The Midtown South submarket of Manhattan may have peaked.

With rents on a high and vacancy rates inching upward, the Midtown South commercial market may have reached its healthiest point.

Both Midtown and Midtown South – perhaps the tightest market in the country –experienced an increase in vacancy rates this past year, according to numbers released Monday by Cushman and Wakefield, rising to 10.3 percent and 7.1 percent respectively. Midtown South has seen a 71.1 percent increase in rent in the past decade. That submarket may have peaked, said Cushman executive director Andrew Sachs.

Many loft-like spaces in Midtown South are not in full service buildings and tenants may look to seek better value in other submarkets, said Mr. Sachs, and that trend is worth monitoring. “Its still a very, very healthy market," he said. "There’s still plenty of demand.”

Tenants who turn away from Midtown South to avoid the high cost per square foot may look to find space in neighborhoods such as Murray Hill, Downtown and the Penn Station, Mr. Sachs said. Cushman has been retained to market 1710 Broadway to tenants priced out of the area.

About 44.6 percent of leasing transaction in Midtown South were executed by companies in the technology, advertising, media and information fields in 2012. The average size of those deals was just over 26,000 square feet.

Ash Zandieh, director of TechStarter – the creative division of ABS Partners – opined recently that priced-out tenants could seek space in NoMad, due to its close cultural ties to Midtown South.

Downtown is a sleeping giant, in terms of office and retail space. Developments such as the One, Three and Four World Trade represent about 7.5 million square feet due to come online within the next three years. Combined with other properties currently in development – such as Hudson Yards and Manhattan West, among others – and there are just over 21 million square feet scheduled to become available in Manhattan by 2016, of which only about 3.5 million is spoken for.

Total square footage leased in 2012 clocked in at 23.2 million square feet, slightly below the ten year average, according to end-of-year figures released Monday by Cushman & Wakefield.

Leasing was down over 2011, in which machers leased 30.1 million—the highest total since 2000. The fourth quarter of 2012 represented the highest peak all year, totaling 6.4 million square feet.