Rents Are Up, Vacancy Rate Stagnant in 1st Quarter of 2012
Average asking rents for Manhattan office space was at $58.90 a square foot at the end of the first quarter of 2012, a 7.6 percent increase from the same time last year, according to a new Cushman & Wakefield report that was released this morning.
Lease activity, however, has hit a lull in the first quarter, down 24 percent from the first quarter of 2011. 5.8 million square feet was leased in the first quarter of this year, compared to 7.6 million square feet leased in 2011.
While addressing reporters inside Michael’s Restaurant over a complimentary breakfast of scrambled eggs, pancakes and bacon, chief operating officer Joseph Harbert said that the sluggish leasing market from the fourth quarter of 2011 is carrying into 2012.
“Remember, last year was a record year,” said Mr. Harbert, citing the 30.1 million square feet in new leases, along with 8 million square feet of lease renewals.
“This year, we are looking at 5.8 (million square feet), which is really just a tad below your average,” said Mr. Harbert.
The overall vacancy rate for the Manhattan commercial real estate market was at 9.1 percent. Perhaps the most surprising of Cushman & Wakefield’s findings was that the information and technology industries, and not financial services, were responsible for eating up a lot of the square footage during the first part of 2012. That industry ate up 27.8 percent of square footage in 2012 year-to-date.
“It’s a really interesting trend to watch,” said Mr. Harbert. “As you see, financial services really occupies about 1 out of every 3 square feet in Manhattan. It’s been a bit quieter in the first quarter.”
Other findings in their report include:
- Midtown South saw rents rise by $10.08, from $57.44 to $67.52 in the last quarter. Vacancy rate for the market at the end of the quarter is at 5.4 percent.
- Asking rents in the Downtown market only went up by $0.49 in the last quarter. The vacancy rate is at 9.2 percent, down from 9.5 percent in the last quarter.
- The Midtown market closed the quarter with a 9.9 percent vacancy rate. The average asking rent is at $66.70, up by $1.28 from the last quarter.
- Demand for larger space is still high. Cushman & Wakefield said there were 13 deals worth 100,000 square feet or more in the first three months of 2012.