Approximately 3 million square feet was leased both this year and last in Midtown by tenants 10,000 to 25,000 square feet in size, while 3.1 million square feet was taken by small tenants—under 10,000 square feet —so far this year, compared with just slightly less during the same period last year.
The data presents a picture of a market in which larger tenants have either been on the sidelines or far slower to take space. Smaller deals, however, are continuing at last year’s brisk pace.
“If you’re an owner or you’re a tenant in the small-tenant market, under 10,000 square feet, it’s been just as busy as it was in 2011,” Mr. Turchin said. “The real drop-off has been in the large-tenant market.”
A big part of the issue is that many of the major tenant groups in Midtown, primarily the financial sector, have not been growing.
Midtown South, meanwhile, which has captured the imagination of tech and creative firms, has seen brisk leasing because these sectors have been thriving and expanding.
“The tenants that are growing are the advertising and tech tenants right now, which are centered in Midtown South,” said Bill Elder, a top executive and leasing director at RXR Realty, a landlord that saw the potential of Midtown South and invested heavily there in past months, buying the Starrett-Lehigh Building and 620 Avenue of the Americas. “The large financial institutions are not growing right now; they’re stable at best. And that’s based largely in Midtown.”
Yet RXR Realty has hosted growth in its Midtown portfolio too, by catering to smaller users.
Artisan Partners, an investment management firm, moved into 1330 Avenue of the Americas, a building RXR owns in Midtown at the beginning of the year, committing to nearly 6,000 square feet. The company signed an almost 6,000-square-foot expansion in recent days.
“Landlords are definitely looking to cater to smaller tenants right now,” Mr. Elder said.
Numerous theories have emerged as to why bigger tenants have been sluggish to take space, with the general sentiment being that more sizeable companies are more coupled to persistent economic headwinds, global problems such as the European debt crisis and the uncertainties created by the presidential election.
“Everyone is generally trying to be very intelligent with their space utilization, doing more with less,” said Neil Goldmacher, a top leasing executive at Newmark (NMRK) Grubb Knight Frank.
“The market is going to continue to see that compression.”
