Manhattan Class B Rent Surge Strengthens

NEW YORK CITY-Average asking rental rates for Manhattan’s class B buildings continued to rise faster than rates for the city’s trophy-quality buildings, a trend that began around the beginning of the year, according to a recent report by Jones Lang LaSalle. Midtown South saw the largest increase at midyear 2007, with the submarket’s class B buildings posting rate increases of 14.4%.

Rents for Midtown South class B buildings rose to $47.87 per sf in the second quarter of 2007 from $41.83 per sf in the first quarter of 2007. The submarket was the only sector of Manhattan to see class A rents grow at a larger pace than class B rates. Midtown South class A average asking rents jumped 61.1% at midyear 2007 after a block of 96,000 sf of office space at 11 Madison Ave. was put on the market with asking rents in the upper $80s. Class A average asking rents in the submarket’s increased to $71.18 per sf from $44.18 per sf the previous quarter.

“With tenant interest in Manhattan office space continuing unabated, average asking rental rates will escalate further,” says James Delmonte, VP and director of research, with Jones Lang LaSalle’s New York City office. “Most of New York’s office submarkets have reached single-digit vacancy rates, and new space is not being added to the market fast enough to meet demand.”