Industry experts say they expect the economy to continue to improve, and that increased hiring could bolster demand for office space. A senior research analyst at Grubb & Ellis, Richard Persichetti, released a report that said, "Economists predict that by the end of 2005, New York City should reach employment levels last seen in 2000." Midtown and the area south are two areas expected to attract greater demand for office space this year, while the downtown area may begin to prosper in 2006.
Midtown has seen strong growth in the last three years with the trend likely to continue, some say. As prime office space becomes sparser in Midtown, vacancies in subprime space will decrease, and creative tenants looking for less expensive alternatives will increasingly migrate to Midtown South.
As for downtown, the general consensus is that the market's revival will not occur this year, with the Fulton Street Transit Hub and other projects not scheduled for completion for another one to three years.
Drivers of the commercial market in 2005 include the conversion of commercial buildings into residential.
The 500,000-square-foot Giftware Building at 225 Fifth Ave., for example, was recently converted into a residential condominium, with tenants signing new leases at an office building at 7 W. 34th St.
As for commercial retail space, 2004 was the most successful year in five years, breaking the previous record set in 1999,according to Faith Hope Consolo of Garrick Aug.
Other factors boosting the market for office space include demand from hedge funds and private equity firms, which have had record-breaking profits and seek space in the most exclusive buildings.
Brokers of commercial properties hope in 2005 their sector can be as successful as residential has been. Meanwhile, some residential brokers cite rising interest rates as a factor that could affect prospects for continued growth.
