Whither Midtown Class A?
Robert Sammons of Cassidy Turley on where midtown Class A availability is headed:
Direct availability for the midtown Class A segment fell to just under 11.9 million square feet in July, its lowest level since January 2009, when it registered 11.4 million square feet and was on its way up. During the recent downturn, it reached a March 2010 high of 15.1 million square feet.
Still, there is a lot of room for improvement—the 10-year monthly average is 8.8 million square feet. But with top-quality, long-term sublet availability waning, tenants’ attention has turned to the generally more expensive direct availability. And as this direct space becomes more popular, expect pricing to rise further—indeed, that scenario has already begun to play out. Of course, the key to further improvement will be job growth,something that has stalled slightly over the past couple of months. On the flip side, there are no new buildings scheduled for delivery in midtown until 2014.
Thus, if we get through this most recent economic hiccup relatively unscathed (thank you, Washington, for delaying the recovery), the market could potentially tighten quickly and direct availability will fall through that 10-year monthly average in 2012.
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