NEW YORK CITY—The Manhattan office market posted its sixth consecutive quarter of positive absorption, with all three markets recording positive absorption in the third quarter, according to a new report from Cassidy Turley. The 2.8 million square feet absorbed in the third quarter brought the year-to-date total to over 5.7 million square feet. Class A space continues to be in high demand, accounting for 84% of absorption with 4.8 million square feet absorbed through the third quarter.
Strong tenant demand for Downtown space and improving Midtown and Midtown South fundamentals contributed to a 60-basis-point-drop in the overall Manhattan availability rate to 9.5%, the lowest rate in 24 quarters.
Leasing activity remained solid with just over 24.1 million square feet transacted. There was no sign of a summer slowdown as seven leases greater than 100,000 square feet were inked during the third quarter, compared to only four signed during third quarter 2013. This brings the number of large leases signed this year to 37. Demand for large spaces remains high, as supply continues to disappear.
Overall Manhattan asking rents continue to rise as demand for space remains robust. Class A asking rents increased $0.90 per square foot to $75.76 in the third quarter throughout Manhattan. Despite the highest average asking rents in Manhattan in more than six years, Downtown pricing remains a value option for tenants with overall asking rents an average of $18.00 per square foot less than Midtown.
After rebounding in the second quarter, the Midtown office market continued gaining momentum during the third quarter with 1.3 million square feet absorbed. This led to a 50-basis point-drop in availability to 9.9%, the lowest availability rate since the second quarter of 2008.
In Midtown South, there was over 430,000 square feet of positive absorption in the third quarter. The rebound caused the availability rate to drop 50 basis points in this submarket as well, landing at 7.9%. Class A asking rents dropped by a noteworthy $4.71 per square foot.
Finally, Downtown remains filled with demand. The availability rate dropped a sharp 110 basis points in the third quarter to 9.8%, bringing that metric lower than Midtown's rate for the first time in eight quarters. Class A asking rents dipped just $0.28 but are still relatively discounted at $54.94 per square foot.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
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.
