Manhattan Office Leasing Lifted by Large Deals

The two largest leasing deals of the year to date in Midtown Manhattan amounted to nearly one-third of the total office leasing activity in the borough in May.

Bloomberg’s extension of its 947K SF lease at 731 Lexington Avenue and Bain & Co.’s new 235K SF lease at 22 Vanderbilt Avenue pushed Manhattan’s total office leasing volume up to 2.98M SF last month, an 8.4% increase over April’s total of 2.75M, according to a new market report from Colliers.

The lift from the two mega-deals overcame a 40% plunge in office leasing velocity in Midtown South, which dropped to 860K SF from April’s total of more than 1.4M SF. Leasing volume Downtown dipped to 152K SF in May from the April tally of 199K SF, the report said.

The overall office availability rate in Manhattan in May was 17.9%, compared to 18% in April, while average asking rent ticked up a few cents to $74.59 per SF per year.

Despite the large leasing deals in Midtown, the availability rate increased slightly in the submarket to 16.2% in May as monthly absorption was negative due to large blocks of space that were added to the available inventory, including 316K SF at 1221 Avenue of the Americas and 173K SF at 125 West 57th Street.

Midtown South’s overall availability rate rose to 18.7% in May, up from 18.4% in April, as large blocks of space were added to the inventory, including 234K SF at 770 Broadway, 196K SF at 11 Madison Avenue and 187K SF at Penn 2. The above-average pricing of these three blocks of space lifted the average asking rent in the Midtown South submarket rose to $81.11 per SF from April’s average of $80.46, Colliers’ report said.

Midtown’s sublet availability rose for the fifth consecutive month to a total of 8.1M SF, the highest level in almost three years. However, overall sublet availability in Manhattan ticked down for the third consecutive month to a total of 20.55M SF.

Four of the top five lease transactions in Manhattan in May were in Midtown. In addition to the Bloomberg and Bain deals, The Trade Desk expanded its footprint at 1114 Avenue of the Americas to nearly 126K SF and Duane Morris inked a deal for about 80K SF at 22 Vanderbilt.

The largest lease in Midtown South in May was Herrick, Feinstein’s 77K SF deal at 2 Park Avenue. Kroll’s 48K SF sublease at 1 World Trade Center was Downtown’s largest transaction last month.