NEW YORK CITY-A third glowing report on fourth quarter office leasing in Manhattan has been issued. Activity hit a quarterly record of 12.7 million square feet, according to Studley, with Midtown hitting a new high since Q4 2010, with 6.4 million square feet leased.
Downtown came in a close second, with 5.3 million square feet leasing once it secured the quarter's four largest leases. That performance shattered the submarket's previous high from within the last decade of 3.6 million square feet in the first quarter of 2000.
The trend of Midtown companies taking advantage of Lower Manhattan's price differential and strong incentives accelerated in the quarter. The GroupM agreement and the Jones Day lease point upLower Manhattan's resurgence and its appeal to tenants as an alternative to older building stock in Midtown's core. Still, larger tenants who stayed put in Midtown at year's end followed the lead of companies that headed South earlier in the year. Asking rents on several of the quarter's biggest Class A leases in Midtown were well below $70 per square foot, Studley says.
Overall, Manhattan closed out 2013 with 53.6 million square feet of available space, down by just 1.3 million square feet from the peak of 54.9 million square feet—a level hit just two years ago. The type of space on the market has shifted though, with higher-priced direct space accounting for a larger share of available space.
In terms of asking rents, Midtown Class A pushed higher by 2.9%, quarter-on-quarter, because the bargains already have been leased while the share of direct space has increased. Meanwhile, Class A rents Downtown soared by 6.2% in the quarter, with space at the high-end accounting for the bulk of availability. The area has approximately 3.2 million square feet of available space priced from $60 to $70 per square foot but just 1.5 million square feet of space with a face rent of $50 or less per square foot. And Lower Manhattan has the added appeal of incentives that can reduce effective rents by as much as 10%.
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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.
