This is the ninth year that we have updated our real estate profile of the approximately 42 million square feet of space within the BID borders. The two predominant building types (office and loft structures) account for approximately 37.1 million square feet or 88% of the space. Office structures account for approximately 21 million square feet, and loft buildings for approximately 16 million square feet of space based on the building classifications as reported by the New York City Assessors Office. These classifications, however, do not reflect usage. There is a good deal of office usage in the larger loft type buildings. This appears to be intensifying as several large loft type buildings in the Fashion Center BID have recently been sold to new owners who are seeking traditional office tenants.

Office Vacancy

The market in the Fashion Center can be characterized as a steady market.
Our recent survey of available space within the BID boundaries indicate that the total space availability in both loft-type and office buildings has declined from 3,714,000 square feet to 3,318,161 square feet. Avenue buildings went from 2,339,000 square feet to 1,979,000 square feet, while Side Street buildings decreased from 1,381,000 square feet to 1,339,100. This decreased space availability from 13.8% to 12.7% in Avenue buildings and from 16% to 14% in Side Street buildings. These recent trends are shown on Exhibit 15.

Office Rental Rates

Office asking rents have either held steady or increased slightly compared to last year. Side Street Buildings have an average asking price of $21.81 per square foot, which is within the range of $19.24-$22.42 per square foot in 2003. The Avenue Buildings have an average asking price of $31.58 per square foot, represents the high end of our 2003 survey. It is important to note that asking rents do not necessarily reflect the full status of the marketplace, as a variety of concessions (greater tenant improvement allowance, a period of free rent, etc.) can be part of the overall lease agreement which reduces the effective rent.

Retail Rents

The retail space market has experienced hardship over the past year. Forty (40) retail stores from our last survey have become vacant. The remaining forty-two spaces that are currently vacant were also available in our prior survey. Thirty-nine (39) spaces that were vacant in our last survey have been leased. However, the vacancy rate has declined from last year and is now estimated at 10.3%. The mix has also not altered much, but there is slightly more non-retail frontage and more space dedicated to food, services, and convenience retail uses.

Retail rents in the Fashion Center are subject to great variation depending on the size, frontage, configuration, and of course, location. Overall, retail rents are still quite high. Broadway retail space asking rents range from $100 - $200 per square foot; Seventh Avenue from $60 - $100 per square foot; Eighth Avenue from $90 - $125 per square foot and the side street locations from $35 - $80 per square foot.

While the rents in part of the Fashion Center sound high, they are much less expensive than Herald Square or Times Square, where rents as high as $300 to $350 per square foot are common. However, as our retail analysis indicates, there is plenty of retail potential in the area and some locations such as the Port Authority Terminal produce significant sales levels, approaching $950 per square foot. This level of productivity can easily sustain rents in excess of $100 per square foot that is prevalent throughout the area. Exhibit 16 summarizes the area retail rents.

Exhibit 16
Fashion Center Retail Rent Levels 2004

Location	Retail Rent Range
Westside of Broadway	$150 - $200 +
Eastside of Broadway	$110 - $150
Westside of 7th Avenue	$175 - $200
Eastside of 7th Avenue	$150 - $175
Avenue of Americas	$125 - $170
8th Avenue	$90 - $125
Side Streets	$35 - $80

Source: Robert B. Pauls LLC

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