Midtown Leases Go Through Repricing

NEW YORK CITY-Office space in Midtown has been largely repriced, portending the approach of a market bottom and signaling a recovery beginning in 2010 as millions of square feet of leases expire, according to a report issued Wednesday by CB Richard Ellis Research.

The report says that 16.1 million square feet of Midtown’s 34 million square feet of office space has been repriced since last September, resulting in a 28% decline in asking rents compared to the peak a year ago. “Repricing [has] been going on for a while,” Pamela Murphy, SVP with CBRE’s New York tri-state market data services, tells GlobeSt.com. “We see it turning a corner now, because it takes a few months for a deal to close, and obviously the asking-versus-taking rent numbers are based on closed deals.”

Accordingly, Murphy says, “it’s a bit of a lagging indicator, because we’re talking about deals that were negotiated during the repricing a few months ago. Now we’re seeing the fruits of that and landlord and tenant expectations are starting to converge. We expect that to continue well into the year.” If the cycle of pricing erosion and recovery resembles the letter U, “we’re curving into the bottom of the U.”