NEW YORK CITY-Lower Manhattan received another very upbeat report card Tuesday when the Alliance for Downtown New York issued its Q1 report. Total leasing in the submarket for the first three months of 2013 came in at 1.37 million square feet, a healthy 39% increase year-over-year and a noteworthy 32% higher than the 10-year average.
According to data provided by CBRE, six of Manhattan's top 10 new deals were in the boroughs bottom reaches. Harper Colins signed the largest agreement, for 180,700 square feet at 195 Broadway. The second largest lease, signed by Liberty Mutual, was for a whopping 130,500-square-foot renewal and expansion at 55 Water St., a deal made especially significant by the fact that the building was heavily damaged by Hurricane Sandy.
Relocation activity was particularly strong in the quarter, with 18 companies committing to move from Midtown and Midtown South to Lower Manhattan, according to the report. Meanwhile, the quarter's robust leasing caused a drop in vacancy to 8%, down from 8.8 last quarter, 9.2% last year and—in an important sign of recovery—it hit the lowest level since 2008. Lower Manhattan now boasts the second lowest vacancy rate in the country, the report says, beat only by Midtown South.
Of the city's three submarkets, Midtown scored the highest, at 10.1%, down from 10.3% in Q4 2012 but up from 9.9% year-over-year, the report notes, signaling a true shift in both perception and reality for Downtown.
Meanwhile, asking rents in Lower Manhattan remained stable. Class A rents were $45.36 per square foot, showing no change from 2012. Taking rents improved, however. According to the Alliance's report, the taking rent index—which shows taking rents as a percentage of asking rents, reached 90% for the quarter—the highest since the end of 2008.
In terms of the various commercial markets, Lower Manhattan now boasts 4,092 hotel rooms in 18 properties. The pipeline is described as “active” as construction continued on seven hotels, while three projects moved forward on pre-construction. The Lower Manhattan average daily room rate nearly matched the Manhattan-wide number of $257.53.
Several big stories developed in retail. Century 21 completed a renovation while 13 new bars and restaurants opened, along with three new stores.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
