NEW YORK CITY–New commercial leasing activity in Manhattan last year reached 32.8 million square feet, its highest total in 16 years. The overall vacancy rate closed out 2014 at just over 9%, with indicators pointing to continued strength in the year ahead, according to Cushman & Wakefield's newly released fourth quarter statistics.
“2014 was a very strong leasing year, with record volume, declining vacancy and rising rents,” declares Ron Lo Russo, president, New York tri-state region. “Manhattan also had record absorption of more than 10 million square feet, which was driven by solid job growth. We expect the New York market to maintain strong momentum in 2015 as the region continues to grow, diversify and thrive.”
The robust leasing activity pushed vacancy rates to single digits across Manhattan's three submarkets for the first time since July 2012. Midtown South, which closed the year with a 7.1% vacancy rate, continues to lead the way as the tightest market of all the Central Business Districts in the nation. The Midtown market closed the year with a vacancy rate of 9.8%, a decrease of 1.3% year-over-year; and the Downtown market ended at 9.7%, a decrease of 2.6% year-over-year.
New leasing in each of the three Manhattan markets is up, recording higher totals than the historical full-year average dating back to 2002. The Midtown South market led the way with 6.5 million square feet of new leasing, 82% higher than the historical average. The Downtown market had 6.7 million square feet of new leasing, 45% higher than the historical average and the Midtown market had 19.5 million square feet of new leasing, 24% higher than the average.
At year-end, the overall average asking rent in Manhattan increased 6.8% year-over-year to $67.70 per square foot from $63.40 and the Manhattan class-A average asking rent increased 6.9% to $73.69 per square foot.??
“New York City continues to evolve to meet the changing global economy,” says Ken McCarthy, senior managing director, economic analysis and forecasting. “From a port to a manufacturing sector to a financial center, New York has continuously adapted to the global environment. Today, New York is taking the next step in that evolution as the TAMI sector becomes more important.”
The diversification in tenant base in Manhattan, a move away from being led traditionally by financial services, has benefitted each of Manhattan's three markets. Over the 12-month period between December 2013 and December 2014, vacancy rates declined in 17 of the 20 neighborhoods tracked by Cushman & Wakefield.?
The Downtown market had a very strong year. With the completion of One World Trade Center, average asking rents in The World Trade submarket reached $65.17 per square foot by year-end, the highest rents ever asked in any submarket Downtown. Additionally, the overall Downtown rents reached $51.04 per square foot, the highest ever recorded.
The Midtown market closed the year with an average asking rent of $75.14 per square foot, up 8.1% year-over-year. The Midtown South market closed the year with an average asking rent of $60.72 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.
