar trends apply to class B space in Midtown North, where lease rates remain stable at $56.67 / sq ft and where absorption levels stood at the area’s average of 289,000 square feet. However, vacancy rates in this area are among the lowest in Manhattan at 4.3 per cent.
As for the Midtown South sub-market, Q4 2014 saw all key indicators increase where Class A office space was concerned. Average lease rates rose to $66.96 / sq ft, and 43.1 million square feet of space were added to the current office stock, 689,000 of which were absorbed during the last quarter of 2014. Vacancy rates increased slightly to 5.5 per cent. There was increased demand for Class B space in this sub-market, as vacancy rates dropped to 6.6 per cent following the absorption of 648,000 square feet of space. Average lease values are $60.10 / sq ft.
Further information on available office space in the Manhattan area.