Midtown's 860,000 square feet of leasing activity in February was short by 29% of the five-year monthly average of 1.21 million square feet, according to CBRE. However, year-to-date volume in Midtown is 2.23 million square feet, an 80% gain over the combined tallies for January and February 2009, which barely matched the average volume for a single month.
The submarket's availability rate was unchanged from January at 14.8%, while vacancy rose one tenth of 1% to 10.5%, CBRE reports. For class A space, JLL says the vacancy rate moved slightly downward during February, finishing the month at 14.1%. The firm says this is evidence that "the market has clearly stabilized," since class A vacancy levels have hovered between the current level and 14.7% since late last summer.
For Midtown South, CBRE described February leasing activity as "robust," its tally of 410,000 square feet 46% above the five-year monthly average for the submarket. There were two deals of more than 100,000 square feet each: the City University of New York's 137,000-square-foot lease at 395 Hudson St. and Horizon Media's commitment to 115,000 square feet at 1 Hudson Sq. It's the first time since November 2007 that there have been two Midtown South deals of 100,000 square feet-plus in the course of a single month, CBRE says.
Downtown still commands the lowest vacancy rate: 8.1% in February, compared to 10.5% in Midtown and 9.8% in Midtown South. Yet this was accompanied by a 46% decline from the five-year monthly average for leasing volume, and the submarket's negative absorption of 800,000 square feet was 10 times that of Midtown.
Where there was any notable adjustment in asking rents for particular submarkets, it was due more to blocks of space coming onto or coming off the market rather than owners proactively increasing their prices. Downtown's average asking rent climbed $1.27 to $38.92 per square foot, but CBRE attributes that to 733,000 square feet of former Goldman Sachs space at 1 New York Plaza becoming available at $55 per square foot as the financial services giant began moving employees to its new world headquarters at 200 West St.
Similarly, JLL reports that in Midtown, class A pricing rose slightly from $65.15 per square foot to $65.25, but says this is due primarily to less expensive space coming off the market. "It is likely that this phenomenon will continue in the short-term as tenants look to minimize real estate costs," according to JLL.
Early next month, both CBRE and Cushman & Wakefield will issue reports focusing on first-quarter results and what they portend for the balance of the year. It's likely that increased stability will be one of the key stories in both firms' reports.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
