NEW YORK CITY-While Manhattan posted a total of 2.13 million square feet of leasing activity in November alone, much of that deal velocity is happening below 42nd Street. According to data from CBRE’s December 2011 MarketView Snapshot report, Midtown South topped its five-year average for the month of November—and the trend is expected to continue into the new year.
“Obviously our market is contingent upon the economy, so as long as that continues to do somewhat well, we should have a relatively good year,” Travis Yuengst, manager of New York research services at CBRE, tells GlobeSt.com. “It is difficult to forecast demand, but Downtown will definitely attract more Midtown tenants.” Yuengst adds that, for the month of November, Downtown was slightly below—at 21%—but that the area was doing well on a year-to-date basis.
Fueled by the moves by WilmerHale and Conde Nast earlier in the year, companies beyond the financial services realm are beginning to re-think the Lower Manhattan office market. “There are a number of tenants looking down there,” Yuengst says, though he was unable to disclose any upcoming deals due to confidentiality agreements.
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But given the absence of mega-deals during the month, Downtown only recorded 270,000 square feet of leasing activity in November, which lagged the five-year monthly average of 340,000 square feet by 21%. Notable leases include Bank of America’s 750,000-square-foot renewal at Two and Four World Financial Center. An additional 2.95 million square feet BOA formerly occupied at the site is being listed as available by owner Brookfield Office Properties but will not impact availability statistics until October 2012, according to CBRE.
Other deals included a 50,667-square-foot lease for Adprime Media Inc. at 33 Whitehall St.; a 35,100-square-foot lease for ArteMiss, LLC at 110 William St.; and a 20,803-square-foot deal for Lifespire at One Whitehall St. Rents range from the high $30s inching upward to the low $40s per square foot. On the capital markets side, Moinian Group recapitalized 180 Maiden Lane by selling a 49.9% interest to SL Green Realty Corp. for $211.9 million, while Beacon Capital Partners purchased a 95% interest in 195 Broadway for $266 million from GE Pension Trust and L&L Holding Co.
Further up in the trendy Midtown South area, neighborhoods like Hudson Square, the Meatpacking District, Chelsea and the Flatiron District have shown positive absorption. According to CBRE, Midtown South saw 620,000 square feet of new leasing activity in the area, the highest monthly total since November 2007.
“The technology sector continues to be a very attractive market there,” Yuengst says. New deals included a 70,736-square-foot space for WeWork at 175 Varick St. and a 55,307-square-foot lease for social media company Foursquare at 568 Broadway. “These firms don’t want a typical Midtown office building,” Yuengst adds. “They want a trendy, loft type building, and that’s been a huge driver in that market.”
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