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Studley: Conde Deal Drives Net Effective Rents Downtown

NEW YORK CITY-Large transactions are helping to boost office rents in Lower Manhattan, but the neighborhood still suffers from a “big overhang of space,” says Studley’s Erik Schmall. Click through for interactive data.

By Jacqueline Hlavenka | Updated on April 20, 2012

NEW YORK CITY-As large blocks of space continue to get gobbled up in Midtown and Midtown South, large transactions are helping to boost net-effective office rents Downtown. According to Studley’s 2012 Effective Rent Index, total rent posted its first gain since 2007 in Lower Manhattan, spiking by 18.1% to $41.34, spurred by a 49.9% spike in net rent to $18.42.

Erik Schmall, executive managing director at Studley, tells GlobeSt.com that the increase was “driven solely by the Conde deal that was done Downtown,” noting that the luxury magazine publisher’s landmark one-million-square-foot-plus trans at One World Trade Center is already having a material impact on the surrounding neighborhood. “I don’t know if this would be a positive number if it were not for this deal.”

As a result, tenant effective rent jumped by 21.8% to $26.99 this year, a huge jump from 2010 when landlord effective rents barely covered building expenses, clocking in with a rate of 71-cents. In 2011, it bounced off the bottom, rising to $5.08.

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