NYC Office has roared back to pre-pandemic levels, Midtown South Outperforms
NEW YORK, April 25, 2022 /PRNewswire/ — Real estate investment firm KPG Funds (KPG) announced today their 1st Quarter NYC RSSI Index Results. KPG accurately predicted a surge of office leasing activity and is now back to pre-pandemic leasing levels.
During the first quarter, Manhattan had more tenant demand than any time in 2021 and is now back to pre-pandemic leasing activity. Most of the new tenant demand was in Midtown South up a staggering 27% percent from the third quarter of last year, according to the analysis. NOHO /SOHO has been the top performing submarket year over year and has pulled away from Park Avenue to solely retain the top spot. The RSSI Index year over year for Midtown South was up an explosive 72.9% while Midtown was up 9.5% and Downtown contracted by a staggering 57%.
"Office demand figures serve as an indicator of future leasing activity and Midtown South continues to outperform and Downtown continues to underperform," said Greg Kraut, CEO of KPG Funds.
Tenants are now using office space as a lure to recruit and retain talent. Vibrant work / live / play locations cater to high growth, emerging companies seeking to draw on NYC’s deep and skilled millennial talent pool, said Kraut.
Highly amenitized and designer office product in cool locations is now king which is a contrast to the surplus of commodity product that remains on the market. In Downtown, demand for office space declined 18% year over year, according to KPG’s report.
"Demand for high-end quality space in cool areas has seen a vast increase in velocity. Fortunately, KPG Funds foresaw this and has acquired properties in Midtown South and prebuilt their spaces to a new top of the market standard," said Newmark Senior Managing Director David E. Malawer.
The relative strength submarket index (RSI) is a technical indicator used in the analysis of Commercial real Estate markets. It is intended to chart the current and historical strength or weakness of a building or submarket based on the demand of TIMS (tenants in the market) in a recent quarter compared to the total availability in that submarket.
The RSSI is classified as a momentum oscillator, measuring the velocity and magnitude of tenant demand. The RSSI computes momentum as the ratio of TIMS to availability in a particular submarket. The lower the score the more demand in that market and vice versa as a percent of availability in that market. The higher the percent the more demand.
The RSSI is measured on a scale from 0 to 100. Levels below 2.0 occur less frequently but indicate stronger momentum to that submarket which will lower supply and increase demand. The relative strength submarket index was developed by Greg Kraut and Rod Kritsberg at KPG Funds. The RSSI provides signals that tell investors to buy or sell when a building or market should be bought or sold.
About KPG Funds
KPG Funds ("KPG") is a fully integrated real estate private equity platform with Asset Management, Project Management, Development, Design, Leasing and Property Management. With over 35 years combined experience based in NYC, KPG manages fully discretionary institutional vehicles targeting middle market value-add office investments. Additional information about KPG and a selection of current holdings and previous transactions are available at www.KPGFUNDS.com or by calling Gregory Kraut at 212-359-0743.
SOURCE KPG Funds