NEW YORK CITY-The Manhattan office market continued to shine in October, led by another 471,785 square feet of positive absorption, according to a new report from Cassidy Turley. Despite 12 blocks of available space greater than 50,000 square feet hitting the market, demand still outpaced space returns as the availability rate dropped 10 basis points to 11.1%. Overall asking rents climbed $0.85 per square foot in October—the largest one-month increase this year—to $64.41. Class A asking rents, after going up and down all year, jumped $1.10 per square foot to $71.07, the highest since 2008.
Despite six blocks of available space being placed on the market in Midtown, the availability rate dropped 20 basis points to 11 percent and another 500,000 square feet of positive absorption was recorded. At 285 Madison Ave., 456,000 square feet of space was placed on the market by RFR, which has started a $65 million capital improvement for the property.
The addition of this large block of space pushed the availability rate for the Grand Central submarket back up to 15.5%, the highest of all the Midtown submarkets. The west side of Midtown continues to outperform the rest of Manhattan, as both the Midtown West/Columbus Circle and Times Square submarkets' availability rate are the lowest at 6.2% The Warner Music Group lease of 288,250 square feet at 1633 Broadway fueled the decline for Midtown West/Columbus Circle. Class A and B asking rents in Midtown posted significant increases in October. Class A asking rents jumped $1.36 per square foot to $78.57, while Class B soared $2.03 to $58.97 per square foot.
Midtown South availability rose for the fourth consecutive month, up 50 basis points to 9.2%. Despite the recent negative trend, the market still posts the lowest availability rate of the three major Manhattan markets. Most of this increase in the available supply can be attributed to three buildings within the F.M. Ring portfolio—212 Fifth Ave., 119–125 W. 24th St. and 251 Park Ave. South—adding 312,800 square feet to the market.
The available supply increased in four of five Midtown South submarkets, as the SoHo/NoHo/Greenwich Village area was the only submarket to post a decline. The SoHo/NoHo/Village availability rate dropped 40 basis points to 8.9%, which was fueled mostly by the first lease signed at 51 Astor Place for 42,000 square feet by 1stdibs. Class B asking rents continueto reach new heights, rising another $0.52 per square foot to $60.54, while Class A asking rents dipped $0.49 to $74.53 per square foot.
Meanwhile, Downtown moved in the opposite direction. Availability dropped for the fourth consecutive month, down 40 basis points to 13.1%. Another 373,195 square feet of positive absorption was posted in October, which made the year-to-date absorption positive for the first time this year.
The 240,000-square-foot lease signed by Health and Hospital Corp. at 55 Water St. mostly prompted this decline in available supply. In October, asking rents made the first significant change this year, as overall rents climbed up $0.45 per square foot to $48.19. After fluctuating for most of 2013, Class A asking rents increased $0.81 per square foot to $53.37, while Class B rents jumped $0.30 to $36.24 per square foot.
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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.
