You are here
Manhattan office leasing seen boosted by US economy, tax cuts
[NEW YORK] A stronger US economy fuelled by President Donald Trump's tax cuts bodes well for the office market in Manhattan in the near term as it provides a modest boost to employment, wages and business investment, brokerage CBRE said on Monday.
Office-using jobs growth in New York has been robust and is the single most important statistic for real estate, said Spencer Levy, head of research for the Americas at CBRE.
"The US economy is in a surprisingly good place where we sit in the cycle," Mr Levy told reporters. "The good news extends here to New York City as well." The International Monetary Fund on Monday lifted its world economic growth forecast in 2018 and 2019 due to the tax cuts and said the US economy is now likely to expand by 2.7 per cent this year and slow to 2.5 per cent next year.
Office employment rose to a record 1.66 million people last year and helped contribute to the best year of leasing activity in Manhattan since 2014, CBRE said.
While a tight labor market will provide a headwind for the economy, further jobs growth and strong leasing activity are expected for New York this year, the brokerage said.
New York City's economy grew at an annual 3.6 per cent in the third quarter of last year, or triple the same period's pace in 2016, CBRE said, citing the New York comptroller's office.
Average hourly earnings for private employees in the city increased 3.7 per cent in the fourth quarter, the largest gain for that quarter since 2008, according to New York state data.
The growth and hourly earnings data are higher than the US average.
"The biggest risk factor out there is a black swan event or a stock market correction," Mr Levy said, adding he did not believe the Federal Reserve will mistakenly raise interest rates too quickly.