The economy is dithering and demand for space in the Midtown and Downtown office markets has not been sturdy enough to absorb new product–like 4 World Trade Center and 55 W. 46th Street– according to commercial real estate brokerage firm Studley’s Second Quarter Office Market and Spacedata Report.
The overall availability rate in Manhattan rose by 0.4 percent to 11.1 percent, the report says. Class A availability in submarkets have also been affected by market malaise. In the Plaza District, which had an availability rate of 8.5 percent in third quarter of 2011, now has an availability rate of 11.1 percent. Midtown’s availability for Class A space rose to 11.62 percent, its highest mark since the first quarter of 2011.
Downtown’s availability rate did not fare any better. It jumped up by 2.14 percentage points to 12.01 percent, with impending vacancies at the World Financial Center and the delivery of 4 World Trade Center to the marketplace affecting the overall rate.
“A few tenants may be holding back as concerns about the shaky economy, looming financial sector reform and the outcome of this fall’s election provide cause for caution,” the report reads. “Nevertheless, companies are not immobilized–they are picking their spots,” it adds.
Renewals are also picking up. Overall leasing jumped to the highest quarterly total since the second quarter of 2010, with 9.4 million square feet in office space lease. Of that, renewals accounted for 3.7 million square feet, Studley said. Two new leases, exceeding 100,000 square feet, were completed: Coty Inc.’s 118,000 square foot expansion at the Empire State Building and Memorial Sloan-Kettering’s 100,788 square foot lease at 650 Madison Avenue.
Overall asking rents in New York City saw a nice increase, jumping up by 7.4 percent to $53.76 from $50.06 a square foot. Class A rents in Midtown increased by 1.1 percent to $72.41 a square foot, while Downtown’s Class A rents rose by 9.7 percent to $51.17.