NEW YORK CITY—The Manhattan office leasing market finished 2014 strong, with new leases having comprised more than 60% of total leased space last year, according to new research from CompStak, a provider of commercial real estate market data.
No office submarket has felt the impact of growing leasing activity more than Midtown South. That area last year posted a 14.2% effective rent growth rate, the highest in the city. This marks the third consecutive year of double-digit growth for Midtown South. Average actual rents there have now surpassed $60 per square foot.
With Midtown South rents climbing toward Midtown's average actual rent of approximately $64 per square foot, the nature of tenants is changing. Many TAMI companies are migrating Downtown in search of lower rents and larger spaces. At the end of 2014, TAMI tenants comprised more than 40% of all leases Downtown, up from about 30% five years ago.
“The increase in new leases signed, combined with a migration of TAMI tenants Downtown, is a terrific signal of both a growing market, and a stable one,” says Michael Mandel, CEO of CompStak. “A more diverse tenant mix throughout Manhattan, and the take up of new spaces in both old and new buildings, protects the Manhattan office market against a future downturn in any particular industry sector.”
Across Manhattan, actual office rents have regained about half of the ground they lost in the downturn, ending the year at $59 per square foot, up from a low of $45 in 2009. Neighborhoods with a high inventory of class-B buildings—such as Penn Station, Time Square and Midtown South—were among the biggest winners.
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.
