NEW YORK CITY—Following a 1.4 percentage-point decline in the first quarter, Manhattan's Class A office availability rate rose slightly from 13.3% to 13.4%, according to Savills Studley.
The firm in its second quarter New York City office report states that Downtown's Class A rate fell from 19.0% to 18.6%. Midtown's office vacancy rate rose to 12.2% in the second quarter, while Midtown South's rate increased to 9.0%.
Overall asking rents rose by 6.7% overall, increasing by 7.8% to $76.54 in Class A properties. Class A asking rents jumped by 8.1% to $84.81 in Midtown, their highest mark since early 2009, as several larger spaces priced above $100-per-square-foot were added, Savills Studley states.
Leasing activity fell to 9.3 million square feet overall, but was still well above the market's long-term average. Deal volume in Midtown dropped by 33.4% to 6.7 million square feet, just above its historical level. Leasing in Lower Manhattan totaled 2.5 million square feet and has exceeded its long-term average for four quarters in a row for the first time since the late 1990s, the brokerage firm reports. David Goldstein, executive vice president for Savills Studley says that leasing velocity is the strongest between 40th and Chambers streets.
“Value-plays continue to reign—net effective rents are still below $50 in many areas,” says Jeffrey Peck, senior managing director at Savills Studley.
“Midtown's landlords find themselves in a position they are unaccustomed to as Midtown has become the submarket of last resort due to a location and space mismatch," the company states. “Sectors still suffering from revenue compression—non-profits, publishing, advertising and media, as well as some law firms—are focused on reasonably priced, efficient space, which puts space in Lower Manhattan at the top of their list.”
Savills Studley closed its report with a rather somber outlook for Midtown: “In the absence of a fundamental pickup in leasing appetite among banks and law firms Midtown is likely to lag for the foreseeable future.”
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
