The office market in both Midtown and Downtown tightened in 2006, with six of the 15 largest deals taking place in Downtown. Joseph Harbert, COO, New York Metro Region, said that by June of last year no one would have predicted almost half of the largest deals by sf would be in the southern part of Manhattan.
Over the last 12 months, there were 41 deals that were signed for more than $100 per sf, a fact that Harbert said he expects never to be able to say again. Additionally, there were 23 deals between $90 and $100 per sf.
With these top deals, the average asking rent for class A property in all of Manhattan hit $66.61 per sf. Rental rates and asking rates jumped significantly in certain portions of the city. In the Park Avenue area, asking rents at the end of 2005 were $62.78 per sf. For Q4 2006 the asking rents had increased almost 40% to $87.69 per sf, according to Harbert.
"Downtown is the big story as far as I am concerned," Harbert said. Compared to 2005 figures, almost every month saw more leasing in 2006 with 37% of downtown leases over 100,000 sf. Vacancy for the area sits at 8.4%. "No one would have thought a year ago that we would be in the middle of [vacancy] equilibrium," which sits between 7% and 9%.
Pricing overall rose by $8 per sf in the Downtown area, with many companies raising asking rents to the $40-per-sf range. Harbert said 25 of the deals in 2006 were done north of $40 per sf, with some even reaching $50 per sf. Executive director Frank Cento said that since the beginning of January a number of the large property owners downtown have raised their asking rents to $55 per sf. Later in the conference Cento said he expects a number of large deals to be signed this quarter in the Downtown area, both from firms leaving Midtown and one large Downtown firm.
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